The future of Australian property prices

Joe Blow · 15 November 2009

This new property thread replaces the previous property threads which have now been closed. Hopefully this new thread will also signal a new beginning in the level of courtesy shown to others.

Please feel free to post your research, analysis, relevant information or opinions on Australian property in this new thread. However, please do not deliberately provoke or personally attack or insult other thread participants.

The moderators and I will be closely monitoring this thread and we urge those participating in it to use the "Report a Post" feature to report any posts that are in violation of site rules or are overly disruptive.

Looking forward to some polite and constructive debate.

robots · 15 November 2009

hello,

good evening brothers, a wonderful day

apologies for the late reporting:

melbourne clearance rate 81%, massive run now with i think 18 weeks of above 80%

paradise

peace out to all

thankyou
professor robots

nunthewiser · 15 November 2009

robots said:
hello,

good evening brothers, a wonderful day

apologies for the late reporting:

melbourne clearance rate 81%, massive run now with i think 18 weeks of above 80%
paradise

peace out to all

thankyou
professor robots

Would this have anything to do with it Docfessor Robots?

Official data released during the week shows the number of home loans surged in September, after two straight months of decline, as first home buyers raced to beat the October 1 roll back of the first home owner grant.

But economists are expecting a sharp pull-back in October and November as interest rates rise.

"It does look very much like a last hurrah for first home buyers getting into the market," Nomura Australia chief economists Stephen Roberts said earlier this week.

"I would expect a reasonably sharp decline in October and November."

The Reserve Bank of Australia has lifted the cash rate by 25 basis points at each at its past two monthly board meetings, in November and October, and the rate now sits at 3.5 per cent.

Damian Smith, chief executive of financial comparison website RateCity, said that in reality first home buyers had just three weeks to make a purchase before the grant is scaled back again.
"First home buyers must have their finances formalised before the December 31 deadline and because it can take a month to process a home loan, there is really only three weeks left to secure the boost," he said.

"But our big advice to people is don't rush and make a silly decision now because there's a couple of extra grand on the table.

"These things last 25 years, therefore the costs of getting it wrong last a very long time."

nunthewiser · 15 November 2009

But economists are expecting a sharp pull-back in October and November as interest rates rise.

"It does look very much like a last hurrah for first home buyers getting into the market," Nomura Australia chief economists Stephen Roberts said earlier this week.

"I would expect a reasonably sharp decline in October and November."

I did find this prediction rather funny though

Gordon Gekko · 15 November 2009

Here is the future of Australian housing.

http://www.sfgate.com/g/pictures/2007/04/27/ga_surreal_img_2705.jpg

And most will be able to afford it.

Sunshine and lolly pops brothers

Yeah

G

wayneL · 15 November 2009

As far as I'm concerned the future of nominal house prices is no longer clear due to the Keynesian "stimulus" outrage. I'm sure that real prices will reduce over time, but if inflation gallops off into the sunset, it will take nominal prices with it.

There is still argument over whether there will be deflation or high inflation and I think we are on the twilight zone end of chaos theory as far as predicting the final outcome.

In other news, Britain's most high profile buy to let gurus, Fergus and Judith Wilson, are in serious arrears and appear to be in deep doo-doo.

http://www.dailymail.co.uk/news/art...uple-rode-buy-let-boom-estimated-350-000.html

robots · 15 November 2009

hello,

what a great start to the thread, this is fantastic

thankyou
professor robots

theasxgorilla · 15 November 2009

The future of Australian property prices? Up, up, up and away.

We will be proud to call ourselves one of the most expensive countries to live on earth, and foreigners will say, "I've heard it's really expensive in Australia, but the people are really nice and the weather is great, and I think you get paid a lot".

Love to know if anyone can see a real trend bender here, but I'm afraid I just can't. Inspite of obvious asset and consumer price rises Australia is still cheap.

theasxgorilla · 15 November 2009

wayneL said:
As far as I'm concerned the future of nominal house prices is no longer clear due to the Keynesian "stimulus" outrage. I'm sure that real prices will reduce over time, but if inflation gallops off into the sunset, it will take nominal prices with it.[/url]

Indeed! I thought the formula was becoming clear though:

1. Borrow
2. Inject
3. Inflate (ie. reduce debt base)
4. Spread the remaining liability over many years (ie. increase taxes)
5. In parallel to steps 1-4, boom, bust, boom, bust, boom, bust to coda or ad finitum, whichever comes first

explod · 15 November 2009

robots said:
hello,

what a great start to the thread, this is fantastic

thankyou
professor robots

Yep. off to a good start.

Ole Pal, can you please explain to me what high clearance rates have got to with property prices? and the future of?

To my mind it is an even sum game. For every willing buyer there is a willing seller. High clearance rates could be seen as sellers capitulating and accepting less and vice versa of course. So the emphasis on clearance rates per se appears meaningless unless we analyse the locations propety types (encompassing demograhpics in fact), adinfanitum???

billv · 15 November 2009

robots said:
hello,

good evening brothers, a wonderful day

apologies for the late reporting:

melbourne clearance rate 81%, massive run now with i think 18 weeks of above 80%

paradise

peace out to all

thankyou
professor robots

Melbourne is in bubble territory IMO.
From memory, last time the Melbourne market was so hot a significant price correction followed.

drsmith · 15 November 2009

wayneL said:
As far as I'm concerned the future of nominal house prices is no longer clear due to the Keynesian "stimulus" outrage. I'm sure that real prices will reduce over time, but if inflation gallops off into the sunset, it will take nominal prices with it.

Trot into the sunset might be better or at least a pace that does not require a rapid response via interest rates.

Beej · 15 November 2009

explod said:
Yep. off to a good start.

Ole Pal, can you please explain to me what high clearance rates have got to with property prices? and the future of?

To my mind it is an even sum game. For every willing buyer there is a willing seller. High clearance rates could be seen as sellers capitulating and accepting less and vice versa of course. So the emphasis on clearance rates per se appears meaningless unless we analyse the locations propety types (encompassing demograhpics in fact), adinfanitum???

Auction clearance rates are an historical leading indicator of what's going on in a particular residential property market, based on the "sample" of total sales at a particular point in time that are reported immediately as auction results are. There's actually a good article on this today in the (printed) Sydney Sun Herald news paper.

For Sydney, usually a sustained auction clearance rates of 60%+ provide a leading indicator that prices are rising strongly. Rates < 50% normally indicate falling or stagnant prices. This has applied for as long as I have been following property (20+ years), and if you look at what happened last year and this year to both auction clearance rates and prices (both last years falls and this years rises), the pattern is clear. The low clearance rates last year preceded the stats indicating falling prices. The high clearance rates that started to emerge from Feb/Mar this year preceded all the stats that confirmed rising prices from that period on. The auction median price is also a good indicator of the market segments where all the action (or lack of it) is.

PS: Sydney preliminary clearance rate for this weekend was reported as 68% (175 sold / 259) with a median sale price of $745k (indicating lot's of sales in the mid/upper price ranges - auction median has been steadily rising in Sydney over the past 12 months from mid $500ks up to the current median). This suggests to me that Sydney prices at least are still rising and the stats that come out for the spring quarter over the next few months will all indicate that. The ABS median may rise quite strongly as the bias of sales is shifting from the FHB end to the mid range and upper end.

Cheers,

Beej

theasxgorilla · 16 November 2009

Beej said:
Auction clearance rates are an historical leading indicator of what's going on in a particular residential property market, based on the "sample" of total sales at a particular point in time that are reported immediately as auction results are. There's actually a good article on this today in the (printed) Sydney Sun Herald news paper.

Further to that, in my opinion you can adapt a little bit of the volume analysis approach in share markets to real estate markets. In an uptrend (yes, that which the Melbourne property is in), stagnation or a slight retreat in prices on lower volume (transactions) is healthy... lets call it consolidation or simply "taking a breather". Higher clearance rates (high volume) in an uptrend suggests a market that is steaming up, up and away.

And all this information is telling us is something about the current sentiment in the market and the ability of buyers to offer up the finance that get deals over the line at prices acceptable to both seller and themselves.

GumbyLearner · 16 November 2009

Gordon Gekko said:
Here is the future of Australian housing.

http://www.sfgate.com/g/pictures/2007/04/27/ga_surreal_img_2705.jpg

And most will be able to afford it.

Sunshine and lolly pops brothers

Yeah

G

ROFL

Or more so like this....

Mofra · 17 November 2009

Gordon Gekko said:
Here is the future of Australian housing.

http://www.sfgate.com/g/pictures/2007/04/27/ga_surreal_img_2705.jpg

And most will be able to afford it.

Sunshine and lolly pops brothers

Think of the development potential, it's metres away from each property boundary

robots · 17 November 2009

hello,

good evening, just got home from pedaling the bike to and from the city, great evening, plenty out and about, snuck in a couple of ruski's, new Australians everywhere, just great

enjoying the place

just some analysis on the Melbourne scene:

up, up, up and up it goes

word out to MrBurns hope all's well and we havent lost a fabulous contributor at ASF

look out to the stars tonite

thankyou
Doctor Robots

satanoperca · 17 November 2009

Good Evening All,

Was also out on the bike with my little man on the back riding around the docklands, beautiful evening. New buildings everywhere.

Just caught a week old article thought was of interest.

Australia's fiscal-financial system has become increasingly dysfunctional in giving tax preference to land-price ''capital'' gains and hence property speculation rather than tangible capital formation. Instead of raising living standards by producing more, what passes as post-industrial ''wealth creation'' takes the form of inflating asset prices on credit. The result is a bubble economy. And inasmuch as asset-price gains are fuelled by debt leveraging, wealth creation is more accurately viewed as debt creation.

http://www.theage.com.au/business/fall-in-housing-starts-to-impact-prices-20091110-i7qk.html

Saw Michael Hudson speak at the Melbourne town hall.

Cheers

Vizion · 17 November 2009

An excellent post santa that reinforces my own opinions 100%.

Dowdy · 17 November 2009

satanoperca said:
Good Evening All,

Was also out on the bike with my little man on the back riding around the docklands, beautiful evening. New buildings everywhere.

Just caught a week old article thought was of interest.

http://www.theage.com.au/business/fall-in-housing-starts-to-impact-prices-20091110-i7qk.html

Saw Michael Hudson speak at the Melbourne town hall.

Cheers

excellent article.

The problem with today's market is that people look at the prices and think that's the way things are meant to be. Where there are markets in which higher prices justify higher prices, they always come crashing down

The future of Australian property prices

Joe Blow

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robots

hello

nunthewiser

nunthewiser

Gordon Gekko

wayneL

VIVA LA LIBERTAD, CARAJO!

robots

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theasxgorilla

Problem solved... next bubble.

theasxgorilla

Problem solved... next bubble.

explod

explod

billv

drsmith

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theasxgorilla

Problem solved... next bubble.

GumbyLearner

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The future of Australian property prices

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VIVA LA LIBERTAD, CARAJO!

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Problem solved... next bubble.

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Problem solved... next bubble.

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