House prices to stagnate for 'years'

[nizar]

Anecdotally, London is still hot, supported by foreign money, but the some parts of the country are definately cooling/dropping.

Yep. All those new money Russians....

 

[theasxgorilla]

Hilarious! Rises are to be immediately believed, yet reports of falls are propaganda. The report came from the NAEA ffs.

These reports are great for buying opportunities. If the overall trend is UP then these stories, coupled with some FUD about interest rates rises (or better still, an actual interest rate rise) scare vendors into thinking that the market won't give them the money they’re asking. Ever noticed how open for inspections or auction turnouts are at their worst just after the media has beaten the living cr.p out of the market's psychology?

Only thing I know for certain, where I own, and where I just sold, the trend is still UP.

If I bought into the B/S stories that was being fed by the Swedish media about the Riksbank's policy to power ahead with their rate rise schedule then perhaps I would not have bought there? But in any case I had hedged my bets. I bought a place with “signficicant building” status (one below heritage listed) with sought after period architecture that needed a makeover, so if the market stagnates I can add value. And I fixed my interest rate, so no matter what happens, for the next ten years (not that intend to hold that long) my monthly outgoing is a known factor.

The other side of the hedge was if the Riksbank couldn't keep raising rates because inflation wasn't stimulated sufficiently to warrant it (YES, believe it or not, in some parts of the world central banks are actually trying to STIMULATE INFLATION! Sweden is such a place). In that instance two things would play in my favour. The SEK would fall relative to the AUD so I could effect a currency play when I bring money over, and the property market would continue its march upward, to which I have a significant amount of upside exposure.

Guess which occurred? Inflation still hasn't kicked in. The Riskbank had to back down on their intended rate rise schedule. The U in FUD became C (certainty). Rates would remain lower for longer than people had anticipated. Imagine that...a country where real returns almost equal nominal because inflation is negligable?

NB. I also bought right in the centre of town so if oil goes silly I can walk/ride/public transport everywhere. In the city in which I live the main street is also heated 24 hours. So if I blow up spectacularly and end up back at zero, or worse still hopelessly in debt, I’ll be a warm hobo…not that the lovely Swedish welfare system would ever let that happen.

Laissez Les Bon Temps Roulez.

 

[wayneL]

These reports are great for buying opportunities. If the overall trend is UP then these stories, coupled with some FUD about interest rates rises (or better still, an actual interest rate rise) scare vendors into thinking that the market won't give them the money they’re asking. Ever noticed how open for inspections or auction turnouts are at their worst just after the media has beaten the living cr.p out of the market's psychology?

Only thing I know for certain, where I own, and where I just sold, the trend is still UP.

If I bought into the B/S stories that was being fed by the Swedish media about the Riksbank's policy to power ahead with their rate rise schedule then perhaps I would not have bought there? But in any case I had hedged my bets. I bought a place with “signficicant building” status (one below heritage listed) with sought after period architecture that needed a makeover, so if the market stagnates I can add value. And I fixed my interest rate, so no matter what happens, for the next ten years (not that intend to hold that long) my monthly outgoing is a known factor.

The other side of the hedge was if the Riksbank couldn't keep raising rates because inflation wasn't stimulated sufficiently to warrant it (YES, believe it or not, in some parts of the world central banks are actually trying to STIMULATE INFLATION! Sweden is such a place). In that instance two things would play in my favour. The SEK would fall relative to the AUD so I could effect a currency play when I bring money over, and the property market would continue its march upward, to which I have a significant amount of upside exposure.

Guess which occurred? Inflation still hasn't kicked in. The Riskbank had to back down on their intended rate rise schedule. The U in FUD became C (certainty). Rates would remain lower for longer than people had anticipated. Imagine that...a country where real returns almost equal nominal because inflation is negligable?

NB. I also bought right in the centre of town so if oil goes silly I can walk/ride/public transport everywhere. In the city in which I live the main street is also heated 24 hours. So if I blow up spectacularly and end up back at zero, or worse still hopelessly in debt, I’ll be a warm hobo…not that the lovely Swedish welfare system would ever let that happen.

Laissez Les Bon Temps Roulez.

Gorilla,

I know nothing about the Swedish market, but it certainly is an interesting place... heated main street? I just gotta see that.

Anyhooz, my comments are directed specifically at the UK and other English speaking markets (US, OZ, Ire, NZ) where I think most of the trouble will be... plus a few European markets where the Poms have lashed out on RE (Spain, France etc)

From what I see, I don't think the rest of Europe will have much of a problem, there is still plenty of value present in many markets of which I have no doubt Sweden would be one.

FWIW, I can see myself ending up living outside the UK, somewhere in Europe and am dying to check out Sweden... the language seems daunting though You obviously speak the language?

 

[wayneL]

Stephen Roach:

http://www.morganstanley.com/views/gef/index.html#anchor4577

 

[numbercruncher]

Indeed I hope there are exceptions to the rule...the opposite of that was called communism, or socialism, or some such.

Let me ask you a question numbercruncher...are you an average person? If so then what you read is true, for you. If you choose to be something different then it might help you to speak with people who know better.

Yeah a bit less of the smart **** European attitude wouldnt go astray.

I read the facts, and simply relay them, You talk like a big shot, perhaps you are a big shot, and good luck to you.

Peace.

 

[theasxgorilla]

FWIW, I can see myself ending up living outside the UK, somewhere in Europe and am dying to check out Sweden... the language seems daunting though You obviously speak the language?

It's the second best country in the world, behind Melbourne If you have sterling (which I presume you would) then you could live like a King in Sweden, sincerly. I have seen the pic you posted of your English cottage. You could like that in Sweden for a fraction of the price. In fact, everything is cheaper, hence my comments about inflation. Cheaper than Aust and definately cheaper than the UK.

The language is difficult, but everyone under 55 speaks perfect English. I mean, the Queen's English...it keeps you on your toes being an Aussie, as I'm sure you're well aware, our dialect (IMO) is a degraded version.

If you know any German it can go a long way to getting Swedish as much of the language has loan words from either English or German. The base of the language is the same as Danish and Norwegian, so if you know Swedish you can get around in Norway or Denmark and read a lot of the signs, menus, timetables, no bother.

I'm not sure what kind of a traveller you are or what activities you enjoy, but I can recommend Scandinavia as a whole in Summer. It's particularly good for road tripping. The warm weather (25-30 degrees), plethora of lakes, and endless daylight hours truly make it heaven on earth. I won't mention the beauty of the local lasses. Suffice to say it's the reason for me being there.

There is a ferry from Newcastle to Gothenburg but beware that they drive on the right

FWIW I think Sweden will blow up economically like Aust, UK and US soon enough...but not just yet. If Germany can push forward reform and gain some traction then Sweden will benefit as they're a significant trading partner. Denmark is booming across the Öresund (very similar economic stats to Australia) and that that is driving the west Skåne region where I'm located.

 

[robots]

hello,

to all the 20 - 25's, get in now

buy what you can afford comfortably in good area, one bed, two bed whatever

think 5yrs, 10years, 20years, 40years

as mentioned on other thread, it takes around 6-7 years if owning when rent would equal owning and from then on sky is the limit

you cant beat living in Aus, things are solid as

thankyou

robots

 

[wayneL]

It's the second best country in the world, behind Melbourne If you have sterling (which I presume you would) then you could live like a King in Sweden, sincerly. I have seen the pic you posted of your English cottage. You could like that in Sweden for a fraction of the price. In fact, everything is cheaper, hence my comments about inflation. Cheaper than Aust and definately cheaper than the UK.

The language is difficult, but everyone under 55 speaks perfect English. I mean, the Queen's English...it keeps you on your toes being an Aussie, as I'm sure you're well aware, our dialect (IMO) is a degraded version.

If you know any German it can go a long way to getting Swedish as much of the language has loan words from either English or German. The base of the language is the same as Danish and Norwegian, so if you know Swedish you can get around in Norway or Denmark and read a lot of the signs, menus, timetables, no bother.

I'm not sure what kind of a traveller you are or what activities you enjoy, but I can recommend Scandinavia as a whole in Summer. It's particularly good for road tripping. The warm weather (25-30 degrees), plethora of lakes, and endless daylight hours truly make it heaven on earth. I won't mention the beauty of the local lasses. Suffice to say it's the reason for me being there.

There is a ferry from Newcastle to Gothenburg but beware that they drive on the right

FWIW I think Sweden will blow up economically like Aust, UK and US soon enough...but not just yet. If Germany can push forward reform and gain some traction then Sweden will benefit as they're a significant trading partner. Denmark is booming across the Öresund (very similar economic stats to Australia) and that that is driving the west Skåne region where I'm located.

As it happens I do have a little bit of German and can put on the Queens if pressed (missus comes from that stock and is on my back all the time about it lol).

Interesting what you say about Scandinavians and their English, apparently there are lots and lots of them in London, but you can't tell who they are (except that they speak better than most of the locals ).

I really love England, particularly the rural S/SW, but a few things really p1ss me off.
1/ Chav culture (overtly yobbish underclass)
2/ Encroaching Americanism (not as advanced as Oz, but still discernible)
3/ Big brother surveillance, Bliar/Brownism etc (hopefully somebody other that the stupid Democrats gets these b@stards out next time.)
4/ I see the potential for significant civil unrest if the economic poo hits the propeller.

Anyway, I'll hop on the barge for a Swedish beer one day soon.

Cheers

 

[wayneL]

hello,

to all the 20 - 25's, get in now

buy what you can afford comfortably in good area, one bed, two bed whatever

think 5yrs, 10years, 20years, 40years

as mentioned on other thread, it takes around 6-7 years if owning when rent would equal owning and from then on sky is the limit

you cant beat living in Aus, things are solid as

thankyou

robots

ramp :sleeping:

 

[chops_a_must]

FWIW, I can see myself ending up living outside the UK, somewhere in Europe and am dying to check out Sweden... the language seems daunting though You obviously speak the language?

So long as you don't speak like those from Dalarna, you'll be fine.

 

[theasxgorilla]

So long as you don't speak like those from Dalarna, you'll be fine.

Hehe, their horses look a little strange too

 

[theasxgorilla]

Yeah a bit less of the smart **** European attitude wouldnt go astray.

I read the facts, and simply relay them, You talk like a big shot, perhaps you are a big shot, and good luck to you.

Peace.

Apologies numbercruncher, the tone of my comment to you was inappropriate.

I become frustrated with quoted stats about 'average' this and that. It's not possible (IMO) to extrapolate a Melbourne metro statistic to mean anything about the average price move in a given suburb, let alone a street or an individual house. And even if you could know the price move in a given suburb (which you can, http://data1.reiv.com.au/trendchart/) you need to know something about the micro situation in that suburb eg. are new developments being released.

Consider this chart from the REIV website. In March 06 the outer suburbs of Endeavour Hills and Mooroobark actually made 'new highs' while Eltham and Metro Melbourne as an averaged whole dipped quite siginficantly. 3.7 million people and 270 suburbs is a diverse place to use a simple average on.

 

[nioka]

Hilarious! Rises are to be immediately believed, yet reports of falls are propaganda. .

Isn't that only for the bulls. Does the opposite apply to the bears.

 

[wayneL]

Isn't that only for the bulls. Does the opposite apply to the bears.

Of course! LOL

 

[numbercruncher]

Apologies numbercruncher, the tone of my comment to you was inappropriate.

I become frustrated with quoted stats about 'average' this and that. It's not possible (IMO) to extrapolate a Melbourne metro statistic to mean anything about the average price move in a given suburb, let alone a street or an individual house. And even if you could know the price move in a given suburb (which you can, http://data1.reiv.com.au/trendchart/) you need to know something about the micro situation in that suburb eg. are new developments being released.

Consider this chart from the REIV website. In March 06 the outer suburbs of Endeavour Hills and Mooroobark actually made 'new highs' while Eltham and Metro Melbourne as an averaged whole dipped quite siginficantly. 3.7 million people and 270 suburbs is a diverse place to use a simple average on.

Thankyou for the apology, nice to see people accept responsibility in a forum!

Look I agree with most everything youve just written. But I still maintain my original statement, that _most_ Melbourne buyers would be looking currently at a paper loss if they bought a year ago and sold right now.

Lets take Eltham here in your graph as an example, Purchase price 400k in March.

House 400k
Duty 20k
Rates 2k
Interest 28k
Conveyancing buy&sell 1k
Insurance/Maintenance 1k
Estate fee to sell 12k
Less rent -20k
----------------------------
Breakeven 444k.

So even in a suburb like Eltham if you where lucky enough to buy at the 2006 low youve lost money.

To me owner occupier realestate in Melbourne currently seems like a suckers investment if your not a cash buyer, I can understand investers still throwing their money at it for the negative gearing benefits is about all.

 

[theasxgorilla]

So unless you did some spectacular renovation, 1 year isn't enough for a moderately rising tide to lift you up past breakeven.

And to be honest a $1k maint/insurance budget is on the light side. Your breakeven would move towards $450k.

 

[numbercruncher]

So unless you did some spectacular renovation, 1 year isn't enough for a moderately rising tide to lift you up past breakeven.

And to be honest a $1k maint/insurance budget is on the light side. Your breakeven would move towards $450k.

Yes and even worse if you bought in the September high your break even would be a little over 500k.

Theres still reasonble buying out there for those whom put in there homework i guess.

I sold a House on the Gold Coast in 2004 for 330k its currently worth about 360, to me thats an enormously bad investment, especially taking Dutys,Fees,Inflation etc, thats before mentioning how extroidinarily well this person would of done if they dumped that money in the stock market instead.

Before this property Boom, Houses had ben stagnating for like a decade it looks like from my side of the fence that where in for much of the same.

Look theres some awesome tales of realestate profits out there, We have friends in Sandringham Melbourne who bought a house in the 80s for 60k ( only like 2 years wages for a couple then) and thats now worth well over a m.
In the current climate i think the only real winners on average are the Developers , (My freeloading Hippy baby boomer parents are part of a large Developer group, and there equity returns are seriously ridiculous) and the Governments who collect the Dutys and development fees, and the result is the end user pays for it with massive debt and high hopes.

Look it would be nice for realestate to keep going skyward for ever more, but can you realisitically expect it to ? With current house prices averaging out above what the avergage wage can afford, at best all people can hope for is prices to stagnate, but thats my opinion and one thats shared by alot of people and denied by nearly as many !

Happy Investing.

 

[theasxgorilla]

Yes and even worse if you bought in the September high your break even would be a little over 500k.

Although the stats are not for a single house, they're for a bunch of houses sold in a suburb during a quarter. It's difficult to know if the value of an individual house is fluctuating like this. Any way you look at the chart, the trend is up, with dips. It's my experience that the dips are caused by interest rate hikes and media hype. These produce good opportunities to buy off vendors who might become somewhat more motivated to give a little on price.

I do believe you can do your homework, tweak a few of the numbers you've presented (add more cash, for example), and find a place for a good price that you can make improvements to so that your maintenance expenses (done right) can actually improve value, not just maintain it.

 

[wayneL]

The contagion is spreading

http://www.belfasttelegraph.co.uk/breaking-news/ireland/article2369491.ece

Ireland
Property prices fall by up to 10 per cent since October


Sunday, March 18, 2007
There are further indications of a slow down in the property market.

A survey carried out by property website Daft has shown that prices have fallen by as much as 10 per cent in some parts of the country since October.

In Galway, prices for a three bed home have been trimmed by up to €40,000.

If the trend continues this year, it would be the first reversal in the Irish property market for more than a decade.

 

[Atomic5]

Anyway, I'll hop on the barge for a Swedish beer one day soon.

You'll probably be driving to Denmark on the weekend with the rest of them for the cheaper booze and end up partaking in drunken "how stupid are the Swedes" jokes by the Danish

i digress.....