House prices to stagnate for 'years'

eternit said:

So do you think the property market in South of Sydney can drop anymore or will it rise up again anytime in the future?

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I don't know, you'll have to find a real estate agent in South Sydney to ask, oops, that's right, their all driving taxi's now, just catch a Cab in South Sydney and ask the Driver...

Hello,

Some weekend reading especially for Robots.

http://www.dailyreckoning.com.au/australian-housing-market-2/2007/01/19/

Thankyou

Is the Over-Leveraged Australian Housing Market About to Crash?
Posted by Dan Denning on Jan 19th, 2007

If the RBA tries to keep pace with the Bank of England by raising interest rates again, it could be Australian home-owners who are left behind. “Higher interest rates are forcing people selling their homes to drop their prices while a rising number of home owners say their mortgage is worth more than their home, a new survey has found,” according to Nick Bourlioufas at news.com.au.

Owing more than your house is worth on the market is not called “being upside down” for no reason. It makes everything you’re told about home-buying look, feel, and most importantly BE profoundly nauseating, not to mention financially disastrous. “Over half the respondents, or 59 per cent, said the combined impact of three rate rises in 2006 had made it more difficult for them to make home loan repayments… Lower income earners were hit the hardest, with 71 per cent of those earning less than $75,000 struggling with mortgage repayments.”

Wage inflation might help a bit. But it would also prompt the RBA to raise rates yet again. Either way, a real reckoning may finally have arrived for the Australian housing market, just as it appears to have arrived in America. The timing couldn’t be more surprising for those who watch interest rates. After all, official central bank policies have not slowed down the rise of other financial assets one bit.

But official rate rises seem to affect the already-rich less than the would-be-rich home buying public. That’s because raising the cost of borrowing hurts people who are already in debt the most. And it compounds the losing logic of financing your old buying habits with new borrowing ones. While it’s true the rising rates are good for the Aussie dollar, which then attracts more foreign investment into Australian fixed-income products, it also makes exports more expensive. The strong dollar looks awfully good, but it may be the case that this kind of strength, it comes from higher interest rates, exposes the real weakness in the economy, the over-leveraged Australian housing market.

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And some Video taped economics lectures which makes good watching (and studying) for robots. Exams next week.

Real Estate Bubbles and California's Economic Growth, Part 1
Real Estate Bubbles and California's Economic Growth, Part 2
Real Estate Bubbles and California's Economic Growth, Part 3

Not to mention, Wayne - part two is out :

Financial Sense University : Sydney's Housing Disaster, Part 2

eternit said:

So do you think the property market in South of Sydney can drop anymore or will it rise up again anytime in the future?

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hello,

My understanding in Syd at the moment is that prices are going well, people are holding to their asking prices,

looking forward to the next five years in life

thankyou

robots

Anyone know if this robots guy is for real or is he just joking?

Flying Fish said:

Anyone know if this robots guy is for real or is he just joking?

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I think he is a Taxi Driving Real Estate agent from Melbourne...

Kimosabi said:

I think he is a Taxi Driving Real Estate agent from Melbourne...

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lol
Obviously couldn't afford to rent in Sydney hey Next stop will be lightning ridge!!

hello,

go out and have a look around because if you think prices have stagnated then you are dreaming big time

I cannot understand why people are so ignorant of this, its not about who has money or doesnt just be truthful to yourself

blue chip property over the last 4 years (as wasnt it 2003 that everything peaked) has still been solid as with good gains

where things go who knows, keep saving

thankyou

robots

robots said:

hello,

go out and have a look around because if you think prices have stagnated then you are dreaming big time

I cannot understand why people are so ignorant of this, its not about who has money or doesnt just be truthful to yourself

blue chip property over the last 4 years (as wasnt it 2003 that everything peaked) has still been solid as with good gains

where things go who knows, keep saving

thankyou

robots

Click to expand...

hello

ok

thankyou

robots said:

go out and have a look around because if you think prices have stagnated then you are dreaming big time

Click to expand...

Robots, Maybe you could fill us in on the Gold Coast Market?

Report reveals lower Gold Coast house prices - The ABC, Monday, 30 April 2007.

A national group of real estate analysts says the median price of Gold Coast houses fell 3 per cent in the first three months of the year.

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robots said:

hello,

go out and have a look around because if you think prices have stagnated then you are dreaming big time

I cannot understand why people are so ignorant of this, its not about who has money or doesnt just be truthful to yourself

blue chip property over the last 4 years (as wasnt it 2003 that everything peaked) has still been solid as with good gains

where things go who knows, keep saving

thankyou

robots

Click to expand...

We're just waiting for the "stupid money" cycle to play out...

Ahh... years of stagnation... May I have the fortune of living to see a boom if this is stagnation!

Presently sitting on gains of 15% or so on a 4 month old purchase in Brisbane, the market in my price range and areas is smoking. Houses are selling above list price, stats will no doubt catch up given time.

Guess I could have theorized about why the market wasn't going to do or shouldn't be doing such things.

** edit... I purchased well.. Hence the cracking CG figure.. But most of Bris from what I can work out (I do a fair bit of research) is growing comfortably above longer term averages to put it in conservative figures. Just thought I would post that to counterpoint the negative posts I am seeing here with some real world feedback.

Looks like a have/have not economy - the rich get richer, the poor get the picture

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SPECULATION of an interest rate rise has hampered a recovery in the housing market, an industry group said today.
The Housing Industry Association (HIA) survey showed new home sales were flat in March, holding level at 8191 dwellings.

Private detached house sales increased by a 0.2 per cent in the month, while the sale of multi-units fell by two per cent.

Sales in the first quarter of 2007 were 16 per cent lower than in the three months to March 2006.

HIA said speculation of an interest rate increase had discouraged would-be buyers and investors, and any upward momentum in new home sales had now stalled.

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Step 1 - borrow more than you can afford
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TIGHTENING home affordability means that first-time home buyers are cutting back on the size of their deposits and opting for bigger mortgages, industry people say.
Average deposits for first-time buyers have shrunk to between three and six per cent in recent years compared with the traditional 10 to 20 per cent, Raine and Horne Financial Services said.

"Very few applicants have a 20 per cent deposit," said Gary Lees who is the general manager of Raine & Horne Financial Services.

Shrinking deposits highlight how housing affordability is increasingly out of reach for more people across Australia.

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Step 2 - realise your mistake
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IMPROPER and aggressive lending practices compounded by rising interest rates have led to a huge increase in the number of people in NSW filing for bankruptcy.
Total insolvencies soared by more than 20 per cent in the first quarter of the year to 2859 cases, according to the Insolvency and Trustee Service Australia.
There were 2404 new bankruptcies in NSW in the March quarter, a rise of 21.54 per cent, 446 debt agreements (up 31.56 per cent) and nine personal insolvencies (up 28.57 per cent).
"This is an alarming reflection of the NSW property crash that people don't want to acknowledge," said insolvency partner and trustee at Hall Chadwick, Geoff McDonald.

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Step 3 - walk away
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STRUGGLING homeowners in Sydney's west are having their properties repossessed in record numbers as rich Harbourside postcodes enjoy surging real estate prices.
The cruel reality of Sydney's two-tier economy is revealed in detail in Supreme Court documents identifying the location of thousands of repossessions by banks and financial institutions over the past 15 months.

The top suburbs where homes have been snatched are all in Sydney's economically embattled suburbs where property prices are continuing to slide.


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There is anecdotal evidence that the reason repossessions in the more affluent suburbs do not show up is because people sell their homes before it gets to this stage, due to the embarrassment of repossession.

Kimosabi said:

We're just waiting for the "stupid money" cycle to play out...

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Well this stupid money is doing just fine.

Where is the smart money these days?

WaySolid said:

Where is the smart money these days?

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Debt collectors and credit services . .

I'm not sure I would be buying where I bought at current prices though, just that I did a lot of research and identified an area I thought perceptions were lagging reality, and was very good comparitive value compared to surrounding postcodes, and I was proven right very quickly which is probably a huge stroke of good luck as much as anything else.

And I think you can find areas right now (instead of telling everyone on a bulletin board how they won't make money in property) and do the same thing I did. Do some research, add some sweat equity, purchase well (Yields for houses in my areas are 5-6%) It's not a complex formula.

Property still rocks right at this moment in Australia as a wealth creation vehicle, don't let anyone tell you otherwise.

YChromozome said:

Debt collectors and credit services . .

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I don't know anything about this area but enjoy learning new things.

How do you invest in this and how are you presently doing so?

hello,

any word on the interest rate decision yet?

did they lift them to 10%?

thankyou

robots

Hi Robots,

No change, the country is flying, now just watch someone come along and stuff it up