The future of Australian property prices

[Mofra]

I will include the conclusion here, readers are encouraged to view the full paper and draw their own conclusions. Anyone with half a brain would see that a 10% decline in prices is not unreasonable in even a healthy bull market but if the numbers on this paper are correct (and from my understanding, they are) then the consequences of a 10% decline in house prices could be huge for Australia.

Over what timeframe?

Personally I am bullish long term but I expect prices to soften to the end of the year at least - possibly until we have confirmed the next peak in the rate cycle. 10% in a few months would be a major issue, over a longer term it would be seen as a far softer landing and set the stage for the next upleg.

AWOTE traditionally rises faster than CPI so the time frame of any pullback does impact on the measure household earnings as a multiple of house prices that some here love so much.

 

[Uncle Festivus]

DETERIORATING funding conditions for Australia's banks will likely prompt rate hikes independent of any RBA move, a senior banker says.

Stories found on these two links

WSJ_World_MIDDLEHeadlinesAsia

theaustralian.com.au


Wait until you see the china issues that is coming, we have seen nothing yet.

Yadda yadda yadda ........ more white noise ........ we aint seen nothing yet ... blah blah blah ..... Banking confidence down in the minors like Bank of Queensland !! Pffffffffffffft ..... What is the loan book worth?? I will toss you for it and I still wont be late home for dinner. Get a grip.

Huh?? You are not making making much sense there nor in your other posts ie not reading Sinners posts correctly?

I just hope none of you leveraged dudes go on strike. If you do, then we are all in for a world of hurt. If you don't go on strike, then maybe it won't hurt as much. Taking one for the team is so much better for the unleveraged. We'll just sit back and help you out in your time of need.

The fiat system & fractional reserve banking are not racist when it comes to over-allocating those freshly printed notes to be mis-allocated into unproductive property bubbles both here and in China. Both countries banks have indicated that the show is over as far as their respective weighting to the property sector is concerned, irrespective of where rates go.

Just a matter of time brothers.....

 

[nunthewiser]

All sweet bro.

Experts say home rental income in Perth has not budged since March despite rising costs for landlords.

Property research firm RP Data said the median house rental price was $380 a week in the quarter to June 30, with the price for units at $330.
Real Estate Institute of WA president Alan Bourke said the State had an almost two-year-long plateau in rental prices. He said a vacancy rate of about 3 per cent struck about the right balance between supply and demand, but the rate now was about 4.5 per cent, which put downwards pressure on rent.

"So far we've not had many decreases in rent and what that might be in part is that we have had a few interest rate rises, so owner-investors need to pay the bank more," he said.

Dianella landlord and Professionals property manager Lauren Musca, who owns two investment properties with her sister and her husband, said she was getting the same amount of income for her properties as she was a year ago, but mortgage payments had increased significantly.

"Another interest rate rise would be difficult, but I suppose we just have to cut back on other areas," she said.

Ms Musca said conditions had changed since Perth's property boom, when prospective tenants were offering well above the asking price just to get into a house.

"We've just had a changeover of tenants and we had to get someone in there quickly at whatever rent they were offering just so we didn't have a vacancy period," she said.


"Our advice to property managers for landlords is that to get a good long-term tenant you need to offer something special - throw in the DVD and the microwave in the deal."

http://au.news.yahoo.com/thewest/a/-/mp/7540478/wa-landlords-feel-the-pinch/

The last paragraph gave me a giggle tho ...... better get out those pom poms guys

 

[UBIQUITOUS]

All sweet bro.



http://au.news.yahoo.com/thewest/a/-/mp/7540478/wa-landlords-feel-the-pinch/

The last paragraph gave me a giggle tho ...... better get out those pom poms guys

"Throw in a DVD"?

Not even a DVD player.

It looks like landlords are "doing it tough"

 

[UBIQUITOUS]

Not looking good at all for the property sector. Expect to see some further squealing by the like of the HIA in the coming weeks.

I reckon that the last 2 years have been about the government buying the banks time to shore up their balance sheets. Now it's time for a culling of the weak - banks and property speculators.

http://news.smh.com.au/breaking-new...-stark-contrast-to-others-20100708-1020c.html

The strength of the report saw financial markets price out any chance of an interest rate cut this year, a move that had been toyed with given the uncertainty generated by Europe's debt problems.

"The ongoing strength in the labour market confirms our view that the RBA still has a tightening bias, given that falling unemployment is likely to put pressure on wages with the potential to add to inflationary pressures next year," Ms Emmett said.

 

[MR.]

RBS Australia senior economist Felicity Emmett said the Reserve Bank may "sit on its hands" if global financial markets continue to sharply deteriorate, but she thought a rate cut was unlikely unless the world economy slipped back into recession.

Oh Felicity, will you stop reading ASF and come up with your own material.

With thanks,
Associate Banker
MR.

HA HA HA what a total useless waste of a post this was.
Will try harder to post content in future.

 

[robots]

hello,

yes ordinary writings from another economist, fascinating

anyhow great day, sun shining strong, the energy it gives you when the rays hit the body is phenomenal

great news with Vic State Gov announcing some Vicroads departments going to Ballarat and some more action in Bendigo

just kicking off, get on it

200k for a house up there still

thankyou
professor robots

 

[MR.]

Another economist just making a living......

Hey, where's the Bigdog thingy?

It looked up a bit this week didn't it?

 

[Wysiwyg]

200k for a house up there still

thankyou
professor robots

Hi botsy ,

Can you answer this question for me please.

Case: A house is bought in 1990 for 200k and is now 20 years later sold for 500k. During that time council rates have cost 15k, house maintenance costs about 30k (painting, guttering, fencing, pergola built, plumbing repairs, new carpet, stairs, electrical repairs, termite treatment, concrete slabs and sheds erected, numerous one off items).

Question: Considering prospective next homes have also increased in time value, where is the capital appreciation?

 

[MR.]

Case: A house is bought in 1990 for 200k and is now 20 years later sold for 500k. During that time council rates have cost 15k, house maintenance costs about 30k (painting, guttering, fencing, pergola built, plumbing repairs, new carpet, stairs, electrical repairs, termite treatment, concrete slabs and sheds erected, numerous one off items).

Question: Considering prospective next homes have also increased in time value, where is the capital appreciation?

Bots must be out strolling along the Port Phillip, enjoying life, in the sun and all.....

Assume this house is hypothetical!
500k – 200k – 15 and 30k would equate to $255k which is approx 4% compounding appreciation minus inflation if you want!
The answer would be to own at least one or more wouldn't it?

 

[Wysiwyg]

Bots must be out strolling along the Port Phillip, enjoying life, in the sun and all.....

Assume this house is hypothetical!
500k – 200k – 15 and 30k would equate to $255k which is approx 4% compounding appreciation minus inflation if you want!
The answer would be to own at least one or more wouldn't it?

What I failed to mention was the interest on mortgage came to 90k on a 150k loan over the 20 years. So 255k - 90k = 165k additional in the pocket after 20 years.

For sure an investment property is lucrative because rental income covers aforementioned property maintenance but the only people I can see benefiting from a non investment property are the next of kin.

 

[MR.]

News flash

“The property tip of the year”
“The real estate market will crash”

http://www.jenman.com.au/news_item.php?id=60

“So we wrote near the end of 2001 in a series of four articles called Boom & Bust. Since then the real estate market has continued to boom.
Our real estate critics have laughed."

and P’ssed em selves, popped arteries, forgotten to breath and turned blue in hysterics!

 

[MR.]

What I failed to mention was the interest on mortgage came to 90k on a 150k loan over the 20 years. So 255k - 90k = 165k additional in the pocket after 20 years.

For sure an investment property is lucrative because rental income covers aforementioned property maintenance but the only people I can see benefiting from a non investment property are the next of kin.

A non investment property owner wouldn't be paying rent, but would be paying that interest instead.

If the question's now, on the next of kin, it's going to be a matter of time!

 

[Wysiwyg]

Onwards and upwards I say. : The ultimate chart pattern.

Australian Property Prices

 

[Wysiwyg]

Sigh. Inflation is the key here.

Australian Property Prices (Inflation Adjusted)

 

[Chief Wigam]

Hi Wys, I just came across this thread. From where did you get this chart?

 

[Wysiwyg]

Hi Wys, I just came across this thread. From where did you get this chart?

Wig, The website is at the bottom right hand corner of either chart.

 

[MR.]

House shortage! What house shortage?

http://www.theaustralian.com.au/bus...unlikely-to-dive/story-e6frg9gx-1225889995260

It said while 150,000 houses had been built each year since 2005, the population had grown by more than 350,000 a year.

How many people on average live in a house?

AVERAGE HOUSEHOLD SIZE
The average household size in Australia is projected to decline from 2.6 people per household in 2001
Australia's household size (2.5) in 2011 is projected

http://www.ausstats.abs.gov.au/Ausstats/subscriber.nsf/0/DF2989BFFA7392E1CA256EB6007D63F4/$File/32360_2001%20to%202026.pdf


150,000 houses x 2.5 people per household = 375,000

No house shortage here! Although it did say more than 350,000

 

[trainspotter]

Question for MR and Wsiwyg. Do you own property? Either PPOR or RI ? Got any commercial RE assets to speak of? What about a strata title unit or two? Any vacant land? Maybe a development block? Just interested if you have property as part of your portfolio?

 

[UBIQUITOUS]

Everywhere I look, I see bad bad news for the RE sector, as foretold on ASF.

In Sydney and Melbourne, auctions hit a 52-week low of 49.8 per cent and 55.6 per cent respectively, according to Australian Property Monitors. On the corresponding weekend last year, Sydney auctions cleared 70.5 per cent of homes and Melbourne's clearance rate was a healthy 78 per cent

http://www.smh.com.au/business/clearance-rate-slumps-as-supply-surges-20100711-105lk.html

http://www.heraldsun.com.au/news/na...lowest-in-a-year/story-e6frf7l6-1225890529725

http://www.theaustralian.com.au/bus...lowest-in-a-year/story-e6frg9gx-1225890485624