House prices to stagnate for 'years'

[robots]

hello,

the so-called credit crunch/tightening isnt really doing much when you see auction clearance rates of around 85% in melbourne on a weekend, up around 20% on last year even with the interest rate rises that have occurred

even RBA comments about housing picking up based on the auction clearance rates,

good property is fine

thankyou

robots

 

[Flying Fish]

wow great

 

[Judd]

That is interesting about the clearance rates. The only hassle I have with it is that

results of auctions are reported on a voluntary basis by real estate agents who, obviously, have absolutely no bias or conflict of interest in the matter; and

auctions are only a relatively small part of housing sales.

Even median price figures by suburb collated some considerable time after exchange of contracts are distorted to some extent as that figure could comprise one house sold for $2m and four houses sold for $700,000 each and so the median figure reflecting the sale price of none of them.

Nevertheless, it is interesting. I think the Reserve Bank was grappling with something similar in respect of movements in measuring house prices according to this 2006 abstract from one of its discussion papers:

"House prices are intrinsically difficult to measure due to changes in the composition of properties sold through time and changes in the quality of housing. I provide an overview of the theoretical nature of these issues and consider how regression-based measures of house prices – hedonic and repeat-sales measures – can control for compositional and quality change. I then explore whether these regression-based alternatives can provide accurate estimates of pure house price changes in the Australian context.

Using unit record data for Australia’s three largest cities – Sydney, Melbourne and Brisbane – between 1993 and 2005, the results suggest that the two regression-based approaches provide similar estimates of the pure price change in housing. The measures are comparable in terms of statistical fit, with around half of the variation in prices growth (for those houses sold more than once) explained. The regression-based measures also produce similar estimates of pure price changes to those obtained by a mix-adjusted measure. However, all three measures behave quite differently from a simple median, implying that compositional change matters empirically. These results confirm that regression-based measures are likely to be a useful analytical tool when measuring pure house price changes in Australia."

 

[toothfairy]

Hi Robot,

so sad to see you get harassed by a bunch of ______s who probably do not own properties and try to talk it down.

Facts :

I own and dis-own shares (in all nations) during UPS & DOWNS(my favorite in OZ is ZFX), that's why I am on this forum
I own properties (4 in Melbourne, inner inner suburbs) during UPS & DOWNS
Shares are more headaches, properties less
Shares are (were a few weeks ago) @ all time high, so are properties in metro Melbourne
In a 20 years time frame, shares has increased more than properties, so you can't say shares are not overpriced compared to properties
Properties increases on average of 7% PA, slow & steady is winning the race
I profited heaps more from properties than shares, shares are for entertainments and fun (unless you are insider/expert), keep you in touch
I don't see many people invested in properties crying, can see some share traders crying (more common now)
Leverage ( -ve gearing) on properties is good healthy strategy, margin trading on shares is gambling
OZ property market surged in 1987-1990 after the 1987 stock market crash, at high interest rate

That's some of the differences, I beg you guys don't be one sided, doesn't do you any good financially.

Cheer UP, do some research, stop arguing blindly.

 

[numbercruncher]

Hello Toothfairy


1/ We are debating not arguing

2/ We are not _________s thankyou

3/ Congratulations on your success


Thankyou


NC

 

[wayneL]

Hi Robot,

so sad to see you get harassed by a bunch of ______s who probably do not own properties and try to talk it down.

Sorry, that's a non-sequitur and a childish argument.

 

[toothfairy]

Sorry, that's a non-sequitur and a childish argument.

1) ________s could be complimentary, like "experts"
2) probably don't own properties does not put anyone down, I know of some very well to do people (multi-millionaires) renting, they put all their $ in business which generates more cash. I can't do that.
Cheers

 

[toothfairy]

Hello Toothfairy


1/ We are debating not arguing

2/ We are not _________s thankyou

3/ Congratulations on your success


Thankyou


NC

Dictionary says debate is "argument about a certain topic". Same thing.

 

[wayneL]

1) ________s could be complimentary, like "experts"

Nice triple backflip with a half twist. But I think we all know you didn't mean something complimetary.

2) probably don't own properties does not put anyone down, I know of some very well to do people (multi-millionaires) renting, they put all their $ in business which generates more cash. I can't do that.
Cheers

Well I do own property and want to buy some more, which is why your point was a non-sequitur.

However I refuse to buy at ludicrous valuations. A restoration a sane value to the housing market, which may be negative for some speculators and recent buyers, would ultimately be an enormous sociological positive for society. (and time to invest )

It is inevitable, however the path and time-table by which this occurs is not.

 

[Smurf1976]

I can't see what's wrong with that, or why that would contribute to a bust in RE. It might merely slightly change the demografics of who can and who can't buy RE, but with the current affordability problem I can't see that 20% down changes anything at all.

It was easy credit that fuelled the boom in the first place. Guess what's likely to happen when it dries up...

20% down would get rid of quite a lot of buyers from the market altogether. They'd likely end up living in shared accommodation in order to save a 20% deposit rather than buying or renting.

The reduced leaverage ends up resulting in the same houses but less money with which to buy them. That's not bullish for prices...

 

[toothfairy]

Nice triple backflip with a half twist. But I think we all know you didn't mean something complimetary.
Well I do own property and want to buy some more, which is why your point was a non-sequitur.

However I refuse to buy at ludicrous valuations. A restoration a sane value to the housing market, which may be negative for some speculators and recent buyers, would ultimately be an enormous sociological positive for society. (and time to invest )

It is inevitable, however the path and time-table by which this occurs is not.

OK, forgive me for the weird comments, I withdraw them, sorry.
Now, can we seriously discuss why do you think that OZ property market is over-valued? On the following basis,
1) Apart from "affordability" which is on everyone's lips, there are not any other reasons. Some can't afford, others can, same as share trading.
2) Been stagnant between 2002 & 2005 (or there about) while shares are going up,
3) I mentioned the average 7% PA increase which is only steady, nothing spectacular. That is to say an average property has triple in 17 years but average share like BHP / CBA had done better than that.
Please comment.

 

[Smurf1976]

Another rate rise is looking pretty likely judging by the 90 day bank bill yields. Only thing is, if they keep going up at this rate the RBA will have to get rid of the 0.25% at a time bit and go for something larger...

 

[robots]

hello,

the RBA could raise by 1% and nothing much will happen,

I find it amusing when all the media report the RBA has increased by 25 basis points, and this amounts to $50 per month on the average mortgage

thats missing out on a couple of cafe latte's a week

goodluck

thankyou

robots

 

[BentRod]

Now, can we seriously discuss why do you think that OZ property market is over-valued?

There's no yield!

 

[Kathmandu]

There's no yield!

Only in some places.

Dave

 

[toothfairy]

There's no yield!

Give you an example of two extremes, many are in the middle.

1) New, luxury high-rise apartments loaded with mod cons attract tenants who pay higher rents and thus better yields. Some developers even guarantee 3 years 7% rent. ( I am not saying anyone should fall for such scheme). I myself would love to rent one to stay for a year or so with full sea or city vew.

2) Old, no-thrill houses on land 3km from CBD attract 2-3% yield but the capital gain is more.

The choice is yours, I know which I will choose to buy.
How many people pick shares purely base on their yields and PE and judge whether it is overpriced or not?

Cheers

 

[Kathmandu]

Give you an example of two extremes, many are in the middle.

1) New, luxury high-rise apartments loaded with mod cons attract tenants who pay higher rents and thus better yields. Some developers even guarantee 3 years 7% rent. ( I am not saying anyone should fall for such scheme). I myself would love to rent one to stay for a year or so with full sea or city vew.

2) Old, no-thrill houses on land 3km from CBD attract 2-3% yield but the capital gain is more.

The choice is yours, I know which I will choose to buy.
How many people pick shares purely base on their yields and PE and judge whether it is overpriced or not?

Cheers

There would be a pretty good chance that guaranteed 7% has been added into the buy price though, and what happens after the 3 years, do you then get a flock of 3 year old units on the market at once, do you find out that you can only realy get a 3% yield?

Dave

 

[nioka]

I find it amusing when all the media report the RBA has increased by 25 basis points, and this amounts to $50 per month on the average mortgage

thats missing out on a couple of cafe latte's a week

Maybe it is a couple of cafe latte's for you I guess it could take a fair amount of bread and milk off the table for others.

 

[numbercruncher]

When people cant afford the repayments on there Mcmansions they receive (and rightly so) no sympathy for over extending themselves outside there means.

But the problem now is not people living outside there means but being unable to afford average houses in average suburbs without over extending themselves, Nurses unable to afford realestate near Hospitals, Familys unable to afford near Schools, its morphed into a problem for society.

Either house prices need to drop or substantial salary increases are required for Teachers , Nurses , Police etc.

I beleive Vic Police are soon planning a strike for wage increases, thats not out of Greed its out of need

Its beyond a joke and its offical that average wages can no longer afford average houses, it is a nation wide problem that needs to be addressed.

I saw a show on TV the other night a School teacher dumped his job to get a truck licence and drive trucks in the mines for treble his teacher salary - if this started happening enmasse it will be catastrophic for society.

It needs to be fixed asap imho. To me the maths seems simple, on average across society house prices cant Increase as they are near price saturation unless substantial wage increases start flowing.


Im amazed the government has let it get out of control like this.

 

[tech/a]

And so the cycle goes on.

The same rhetoric was heard in the late 80s and will be heard again throughout time from generation to generation.