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Sydney Property Price History Charts

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tech/a said:
What is this fixation with property and investors/interest rates.
Serious investors have sold or are selling property and gearing to more sensible levels.Sell one house and positively gear 2.

Theres more to property investment than buy and hold.
Personally I feel there is a poor understanding of wise property investment Just as there is in wise share trading.
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In other words, the smart money is reducing exposure to real estate. I wonder why that is...

This fixation is clearly limited to those who lament missing out!!
All singing in chorus that they WILL buy when prices crash.

Would one of these wise people just let me know when I should rush out and buy
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The same could be said of anyone who suggests that ANY stock is likely to stop soaring in price EVER. It's not lamenting anything, it's just using some commonsense and coming to a conclusion as to what is most likely to happen next. That's ultimately the whole point of analysing stock fundamentals, technical analysis etc. An attempt to determine what happens next and use that for financial gain.

Whether or not I or anyone else thinks house prices "should" do this or that is irrelevant. It's what's likely to actually happen that matters. Now, with house valuations at historic highs by practically every measure, it seems rather likely that at some point those valuation levels will fall.

Even a brief look at the actual market, at least in Sydney, Melbourne or Hobart, reveals that the number of forced sales is on the rise. Call it good, bad or whatever. That's not the point. The point is that most of the available evidence points towards a fall in valuation. Indeed that is already very much happening in some markets.

Nothing personal here, I'm NOT having a go at tech/a, but it never ceases to amaze me that many people become so emotional when discussing real estate as an investment, usually refusing to even consider the possibility of price falls, whilst those same people can readily accept the possibility of shares or commodities falling in value. The way I see it, that emotional attachment and outright denial of what is certainly a possible event is in itself the ultimate symptom of bubble psychology at work. As I said, that's just a general observation and not a comment directed at tech/a. :)
 
I have changed my view.

I have not seen in my area (within 7k of the City, N/W Melbourne) and fed well by public transport, any evidence of a fall in housing, prices just keep rising with the tax cuts. I hate to say this but the fall mainly affects the city fringe of most Cities where rising petrol prices and less well paid people live.

The fall will only come if we have a recession and people start losing jobs.
We have high employment and the average homeowner will fight extremely hard to keep their home no matter what deprivations they may have to handle. A rise of a little over 1% is not enough to shake them.

Once the middle class lose their jobs with their car loans and highly geared investment property then we shall see some misery. We are a long way from that - in fact if interest rates plateau, as it looks like happening, house prices will continue to rise,though not as strongly.

It is a bubble but in my view (but it is a bubble that mainly occurred in Sydney), it is not overly inflated one. Sorry Kris.
 
Smurf1976 said:
Even a brief look at the actual market, at least in Sydney, Melbourne or Hobart, reveals that the number of forced sales is on the rise.
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On a side note, we received word that last weekend 31-33% of houses cleared at auction in Sydney were Mortgagee sales. I cannot vouch for their accuracy as I am unsure of the exact method of vetting, but these are figures major lenders & mortgage insurers use to determine how strict they will interpret their current lending policy.
 
Smurf1976 said:
In other words, the smart money is reducing exposure to real estate. I wonder why that is...
Click to expand...

Well the smart money in R/E from those I'm involved with is simply changing direction from Buy and hold established property to---
(1) Commercial
(2) Cut and shut larger properties particularly on corners.
(3) Demolishion and Community title developement.


The same could be said of anyone who suggests that ANY stock is likely to stop soaring in price EVER. It's not lamenting anything, it's just using some commonsense and coming to a conclusion as to what is most likely to happen next. That's ultimately the whole point of analysing stock fundamentals, technical analysis etc. An attempt to determine what happens next and use that for financial gain.
Click to expand...

Again personally----in the markets I and others simply search out those performers regardless of what the market is doing now or is likely to do.

Whether or not I or anyone else thinks house prices "should" do this or that is irrelevant. It's what's likely to actually happen that matters. Now, with house valuations at historic highs by practically every measure, it seems rather likely that at some point those valuation levels will fall.
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Likely and Should seem to be identical.

Even a brief look at the actual market, at least in Sydney, Melbourne or Hobart, reveals that the number of forced sales is on the rise. Call it good, bad or whatever. That's not the point. The point is that most of the available evidence points towards a fall in valuation. Indeed that is already very much happening in some markets.
Click to expand...

Yes that is true.But I open the Sunday mail today to a headline

"1000 of homes lost in 2006 to rate rises"

1000s!!!!!! I read on.---- " 40 homes a month over the last year have been forced mortgagee sales" it goes on to say.---well I make that max 480 in a year NOT 1000s!!!


Ok prices are coming off---.

Nothing personal here, I'm NOT having a go at tech/a, but it never ceases to amaze me that many people become so emotional when discussing real estate as an investment, usually refusing to even consider the possibility of price falls, whilst those same people can readily accept the possibility of shares or commodities falling in value. The way I see it, that emotional attachment and outright denial of what is certainly a possible event is in itself the ultimate symptom of bubble psychology at work. As I said, that's just a general observation and not a comment directed at tech/a. :)
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Come on Smurfy I can take it!! I become emotional because most who comment and even jurno's have no EXPERIENCE in R/E but all of a sudden everyone is an expert. Same happens in Trading!
 
Mofra said:
On a side note, we received word that last weekend 31-33% of houses cleared at auction in Sydney were Mortgagee sales. I cannot vouch for their accuracy as I am unsure of the exact method of vetting, but these are figures major lenders & mortgage insurers use to determine how strict they will interpret their current lending policy.
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Interesting, also below video about US Housing Market Prices in 2007, debate between bulls and bears

http://www.europac.net/media/Schiff-Fox-12-16-06_lg.wmv

australianpropertymarkeor7.jpg


thx

MS
 
michael_selway said:
Interesting, also below video about US Housing Market Prices in 2007, debate between bulls and bears

http://www.europac.net/media/Schiff-Fox-12-16-06_lg.wmv
Click to expand...

I have to laugh after watching that. No one was given any time to properly explain their scenarios.

I'm also one that doesn't buy this historically low 'absolute' interest rates is what will save the housing market. Sure, cheap and easy money is what started it, but housing affordability is made up of two things - interest rates and the upfront capital cost to purchase the house. Interest rates might be historically low, but house prices even factoring in inflation has gone out of control and is at historical highs canceling out any net gains by low interest rates. After all the housing affordability index is lower today than it was in the late '80s when rates were at all time highs, but houses were cheap.

One interviewee indicated the only thing that will derail housing is higher unemployment. Sure this will impact borrowers ability to service their debt, but I believe there has to be some equilibrium point somewhere too where one can no longer service a level of debt due to unsustainable increases in house prices. House prices are rising faster than wage growth. If interest rates rise, and prices also rise as predicted, then you have both components going against you in terms of housing affordability helping you to hit this equilibrium point faster.

I thought it was interesting how one of the guys shrugged off interest rate rises, saying because they are historically low people wouldn't have a problem if they went up 1.5 percentage points. However I believe because we have taken on so much extra debt now, smaller changes in rates will have a much bigger impact than historically.

Looking at our markets, there was this article published Today :
Bubble Watching - The Australian - December 23, 2006

It examines views from Ian Mcfairlane and Glen Stevens on interest rates, debt levels and inflation.
 
michael_selway said:
Interesting, also below video about US Housing Market Prices in 2007, debate between bulls and bears

http://www.europac.net/media/Schiff-Fox-12-16-06_lg.wmv
MS
Click to expand...

When watching that footage I like to keep in mind a friend of mine who is forever trying to go short. After watching a a big move up that he's missed again due to being in the toilet (or whatever) he starts trying to predict the top and the inevitable fall. A common phrase I hear is , "It's too far away from it's moving average! It's gotta fall!".

And boy-oh-boy when it pulls back is he gonna cash-in and all those silly bastards that bought over-valued shares are gonna be hurting!
 
theasxgorilla said:
When watching that footage I like to keep in mind a friend of mine who is forever trying to go short. After watching a a big move up that he's missed again due to being in the toilet (or whatever) he starts trying to predict the top and the inevitable fall. A common phrase I hear is , "It's too far away from it's moving average! It's gotta fall!".

And boy-oh-boy when it pulls back is he gonna cash-in and all those silly bastards that bought over-valued shares are gonna be hurting!
Click to expand...

Yeah thats true

http://www.1stmillionat33.com/2006/09/charts-on-housing-markets-us-economy/

house_his.gif

thx

MS
 
The OECD released a paper titled Recent House Price Developments: The Role of Fundamentals a couple of months ago which I found was a good read.

It has charts such as

Real house prices
Price-to-income
price-to-rent ratios
OECD Real house prices and the business cycle

of many of the OECD countries, so you can compare the US to Australia etc. If you thought the US was over-inflated have a look at Australia and Spain. Also looks like you get good rent returns in Ireland . .

Housing is also a different investment to that of shares. With shares, the price can just keep going up and up. At some stage the PE ratio may be junk but if you have the money and the want, you can keep buying and lifting the price - supply and demand.

Residential Housing is dominated by owner-occupiers. Sure the wealthy can continue to drive up the top end of the market and pay what they want, but at some stage the middle and lower classes will be priced out of the market. I can remember a Money show on TV presented by Paul Clitherow not long ago. One couple in Sydney was putting 100% of their wages into the mortgage, and using government assistance etc to live off, pay bills etc. At some stage it will become unsustainable.
 
theasxgorilla said:
When watching that footage I like to keep in mind a friend of mine who is forever trying to go short. After watching a a big move up that he's missed again due to being in the toilet (or whatever) he starts trying to predict the top and the inevitable fall. A common phrase I hear is , "It's too far away from it's moving average! It's gotta fall!".

And boy-oh-boy when it pulls back is he gonna cash-in and all those silly bastards that bought over-valued shares are gonna be hurting!
Click to expand...

It probably didn't come across but I was trying to be facetious. Just because something has soared up to a historically extreme level and defies economic logic is not reason enough for it to suddenly come crashing down.

http://www.abc.net.au/lateline/stories/s690761.htm

Where is the burst property bubble we were promised?
 
theasxgorilla said:
It probably didn't come across but I was trying to be facetious. Just because something has soared up to a historically extreme level and defies economic logic is not reason enough for it to suddenly come crashing down.

http://www.abc.net.au/lateline/stories/s690761.htm

Where is the burst property bubble we were promised?
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Depends on what you define as a burst bubble.

If it's simply a decline in nominal house prices for the SAME house (since an "average" house is of gradually improving quality due to renovations etc in recent times) then parts of Sydney and Hobart have a burst bubble.

Put it in "real" terms and it's a substantial fall over 20% in many Hobart suburbs (middle income, not too far from the CBD, public transport in the area, schools and the largest shopping centre in the state not far away) indeed they're approaching that for the SAME house in nominal terms if you're happy with a modest 3 bed house. Much the same in Sydney.

But if you're looking for an outright crash in nominal terms then it hasn't happened yet, at least not in an Australian capital city although reports indicate some parts of the US are getting close for certain types of property.
 
This is just crazy....how many young people have been forced out of the housing market to accomodate this kind of filthy greed.

How many low cost houses could be built....hundreds.

Now ya see why so many young people just give up!. The gap just keeps getting bigger and bigger!

There is nothing funny about this its sad and sick that we allow such things to happen
 
Stop_the_clock said:
Now ya see why so many young people just give up!. The gap just keeps getting bigger and bigger!
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. . not that this is a bad thing. As housing is no longer reachable for this demographic and they no longer need to put money away for the Mortgage, there is so much more disposal income to help keep the economy going, to underpin company profits, keep unemployment low, help China along etc. Just pray it doesn't blow up anytime soon.
 
YChromozome said:
. . not that this is a bad thing. As housing is no longer reachable for this demographic and they no longer need to put money away for the Mortgage, there is so much more disposal income to help keep the economy going, to underpin company profits, keep unemployment low, help China along etc. Just pray it doesn't blow up anytime soon.
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...and to reciprocate into higher share prices which those of us who are comfortable trading from our over-priced homes get to enjoy.
 
YChromozome said:
there is so much more disposal income to help keep the economy going, to underpin company profits, keep unemployment low, help China along etc. Just pray it doesn't blow up anytime soon.
Click to expand...

There is also the wealth effect. When houses are going up, people will spend more.

I guess neither helped today. Something derailed despite personal loans up to buy Christmas presents. Initial consumer spending looks down. All hopes are now set on Boxing day.

Following Michael Selway's links on Peter Schiff here is more :
US pessimists say house price crash is inevitable

The housing market is a crucial component of consumer spending, which, in turn, is a crucial driver of the economy. When consumers are confident that the value of their house is rising, they are happy to take out loans against their properties to spend on goods and services.
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I guess today's consumer spending reflects stagnate house price growth this year.

Leading the pessimists is Peter Schiff, chief executive of Euro Pacific Capital, a broker based in Connecticut. He argues that house prices will experience an unprecedented collapse, falling by as much as 70 per cent in some areas.

If a house has risen in value several times over in recent years, then it is ludicrous to think that it cannot fall by that amount, he says, drawing a comparison with the dot-com boom and bust in the late 1990s and early 2000s.

Two reports out yesterday appear to bolster Mr Schiff’s argument. The first, from George Wimpey, gave warning that the housebuilder faced “very poor” conditions in the US, where cancellation rates averaged 50 per cent in the second half and the forward order book was worth 68 per cent less than a year ago. In the second, it emerged that US mortgage applications slumped by 10.2 per cent last week compared with the previous week.
Click to expand...

Probably the only thing stopping the housing market falling is a trigger? Recession ?
 

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