House prices to stagnate for 'years'

[Flying Fish]

hello,

just got feedback from friends in Sydney and indicates strong day on the auction front

it appears people are buying/investing well in the capital cities at the moment, some observers are talking up big time but I am not so sure whats around the corner

solid times at the moment though, enjoy the day

thankyou

robots

Hello

Sounds like a lot of mortagee auctions to me.

thankyou

 

[biff]

Ive listened to people trying to talk the housing market down for over 30 years, Id be missing a million dollars or so if I listened to them. Where I would be buying at the moment is in some of the more under rated suburbs in Melbourne within 20 kms of the city.

 

[Smurf1976]

Ive listened to people trying to talk the housing market down for over 30 years, Id be missing a million dollars or so if I listened to them. Where I would be buying at the moment is in some of the more under rated suburbs in Melbourne within 20 kms of the city.

Fair enough. But if I'd listened to those trying to talk the market up over the past 3 years then I'd have lost an outright fortune.

House prices may well have risen a little since then in terms of the average selling price. But once you factor in the massive investment needed to keep up with the rising quality of "average" houses over that time it's been worse than cash in the bank.

A lot of people seem to be forgetting that if you take a house in, say, 2003 and compare that price to today's price then you need to deduct the cost of a decent "reno" from that. Those properties in essentially the same condition (less wear and tear) as 2003 have, in my area at least, gone down in value despite the "average" (renovated) property price going up.

I wonder why the real estate groups etc never mention quality of houses selling, only the price? It's like saying the average TV has gone up in price without mentioning that you're comparing a modest CRT 5 years ago with a giant plasma now. The price of the same TV has outright crashed in that time even though the "average" TV selling price has gone up.

 

[YChromozome]

Sounds like a lot of mortagee auctions to me.

Families are forced onto skid row news.com.au - May 13th.

FAMILIES are being forced to live out of cars and in motels as a rental crisis and a lack of affordable housing creates a new breed of desperate and homeless Australians. Despite low unemployment, NSW welfare agencies report they are turning away about 60 families a day seeking help because of mortgagee sales, a shortage of rental properties and domestic violence.

Thats the problem with robots, unlike Humans they don't have a conscious.

BTW robots, Auction clearance rates (if they actually mean anything) has fallen to 60% in Adelaide this weekend . . Must be a slow news week, no media outlet ever reports falling clearance rates?

 

[biff]

Fair enough. But if I'd listened to those trying to talk the market up over the past 3 years then I'd have lost an outright fortune.

Not if you didnt sell, a loss is only a loss when realised. I think the key to the whole thing is buying something you can afford and being prepared to live in it. 30 years ago my first property was a dingy 1 bed flat in the back blocks but it did give me an entry into the housing market. These days no one wants to start out without a 4x 2 in a nice area it seems.

House prices may well have risen a little since then in terms of the average selling price. But once you factor in the massive investment needed to keep up with the rising quality of "average" houses over that time it's been worse than cash in the bank.

A lot of people seem to be forgetting that if you take a house in, say, 2003 and compare that price to today's price then you need to deduct the cost of a decent "reno" from that. Those properties in essentially the same condition (less wear and tear) as 2003 have, in my area at least, gone down in value despite the "average" (renovated) property price going up.

I wonder why the real estate groups etc never mention quality of houses selling, only the price? It's like saying the average TV has gone up in price without mentioning that you're comparing a modest CRT 5 years ago with a giant plasma now. The price of the same TV has outright crashed in that time even though the "average" TV selling price has gone up.

well this is true to an extent, investors frequently overlook the fact that housing is high maintenance in order to keep the value of the investment. And many homeowners do too, in a flat market which is what a lot of the country has experienced in the last few years no one can expect to buy a property not do any maintenance for a few years and then sell without losing money.
In many cases a reno is just catch up property maintenance.

 

[robots]

hello,

I hope people can differentiate between the title of this thread and the affordability issue

if you want to discuss why people should get handouts, affordability issues etc then start a new thread

if I started a thread "CBA to stagnate for years" and the opposite happened but I continually campaigned that CBA had stagnated I would be laughed at as well

quality property across Aus has done well over the last 3 years and creams cash in the bank

thankyou

robots

 

[biff]

quality property across Aus has done well over the last 3 years and creams cash in the bank

thankyou

robots

Wheres your evidence to support this?

 

[AAA]

Fair enough. But if I'd listened to those trying to talk the market up over the past 3 years then I'd have lost an outright fortune.

House prices may well have risen a little since then in terms of the average selling price. But once you factor in the massive investment needed to keep up with the rising quality of "average" houses over that time it's been worse than cash in the bank.

A lot of people seem to be forgetting that if you take a house in, say, 2003 and compare that price to today's price then you need to deduct the cost of a decent "reno" from that. Those properties in essentially the same condition (less wear and tear) as 2003 have, in my area at least, gone down in value despite the "average" (renovated) property price going up.

SMURF,

A check of the ABS figures show average Hobart prices are up 25% in the 3 years up to March 07. Do you really think you can put this significant price increase down to value adding by renovations.

If someone could tell me how to post a link I would.

Thanks

 

[Julia]

Families are forced onto skid row news.com.au - May 13th.



Thats the problem with robots, unlike Humans they don't have a conscious.

Much of this is genuinely beyond the control of the people concerned, but not all of it. Often rent is not paid because the choice has been made to spend that money on alcohol or drugs or even a holiday.

Because of poor role modelling when they were children, many adults simply have no conception of budgeting or money management. If you suggest to them, e.g. that if they put the equivalent of the electricity account aside on a pro rata basis every fortnight (Centrelink will deduct this from benefits and pay to the electricity supplier) then they don't get that large bill to pay all at once, they are often simply uninterested. Easier to take the electricity bill into some kind charity or community organisation and ask them to pay it.

That said, there is a huge need for safe accommodation for victims of domestic violence and people who are mentally ill. The country's miserable, drug filled caravan parks are full of vulnerable people who simply have nowhere else to go.

 

[robots]

hello,

bif, go around the inner areas of capital cities, new higher prices are being achieved everywhere for units, townhouses, houses etc

the quality property out there has continued to do well since the so called end of the boom in 03

if you think the current prices are some abberation then goodluck, everybody can make their own decisions

who konws what happens in 10 yrs, 20 yrs or 30 yrs, all I know is shares and property will be leading the way, hold onto your assets

thankyou

robots

 

[YChromozome]

Much of this is genuinely beyond the control of the people concerned, but not all of it. Often rent is not paid because the choice has been made to spend that money on alcohol or drugs or even a holiday.

There is two sectors. I don't believe people renting have any excuses unless rents do dramatically go up. Historically rents up to 2006 have never increased any more than inflation. This year could be the first year in history where rents increase much more than inflation and this deviation could put many out on the streets. However all this hype of rents increasing 20% have not yet appeared in the first quarter CPI and rent index figures, so I guess we can only wait and see the effects.

However in the other sector, the owner occupier, while some could use the typical social excuses of alcohol and drugs, but the bottom line is the level of debt we have today and where it came from.

In the '80 household debt was 40% of disposable household income. Today, it is 160%. The single cause has been housing asset prices, mainly direct but also indirect through the wealth effect where owners feel richer hence they spend more on credit (or take holidays). Historically, house asset prices have never increased much more than wage growth or inflation. Fair enough, we have seen some booms followed by busts, but these are all dwarfed by the bubble we are currently in.

There is also not a week that goes past now where there is another example of a lender, lending money to someone that can't afford it, be it lending hundreds of thousand of dollars on a 40 year loan to someone in their 80s, or loans to someone unemployed.

Not everyone is on drugs. Lots of people are genuinely struggling. How long this lasts though, is anyones guess.

 

[Julia]

Not everyone is on drugs. Lots of people are genuinely struggling. How long this lasts though, is anyones guess.

Of course not everyone is on drugs. I didn't suggest any such thing.
One of the problems for people on welfare is that rent assistance has not increased in line with the actual rent increases they are having to pay.

 

[robots]

hello,

in today's australian

http://www.theaustralian.news.com.au/story/0,20867,21725066-25658,00.html

great reading, looking forward to the reply's, some more great sales over the weekend by the looks of it

thats right, its the blip before it goes bang

thankyou

robots

 

[tech/a]

This thread started back in 2005.

Since then in Adelaide (Where the instigator of the thread lives).
Average prices have risen 20-35%.

Sadly this will be a similar case (No 20-30% rewind in pricing across the board) for those who wait and wait and wait for the "right" time to enter the housing market.

Ive said it before and I'll say it again.
There is NO BETTER TIME to enter the realestate market than NOW.

Just be smart in the way you enter it.(be creative).
That doesnt mean all can afford to enter the market either.

 

[YChromozome]

There is NO BETTER TIME to enter the realestate market than NOW.

But I guess we should all pray tonight that someone comes up with some means that we can all spend more than we earn and it is still sustainable long term.

 

[Kimosabi]

This thread started back in 2005.

Since then in Adelaide (Where the instigator of the thread lives).
Average prices have risen 20-35%.

Sadly this will be a similar case (No 20-30% rewind in pricing across the board) for those who wait and wait and wait for the "right" time to enter the housing market.

Ive said it before and I'll say it again.
There is NO BETTER TIME to enter the realestate market than NOW.

Just be smart in the way you enter it.(be creative).
That doesnt mean all can afford to enter the market either.

I'm sure this was said about 1 day before the US housing market turned to sh*t as well.

They were very creative over there and gave out mortgages to anyone and everyone who had a pulse, including cats. Oh let me think, they've been doing the exact same thing here in Australia as well, hhmmm, let me think, how could this play out...

Oh, that reminds me, if I don't bite the bullet and buy a house now, I'm going to miss out and never going to be able to afford my own house, I don't think so...

Don't get sucked in people, just as rising housing prices feed on themselves going up, they'll feed on themselves going down.

And whatever you do, don't listen to people who have property, because they have a vested interest in seeing the continual value of their property appreciate or will happily sell you their overpriced property for a massive profit..

When this current bubble pops, and it will pop, those with cash or minimul debt will be King. Because, while the rest of the bubble suckers are struggling, just to keep their bubble homes and bubble investment property's those with cash or minimul debt will be in a prime position to pick up bubble free property at their true value...

And on to Mathematics 101

If a property a year ago was worth $300,000 and and has gone up 30% in a year it would now be worth $390,000.

Now for that same property to drop back to $300,000, it only has to drop 23%.

What this means, is that a 30 percent increase in property prices is very different to a 30 percent decrease in property prices.

If anyone wants a real life, happening as I write this post, case study on the aftermarth of a housing boom, just have a look here and get yourself educated ==> http://ml-implode.com/

 

[tech/a]

When I bought my first home it was $30k back in 75.
Back then it was an insane amount of money.

Its all relative.

 

[wayneL]

When I bought my first home it was $30k back in 75.
Back then it was an insane amount of money.

Its all relative.

What was the earnings/pirce ratio then? I'll bet it wasn't 6 - 10 times.

I'll bet yield was greater than 2.5 - 4.5% too

 

[Kimosabi]

When I bought my first home it was $30k back in 75.
Back then it was an insane amount of money.

Its all relative.

Buying houses is no different to buying shares, it's all about the timing...

The only real difference is that housing cycles are much longer than share cycles.

 

[stock_man]

When I bought my first home it was $30k back in 75.
Back then it was an insane amount of money.

Its all relative.

Slightly of topic, but what was the interest rate figures like back in 75?
I have checked the rba web site, and inflation was high at 14.4% for the year.

Given the average income now of $50K, the average income in 75 was $9.3K (rba).

That results in an earnings/price ratio was about 3. Definately lower than today, but a more reasonable comparison would be the actual yearly interest cost as a percent of income.

Lets examine the figures more closely:

2007 at $300K, interest 7.25%, interest/income percent = 43%
1975 at $30K, interest 13.25%, interest/income percent = 43%

As you can see, its easy to say the house was cheaper when looking at multiples of income, but during a booming inflation economy, interest rates were often high. Of cause, this is all blown out of the water if today's interest rates went to 13.25% (79.5% of gross income)