The future of Australian property prices

[singlefished]

Really? Which part of the constitution exactly would you propose to be amended by your referendum???

Obviously the part of the constitution I am referring to is on a completely different page to anything that you would likely refer to....

I wasn't proposing any amendments. I was providing a response to the catch 22 situation Aussiejeff brought up.

 

[satanoperca]

And how many $$billions$$ in REVENUE was reaped by the NSW government (and other states ) in property stamp duty charges?? The FHO grant is simply re-distributing a small portion of that massive stamp duty rip off from established home owners trading up and investors to people just starting out in life and buying their first home. Seems like a perfectly fair and reasonable thing to do to me???

FHOGs do not cost you as a tax-payer anything in reality, because if you think they prop up house prices, and were removed, "thus" resulting in big property price correction, then stamp duty revenues would plummet over-all and you would end up paying more taxes in other ways anyway as the state governments found other ways to tax you and maintain their revenue.

Agrees with Beej except the fair bit.

Cheers

 

[sinner]

FHOGs do not cost you as a tax-payer anything in reality, because if you think they prop up house prices, and were removed, "thus" resulting in big property price correction, then stamp duty revenues would plummet over-all and you would end up paying more taxes in other ways anyway as the state governments found other ways to tax you and maintain their revenue.

This is an extremely short sighted and probably logically incorrect argument. I would prefer that both State and Federal Governments kept their fingers out of this pie, which would therefore cost me literally nothing as a taxpayer (as opposed to your magical $7000+ grant that costs me nothing "in reality") as well as return the real estate market to the influence of the laws of supply and demand.

If politicians wish to levy new or otherwise exotic taxes as a result of decreased revenues, they can try and then see if they remain elected for another term.

Nonetheless, reality does not match up with your claims of what a State Government would do as stamp duty revenue has fallen significantly in QLD without any new taxes being levied on the citizens to make up the shortfall.

Here is a piece on demographics in which BIS Shrapnel argues against the "immigration" sell: "buy now because there will be more and more people every year coming here":

http://www.businessday.com.au/business/population-growth-to-ease-report-says-20100516-v6cx.html

I believe they released a follow up report to the above linked one within the last week but can't seem to find a copy.

 

[Aussiejeff]

And how many $$billions$$ in REVENUE was reaped by the NSW government (and other states ) in property stamp duty charges??

RE is not the only sector to be "robbed blind" by guvnuts, ya know.

And how many $$billions$$ in REVENUE was reaped by the Federal Gov't in savings account interest tax that should be re-distributed 100% to honest, hard-working savers - but unlike RE sector FHOG's, isn't??

And how many $$billions$$ in REVENUE was reaped by the Federal Gov't in petrol taxes that should be re-distributed 100% to fixing roads and other road safety initiatives, but unlike RE sector FHOG's, isn't??

On and on it goes....

Did anyone say RE "Negative Gearing" is a bonus too?

As far as free govnut handouts go (related to taxes received) the RE sector & FHOGS when compared to most other sectors of the economy seem to be specifically benefitting quite nicely, thankyou, IMO!

Afterthought: Maybe, just maybe, that $780 Million thrown at FHOG's by the NSW govnuts last year would have been better spent on behalf of ALL residents in significantly improving the NSW economy in many other areas - health, roads, education, infrastructure etc, etc?

 

[robots]

hello,

good afternoon, great day as usual

thought would be good to get the thread back on track, i chose Ballarat just recently and Trainspotter has his eye on Geraldton

so what other towns/suburbs are people watching?

big up for Ballarat again with John Brumby announcing a further 500 jobs into the town, just fantastic, going to be great for Victoria

on the flip side i read yesterday Asciano cut its dividend, oh well, try and oust the board, new management or just continue to get ripped, what you reckon Kincella?

thankyou
professor robots

 

[medicowallet]

And how many $$billions$$ in REVENUE was reaped by the NSW government (and other states ) in property stamp duty charges?? ???

Not sure, but since you are sure it is such a high figure in NSW, can you please enlighten us.

 

[satanoperca]

Sorry to bring up the discussion on negative gearing again but I thought this chart clearly shows that NG does not add to the rental supply and thus PI provide some civic service to the community.



As a business yes, NG should apply to property just like in other business forms. To argue that it adds to the rental supply is clearly untrue.

Cheers

 

[Bigukraine]

hello,

good afternoon, great day as usual

thought would be good to get the thread back on track, i chose Ballarat just recently and Trainspotter has his eye on Geraldton

so what other towns/suburbs are people watching?

big up for Ballarat again with John Brumby announcing a further 500 jobs into the town, just fantastic, going to be great for Victoria

on the flip side i read yesterday Asciano cut its dividend, oh well, try and oust the board, new management or just continue to get ripped, what you reckon Kincella?

thankyou
professor robots

Normanville, Carrickalinga S.A ,own a house there near the beach great location 80k south of Adelaide 40k from the suburb of Norlunga and about same distance from Victor hbr
Features ,rural setting close to Adelaide ,Links lady bay sandbelt course and 4 star acc resort,due to lay out of the area very restrictive for any further development beaches unreal ,35k from ferry at Cape jervois to get to Kangaroo island.A bit like your Mornington pen. Oh and about 30k from the Mclaren vale wine district.

 

[kincella]

Hi Robots, I dont follow the stock market these days....
but there are some good articles out today.....Rick Battellino and busting all the property myths, including the banking myths....as propogated by the doomsdayers....
Rick Battellino busted all the myths on aussie homes...
read it at your peril, for the otherside....the property people know what they are doing....no need for them to read it...since they are cashed up, and unlikely to be concerned....
of course the media did not take it up.....it would not sell the mania, they need

http://www.theage.com.au/business/rba-myth-busters-explode-debt-headlines-20100618-yk37.html
then the other article about our house prices with asia growing at 20%, but europe and the rest are down.....
http://www.theage.com.au/business/property/property-investors-on-top-of-the-world-20100617-yjus.html
and finally the media grabbing the article about how credit card risk is higher than housing mortgages.....but the poll that follows totally disputes that rubbish......with over 4500 pollsters

as far as location....Wodonga near the nsw border missed out on brumbys new deals....but the black coal mine at Oaklands should be good for the area anyway...
I believe the current govnuts will be thrown out at the election, together with the sticken new mining tax.....it may well be too late for confidence in the mining industry.......however the location on the nsw/vic border will always hold its own, for tourists and travellers......
I am happy with my investments there.....in hindsight i should have stuck with inner city only, for the stunning capital growth......but I will be the first to return, if the prices were to plunge 40%.....that is unlikely to happen, so better to have IPs anywhere....rather than not be in that market....
oh and no problems with.. travel or transport here.....its a laid back area, fresh country air....
I will need a constant city hit, for the retail therapy....
cheers

 

[satanoperca]

Hi Robots, I dont follow the stock market these days....
but there are some good articles out today.....Rick Battellino and busting all the property myths, including the banking myths....as propogated by the doomsdayers....
Rick Battellino busted all the myths on aussie homes...
read it at your peril, for the otherside....the property people know what they are doing....no need for them to read it...since they are cashed up, and unlikely to be concerned....
of course the media did not take it up.....it would not sell the mania, they need

http://www.theage.com.au/business/rba-myth-busters-explode-debt-headlines-20100618-yk37.html
then the other article about our house prices with asia growing at 20%, but europe and the rest are down.....
http://www.theage.com.au/business/property/property-investors-on-top-of-the-world-20100617-yjus.html
and finally the media grabbing the article about how credit card risk is higher than housing mortgages.....but the poll that follows totally disputes that rubbish......with over 4500 pollsters

as far as location....Wodonga near the nsw border missed out on brumbys new deals....but the black coal mine at Oaklands should be good for the area anyway...
I believe the current govnuts will be thrown out at the election, together with the sticken new mining tax.....it may well be too late for confidence in the mining industry.......however the location on the nsw/vic border will always hold its own, for tourists and travellers......
I am happy with my investments there.....in hindsight i should have stuck with inner city only, for the stunning capital growth......but I will be the first to return, if the prices were to plunge 40%.....that is unlikely to happen, so better to have IPs anywhere....rather than not be in that market....
oh and no problems with.. travel or transport here.....its a laid back area, fresh country air....
I will need a constant city hit, for the retail therapy....
cheers

You crack me up Kincella. One day the RBA has no idea what they are doing and the next you are congratulating them. Bias besides a better man.

PS. dont you think it might be the RBA softening the way for another rate rise to control inflation.

PS2. RBA debunks the myth that NG provides more rental properties (see above post)


Cheers

 

[Mofra]

thought would be good to get the thread back on track, i chose Ballarat just recently and Trainspotter has his eye on Geraldton

so what other towns/suburbs are people watching?

Bendigo. 7,000 smaller than Ballarat, however it has a higher proportion of renters than the state average (30% compared to 23%) and is only 50km away from Heathcote, an area that produces the most consistently high quality of Shiraz out of almost any other wine region in Australia IMO

 

[nunthewiser]

Bowen. QLD

 

[sinner]

but there are some good articles out today.....Rick Battellino and busting all the property myths, including the banking myths....as propogated by the doomsdayers....
Rick Battellino busted all the myths on aussie homes...
read it at your peril, for the otherside....the property people know what they are doing....no need for them to read it...since they are cashed up, and unlikely to be concerned....
of course the media did not take it up.....it would not sell the mania, they need

http://www.theage.com.au/business/rba-myth-busters-explode-debt-headlines-20100618-yk37.html

What myths does this article bust exactly? After reading the article and its proposed myths I have noted the article states plainly:

* Proposed myth: Australian banks fund huge amounts of their lending on foreign debt markets.
NOT A MYTH We certainly do fund huge amounts of lending on the foreign debt markets and it is stated plainly in the article. The Dep.Gov. of the RBA states that we can do this because of our high investment rate and because the majority of the debt is denominated in AUD. The fact is that without the Treasury debt guarantee that foreign demand for Australian dollars would be extremely low. If 2008 showed us anything it is that bond vigilantes will always be long the "guaranteed" debt over non-guaranteed (see Irish debt as example). Financing of debt on the scale that currently takes place would be literally impossible without this guarantee. If foreign investors are so happy to hold our debt then why do we need the Treasury guarantee? Due to the Eurozone crisis cracks in the ability to finance debt have already started:

The current euro-zone debt crisis has caused costs to blow out on funding markets, and this is expected to have an effect on some of the Australian banks.
NAB and the Commonwealth Bank are fully funded for the next few months.
However, the ANZ Bank and Westpac still need to raise between $8bn and $13bn by the end of September.
The cost of raising five-year term debt has increased by at least 60 basis points in the past two months.

From http://www.news.com.au/business/for...-local-banks-rba/story-e6frfm1i-1225880209530
Not to mention the 11% drop in the price of the AUD in less than a month. I am sure we will never be bitten on the **** funding our debt like this.


* Proposed myth: We are bad savers. NOT A MYTH
We are only not bad savers when compared to Europe (as a whole) or the USA with their all time historical low current saving rates (which are increasing!). Compared with China or Japan or France we are saving at roughly one third the rate.
* Proposed myth: We have a high household debt. NOT A MYTH
As plainly stated in the article:
“Household debt has risen significantly faster than household income since the early 1990s,” Battellino said. “At that time, households on average had debt equal to half a year's disposable income; by 2006, debt had risen to around one and a half years' income. Since then, however, the ratio of debt to income has stabilised. “Most of the rise was due to housing debt, including debt used to fund investment properties.
Hmmm...let's take a look at the actual numbers:
1990: Australian household debt 85% of GDP
December 2009: Australian household debt 100% of GDP
http://www.news.com.au/money/money-...e-for-first-time/story-e6frfmd9-1225813961183

So there we go. All the proposed myths seem to be fact after all. Only the reporter from "The Age" seems to think they are busted, other reporters on this article definitely seem more skeptical, one I read today went so far as to say "While Battellino gave a cautious no to his own questions; he didn't spell out that all this turned on one huge all-encompassing assumption. Forget about the US; that China keeps on trucking". The Dep.Gov reckons "everything is fine here, nothing to see, move along". That is what he is saying. We have no issues with foreign debt funding on a huge scale, we have no issues with household debt, we have no issues with saving, everybody who loaded up on debt in the last 24 months can handle it. Just move along, everything is fine.

Meanwhile, analysts at JPM and Fujitsu seem to be busting some real myths:
http://www.theaustralian.com.au/bus...affect-1-million/story-e6frg9gx-1111116815756

MORTGAGE stress levels in Australia are tipped to reach more than 1 million homes by December, amid dire predictions that more than 53,000 jobs will disappear from small- to medium-sized businesses.
...
His message came with a warning that Australian banks could be entering a loan loss cycle not seen since the 1990s -- more casualties from the global credit crunch, further interest rate rises from the banks beyond any central bank movement and some fee increases, in areas such as loan applications.
...
while the Australian banks claim to be comfortable with their asset quality, Mr Johnson said only a small movement in the loan loss charge was required to have a big impact on earnings.

"There's a reason why they call Australia the lucky country, that's because we have the most optimistic people in the world," he said.

Mr Johnson said loan losses had been low for so long and local banks were geared "very highly compared to global peers" at 25-30 times versus 15-20 times.

"We haven't seen a loan loss cycle since the early 90s ... and I think that created a perception that there's absolutely no problem on the asset quality front, which I think is a little bit naive," he said.

"Personally, I still think the valuations look stretched and the earnings risk is rising."

Fujitsu's Martin North said: "There are some disruptive factors here that people have yet to fully comprehend."

That article meshes with my feelings much better. Australian banks will soon have trouble funding debt like they currently do on foreign capital markets. They will be crowded out as bigger banks, companies and even the US Treasury constantly issue huger and huger new amounts of debt. I read today BP is trying to sell $10bn in debt right now. I expect the debt market to become fully saturated. Therefore Aus banks will charge rates higher than the RBA - as the market will demand higher rates and there is low domestic demand for Aus debt.

 

[nomore4s]

My personal opinion is that property in Oz will continue on it's merry way (although I'm skeptical that we will see the same returns in the next 10 years as we have seen in the last 10 years) until there are issues servicing the debt, then both property prices and banks are probably in a little bit of trouble.

I also think there won't be any trouble servicing the debt until we get a round of high unemployment. With the general population so deep in debt it won't take long for :fan when people start losing their ability to earn the type of wages we have become accustomed too. The wild card could be if we see a round of serious deflation.

But until we see high unemployment I think property will continue to tick along as the general population still regards it as a safe investment and nearly an essential part of Aust life really. Until something changes that or our ability to take on and service debt I can't see too much changing in the property market.

 

[robots]

hello,

great suggestions, keep them coming brothers

i will probably look at Bendigo in a few years time, pay down a bit and kick off again

i reckon St Kilda/prahran/elwood/richmond here in Victoria would have to be on hotspotting, especially 1-bedders which will provide good solid returns, get one in a good spot in the building with carpark

fantastic day

word out to Glen48, smoking must of got him

thankyou
professor robots

 

[kincella]

monica wakelin on abc this morning suggests Geelong 1st, then bendigo ballarat
rick bettellino deputy rba, provides a more informative view on finance and housing than his boss, the ugly Stevens.....it often appears to me to be somewhat contrary to Stevens views....
Stevens has bad body language, avoiding eye contact with his viewers or listeners, which implies to me, that he is lying, or untruthful....or receiving directions, or advice from the pm....
I usually make reference, or imply to Stevens as being wrong, he being the head of the rba....oh my goodness, did I refer to the RBA without specifically noting Stevens......

whatever, housing in OZ is sound, no great drops, and probably an increase in the next few years, as the conservative investor departs the gambling den of the stockmarket, and heads to the safety of bricks and mortar...
and whilst around 1500 immigrants head into melb each week from their god forsaken countries....they must be envious of our high standards of living, and particularly envious of our housing......
at the same time, unable to comprehend the cost of housing here.....

 

[UBIQUITOUS]

whatever, housing in OZ is sound, no great drops, and probably an increase in the next few years, as the conservative investor departs the gambling den of the stockmarket, and heads to the safety of bricks and mortar...

Kincy, you don't appear to be nearly as bullish as the long term 10% pa return you are on record as banking on (mentioned on here by you a few months back).Howcome the change in sentiment?

 

[kincella]

no change in sentiment......I am talking non inner city housing......which will grow at the usual rate...
inner city housing may grow at a slower rate until the 2nd GFC pans out, or with removal of the foreign ownership new rules.....with a change in govnuts....
there will be plenty of astute investors buying non inner city housing, as they flee from the gambling den....
rents will keep rising, whilst we allow 1500 or more immigrants in each week to melb and sydney.....
since investors have stopped building new houses, where will all those immigrants go.....well some of the immigrants will replicate their former housing arrangements, by piling 10-12 into 2 or 3 bedroom houses
the resources tax and the most incompetent govnut in our history will dampen any incentives for investors for a couple of years, or until they are removed from office.....
10% or more growth rate will be easily achievable for the outer suburbs and the regional areas....
nothing the state govnuts are promising pre election will ever become a reality....no fast trains, no more housing or jobs.....absolutley nothing will be done to fix the current problems......until we have changes at both a state and federal level
enjoy your day, as it is now, its about as real as it can get......

 

[nunthewiser]

Negative growth of median house prices over the next 3-5 years?

Nah could never happen

 

[satanoperca]

nothing the state govnuts are promising pre election will ever become a reality....no fast trains, no more housing or jobs.....absolutley nothing will be done to fix the current problems......until we have changes at both a state and federal level
enjoy your day, as it is now, its about as real as it can get......

Negative growth of median house prices over the next 3-5 years?

Nah could never happen

Completely agree and it just might happen.

Beautiful day in Melbourne.