House prices to stagnate for 'years'

[Smurf1976]

Building in public infrastructure is the way to do that, and in that way shaping the social culture (something that needs to happen here in Perth). We are in boom times, and what the hell do we have to show for it?

A number of years back now, I was looking at policies to attract people to Perth and WA. The number one reason people stayed here and came here was affordability.

Exactly. And it's much the same everywhere outside of Sydney, Melbourne, SE Queensland, Canberra (public service jobs) and defence force towns/cities.

Whilst there will always be some who want to live in a country town or in the smaller cities (that is, any city other than Syd / Melb / Bris) history has shown pretty well that they aren't the number one choice for the majority.

Perth has had the big attraction of relatively easy to get employment (compared to the other capital cities) since at least the early 1990's recession. Add in cheap housing and a resources boom and it's not hard to see why the population has increased.

But the underlying point is that many in Perth are there for economic reasons alone. They came for money and will likely head back to their home states if/when the money dries up.

It's not just Perth either. Tasmania has long experienced the exact same situation with workers from interstate during big construction projects - once it's built the workers head straight back home with a fist full of $.

There is, of course, nothing wrong with people moving between the Australian states (or overseas) to pursue the available opportunities. But a problem arises when a temporary boost to economic growth is assumed to be permanent. At best they stop arriving but more likely some will leave thus pushing population and economic growth heavily down if not into reverse.

As for public infrastructure, we seem to be massively underinvesting in the future of this country. We haven't added serious water supply capacity to Sydney, Melbourne or Brisbane for over two decades. We're not doing much better with electricity (except Queensland and Tas) and we've got no long term plan for gas or what to do about oil depletion or greenhouse.

It's worth noting that those latter 2 points, oil and greenhouse, directly threaten 99% of our transport and 90% of our electricity in this country. Obvious national priorities that we're doing basically nothing about.

Meanwhile, as all this important invesment is neglected, we choose to borrow a fortune and push up house prices - something that fixes no real national or state problem and produces no real wealth. Pure madness.

 

[wayneL]

So apart from jobs, what exactly is keeping people here in Perth? There IS nothing. Forget cutting tax on property, they should be spending money on things that will keep people here, once the boom inevitably turns into a bust. Otherwise, people will leave in droves, and people will cry foul once their asset value is halved.

I could not agree more with this.

WayneL, where exactly do you live? I thought you were in WA.

Geraldton at the moment; though off to Blighty in a month or two... It seems I will be earning an honest living for a change

Could be a permanent move

 

[krisbarry]

The Adelaide Sunday Mail has some top quality journalism today. There is a full two page spread showing, by suburb, what your Adelaide house will be worth in 2016.

Titled "Future Shock : Welcome to our millionaire city", they tell us that Adelaide will have 83 million-dollar suburbs by 2016.

They go on to interview two 16 year olds contemplating their futures in ten years time and if they will be able to buy a house.

"The 2016 projections were made by applying the annual 8.7 per cent growth rate recorded by the Valuer General's office in the past decade to the next ten years."

"Independent real estate analyst firm Australian Property Monitors said the predictions were conservative." "Over the past decade the population and economy have grown and there is no reason why that wouldn't continue to put pressure on prices to grow at around the same rate," APM operations manager Michael McNamara said.

Now if you could only get PUT options on housing . .

Yep read it too, just another ramp from a "Real Estate Guru". He must be getting a little frightened about the real truth of the housing market.

Housing sales flat, first home buyers not buying anymore, seniors selling off homes in droves to place profits in super funds, and 8 interest rate rises over the past couple of years.

Sounds like he is floggin a dead horse...where is all this extra money going to come from to pay for these million dollar homes. We all know Adelaide is the welfare state.

 

[YChromozome]

We all know Adelaide is the welfare state.

Not anymore. More euphoria from quality journalism in today's Adelaide Advertiser :

"Mining set to drive up home prices"

"Mining growth es expected to fuel a property price SURGE in South Australia. "

...

"With at least six SA mining projects expected to be decided this year and more than 40 exploration companies scouring SA for new discoveries, many believe it is only a mater of time before property prices climb sharply"

So there you have it. Can't go wrong with Real Estate in South Australia - Safe as Houses.

Even the auctioneer says, Ladies and Gentlemen, step up, place you bids. Your buying appreciating assets, buy today - worth more tomorrow.

 

[Rafa]

The Advertiser is a joke...
sums up everything that is wrong with today's media really...

 

[robots]

hello,

the fact is quality houses and units across Aus have continued to rise

people waited for the crash several years ago it did not happen

buy what you can now

you can put whatever spin you want from "real estate guru's", media doing this or doing that

thankyou
robots

 

[theasxgorilla]

OMG, Robots, what the heck are you doing?!?!

Damn, the secrets out...

 

[Smurf1976]

hello,

the fact is quality houses and units across Aus have continued to rise

people waited for the crash several years ago it did not happen

buy what you can now

you can put whatever spin you want from "real estate guru's", media doing this or doing that

thankyou
robots

In other words, the Australian Dollar continues to lose value so you'd better change your Dollars for something else (such as real estate) before they lose what little remains of their value.

Exactly the situation predicted by Keating two decades ago.

 

[theasxgorilla]

Smurf, is this really a problem going forward?

 

[Uncle Festivus]

hello,

the fact is quality houses and units across Aus have continued to rise

people waited for the crash several years ago it did not happen

buy what you can now

you can put whatever spin you want from "real estate guru's", media doing this or doing that

thankyou
robots

hi robots, unless real estate has gained by more than inflation then it's been treading water at best ( in the Eastern states at least) for the last 3 years.

If the commodity 'correction' gets some legs then those states with exposure to it and consequently housing appreciation will suffer the same fate as the other states, ie stagnation. The savour is rising rents for the moment, which may in itself create a reduction in economic activity and the cycle continues downwards. A property investor friend of mine told me how his agent raised the rent of one of his properties from $230 to $280 per week. The tenant said they would not pay & move out, but had to in the end accept it because there was nothing else available.

This example show the scale of damage being inflicted on disposable incomes for renters. I don't know the exact figures but renters make up some 60%? of the population. How much can the consumer absorb before it starts impacting growth and property prices negatively??

 

[robots]

hello,

you can forget the analysis, prices have risen

stagnation has not occured for the quality property

every situation is different in history and in the future

thankyou

robots

 

[wayneL]

Smurf, is this really a problem going forward?

Combined with other factors it could be a very serious problem.

 

[theasxgorilla]

Combined with other factors it could be a very serious problem.

Such as? Commodities price depreciation?

 

[wayneL]

hello,

you can forget the analysis, prices have risen

stagnation has not occured for the quality property

every situation is different in history and in the future

thankyou

robots

Forget analysis! Yeah good idea!

Do not forget the role of gentrification putting an upward skew on housing indicies. Indicies are useless.

In real estate, analysis of anecdotal evidence is far more accurate.

This is showing some big problems in some areas in a world economy that is still strong. WHEN the fiscal pidgeons come home to roost, some people will be truly shocked at what happens to RE.

Governments are currently, desperately propping up RE values via a range of measures as this is what is underpinning the entire world economy. Having undermined our manufacturing base we are left to flog houses at ever increasing prices to each other.

Don't you see the problem here? House prices cannot outstrip inflation ad infinitum. Any idiot with Excel could work that out. Add a credit tightening cycle and there is only one possible result, and you won't like it.

 

[robots]

hello,

prices are still strong,

16mths for this thread, no crash no correction any idiot can see that

but hey the governments of the world are doing naughty things to help property owners, crap

thankyou
robots

 

[theasxgorilla]

In real estate, analysis of anecdotal evidence is far more accurate.

Should we create a "poll" thread? I think I might.

 

[wayneL]

hello,

prices are still strong,

16mths for this thread, no crash no correction any idiot can see that

but hey the governments of the world are doing naughty things to help property owners, crap

thankyou
robots

Prices trend, unquestionable.

Prices correct to the mean, either nominally or real terms, unquestionable.

As far as propping, I could go on ad nauseum. But first home owners grant, part ownership, easy credit and importantly, government spin are a few examples of such. So they suck a bit of tax from you... dittums.

 

[wayneL]

Should we create a "poll" thread? I think I might.

Pointless at the moment. Do it in 2009 - 2010

 

[theasxgorilla]

Pointless at the moment. Do it in 2009 - 2010

Perhaps. But I think you would agree that what has happened can be considered FACT, regardless of what might happen between now and 2009 - 2010. Unless of course people aren't telling the truth...but I can't do anything about that.

 

[Rafa]

I am a natural bear... i am not a property investor, i only have one house which i live in.
but can i just say one thing...

the earth population stands at 6 billion and growing rapidly..
people have to live somewhere...

and the way i see it, the things that are non-essential, will become dirt cheap, where as the things that are vital, will become more expensive.


What is essential...
natural resources (for food, energy, etc)... and a piece of land to live on...

all the rest is not...

i'd be surprised if you compare house prices over the long term, to inflation, whether there is any correlations whatsover...
rather, compare it to population growth and you have your answer right there...