The future of Australian property prices

[trainspotter]

Interesting to note that the increase in pre-auction sales - accounting for 25 per cent of those listed for the weekend. Factor in the 50 per cent clearance rate and the answer is? Property is slowing down? So therefore if 25% of the market is sold prior to auction of 100% then this leaves 75% of houses that at auction a 50% clearance rate was achieved? Is this how it works? HUH?

 

[Bigukraine]

Interesting to note that the increase in pre-auction sales - accounting for 25 per cent of those listed for the weekend. Factor in the 50 per cent clearance rate and the answer is? Property is slowing down. So therefore if 25% of the market is sold prior to auction of 100% then this leaves 75% of houses that at auction a 50% clearance rate was achieved? Is this how it works? HUH?

Housing finance up 1.9% in may for owner occupied rose for the first time in months.... don't worry about clearance rates....they will fall...not for the fact that the housing market is crashing... but for the fact the ability for the banks to lend is drying up... why do you think that the major banks are being re-rated down.... because their cost centre to supply funds is rising sharpley and the money is not there to lend....why do you think the fight is on to obtain deposits from punters ?

In summary it means to me get a loan now before you won't be able to borrow!!!

confucious say..."man who drive car and keep looking in rear view mirror for danger miss the train in front"

 

[sinner]

Sigh. Inflation is the key here.

Australian Property Prices (Inflation Adjusted)

That chart assumes you believe the official measure of inflation (CPI) to be "real".

Just as the chart you showed "House Price Index" was adjusted to "House Real Price Index" after adjusting for inflation, there should be a third adjusted chart showing returns "House Real-Real Price Index" after adjusted for real inflation!

Hell, even the RBA is rubbishing CPI these days
http://www.news.com.au/business/rba-says-cpi-data-not-representative/story-e6frfm1i-1225842175839

I advise everyone to look at that article, as it has a chart showing Australian "underlying inflation" - you can see the RBA has failed to keep within their "target rate" since Sep 2007 if you use underlying inflation. Even after six-in-a-row panic rate cuts in 2008. Readers are encouraged to think and make up their own minds why the RBA seems to lack the monetary policy controls to keep inflation within their target band.

As you can see if we were adjusting your stubbornmule chart for "real inflation" then "real real" returns on housing would be even lower than 2.1%. FHOG is probably a very good explanation as to why 2008/2009 capital gains could be less than 0 after adjusted for inflation!

 

[UBIQUITOUS]

Interesting to note that the increase in pre-auction sales - accounting for 25 per cent of those listed for the weekend. Factor in the 50 per cent clearance rate and the answer is? Property is slowing down? So therefore if 25% of the market is sold prior to auction of 100% then this leaves 75% of houses that at auction a 50% clearance rate was achieved? Is this how it works? HUH?

What I do know is that it's a buyers market, and buyers are holding off from buying. There are too many conflicting indicators here in Oz. Uncertainty means that people aren't putting their hands in their pockets.

 

[trainspotter]

What I do know is that it's a buyers market, and buyers are holding off from buying. There are too many conflicting indicators here in Oz. Uncertainty means that people aren't putting their hands in their pockets.

AGREE 100% ... this is a time of uncertainty and volatility in the real estate market place. The rate clearance is down but the pre sales is through the roof. Works out to still 62.5% of volume turnover. Some places have sold for more than the asking price at auction whilst others on a presale contract have just fallen short of the asking price but still gone to settlement??

Sure aint sunshine and lollipops for the greedy property developers ... a bit more like "Cloudy with a chance of holding costs"?

 

[Bigukraine]

AGREE 100% ... this is a time of uncertainty and volatility in the real estate market place. The rate clearance is down but the pre sales is through the roof. Works out to still 62.5% of volume turnover. Some places have sold for more than the asking price at auction whilst others on a presale contract have just fallen short of the asking price but still gone to settlement??

Sure aint sunshine and lollipops for the greedy property developers ... a bit more like "Cloudy with a chance of holding costs"?

The last time i looked we were in a capitalist society .....you know make profit from property develop,trade shares.....just general wealth building.....

unfortuatley "GREED" is part of it.... yes..... no.... comprendey...

 

[trainspotter]

The last time i looked we were in a capitalist society .....you know make profit from property develop,trade shares.....just general wealth building.....

unfortuatley "GREED" is part of it.... yes..... no.... comprendey...

You missed the tone of the post Bigukrane. I am completely for making a profit on any kind of transcation whether it be property or shares or horse trading.

The GREEDY property developers have a chance of holding costs due to lack of sales due to over priced, end sale structure. If the pricing was in a generalised margin and foreseen as good value to the market place then turnover would be forthcoming ie a profit. Maybe not the killing they thought they were going to make but nevertheless a profit.

Milk the cow slowly and it will give you a return all it's life. Rip it's teets off and ......... well you know the rest.

 

[Bigukraine]

You missed the tone of the post Bigukrane. I am completely for making a profit on any kind of transcation whether it be property or shares or horse trading.

The GREEDY property developers have a chance of holding costs due to lack of sales due to over priced, end sale structure. If the pricing was in a generalised margin and foreseen as good value to the market place then turnover would be forthcoming ie a profit. Maybe not the killing they thought they were going to make but nevertheless a profit.

Milk the cow slowly and it will give you a return all it's life. Rip it's teets off and ......... well you know the rest.

sorry about that and i agree with you on milking the cow slowly,the problem i see with most developers is that in the begining of the upward trend (started around intro of the GST ...2000) finance was cheap and plentiful and in one form or another remained so until the US subprime domino.....the problem is they borrow with the intention to sell a bit.... real or sureal sales and then go back to the lending institution ,show the sales refinance then sell abit more etc etc so ends up like a pyramid and them backing themselves into a corner..... some came in with reasonable capital and get in and out quick some end up like the above scinario .... some time's not all there faults.. (got to love councils) but the point being a lot of projects for the fhb would not of even got of the ground if not for some over leveraged developers that now if they tried to get the project of the the ground in 2009-2010 wouldn't have a hope in hell........i think some developers are greedy but some that due to the situation in the early 2000' ens .....that had a good old aussie crack have now been left short ...in trouble.. and to the detriment of project development in this country...... its economics... if you can't make a dollar you don,t do it , so to me it means no finance to get projects of the ground = not many land releases

=existing cost of established houses goes up

=holding and or rising of housing prices upto the point of max affordability

we are there now and due to no cheap finance avaliable to fhb or established owners due to the gfc and a short fall of banks ability to lend the chance of getting a loan is harder and harder.

Just my opinion housing at the top end pullback abit.... housing around the medium to lower end will hold more or less.. people who have loans for housing now will fight tooth and nail to keep it even if it means to eat rice !!!!

 

[robots]

That chart assumes you believe the official measure of inflation (CPI) to be "real".

Just as the chart you showed "House Price Index" was adjusted to "House Real Price Index" after adjusting for inflation, there should be a third adjusted chart showing returns "House Real-Real Price Index" after adjusted for real inflation!

Hell, even the RBA is rubbishing CPI these days
http://www.news.com.au/business/rba-says-cpi-data-not-representative/story-e6frfm1i-1225842175839

I advise everyone to look at that article, as it has a chart showing Australian "underlying inflation" - you can see the RBA has failed to keep within their "target rate" since Sep 2007 if you use underlying inflation. Even after six-in-a-row panic rate cuts in 2008. Readers are encouraged to think and make up their own minds why the RBA seems to lack the monetary policy controls to keep inflation within their target band.

As you can see if we were adjusting your stubbornmule chart for "real inflation" then "real real" returns on housing would be even lower than 2.1%. FHOG is probably a very good explanation as to why 2008/2009 capital gains could be less than 0 after adjusted for inflation!

hello,

exactly Sinner, and for over 6yrs now at ASF and the bloggo-sphere people have been carrying-on about house prices

why are you and others so interested in an asset that performs so poorly?

surely all the research you have conducted makes you put a line through property as its only returning 2.1%/yr,

i bought and settled a month ago, got finance from the CBA

what a surprise, someone has mentioned uncertainty

thankyou
associate professor robots

 

[robots]

hello,

more grreat news out for regional victoria with the state gov fast tracking works on the regional link, does this include BALLARAT any one know?

thanks again to all the bankers for contributing here at ASF

thankyou
associate professor robots

 

[MR.]

Housing finance up 1.9% in may for owner occupied rose for the first time in months....

Giday all,

Not seasonally adjusted the number of houses fell by 1.2% from last month. Seasonally adjusted owner occupied is up 1.9% which is a first for some time. Both finance figures fell for owner occupied though.
http://www.abs.gov.au/AUSSTATS/abs@...05DBCE56402EC566CA25723D000F2999?opendocument

I have updated the chart which I put together to see the impact of interest rates on new housing finances. (below) Last years boom was in line with interest rates being so low.

The data used was the raw data not seasonally adjusted. Do you think the data should have been seasonally adjusted in the charts?

Check it out!
View attachment Investment loans as a % of Total Housing Loans $.pdf

 

[explod]

hello,

exactly Sinner, and for over 6yrs now at ASF and the bloggo-sphere people have been carrying-on about house prices

why are you and others so interested in an asset that performs so poorly?

surely all the research you have conducted makes you put a line through property as its only returning 2.1%/yr,

i bought and settled a month ago, got finance from the CBA

what a surprise, someone has mentioned uncertainty

thankyou
associate professor robots

When you have been hurt yourself you tend to try and warn others from not doing the same. I made a lot of money over the years out of real estate but also have been burned. As a result I went to the books and learnt the real story behind economics. Certainly called it too early but do know a lot of people sadly will be burnt from property in the not too distant future.

We are just a ballance Confessor to the rampers. And Bankers are crooks.

 

[robots]

hello

no-one here at ASF ramps property explod,

plenty like Bigdog, just putting in a daily or weekly report

data like what Sinner produces further indicates we not in a bubble but just rolling along

maybe the real issue is wages, but looking at most people i see working their "worth" is about right

thankyou
associate professor robots

 

[UBIQUITOUS]

maybe the real issue is wages, but looking at most people i see working their "worth" is about right

thankyou
associate professor robots

I thought that the real issue (as spruiked by cheerleaders on ASF) was that there a shortage of properties. Shouldn't that mean 100% clearance rates?

 

[explod]

hello

no-one here at ASF ramps property explod,

plenty like Bigdog, just putting in a daily or weekly report

thankyou
associate professor robots

Bigdog does not ramp at all. He merely lifts and posts the daily news report from Google on how the US market, namely the Dow performed overnight.

And it will be there again in the morning as a service to many on ASF

cheers explod

 

[trainspotter]

I thought that the real issue (as spruiked by cheerleaders on ASF) was that there a shortage of properties. Shouldn't that mean 100% clearance rates?

Supply and demand does not necessarily mean vendors price is equivalent to purchasers price therefore equalling 100% clearance rates.

 

[UBIQUITOUS]

Supply and demand does not necessarily mean vendors price is equivalent to purchasers price therefore equalling 100% clearance rates.

But it does mean that the disparity between what vendor's want and prospective purchasers are willing to pay.

 

[MR.]

There were 528 auctions reported this weekend with a total of 361 selling and 167 being passed in, 96 of those on a vendors bid. The clearance rate from this weekend’s auctions is 68 per cent. This weekend last year saw 293 auctions reported and a clearance rate of 85%. Next weekend the REIV expects 590 auctions.

Enzo Raimondo

CEO, REIV

http://www.reiv.com.au/home/inside.asp?ID=162&nav1=1226&nav2=162

 

[robots]

hello,

thanks MR. for posting up the data,

just took the weekend off from the responsibilities, i just chilled out, went for a walk, stroked the cats, watched television and listened to some music

thankyou
associate professor robots

 

[trainspotter]

But it does mean that the disparity between what vendor's want and prospective purchasers are willing to pay.

Agreed with this statement of fact. This has always been the law of the jungle. "Vendors are benders and Buyers are liars". As a vendor I get talked into a ridiculously high price by the RE Agent and decide to list with them. It does not sell prior to auction or even at auction because it is listed too high in the first place. Rule # 1. Take the emotion out of the equation and think with your head and not with your heart.