House prices to stagnate for 'years'

[wayneL]

hello,

what a load of rubbish

I live in Melbourne

uncle's place in Stanmore sold just recently and he came out tops, previously he was in St Ives and I would imagine there are plenty more stories like that

where there is demand the prices are solid as

probably all the crap is going down, buy inner city is good

thankyou
robots

While incumbent western governments hopes are pinned on increasing house prices (indeed the entire economies), they will continue to flood the money markets with liquidity. In other word, credit will be loose and fast.

This is all fine while it lasts, but has the effect of undermining the base (the true underpinnings of our western economies) while adding froth to the top.

The end result can be delayed by manipulation of money supply and relevant statistics (as it is now), but the inevitable is recession. This time will be particularly painful. It is just a question of WHEN.

Already, the inflation genie is emerging from the bottle in the fraudulent government numbers... of course in reality it has been out for some time.

The result is that savers have been severely punished. This cannot last.

I will be the first to admit it is taking longer than expected, but most of us were unaware of the extent to which governments would go to prop it up.

Ultimately there can only one result. Peoples precious, ridiculously overpriced pile of bricks will return to fair value, perhaps even overshooting on the downside.

Cheers

 

[Sean K]

While generally, it seems that prices have stagnated the past few years, there are suburbs that have done better than others everywhere.

Anyone have a good summary of the past 3 years housing prices by suburb that has had the best gains....

Must add, I am more bearish generally, but see some short term possibilities.

 

[robots]

hello,

in my area St Kilda, demand is high, plenty of people want to live there and I am sure there are similar areas in every capital city

understand you Wayne, savers are getting screwed

thankyou
robots

 

[Sean K]

understand you Wayne, savers are getting screwed

I'm not sure if Wayne is saying this.

It's those borrowing, and getting into morgages over their heads, in a time of rising interest rates, and falling house prices, that will be screwed.....

Exactly what may happen in the next few years.....or not.

 

[theasxgorilla]

I have a good barometer that should predict when the hurt is really about to arrive. Get to know someone who has been saying that when interest rates go up all those people telling dinner party and water cooler stories about their property wins will be uber sorry. The more they say it and the more tabloid newspaper articles they show you to back it up, the better.

When the day arrives that they can't take any more of their colleages and associates telling smug stories and they finally decide to buy an "investment property" the next interest rate move will be down and property prices will really go to poo

 

[krisbarry]

Looks like the next rate rise is up....On top of Xmas Credit card binges, school fees, books, uniforms...this will be the interest rate rise that breaks the camels back...watch for the March, April, May slump in house prices!

This is it folks!

Poor bity the bastards in Sydney!

 

[krisbarry]

By the way I just bought another sh_it load, sorry I mean to say Ship load of Ipods to secure that upward pressure in interest rates

For those that are long-term followers on this thread and others you will know that I am locked out of the housing market (along with millions of other generation x and y's) and was for many years pissed off by it, but not anymore...couldn't give a rats ****...!

You can have you 40 investment properties and the rate rise that go with. I will have my superanuation thanks...it is paying me more that a 30% return.

Best to take a different route in life....stuff the bricks n' mortar, just add to your super and buy a house a house when you are 60, best way to beat the 30 year mortgage!

 

[krisbarry]

Just for the baby boomers while you munch over your morning weeties...and wondering if you should purchase that 40th investment property this is what you are doing....to your sons and daughters....shame on you!!!!!!!!!!!!

Key workers 'priced out of cities

AUSTRALIA is facing a crisis in which key workers will not be able to afford to live in the major cities, the federal Opposition says.

A house in Australia is less affordable for first-time buyers now than at any time in history, and the Opposition claims teachers, police, nurses and other essential workers are being priced out of cities such as Sydney and Perth.

According to Housing Industry Association (HIA) figures published today, the average mortgage repayment in Perth in the December quarter was $2759 per month, which put it ahead of Sydney which was paying $2741.

The West Australian resources boom has pushed Perth prices past Sydney for the first time, with its median first-home price at $444,900, an affordability drop of 7.4 per cent over the quarter.

Sydney's median price was $442,000, for a drop of 4.7 per cent.

The national median first-home price was $376,000, up from $361,500 in the previous quarter.

Labor spokeswoman for housing, Tanya Plibersek said the figures showed John Howard's government had condemned young Australians to a life of never owning their own home.

"The Howard government has given up on a generation of Australians," she said in Sydney.

"They have given up on allowing those people to dream of owning their own home."

Ms Plibersek said even middle income earners could not afford housing in areas close to the city in Sydney and Perth.

"We're actually seeing a situation in major cities like Sydney where key workers - nurses, teachers, police - find it almost impossible to afford to live within commuting distance of their work.

"We're going to have a situation like London where they had to revolutionise the way housing was built to make sure people on middle incomes could afford to live there.

"London had shortages of teachers, nurses and police and we're heading down that same path."

Mr Howard and Treasurer Peter Costello have defended last year's three interest rate rises by pointing out that unemployment is at a record low and the economy is the strongest it has been for decades.

But Ms Plibersek said Australians needed houses as well as jobs.

"One of the main reasons people work so hard is to put a roof over their head," she said.

"People, even if they are employed, if they can't find a roof over their head, aren't going to be very happy with the Howard government."

 

[krisbarry]

What a filthy mess...I am meant to be proud to be Australian on Jan 26th. and the great Australian dream is home ownership?

Biggest load of cr_ap I have heart in my life!

First homebuyers need help,

PERTH'S historic eclipsing of Sydney as Australia's most expensive city for first home buyers has prompted a call for the West Australian Government to take urgent action to help them.

Last year's three interest rate rises, coupled with an on-going shortage of housing stock, had sent affordability to a record low around Australia, the Housing Industry Association (HIA) said today after it released its quarterly Housing Affordability Index.

But the figures showed Perth had been hardest hit.

Sheryl Chaffer, of the HIA in WA, said Perth was now less affordable than Sydney for first home buyers - based on the average income of first home buyers and the median first home purchase price.

"It is the first time another city has been less affordable than Sydney for first home buyers," she said.

A 6.2 per cent surge in the median first home buyer prices in Perth, to $445,000 in the December quarter, prompted local first home buyer affordability to drop 7.4 per cent over the quarter and 34.5 per cent from a year ago.

In Sydney, a 3.1 per cent rise of the median first home buyer price during the quarter to $442,000 caused the first home buyer affordability index to drop 4.7 per cent over the December quarter, and 4.7 per cent over the year.

Ms Chaffer said immediate action was needed to help first home buyers into the market in Perth.

"It is very urgent, what we have seen over the last 12 months in particular is a significant falling out of the first home buyers in the market.

"From the state Government what we are looking for is action on stamp duty on a number of fronts and faster approvals processes for land release."

The HIA is calling for a review of the stamp duty threshold for first home buyers so it is aligned with the median first home purchase price.

The organisation also wants stamp duty removed on the GST component of the prices and a review of the stamp duty structure that applies to house and land packages.

"Unless there is some immediate action taken the situation will actually worsen if we have another interest rate rise," Ms Chaffer said.

WA's Housing Minister Michelle Roberts was overseas today and unavailable for comment.

 

[The Red Baron]

What is everyones feeling about this recent interest rate decession coming up? The papers and internet links ive been reading seems to be 50/50.

I'm a 24yr old perth guy trying workout where were going. Had two mates buy 3 years ago, decent block sized 4x2 for $250k. They have done really well and interest rates arent hurting them too much. Sure they are now drinking Carlton Draught instead of Corona and Rump steak on the bbq instead of Fillet but they are doing really well.

On the other hand i've had another 2 mates just buy in past 3 months. $400k for 3x2 in average suburbs. After missing out on a few properties paid $20k over the asking price to join the Perth property boom. Only to be hit by a few interest rates and the suburb to give up a tiny 0.9% in the December quarter, but still backwards in the Perth market. Another rate rise will really really hurt.

 

[krisbarry]

On the other hand i've had another 2 mates just buy in past 3 months. $400k for 3x2 in average suburbs. After missing out on a few properties paid $20k over the asking price to join the Perth property boom. Only to be hit by a few interest rates and the suburb to give up a tiny 0.9% in the December quarter, but still backwards in the Perth market. Another rate rise will really really hurt.

Poor bastards, they bought at the top of the market...just imagine a collapse in the resource boom, they will be stuffed for many, many, many years to come. At least Sydney has the night life, head offices, lifestyle and sights to support it in a downturn, Perth is so damn cut off from the rest of Australa and is only really supported by one thing and that is resources.

Its all downhill from here!

 

[krisbarry]

Hey "Realist", I reckon you could almost buy a house in Sydeny real soon, looks like the bottom of the market after the next rate rise in Feb/March.

Good luck mate, its been a hard slog for the rest of us trying to push down house prices but its now our turn to shine!

Much Thanks and support from our friends at the RBA!

 

[The Red Baron]

Poor bastards, they bought at the top of the market...just imagine a collapse in the resource boom, they will be stuffed for many, many, many years to come. At least Sydney has the night life, head offices, lifestyle and sights to support it in a downturn, Perth is so damn cut off from the rest of Australa and is only really supported by one thing and that is resources.

Its all downhill from here!

I think that's what they are hoping for, the resource boom to continue. After speaking with them last night, beening tradies they have decided to try get some work in the red dirt up north to keep their houses.

They did consider putting the property back on the market but the number of houses for sale in the area is now x3 and they aint selling.

 

[wayneL]

They did consider putting the property back on the market but the number of houses for sale in the area is now x3 and they aint selling.

Noticed that up here now as well... the top is in IMO.

I've just been perusing house prices in Canada, which is similar to Australia in size, economy and resources. Prices there, whilst experiencing somewhat of a boom as well, are nowhere near the absolute insanity of prices here.

On a price/earnings basis, Canadian prices are waaaaaayyyyyyyyyyyy cheaper...rents too.

Cheers

 

[Smurf1976]

They did consider putting the property back on the market but the number of houses for sale in the area is now x3 and they aint selling.

That comment alone says all you need to know about the Perth market. It's following what's happened in the suburbs of Sydney and some suburbs of Hobart over the past few years.

Each Friday down here in Tassie we get an 80 page "Real Estate Guide" with the newspaper. 80 pages!!! And it only covers the South of the state (population about 200,000 including Hobart).

Now, I'm not certain as to the population of Perth but I know it is well over 1 million. I assume you don't have literally 400 pages of houses for sale in the paper yet? If not then there's a lot of room for the supply of unsold stock to increase simply to catch up with what's already happened elsewhere.

First they start to "stick" and take longer to sell. Then the poorer quality stops selling altogether. Then the owners of poorer quality properties either give up on selling or drop the price. Then the owners of medium quality properties are forced to drop their prices to compete with the "renovators delights" once the latter becomes a cheaper option even with paying a builder to do all the work.

Then it gets to the point, which is just starting to happen in the suburbs of Hobart, where building projects are either drastically slowed or abandoned altogether. They've cleared the land, started building a few houses and then walked away. Either that or they've cleared the land, put in the roads and it's just sitting there as land for sale, the developer having scrapped the original plan of building houses themself. Those land prices are now starting to fall too, down around 10 - 20% in some cases compared to asking prices 12 months ago for similar blocks in the same area although the falls are not universal.

As for the building industry, it is to the point in Hobart now that major builders are literally advertising on the radio offering to build cupboards, cabinets, fix doors and so on. Not one man operators, but big builders. It must be bad when they are advertising wanting trivial works that they wouldn't even bother to quote on during the boom.

All coming to a suburb (of Perth) near you soon.

As for interest rates, my best guess is up 0.5% within 6 months, probably in the form of a 0.25% rise in February and another one sometime after. That's just watching the bank bills etc and looking at the underlying fundamentals with inflation, consumer credit etc.

 

[insider]

If the housing market goes down... then the share market goes up

 

[clowboy]

. Another rate rise will really really hurt.

Living/owning in perth so my comments reflect that market.

Yep I think that another rate rise is going to really start to have an effect on people in this catorgory. (ie bought in within the last year.)

Having said that fuel is falling so I think it would take two or more rate rises to really start putting a strain on things. Up is not a word im using in the same sentance with perth property ATM.

 

[Sean K]

If the housing market goes down... then the share market goes up

Does it depend on how much the market goes down? I have assumed that a softening housing market with higher interest rates would mean that more money goes into the stock market, but what if the downturn in housing was more severe? There is probably a point at which a housing crash would be negative for the market? I'm not sure, don't know enough about it??

 

[Realist]

Hey "Realist", I reckon you could almost buy a house in Sydeny real soon, looks like the bottom of the market after the next rate rise in Feb/March.

Good luck mate, its been a hard slog for the rest of us trying to push down house prices but its now our turn to shine!

Much Thanks and support from our friends at the RBA!

Yep, we are getting closer and closer, not yet though, maybe later this year..

 

[theasxgorilla]

My grasp of economics isn't all that special but I can't understand why people keep expecting house prices to fall. The mania may subside, but lets look at what is driving house prices:

1. Expectations/sentiment
2. Record low unemployment
3. Record high wages

Eventually the factors leading to point 1 will let up. This is what happened in Sydney and Melbourne. The raising of interest rates convinced people that the party was over. But factors 2 and 3 remained in place. What I saw in Melbourne was akin to a pull back on lower volume (in the sharemarket). Places were listed or went to auction and bottom feeders appeared trying to scoop up bargains.

But in "blue chip" suburbs the owners of the properties held fast. They didn't need to sell for lower. They were not being paid less (the opposite as a matter of fact) and they were not at risk of losing their jobs (the opposite actually, due to a skilled labour shortage).

As investors sold out around the peak they tended to sell to owner occupiers (first home owners could still get the 12k grant from the Vic government). This led to a decrease in rental stock so those that held their investment properties did so with secure tenants as vacany rates were and still are very low.

Does anybody really expect Perth to exhibit lower wages and higher unemployment and higher vacancy rates in the near future?