House prices to stagnate for 'years'

[tech/a]

The name you use in the forum.

Tinaunderthebridge.

Whats it mean,where is its origin,how did you come about using it

 

[Smurf1976]

Looking locally (Hobart) what I've noticed is that there seems to be a considerable "compression" of the market going on lately. I acknowledge that Melbourne, Brisbane, Adelaide or wherever may be totally different. But I'm not familiar with the suburbs there so I did this research for Hobart using realestate.com.au today.

Looking at prices in typical middle income suburbs, the top end of town (high income) no longer looks that expensive. If you ignore the water views and mansions then just buying a basic house in a top suburb is perhaps 50 to 70% more than buying a similar house in a middle income suburb and only 3 times what you'll pay to live literally right next to a prison which you would expect to be fairly cheap.

Even just comparing neighbouring suburbs the story seems to be much the same with prices between one reasonably wealthy (but not elite) suburb having merged with a neighbouring "middle" suburb to the point that there is now no difference at all if you ignore factors such as water views that some properties have.

Even amongst styles of houses it's going the same way. Specifically, I could have bought a 3 bed weatherboard house for about $270K (mid point of listed price range) when the boom was on although about $250K would have been more typical either side of the sales mania in Winter/Spring 2003. Now I could go to the neighbouring better suburb and buy a similar sized brick house for about $255K (mid point of listed price range). So, same price but better house in a better suburb. But if I still wanted weatherboards in the cheaper suburb then there's one for sale right now listed at $219K. A drop, but not as noticeable as the market compression IMO.

The other real change I have noticed is liquidity or, more to the point, the lack of it. Whilst there does seem to have been a bit of an increase lately which coincided with the beginnings of the price falls (so that's falling prices on rising volume) the overall rate of sales has been slow to say the least. I've just checked 12 Hobart suburbs spread across the city both geographically and socio-economically on realestate.com.au and the results are that of those 12 suburbs:

Based on the rate of sales it will take, on average, 13 months to sell all of the listed properties in those suburbs. It is at least 10 monts in all but 2 cases and none are below 6 months (rounding to the nearest whole month). There are three areas, all of which are reasonably middle income and are geograhpically dispersed from each other, where the time is at least 2 years.

Anecdotally from my own regular observations I have noted that in some of these suburbs the number of properties withdrawn from sale exceeds the number actually selling. This has been going on for quite some time now. Regular property listings but most never sell. Some come back to let and in other cases the owners presumably just don't move.

So quite apart from issues of pricing, there is the question of actually being able to sell your property. Of course you can jump the queue and sell quickly, that is quite clearly starting to happen in some cases ("priced to sell NOW!" wording in listings etc) but of course that means dropping the price. And I think this is the real point here. If you have a couple of years to sell then prices probably haven't moved much at all. But if you want to sell in less than a year you are going to have to drop the price. And if too many start doing this (not to say that they will but anything is possible) then with such a lack of overall activity it wouldn't take much to bring on a crash in my opinion.

I'm not saying never buy a house. Nor am I saying never be a landlord. But I just don't see the point in rushing to buy something that yields less than the interest on the debt to buy it, has significant ongoing costs (repairs etc) and is, at best, going nowhere in terms of value. IMO it would make more sense to invest the money in something else for the moment and then come back to property when the valuations are more reasonable and the RBA has stopped threatening action should your investment be profitable.

As for liquidity, investing in property in Hobart is a bit like buying 100,000 shares in a company with an average daily trading volume of 350 shares. You had better hope that there aren't too many others wanting to sell at the same time you are... And yet properties were selling in a matter of hours (or minutes!) during the boom. Usually before the "for sale" sign even went up. But not any more...

As I said this could all be different in other locations of course, so do your own research.

 

[tech/a]

I'm not saying never buy a house. Nor am I saying never be a landlord. But I just don't see the point in rushing to buy something that yields less than the interest on the debt to buy it, has significant ongoing costs (repairs etc) and is, at best, going nowhere in terms of value. IMO it would make more sense to invest the money in something else for the moment and then come back to property when the valuations are more reasonable and the RBA has stopped threatening action should your investment be profitable.

As for liquidity, investing in property in Hobart is a bit like buying 100,000 shares in a company with an average daily trading volume of 350 shares. You had better hope that there aren't too many others wanting to sell at the same time you are... And yet properties were selling in a matter of hours (or minutes!) during the boom. Usually before the "for sale" sign even went up. But not any more...

As I said this could all be different in other locations of course, so do your own research.

So you have done your due diligence and your results are similar to any that would be found by a serious investor in Tassy,or anywhere else for that matter.So you would take appropriate action.

So like trading shares look for those that you WOULD buy---simple.
In a raging Bear market is it not possible that traders find outstanding LONG trades?

Property is no different.

Every Property Investor,Developer or trader isnt doomed to extinction due to looming or even falling Property markets,infact other opportunities then exist.

All I'm suggesting to those here who are petrified of hard difficult or challenging times is to adjust your way of thinking--away from the 95% who will ultimately lose or underperform to the ways of the 5% who DO and WILL continue to succeed.


Its these areas I'm willing to discuss and I thought had given some positive hints to those who have asked--HOW THEN?

Its a very important topic,one which people better become experts in--WHY
Well look around you and I'll bet those you know who are comfortable or wealthy have a basis in Realestate.

If you wish to be financially secure in your later years and REMOVE one of the leading stresses in relationships and life itself (Having enough money) then look no further ---- your looking at the Universal FOUNDATION of financial security. and we are lucky enough in this country to be able to take advantage of it-----Cant do it in India--China,South America,Parts of Africa---blah blah.

 

[krisbarry]

Here is the crunch...milk prices to rise by 24 cents on a 2 Ltr, due to the increase in fuel costs.

Rising prices on basic foods, will most ceratainly increase interest rates.

**** VERY IMPORTANT ****

 

[tech/a]

And when you have financial security the fact that milk rises 16c/L pales in significance.

 

[krisbarry]

The snowball affect has started. Fuel up, basic food items and transporation up.

Inflationary pressures up.

Interest rates will most ceratainly go up

A drop in house prices will occur

Make me happy!

 

[RodC]

You really think higher inflation and higher interest rates are going to make you happy and make it easier for you to buy a house in four years time?

 

[krisbarry]

It is the overall affect that will bring a downward trend to the housing market. I am looking at the bigger picture, which will ease me into a more affordable house, at a slightly higher interest rate.

Just a slight upward movement in interest rates will cause a massive snowball affect.

Don't laugh but that 24 cent increase in a 2Ltr milk will have a massive impact on the CPI. That is nearly a 10% increase on one of the most basic food items.

I believe today marks a significant day for inflationary pressure on the food front

On a positive note the unemployment figures were up, which means an easing on inflationary pressures from that front.

 

[tech/a]

Kris.

How much do you think interest rates will decline in 4 yrs as a %?
AND how much of a decline in house prices do you expect in 4 yrs as a %?

Generally speaking and in your case.
In other words what would be your best case scenario?

 

[It's Snake Pliskin]

The name you use in the forum.

Tinaunderthebridge.

Whats it mean,where is its origin,how did you come about using it

Tech,

Sorry to keep you wondering all night and day, but I have been off the computer. In answer to you questions my username is purely a fictional name and has no real origin except it used to be a joke of a saying with some of my friends. It doesn't mean anything. I guess it's more the sound of it that has an effect. I think it's quite different which is why I used it.

And, are you ready?

I'm not a woman. I don't pretend to be one nor should anyone assume I am one. Simply having a female part in your user name doesn't make you woman.
I'm sorry if some of you have assumed that to be the case and for that I'm sorry. I don't think it is important who you are, other than your username; some privacy is in my case was intended.

Maybe I should change my username to something more blokey. Like: Max driving his truck over the bridge, or Bill constructing the bridge.

So from now on everyone can be blokey with me and that's ok.

Cheers
Snake Pliskin

 

[wayneL]

Tech,

Sorry to keep you wondering all night and day, but I have been off the computer. In answer to you questions my username is purely a fictional name and has no real origin except it used to be a joke of a saying with some of my friends. It doesn't mean anything. I guess it's more the sound of it that has an effect. I think it's quite different which is why I used it.

And, are you ready?

I'm not a woman. I don't pretend to be one nor should anyone assume I am one. Simply having a female part in your user name doesn't make you woman.
I'm sorry if some of you have assumed that to be the case and for that I'm sorry. I don't think it is important who you are, other than your username; some privacy is in my case was intended.

Maybe I should change my username to something more blokey. Like: Max driving his truck over the bridge, or Bill constructing the bridge.

So from now on everyone can be blokey with me and that's ok.

Cheers
Snake Pliskin

Ahahahah! I thought there was a bit too much yang in your posts for a female. My preset gender sterootype remains intact hahahah!

 

[RichKid]

Ahahahah! I thought there was a bit too much yang in your posts for a female. My preset gender sterootype remains intact hahahah!

Have to agree, I had the same impression but you can never be sure, not that it matters when it's just an exchange of ideas. So 'Tina' has come out on ASF!

 

[Julia]

Tech,

Sorry to keep you wondering all night and day, but I have been off the computer. In answer to you questions my username is purely a fictional name and has no real origin except it used to be a joke of a saying with some of my friends. It doesn't mean anything. I guess it's more the sound of it that has an effect. I think it's quite different which is why I used it.

And, are you ready?

I'm not a woman. I don't pretend to be one nor should anyone assume I am one. Simply having a female part in your user name doesn't make you woman.
I'm sorry if some of you have assumed that to be the case and for that I'm sorry. I don't think it is important who you are, other than your username; some privacy is in my case was intended.

Maybe I should change my username to something more blokey. Like: Max driving his truck over the bridge, or Bill constructing the bridge.

So from now on everyone can be blokey with me and that's ok.

Cheers
Snake Pliskin

Tina (is that still the correct form of address in light of your revelation?)

And here I was thinking I had some sort of female companionship on the forum (as suggested by TechA). I had no idea. Does this mean we largely see what we want to? And that we make bland assumptions regarding gender where names are concerned? Probably. But, I've yet to meet a bloke named Tina. Thanks for letting us know. How would you have responded if I'd addressed a post to you asking for, e.g. "some support of a female point of view"? Doesn't using a name like this leave you open to some misunderstandings and possible difficulties?

Julia

 

[It's Snake Pliskin]

Tina (is that still the correct form of address in light of your revelation?)

And here I was thinking I had some sort of female companionship on the forum (as suggested by TechA). I had no idea. Does this mean we largely see what we want to? And that we make bland assumptions regarding gender where names are concerned? Probably. But, I've yet to meet a bloke named Tina. Thanks for letting us know. How would you have responded if I'd addressed a post to you asking for, e.g. "some support of a female point of view"? Doesn't using a name like this leave you open to some misunderstandings and possible difficulties?

Julia

Hi Julia,

Just for the record my name is not Tina. My user name is Snake Pliskin, one word.

I probably wouldn't have given you any female advice. I was dredding that day actually. But, I can try if you like.

Yes I think this name leaves me open to misunderstandings. Maybe I should change it. Any suggestions?

Cheers

 

[Smurf1976]

Don't be too conservative. Keep the name IMO.

 

[Julia]

Hi Julia,

Just for the record my name is not Tina. My user name is Snake Pliskin, one word.

I probably wouldn't have given you any female advice. I was dredding that day actually. But, I can try if you like.

Yes I think this name leaves me open to misunderstandings. Maybe I should change it. Any suggestions?

Cheers

Fair enough, I stand corrected Snake Pliskin. It's a bit of a mouthful though. Keep it - we're all probably used to it now.

Julia

 

[DTM]

And, are you ready?

I'm not a woman. I don't pretend to be one nor should anyone assume I am one. Simply having a female part in your user name doesn't make you woman.
I'm sorry if some of you have assumed that to be the case and for that I'm sorry.

Snake Pliskin

Arrrggghhhh. Everytime I read your posts I imagined a womans voice. A beautiful woman actually..., arrgghhh.

 

[It's Snake Pliskin]

Arrrggghhhh. Everytime I read your posts I imagined a womans voice. A beautiful woman actually..., arrgghhh.

No I have hairy legs.

 

[tech/a]

For those interested
"A Current affair" on Monday is doing a piece on the best buy areas still around.---should be around 10 seconds of rivveting television!.

 

[dutchie]

Snake Pliskin

how about tut bridge (tut for short)

fooled me too!

whats in a name?