House prices to stagnate for 'years'
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Julia
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To get back to the original question of where do we think prices will go in the future: I don't think any of us know. There are just too many variables which can have a flow-on effect to the housing market.
Basically I view the housing market in the same way I view the stock market. If I buy good quality I shouldn't be too worried about fluctuations in the short and medium term.
When I had investment property I applied the philosophy of never buying anything for rental that I wouldn't be prepared to live in myself. If the capital valuation of the property drops for a few years, you still have rents coming in, and you know the value will rise again eventually. That is the nature of the cyclic character of markets.
Similarly, if I own Woolworths shares, do I get worried if the share price goes down temporarily? No, of course not. The dividends (like rent) continue to flow in, and I know people will always contiinue to eat, wash and clean their houses.
When I first bought the house I'm living in now (12 years ago), it happened to be at the top of the market. Had I wanted to sell for the next five or six years, I would have had to accept a loss of about 20 percent. The next few years things turned around, and it is now worth about 3 times what I paid for it. It's all about timing. The sad part is if someone has to sell at a particular time because of personal circumstances, but if that doesn't apply, then one just needs to wait until the next upturn to achieve a good sale price.
That is, as long as you have bought quality in the first place
Julia
Basically I view the housing market in the same way I view the stock market. If I buy good quality I shouldn't be too worried about fluctuations in the short and medium term.
When I had investment property I applied the philosophy of never buying anything for rental that I wouldn't be prepared to live in myself. If the capital valuation of the property drops for a few years, you still have rents coming in, and you know the value will rise again eventually. That is the nature of the cyclic character of markets.
Similarly, if I own Woolworths shares, do I get worried if the share price goes down temporarily? No, of course not. The dividends (like rent) continue to flow in, and I know people will always contiinue to eat, wash and clean their houses.
When I first bought the house I'm living in now (12 years ago), it happened to be at the top of the market. Had I wanted to sell for the next five or six years, I would have had to accept a loss of about 20 percent. The next few years things turned around, and it is now worth about 3 times what I paid for it. It's all about timing. The sad part is if someone has to sell at a particular time because of personal circumstances, but if that doesn't apply, then one just needs to wait until the next upturn to achieve a good sale price.
That is, as long as you have bought quality in the first place
Julia
tech/a
No Ordinary Duck
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Agree 110% Julia.
AnUbIs
It doesnt even have to be at the right price---long term.
Even those that found themselves owning properties 20-30% above market value in the late 90s early 2000's--curtouesy of sharks in QLD--are today beeming in greedy bliss!
This can be argued till your blue in the face and was when my Father was a boy.
I remember him "thinking of buying a house for $30,000---and I remember comments like--Rediculous,Will never pay it off,cant afford it.
He never bought it--that was in the late 60s--today the exact same home went a year ago for $650,000.
In 30 yrs time the houses your all saying the exact same thing will be worth 2 if not 5X todays value.
Ever remember your parents saying.
"If I knew then what I know now!!"
Well you DO--what you do with it makes the difference.
AnUbIs
It doesnt even have to be at the right price---long term.
Even those that found themselves owning properties 20-30% above market value in the late 90s early 2000's--curtouesy of sharks in QLD--are today beeming in greedy bliss!
This can be argued till your blue in the face and was when my Father was a boy.
I remember him "thinking of buying a house for $30,000---and I remember comments like--Rediculous,Will never pay it off,cant afford it.
He never bought it--that was in the late 60s--today the exact same home went a year ago for $650,000.
In 30 yrs time the houses your all saying the exact same thing will be worth 2 if not 5X todays value.
Ever remember your parents saying.
"If I knew then what I know now!!"
Well you DO--what you do with it makes the difference.
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The opposite can be said too.
May parents built a house valued at $250,000 back in the 80's. sold it in the 90's for $150,000. Massive loss!
Thats what divorce does!
Struggled to sell it, only had a few bidders at the auction.
Amazing what 10 years in the property market does.
But on the other hand if they kept it and sold it in todays market it would be worth $450,000.
Timing is the key in the property market. I will buy in 4 years time, thats when I beleive that I will get better value for money
May parents built a house valued at $250,000 back in the 80's. sold it in the 90's for $150,000. Massive loss!
Thats what divorce does!
Struggled to sell it, only had a few bidders at the auction.
Amazing what 10 years in the property market does.
But on the other hand if they kept it and sold it in todays market it would be worth $450,000.
Timing is the key in the property market. I will buy in 4 years time, thats when I beleive that I will get better value for money
Krisbarry,
Value in 80s = 250k. Value now at least 15 years later = 450k???
Where was this house located. I find it hard to believe there could be a house in Australia that hasn't doubled in value since the 80s. Most have doubled over the last 5 years.
Value in 80s = 250k. Value now at least 15 years later = 450k???
Where was this house located. I find it hard to believe there could be a house in Australia that hasn't doubled in value since the 80s. Most have doubled over the last 5 years.
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Outer southern suburbs of Adelaide.
Very much price sensitive areas!
Split level, 4 bedroom, open planned house on 1/2 an acre.
It may be valued at a lot more than $450,000 that was just a rough estimate.
Very much price sensitive areas!
Split level, 4 bedroom, open planned house on 1/2 an acre.
It may be valued at a lot more than $450,000 that was just a rough estimate.
tech/a
No Ordinary Duck
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A $250k home in the outer suburbs (southern) of SA would have been quite a house.The average price back then was 50K I was selling back then with interest rates of 18%
That would be a million $$ property now.
I live here and know of a handful.
What was the address?
That would be a million $$ property now.
I live here and know of a handful.
What was the address?
KrisBarry,
I think your approach is the correct one at the moment. Best to wait but save hard for a deposit. Generally I would not buy at the moment myself, but would wait for tougher times to come, or until you find a good buy.
I actually have an offer on a property at the moment, but only because I think its a very good buy. I have not seen anything else that has even tempted me besides this one for a long time.
Keep Saving hard, and buy when you see value
I think your approach is the correct one at the moment. Best to wait but save hard for a deposit. Generally I would not buy at the moment myself, but would wait for tougher times to come, or until you find a good buy.
I actually have an offer on a property at the moment, but only because I think its a very good buy. I have not seen anything else that has even tempted me besides this one for a long time.
Keep Saving hard, and buy when you see value
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Listening to the radio this morning and up go the interest rates!
The RBA comes to my rescue and answers my prayers. LOL
A prediction of 1% next year
Lock in those variable rates peoples, we are in for a bumpy ride.
Now where is that piggy bank? I am saving for a house deposit
The RBA comes to my rescue and answers my prayers. LOL
A prediction of 1% next year
Lock in those variable rates peoples, we are in for a bumpy ride.
Now where is that piggy bank? I am saving for a house deposit
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Checked out the new "Air" Apartments yesterday in Adelaide.
Went into one apartment and it was selling for 1.25 million, ouch!
Brilliant views of the hills, but way over priced.
Rental returns of $900 per week or a 4% return, very dismal for property investors.
The boom is most certainly over! Now just get ready to open those wallets! LOL
Went into one apartment and it was selling for 1.25 million, ouch!
Brilliant views of the hills, but way over priced.
Rental returns of $900 per week or a 4% return, very dismal for property investors.
The boom is most certainly over! Now just get ready to open those wallets! LOL
tech/a
No Ordinary Duck
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Have 3 on the market at the moment.
Sold one with an 18 mth settlement a few months ago at considerably over market value.
Sold another last Friday at full asking price.
Sure the run away prices are history but I'm not experiencing a drop in pricing.
If the buyer likes it they are prepared to pay for it.
Investors and speculators have been very fortunate that interest rates haven't rocketed as some would have been in trouble--READ SOME.
They have had and will continue to have for around another 12 mths to decrease gearing or mitigate risk.
Kris I will agree with you that anyone who finds themselves in the position of self inflicted financial difficulty after a 2 yr period of being able to help themselves---was and is GREEDY.
Sold one with an 18 mth settlement a few months ago at considerably over market value.
Sold another last Friday at full asking price.
Sure the run away prices are history but I'm not experiencing a drop in pricing.
If the buyer likes it they are prepared to pay for it.
Investors and speculators have been very fortunate that interest rates haven't rocketed as some would have been in trouble--READ SOME.
They have had and will continue to have for around another 12 mths to decrease gearing or mitigate risk.
Kris I will agree with you that anyone who finds themselves in the position of self inflicted financial difficulty after a 2 yr period of being able to help themselves---was and is GREEDY.
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Yes valid points tech/a, the prediction of rocketing/continued interest rate rises didn't eventuate, which is well and good for some.
And yes very true, it has given property owners/investors much more time to consider all options.
This may be the key to a stable downturn in the market and not the blood-bath that was experinced in previous cycles.
By the way, well done on your sales.
And yes very true, it has given property owners/investors much more time to consider all options.
This may be the key to a stable downturn in the market and not the blood-bath that was experinced in previous cycles.
By the way, well done on your sales.
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Everywhere I look I'm seeing more and more evidence of inflation. Petrol, wages, food...
So either the government/RBA is going to change the way inflation is calculated, ignore it or raise interest rates to contain it IMO. Which one they choose is good question but the key point is that a rate cut doesn't seem likely so there's not much chance of the boom restarting.
That doesn't mean I'm expecting a massive crash or saying that you should never buy a house. But I just can't see that there's any hurry to buy when prices are unlikely to rise for a while and renting is cheaper than the interest on a mortgage. Saving / investing the difference between rent and a mortgage taken out today would put you well in front IMO.
Not advice, just my opinion of course.
So either the government/RBA is going to change the way inflation is calculated, ignore it or raise interest rates to contain it IMO. Which one they choose is good question but the key point is that a rate cut doesn't seem likely so there's not much chance of the boom restarting.
That doesn't mean I'm expecting a massive crash or saying that you should never buy a house. But I just can't see that there's any hurry to buy when prices are unlikely to rise for a while and renting is cheaper than the interest on a mortgage. Saving / investing the difference between rent and a mortgage taken out today would put you well in front IMO.
Not advice, just my opinion of course.
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Interesting reading in the paper today.
http://www.smh.com.au/news/business/slowdown-hits-home-for-agents/2005/09/25/1127586747071.html
I saw the results of mass property marketing over 4 years ago in the CBD of Sydney when I worked in the industry. People bought and at that time couldn't find tenants, nor could they sell at a profit - more so a loss. That was in 2000! I am surprised it has taken this long to affect the agents to an extent that they are selling their rent roles - the bankroll of any agency - to get capital.
http://www.smh.com.au/news/business/slowdown-hits-home-for-agents/2005/09/25/1127586747071.html
I saw the results of mass property marketing over 4 years ago in the CBD of Sydney when I worked in the industry. People bought and at that time couldn't find tenants, nor could they sell at a profit - more so a loss. That was in 2000! I am surprised it has taken this long to affect the agents to an extent that they are selling their rent roles - the bankroll of any agency - to get capital.
another interesting article in The Australian
http://www.theaustralian.news.com.au/common/story_page/0,5744,16700437%5E25658,00.html
excerpt from the article....
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Conclusion:
So what has happened to real housing prices since 1970? The answer is they have risen by around 160 per cent, or 100 per cent after adjustment for quality changes. I'll leave you to work out how much that is a year. Now look at the accompanying chart, (the Treasury price index is previously unpublished data from the Australian Treasury for comparison purposes). There are four housing price booms between 1970 and 2003 -- from 1971 to 1974, from 1979 to 1981, from 1987 to 1989, and from 1996 to 2003, where the figures end. Each boom was followed by a fall in prices and a significant period of flat prices. However, in the long run, real price rises exceeded falls, hence the 100 per cent rise over the 33 years.
But there has been no boom like the last boom, and December 2003 we now know was the price peak. Since then, Sydney prices have dropped by 7 per cent in nominal terms and more than 10 per cent in real terms over the 18 months to June 2005. Australia-wide, prices have been flat. If history is a guide, we can expect a further fall in real prices and an extended period of flat prices.
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comments, especially from some of you guys who have been around for a while is much appreciated... but it does seem to point to a fall in house prices (in real terms), but definitely no crash as widely speculated...
also, for those like kris... it means there should be no rush to get into the market for a couple of years...
http://www.theaustralian.news.com.au/common/story_page/0,5744,16700437%5E25658,00.html
excerpt from the article....
------------------------------------------------------
Conclusion:
So what has happened to real housing prices since 1970? The answer is they have risen by around 160 per cent, or 100 per cent after adjustment for quality changes. I'll leave you to work out how much that is a year. Now look at the accompanying chart, (the Treasury price index is previously unpublished data from the Australian Treasury for comparison purposes). There are four housing price booms between 1970 and 2003 -- from 1971 to 1974, from 1979 to 1981, from 1987 to 1989, and from 1996 to 2003, where the figures end. Each boom was followed by a fall in prices and a significant period of flat prices. However, in the long run, real price rises exceeded falls, hence the 100 per cent rise over the 33 years.
But there has been no boom like the last boom, and December 2003 we now know was the price peak. Since then, Sydney prices have dropped by 7 per cent in nominal terms and more than 10 per cent in real terms over the 18 months to June 2005. Australia-wide, prices have been flat. If history is a guide, we can expect a further fall in real prices and an extended period of flat prices.
----------------------------------------------------------
comments, especially from some of you guys who have been around for a while is much appreciated... but it does seem to point to a fall in house prices (in real terms), but definitely no crash as widely speculated...
also, for those like kris... it means there should be no rush to get into the market for a couple of years...
tech/a
No Ordinary Duck
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My view.
Rates will increase.
Prices will come off more in areas of less demand and over supply.
Pricing generally will remain flat.
Opportunity for developers will be high density single bedroom Flats/Apartments--that those who cant afford housing or even rental housing can at least rent.
I also agree with the general consensus here that now and in the forseeable future buying realestate will be less than lucrative,unless you are a developer.As there will always be demand for something!
Rates will increase.
Prices will come off more in areas of less demand and over supply.
Pricing generally will remain flat.
Opportunity for developers will be high density single bedroom Flats/Apartments--that those who cant afford housing or even rental housing can at least rent.
I also agree with the general consensus here that now and in the forseeable future buying realestate will be less than lucrative,unless you are a developer.As there will always be demand for something!
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On the news this morning, the following was reported:
"The RBA's latest review follows a new survey from BIS Shrapnel, which warns a chronic skills shortage and subsequent rise in labour costs could force the RBA to push interest rates up to 6.5 per cent next year from the current 5.5 per cent level." (Nine News)
So yes, prices will possibly stay flat, rates will rise because we will all be earning so much more money due to increase wages because of a lack of skilled labour!!! Sounds a bit like a merry - go- round!
"The RBA's latest review follows a new survey from BIS Shrapnel, which warns a chronic skills shortage and subsequent rise in labour costs could force the RBA to push interest rates up to 6.5 per cent next year from the current 5.5 per cent level." (Nine News)
So yes, prices will possibly stay flat, rates will rise because we will all be earning so much more money due to increase wages because of a lack of skilled labour!!! Sounds a bit like a merry - go- round!
tech/a
No Ordinary Duck
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You know they arent wrong about labour shortage.
I have an ad running constantly in the Employement section.
Even at $60k plus a vehicle I can't get a supervisor.
Its just that they arent out there.
I have an ad running constantly in the Employement section.
Even at $60k plus a vehicle I can't get a supervisor.
Its just that they arent out there.
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Tech, you're right. We have had a job advertised for a History / Geography Teacher with the ability to teach English to Year 10 advertised for 3 months. One of the most common teaching combinations, yet a school in Sydney's north shore area just can't get someone suitable. We filled it with a casual and this term I'll have to take an extra class to make it work! It's not just the building game, it's universal!
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