House prices to stagnate for 'years'

[YELNATS]

NB (Loooong term they may of course go up,

Wasn't it John Maynard Keynes who said in the long term we're all dead. In fact, some of us are closer to that than others. LOL

 

[Kimosabi]

hello,

any changes on the property prices this week, another week passed, faithful still hanging in there for the bust

around 3 months form the 2 yr anniversary, anyone post a count down clock

thankyou

robots

Post Housing Bubble Robots

 

[tech/a]

I couldn't agree more. As a director of a company, we sold our rental property assets in February to minimise risk. We are very happy with our returns over the years.

At the end of 2003, we were cautious with property being overvalued by 51% based on Fundamentals. The warning bells were ringing. Now the alarm bells are ringing and we have moved that money into other assets and reduced all exposure to the residential property market.

Exactly

Maximise geraing when opportunity presents and minimise when you deem it appropriate.
Done similar myself.
The only property I hold is well and truely positively geared to 11%.
Which is highly likely given a Labor Govt.

 

[slooi1]

I've been reading this thread for quite a while. The bears seem to think that the housing market is uniform and that the stats capture all essential details (similar to the stockmarket). Well it's not. That's why people like robots and tech/a are bulls.

Housing in the right area will continue to go up. I've seen it in the inner city areas of Melbourne where I live, comparable houses have been going out in prices to the extent of 50% in the past 3 years. Hardly a crash.
Houses in the outer suburbs/mortgage belt are not going up as fast (note I did not say that the prices were going down).

The market isn't uniform, not all house sales are reported and compiled - so the stats that people quote and glean from the papers are pretty much useless. The real check is when you go out and pound the hard yards and find comparable houses in location/condition and then compare the price. And from my checking, houses of comparable location/condition are going up, rapidly.

Agree with Robots that affordability is another issue and should be dealt with separately. People may say talk about the rising interest rates - you have to differentiate between houses. To me there are really two subclasses of houses:
1) Good family homes in good locations that always sell well and are never sold in a "fire sale" situation. Ie if the owners can account for repayments easily.
2) Investment type houses - normally average in location and condition. Rising interest rates will affect these investors who will sell in a "fire sale" situation

If a "crash" did occur, you'd see more houses of 2) being sold, and those would be the rubbish ones. The good houses in good locations won't be sold. I know I wouldn't be holding out to buy houses in the characteristics of 2). A caveat to this is that this is what I've seen in inner city. Outer suburbs, I would never purchase to live or invest.

slooi1

 

[Flying Fish]

hello,

another great weekend coming up chromo for property holders

open for inspections are insane at the moment, so many people, many bidders

great stuff across australia

thankyou

robots

hello

Are you the original crystal ball reader? Or perhaps you are just on the stuff.


thankyou

 

[wayneL]

The good houses in good locations won't be sold.

Nonsense! How old are you?

In the early 90's I lived on the Gold Coast. Primo waterfront properties were being flogged off at huge discounts. One across the road from my folks was sold at a 30% discount to it's late 80's purchase price, after a 100k reno/addition. This was not a one off either. It was happening everywhere. I recall Sydney waterfronts copped a caning as well.

When the poo eventually hits the propeller, no class of property will be immune.

 

[Flying Fish]

Nonsense! How old are you?

In the early 90's I lived on the Gold Coast. Primo waterfront properties were being flogged off at huge discounts. One across the road from my folks was sold at a 30% discount to it's late 80's purchase price, after a 100k reno/addition. This was not a one off either. It was happening everywhere. I recall Sydney waterfronts copped a caning as well.

When the poo eventually hits the propeller, no class of property will be immune.

I totally agree with you. Its a bit like a pyramid, take enough of the bottom bricks away and eventually the top ones also crumble. While I admire all the positive thinkers out there, the problem is that the majority are living in a fantasy world of their own. When the brown sloppy stuff does hit the fan, I for one would not like to be standing in its path.

 

[tech/a]

That's why people like robots and tech/a are bulls.

In my case,Ive been in Property (again) heavily since 96 and developing as part of business since 2000.

I look at property not as an investment/commodity but as a business (As the Developement side is!!)
It is neither bullish or bearish to me.
It is a vehical to run a business in and as such I look for ways of improving the profitability of my business.
I look for opportunities and exploit them.

Looked in this way I'm sure youd find property more dynamic than as a commodity which rises/falls/or is flat.

Big difference!

When the brown sloppy stuff does hit the fan, I for one would not like to be standing in its path.

And those of us involved in the Industry will take it as it comes ,finding opportunity when it presents itself.
This isnt fantacy,but the difference between those who perhaps look a little differently at Property/Trading/and Business than most others.
No point in "What if's", Opportunity doesnt look you in the face for ever.
You simply structure Business differently.

 

[Flying Fish]

In my case,Ive been in Property (again) heavily since 96 and developing as part of business since 2000.

I look at property not as an investment/commodity but as a business (As the Developement side is!!)
It is neither bullish or bearish to me.
It is a vehical to run a business in and as such I look for ways of improving the profitability of my business.
I look for opportunities and exploit them.

Looked in this way I'm sure youd find property more dynamic than as a commodity which rises/falls/or is flat.

Big difference!




And those of us involved in the Industry will take it as it comes ,finding opportunity when it presents itself.
This isnt fantacy,but the difference between those who perhaps look a little differently at Property/Trading/and Business than most others.
No point in "What if's", Opportunity doesnt look you in the face for ever.
You simply structure Business differently.

No offence tech. because doubtless you have and will do we ll, but is not this an admission of defeat?

Wait for the onslaught, you reckon 11% interest rates.... I aim a little higher

 

[Smurf1976]

I seem to recall the point of this thread being whether house prices would rise, fall or be flat rather than whether or not it's possible to make money running a housing related business.

Now, if I just invest in 20 randomly selected properties to represent real estate as a whole and then do nothing with those properties apart from maintenance then, after holding costs, can I expect a reasonable profit?

If "yes" then the bulls are right. If "no" then the bears are right. That I could start a property development company or go into the business of renovation for profit is an entirely different question as to whether house prices, as a whole, are headed up, down or sideways.

 

[tech/a]

No offence tech. because doubtless you have and will do we ll, but is not this an admission of defeat?

Wait for the onslaught, you reckon 11% interest rates.... I aim a little higher

Defeat?

If you take the black and White stance of Smurf,then yes.
If you take the stance of Property just as another form of business then no.

With rentals at such a high demand,and with it possible to positive gear (just invest more in the initial deposit),there will always be ways even for those not highly cashed to turn a good/satisfactory profit.

Commercial and Industrial property is currently 3 yrs behind the Housing Boom.
An area ignored by retail investors.

 

[Mofra]

Commercial and Industrial property is currently 3 yrs behind the Housing Boom.
An area ignored by retail investors.

I would argue that this area is not so much ignored, as it is more difficult to obtain finance for such proposals (especially with little equity) so many give up.

Comparing the ease of obtaining a 95% lend on residential compared to 70% as a stardard lend against commercial (up to 85% if you're willing to pay the extra margins), residential property is more accessable and thus more obtainable for the average investor.

 

[Clubsharer]

Hi all. This is the first post from me and I'm very much a novice compared to most of you guys, so be kind to me if I come accross as simple. The housing and stock markets appear to be both quite healthy, with plenty of cashflows coming in both areas. My question is, how much of the Australian property market is actually owned by the banks/martgage brokers? Coversely, how much of the stock market is actually owned by outright cash? It would appear, going from the little I know, that the housing market's artificially inflated by the over borrowings. This could be some cause for concern if there's ever (and there will be sooner or later) a recession where many home owners and investors are forced to sell off their properties because of no cash flows. So to summarise my post; how much of the property market is owned by the general public? Is the stock market artificially boosted as well? Which is more vulnerable in hard times? Thanks for this great site. Rob

 

[YChromozome]

My question is, how much of the Australian property market is actually owned by the banks/martgage brokers?

The RBA publishes Housing Debt to Housing Asset ratios. For the December 2006 quarter, the figure was 26.1%.

Between 1977 and 1990 the figures stay reasonably flat and hovered around the 10% mark. Since about 1990 it has started to accelerate upwards. This is consistent with Household debt (as a percentage of household disposable income) figures I posted earlier, as housing makes up most of Australian's household debt.

 

[Kimosabi]

Hi all. This is the first post from me and I'm very much a novice compared to most of you guys, so be kind to me if I come accross as simple. The housing and stock markets appear to be both quite healthy, with plenty of cashflows coming in both areas. My question is, how much of the Australian property market is actually owned by the banks/martgage brokers? Coversely, how much of the stock market is actually owned by outright cash? It would appear, going from the little I know, that the housing market's artificially inflated by the over borrowings. This could be some cause for concern if there's ever (and there will be sooner or later) a recession where many home owners and investors are forced to sell off their properties because of no cash flows. So to summarise my post; how much of the property market is owned by the general public? Is the stock market artificially boosted as well? Which is more vulnerable in hard times? Thanks for this great site. Rob

Well, this has got to be the Post of the Year so far, well done.

 

[Bronte]

Perth Median Home Price Tipped to Reach $500,000

Very interesting article in todays West Australian:
http://www.thewest.com.au/default.aspx?MenuID=77&ContentID=8874

"Median house prices in Perth will break through $500,000 in the next fortnight, a key property analyst predicted yesterday, as John Howard said he expected the commodities boom to continue for years."

 

[robots]

hello,

great post slooi1

i think your example of house 1 & 2 is spot on, and remember 1 doesnt have to be some primo multi million dollar house, house type 1 is over all price brackets

houses are so individual and I doubt if any here go out and do the hard yards looking at what things are going for, i have and people think you make things up

i dont know what is going to happen to property, all I am saying is things are definitely not flat, yet people assume from that your campaigning property never goes down

please go out and have a look around, have a great day

thankyou

robots

 

[Freeballinginawetsuit]

And those of us involved in the Industry will take it as it comes ,finding opportunity when it presents itself.
This isnt fantacy,but the difference between those who perhaps look a little differently at Property/Trading/and Business than most others.
No point in "What if's", Opportunity doesnt look you in the face for ever.
You simply structure Business differently.

Too True,

Unlike chilly Scotland thats cold & expensive with a generational wealth gap wider than the Grand Canyon. They do like us holidaying Aussies though

 

[wayneL]

I look at property not as an investment/commodity but as a business (As the Developement side is!!)
It is neither bullish or bearish to me.
It is a vehical to run a business in and as such I look for ways of improving the profitability of my business.
I look for opportunities and exploit them.

Looked in this way I'm sure youd find property more dynamic than as a commodity which rises/falls/or is flat.

Big difference!

This is such an important distinction.

Most people when speaking of RE investment are speaking of buying a pile of bricks, renting it out so somebody and look to create positive cashflow and/or capital gain. In other words a fairly passive "investment".

What you're talking about Tech is not really relevant to the topic at hand which is more about the passive investment in RE. Valuable information though it is and certainly an option if folks are inclined towards that sort of thing. But in reality, it is only viable/achievable/desirable for a minority.

You actually wouldn't want too many $%^&ing muppets involved in development as they would destroy your advantage. just like too many video shops or pizza parlours wrecks it for all.

I would argue that too many $%^&ing muppets have ruined the residential property market. Sure lots of folks have made a motza in the run up. I have two houses in SW England still that are still ludicrously overvalued, so not much to complain about there. But it has ruined my investment model, it has created over indebted muppets, panic buyers and would be johnny-come-lately property tycoons who are now crapping themselves over 0.25% rate rises ffs. I means I can't find investments that fit my specific model.

Defaults and repossessions are climbing astronomically (and quietly) and debt is getting right out of hand for many.

Governments are now actively manipulating the markets via grants, part ownership schemes and stamp duty concessions as they know RE tankage would result in the end of their tenure.

In the UK BTL (buy to let) loans are rising astronomically in number, yet the supply of rental properties has not really risen all that much... so someone is selling their BTLs. Anecdotally (and in simplistic terms) the professionals are selling their BTLs to the $%^&ing muppets. Classic distribution, in share market parlance.

...and we've seen this all before.

...and we've seen the results before.

 

[robots]

hello,

buy to let happened here in Aus around 01-03, the likes of Kaye et al, and still happens today

have I got a deal for you, we have bought 100 units of a developer and are going to pass them onto you for X, join our club will save you thousands, our valuer's with appraise in 12 mths etc

it hasnt brought the market to its knee's though

I have a friend heavily involved in BTL in the UK, was a very successful developer in Melburn and went to UK when things blew up here in Aus in relation to the Kaye et al and started, he is doing well albeit with morality an issue IMO

http://www.ticltd.com/

and those who have held will be now doing okay here in AUS

money here in Aus will get easier to get hold of, whether thats good or bad who knows

thankyou

robots