House prices to stagnate for 'years'

[theasxgorilla]

Acerage 30 mins from London.
Well friends sold 1.5 acres with a 3 bed home 150 yrs old 1 hr out of London---Barnet for $2.5 Million Pounds dont tell me an acerage 30 mins from London is comparable to Perth 30 mins out!!

Those trying to time an entry into the property market will still be trying in 10 yrs time.

It's not comparible exactly because Horsham has a fast train. Perth doesn't, which means in 30 minutes, you don't get as far! Horsham is 65ks out of central London.

 

[moses]

The median price is heavily influenced by WHAT is selling as well as the price.

Agree with your qualification in principle, not sure it makes a great impact in practice. But yes, worth checking in a disorted market.

 

[wayneL]

NO PEOPLE. well very few.

This can be the problem with Oz for some

Few own homes there though. The average wage on balance isnt much more than the Aussi average.25-30000 Pounds.

I'm not talking about working visa folk. I am talking about emigrants... these people own homes.

Acerage 30 mins from London.
Well friends sold 1.5 acres with a 3 bed home 150 yrs old 1 hr out of London---Barnet for $2.5 Million Pounds dont tell me an acerage 30 mins from London is comparable to Perth 30 mins out!!

I'd like to see the property before passing comment... photos?

Those trying to time an entry into the property market will still be trying in 10 yrs time.

I disagree, but agree to disagree, if you agree.

 

[robots]

hello,

the issue is prices have risen, they have not been stagnate and will continue to increase for many years to come

buy blue chip unit or house, do not wait for a crash or a major correction it will not happen

plenty of people tried to time it 3-4 yrs ago

inner city within 15km, I was in through eighties and they are sound as

thankyou
robots

 

[Sean K]

buy blue chip unit or house, do not wait for a crash or a major correction it will not happen

robots

Hi robots,

Interested in your recommendation to buy units. I have always thought that you needed a free standing house with land for a good property investment.

There will never be a correction in housing? Ever?

 

[wayneL]

hello,

the issue is prices have risen, they have not been stagnate and will continue to increase for many years to come

buy blue chip unit or house, do not wait for a crash or a major correction it will not happen

Yes it will! If not in nominal terms, in real terms it will with 100% certainty.

 

[tech/a]

Hi robots,

Interested in your recommendation to buy units. I have always thought that you needed a free standing house with land for a good property investment.

There will never be a correction in housing? Ever?

Kennas.

Over the longterm its the land value that creates the increase in property value.

However Rental vacancies are at an all time low in many places in Aust.
We just put ours up 15% (First time in 4 yrs) and not a blink---there just isnt alternatives.

Community Title Apartments in medium value suburbs are in very high demand.
Selling off plan is relatively simple here.
Finding suitable land (Corner or 1500-3000 squ meters) is the difficult part.
Anything under $300k in Adelaide is just running out the door. Beats renting for most and they cant find anything even close to comparable anyway.
High rise high price apartments are well behind the eightball.

Thats NOT the Target market!

Wayne

OK I'll agree.---to disagree.

 

[robots]

hello,

the day my house goes from 500k to 250k or 300k will never occur

in fact people have to get over this issue prices will crash

20 yrs ago did you think people just walked into buying property with spare change or their ashtray money

people saved every penny just like what you have to do today,

thankyou
robots

 

[theasxgorilla]

Hi robots,

Interested in your recommendation to buy units. I have always thought that you needed a free standing house with land for a good property investment.

There will never be a correction in housing? Ever?

There are strategies to make money with units. For a plain old buy/hold/hope strategy a significant increase in house prices in an area where unit stock is tightly contested can be a tell-tale sign that over the coming 1 to 2 years unit prices will follow. Generally speaking, premium location units first and main road facing units last.

Improvements are generally limited to the inside and here you need to be uber mindful of the budget as it's easy to over-capitalise on lower prices units. Any improvements to the outside can be difficult or practically impossible as you'll usually require consent from all parties and this can take many years and headaches.

You'll almost never be able to knock a unit down and sub-divide/redevelop, unless you play monopoly and buy the entire block.

 

[krisbarry]

hello,

the day my house goes from 500k to 250k or 300k will never occur

in fact people have to get over this issue prices will crash

20 yrs ago did you think people just walked into buying property with spare change or their ashtray money

people saved every penny just like what you have to do today,

thankyou
robots

My parents lost half the value of their home within a few short years, prices crashed in the mid to late 90's. It can happen, I have seen a bust and I have also seen a boom. Its time for a bust again!

 

[wayneL]

hello,

the day my house goes from 500k to 250k or 300k will never occur

in fact people have to get over this issue prices will crash

20 yrs ago did you think people just walked into buying property with spare change or their ashtray money

people saved every penny just like what you have to do today,

thankyou
robots

20 years ago, prices were 3.5 times earnings. Today they are 6-8-10 times earnings.

Historically, whenever this has happened, prices have corrected in real terms at least. It will happen again, either nominally or real, it is inevitable.

 

[robots]

hello,

still waiting

thankyou
robots

 

[Smurf1976]

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

1 has now largely reversed at least according to surveys reported in the media. People now expect prices to fall or at most stagnate.

2 is at least partly a function of the real estate boom which has directly created rather a lot of jobs from construction to financial services. Jobs that disappear when the boom ends.

3 Wages are at record LOW levels relative to house prices and aren't growing at a rate anywhere near that at which house prices have grown. If property prices were to rise in line with wages over the next few years then the total return is at best equivalent to cash in the bank despite higher risk and far greater physical effort of having to actually buy property, maintain it etc. Leaving it in the bank requires virtually no ongoing effort.

 

[Smurf1976]

Cause i my place falls to say 200k, there is a good chance the place i am looking to move into will have fallen by 50% as well...

It took me a long long time to realise this above fact... Once i did, i had no hesitation in buying the first home as soon as i found the right one.

That this works in reverse too, that if your house doubles in value then so does another one that you could move into, is precisely why ordinary home owners with only one property (that is, most Australiana) do not gain at all when house prices rise. They can't actually spend their profit unless they sell their house and don't buy another similar one.

Those trading up or first home buyers lose when prices rise. They pay more cash for exactly the same thing that previously would have cost less.

The economy as a whole becomes less focused on productive investment and more focused on speculation. Speculation that produces no real wealth but merely transfers it from one person to another with banks, agents and others taking much of it back (over the long term).

Who wins?

Last home sellers and speculators obviously gain. Builders tend to ramp up profit margins at least in absolute $ terms so they gain too. Banks, governments and real estate agents all gain through increased interest payments, taxes and commissions.

 

[theasxgorilla]

Smurf,

I hope you are right. About 3 weeks ago I sold out of my last property in Australia and nothing would make me happier than to see my properties in Sweden go up another 20+% this year while Australia gets cheaper...unfortunately I don't see it happening...inspite of it being to my ultimate benefit.

TheASXGorilla.

 

[wayneL]

hello,

still waiting

thankyou
robots

In the seventies prices stagnated for several years. This was during a period of double digit inflation. In real terms this was quite a calamitous crash in value.

In the early nineties prices crashed in nominal terms. (you need to look to empirical evidence rather than the fraudulent statistical measures)

Both of these incidences were following periods of deteriorating affordability, similar to now.

Go back as far as you like, affordability oscillates around a mean of about 3.5 times earnings. We are greater than 3 sigma above that mean, prices WILL return... somehow.

 

[nomore4s]

Last home sellers and speculators obviously gain. Builders tend to ramp up profit margins at least in absolute $ terms so they gain too. Banks, governments and real estate agents all gain through increased interest payments, taxes and commissions.

This is a very valid point. I live in Darwin and we are currently going through a property boom, house prices have gone up over 30% (more in some areas) in the last 18 months.
During this time, builders think they are doing something wrong if they aren't making $100K per house they build - used to be alot less then this. (I'm not a builder but I run a business in the construction industry and deal with builders regularly).
Real estate fees have gone from 2.5% two years ago to 4.5%.

The only advantage for current home owners is the extra equity in their properties and people are using this money to renovate etc, therefore further increasing the value of the property, but you obviously pay for this through your loan.

The other thing I've noticed is people falling over themselves to get into the market, thinking that if they don't buy now they'll never be able to get into the market (therefore pushing the market up further). The problem this creates is sooner or later is alot of people (up here - first home owners etc) with the interest rate rises and rises in the cost of living, they can't afford the payments and what happens then?
There is alot of money floating around town at the moment (commodity & housing/construction boom) what will happen when the money dries up? This will happen as Darwin is very much a boom or bust town.

 

[theasxgorilla]

In the seventies prices stagnated for several years. This was during a period of double digit inflation. In real terms this was quite a calamitous crash in value.

The difference then was that there was no economic growth either. It was dubbed stagflation. That is not this environment/market.

 

[wayneL]

The difference then was that there was no economic growth either. It was dubbed stagflation. That is not this environment/market.

I didn't imply it is, it is also not the high % environment of the late 80's-early 90's I mentioned either. What is similar are the affordability issues which have been caused by a set of political expediencies.

However, some commentators worry over stagflation re-emerging. The inflation genie is out of the bottle (though the official fraud continues) at a point where growth is slowing....

 

[moses]

OTOH there is sufficient money coming in from OS in the sense that Oz today is a more desirable and accessable place to live and do business than before that breaks the old rules and will keep prices up above what we Aussie's might regard as reasonable or sustainable. Our remoteness is less of an obstacle and the lifestyle makes it worthwhile.