House prices to stagnate for 'years'

[theasxgorilla]

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.....

And here I was expecting a comment about Swedish vrs Danish beer

 

[theasxgorilla]

The contagion is spreading

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

From the article:

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

In a way I wonder if quoting a 10% drop in Ireland isn't a little bit like worrying about a 9% drop in the Shanghai exchange. Their markets have been so ridiculously out of control for so long now that it could just be a bit of downside volatility while the market takes a slight breather (that was terrible positive spin wasn't it ?? lol)

They suffer from the problem of having the ECB setting their rates. Whilst their economy and r/e market has been redlining for years the ECB has had to set rates in accordance with what other larger EU member states require. Imagine having 20% average annual house price rises for 10 years and interest rates down at 3% because Germany has issues?!

 

[bingk6]

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.

I reckon that you could include a large portion of Sydney buyers to this list. Sydney is in a really delicate stage right now in that small pockets in the "richer" suburbs (eg North Shore) can still show reasonable price appreciation, whereas other areas are really getting hammered. It just goes to show how people in different areas react to the 3 interest rises that we had recently, obviously affecting some much more than others.

Sydney is fast becoming a city of "haves" and "have-nots" with the divide growing larger by the day.

 

[numbercruncher]

Good article in todays SMH about the Housing boom Illusion and a Good chance of another Interest rate rise in as soon as two weeks.

We're at the point of experiencing the downside of the housing boom. Many home owners have been most gratified to see the value of their home at least double over the Howard Government's 11-year term.

What started as a way to get rich quick has been transformed into a way to bleed slowly. More may decide to cut their losses and sell. It's likely that a lot of the mortgagee sales we're hearing about are of investment properties.

Boom Over


Happy Property Investing Folks

 

[Mofra]

The vast majority of mortgagee sales are instigated by non-conforming lenders (ie Bluestone, Liberty) and smaller boutique lenders. Basically 15% of the lending market is providing 85% of the mortgagee sales, so if you qualify for a traditional mortgage the chances of a major default are actually fairly remote - especially when you consider the vast majoity of UCCC protected lending that does default is due to marriage/relationship breakdown.

 

[robots]

hello,

gee another conspiracy to keep house prices up with the US reserve bank keeping interest rates on hold

rubbish

but wayne says the inflation genie is out of the bottle

save hard , get a property

thankyou

robots

 

[wayneL]

hello,

gee another conspiracy to keep house prices up with the US reserve bank keeping interest rates on hold

rubbish

but wayne says the inflation genie is out of the bottle

save hard , get a property

thankyou

robots

The fed is caught beteen a rock and a hard place. Inflation is rising, but the economy is slowing. Holding interest rates or even lowering will take out the USD... it is already in trouble.

RBA next move is up.

BOE next move is up.

Oh, and house prices are crashing in the US... coming to a town near you

The Fed statement, revised for reality - from Barry Ritholtz

 

[wayneL]

save hard , get a property....

...when the time is right

 

[Kimosabi]

hello,

Up to 2.2 million American's could loose their homes due to predatory lending in an over-inflated property market.

Rubbish.

Buying overpriced property at the top of a boom is always a good idea.

Save hard, buy at the top of the boom, loose your hard earned savings, your house, and ruin your credit rating for the rest of your life.

thankyou

Kimosabi

 

[robots]

hello,

prices havent dropped in Aus for "quality" property, but increased

people have been buying well, people with the dollars

solid as in capital cities, go for walk around see whats happening instead of reading the media

so easy picking the top of the boom!!, you will regret it if sitting waiting

thankyou

robots

 

[wayneL]

hello,

prices havent dropped in Aus for "quality" property, but increased

people have been buying well, people with the dollars

solid as in capital cities, go for walk around see whats happening instead of reading the media

so easy picking the top of the boom!!, you will regret it if sitting waiting

thankyou

robots

Ramp

:sleeping:

 

[Kimosabi]

Hello,

To be able to afford to buy Quality property. Inflation will have to be contributed to by Increasing Fees charged to clients.

Due to everyone increasing prices to be able to afford to pay for Over-Inflated Assets, Interest Rates will be forced to RISE, eventually forcing the Over-Leveraged (Greedy and/or Stupid) to sell or the bank to foreclose on them.

Credit Crunch is coming to a bank near you. Due to banks tightening lending standards, fewer will be able to borrow money to buy over-priced assets, thus prices will have to come down.

Look at what is happening in US. "AUSTRALIA" will be next, has already started to happen in NSW, Victoria. This is only the beginning. As soon as commoditieis boom end, this will spread to the rest of Australia, dragging NSW and Victoria even lower.

An example of what will happen in Australia from our silly friends in the USA.

"For condominiums, the price fell 31 percent from $356,600 to $247,600 and the number of sales fell 24 percent from 195 to 149."

http://www.news-press.com/apps/pbcs.dll/article?AID=/20070323/BUSINESS/70323051/1075

Australian Housing prices were 50% over-valued in 2005.

http://www.theage.com.au/news/plann...ugh-for-a-while/2005/07/09/1120704594565.html

When the demand for commodities drops off, unemployment will increase, causing many to loose homes.

Commodities BOOM is the only thing that has kept Australia out of recession in last 3-4 years.

Open eyes, property busts are beginning to happen everywhere there have been booms.

What happened to Japan will happen to US, UK and Australia. Has already started in US.

People with the BANKS dollars have not been buying well. Over-Leveraging on Over-Priced assets is not a good investment.

Get positioned now to pick up Bargains in the Bust. Save hard now, make sure credit rating is 100%. Some Aussie Banks are already increasing lending standards NOW. Borrowing money will be much harder during Bust.

The bigger the boom, the bigger the Bust will be.

You will regret buying at the top of a boom...

Thankyou



Kimosabibots

 

[robots]

hello,

and you where one who ploughed all your dollars into the stock market in 2000 and 2001,

thankyou

robots

 

[YChromozome]

Due to everyone increasing prices to be able to afford to pay for Over-Inflated Assets, Interest Rates will be forced to RISE

Don't forget because Over-Inflated Residential 'Sure Things'(TM) has gone up 160% in the last decade and rents have only gone up in line with inflation (~50%), then now want to increase rents to fix the low yield problem. It is estimated rents will rise 20% this year. Many landlords have already increased rents by a flat 20.00%.

You you look at the weightings used to calculate inflation, Rents make up one of the largest proportions of the CPI - they contribute 5.22% to the overall index. If rents rise 20%, you can work out the rest, and guess at how many interest rate rises there will be to correct it.


Note : 'Sure Things' = houses. They always go up - it's a sure thing.

 

[Kimosabi]

Hello,

Reality is a cruel Mistress...

Houses cheaper than cars in Detroit

"We were sent an article yesterday from Yahoo! News detailing the levels to which housing prices in Detroit have fallen, and they have fallen very far indeed. Apparently last week, a Texas auction firm was commissioned to sell off a number of homes there. The prices were unbelievably cheap, with 'house after house [selling] for less than the $29,000 that it costs to buy the average new car.' The auctioneer became so exercised that he enjoined the audience with the simple statement that 'Folks, the ground underneath the house goes with it. You do know that, right?' Several houses that went by the boards sold for less than $10,000... some even for less than $7,000. As one participant said, 'You cannot even buy a good used car for that!'


"Sadly, these 'bargains' are not only in seedy, run-down depressed portion of the city. We read where a house in Bloomfield Hills, an area of the city we've been to several times in the past two years and is really very, very nice indeed, which had been listed for $525,000 sold for $130,000! Five years ago, at $525,000 the house was a bargain; at $130,000 it is even 'bargain-er.' However, when nice, tidy, small houses begin to sell for less than the price of a nice, tidy, used car, either cars are expensive or houses are inexpensive... or both. Now, how do we do the arb?"

http://www.frontlinethoughts.com/article.asp?id=mwo032307

Thankyou


Kimosabibots

 

[Smurf1976]

Credit Crunch is coming to a bank near you. Due to banks tightening lending standards, fewer will be able to borrow money to buy over-priced assets, thus prices will have to come down.

...


Some Aussie Banks are already increasing lending standards NOW. Borrowing money will be much harder during Bust.

I suspect that's true and I've long been expecting that to happen at some point. But do you have any firm evidence that major lenders are tightening credit right now?

Are they just increasing the minimum quality of borrower they will lend to or are they actually reducing the amount that will be lent to high quality (less than 80% loan to value, full time employed, clean credit history) borrowers?

 

[Kimosabi]

I suspect that's true and I've long been expecting that to happen at some point. But do you have any firm evidence that major lenders are tightening credit right now?

Are they just increasing the minimum quality of borrower they will lend to or are they actually reducing the amount that will be lent to high quality (less than 80% loan to value, full time employed, clean credit history) borrowers?

ANZ has started tightening their lending standards, and have also increased their loan loss provision.

The important point about it all (well there are several really) is that you don’t make house prices more affordable by making credit more widely available. By the way did you notice ANZ is already tightening its lending practices? Australia is not America, of course. What will happen here? Hopefully not a repeat of America’s mortgage market.

http://www.dailyreckoning.com.au/mortgage-market-2/2007/03/15/

Profit growth slowing – loan loss provisions rising!

ANZ has provided a timely warning about substantially rising loan loss provisions in the coming year. Recent interest rate increases are affecting overall lending with a slowing in the rate sensitive mortgage lending segment. From heady growth above 20% two years ago the growth rate in mortgage lending is currently around 12% and slowing.

While the credit cycle has peaked and therefore one would expect loan loss provisions to increase it is the adoption of new accounting standards – AIFRS – that will also impact on the level of provisions and introduce more volatility. Under the previous Economic Loss Provisioning, banks could smooth the impact of losses as the charge to the Profit & Loss account reflected the loss expected across the portfolio through the economic cycle. The sensitivity to losses in one particular year was eliminated. Under AIFRS the charge to the Profit & Loss account is direct and comprises two components: (1) `individual provisions’ for losses on specifically identified impaired loans; and (2) `collective provision’ being an allowance for loans that have not been specifically identified but events have occurred that are likely to have caused them to become impaired. Consequently when the credit cycle turns, not only will the individual loan provision increase but banks will also have to increase the collective provision as the change in conditions could cause some of the loan portfolio to become impaired.


In FY06 ANZ’s loan loss provision was $407m comprising an individual provision of $338m and a collective provision of $69m. This compared with FY05’s total provision of $565m comprising an individual provision of $357m and a collective provision of $139m. In the current year it is likely the total provision could increase by around 50% to near $600m – individual $450m and collective $150m.


The combination of slower lending growth and intense competition will continue to pressure net interest margin and reduce growth in net interest income while non-interest income growth will also be impacted by competitive pressure on fees and commissions.


We are looking at a slowing to 9.5% in the current year after a 13.8% lift in cash net profit in FY06. Management is committed to increased capital expenditure in the Personal business segment which accounted for 50% of the increase in group cash earnings in FY06. Management has identified growth in the domestic branch network and expansion into as key parts of the overall growth strategy.

Source: e-Trade Aspect Huntley's Recommendation

ANZ appears to be one of the more responsible banks.

The problem with being a ROBOT is that you have no concept of reality...

Thankyou

Kimosabibots

 

[The Red Baron]

The Real Estate Institute of WA has reported the number of homes in the market has ballooned to almost 13,000 mid Feb, twice the number of the same time last year. Initial assessment by REIWA reveals that total house sales has dropped by some 40% below March 2006 and 33% below March 2005 respectively.

Add that rates could also be on the rise. Interesting times ahead.

http://www.news.com.au/business/story/0,23636,21426591-37037,00.html

Rates forecast to keep rising
By Nicki Bourlioufas
March 22, 2007 11:14am

A KEY analyst is predicting interest rates will rise in the first week of April and again within 12 months, which would hit hard Australians on lower incomes.

“On balance it now looks likely that the Bank will raise rates by 0.25 basis points following its April 3 Board meeting,” said Westpac Bank’s chief economist Bill Evans today in a research note.

Any decision would be announced to the public on April 4.

The central bank raised interest rates three times last year, with November’s rate rise of 25 basis points taking official interest rates to a 6-year high.

Being stung by higher interest rates? Have your say in our survey.

According to Mr Evans, the pain to households will continue into next year and rates would rise even more.

“A rise in interest rates in April or May would not mark the peak of the cycle. We expect that the Bank would be prepared to go on hold for the remainder of 2007 to assess the cumulative impact of four rate hikes over a full year.

“However, we expect that the factors pushing up inflation over the last year would remain apparent through the second half of 2007 leading to a further move by early 2008.”

Recent economic data suggests wages growth remains robust and economic growth remains “relatively growth”.

The RBA sets interest rates to keep inflation between 2 and 3 per cent and strong economic growth pressures inflation higher.

The Aussie dollar has surged over US80 cents and bond yields have gone up in expectation of another rate rise. The Australian bank bill futures market yesterday put the chance of a rate rise at the next Reserve Bank board meeting at 50 per cent, while a rate hike in the next 12 months is considered a certainty.

People on lower incomes and Australians up to their ears in debt would be hurt particularly by another rate rise.

Bank repossessions of properties are rising around Australia, especially in lower income areas such as Sydney's and Melbourne's outer suburbs.

Property investors who also bought at the peak of the boom of 2003 have also been stung by higher interest rates and some home owners are now in a position where their mortgage is worth more than their home, or they hold "negative equity".

 

[robots]

hello,

wow a .75% increase last year, and "maybe" a .25 increase coming up

gee that will knock things over wayne, but there already knocked over aren't they?

things have already collapsed going by this thread

thankyou

robots

 

[wayneL]

hello,

wow a .75% increase last year, and "maybe" a .25 increase coming up

gee that will knock things over wayne, but there already knocked over aren't they?

things have already collapsed going by this thread

thankyou

robots

:sleeping: