The future of Australian property prices

[tech/a]

And exactly why is it the best time Professor self proclaimed?

Simply because.
Last year was the best time
So was the year before that
and 5 yrs before that and
10 yrs ago and 15 yrs ago was
better still as was 25 yrs ago.

Next year wont be as good as
now and 5 yrs wont be either
neither will it be in 10 yrs.

Take this thread when it started it was
a better time to buy than now and
in 3 yrs I'll be saying the same thing.

I'm still buying and developing.
But then thats what I do! (well one of them)

 

[sorcar]

Tech,

When you develop do you stick to set suburbs? I.e only buy in 10 different suburbs that you have listed 'good areas' to develop

 

[trainspotter]

And exactly why is it the best time Professor self proclaimed?

Like the man said .... NOW is the best time to buy. There will be no other time. 5 years ago, 10 years ago. Not gonna happen. Where do you think it will be in the next 5-10 years?? I bought my first property on an average wage of 25k per annum and 17% interest. Was then a good time to buy? You betcha. No time like the present. DEPENDS WHAT AND WHERE YOU BUY !!

 

[singlefished]

I bought my first property on an average wage of 25k per annum and 17% interest. Was then a good time to buy? You betcha.

Wow.... sounds like you bought right at the peak with interest rates @17%! I bet at the time most people thought they were about to miss the boat whilst others were spruiking that NOW was a good time to buy ehh?

According to the Treasury Economic Roundup (summer of 2003/2004) :

Despite the general perception that house prices can only go up, Australia has actually experienced falls in house prices, especially in real terms. Between March 1989 and December 1990, real house prices fell by 8 per cent and did not recover to the same levels until a decade later. Some individual markets in Australian cities recorded greater falls in the early 1990s. Dwelling prices in Melbourne fell by 22 per cent in real terms between March 1989 and March 1996.

http://www.treasury.gov.au/documents/780/HTML/docshell.asp?URL=03_Housing_Market.asp

Doesn't really give much credence to either your or tech/a arguments does it?

DEPENDS WHAT, WHEN AND WHERE YOU BUY !!

 

[tech/a]

Tech,

When you develop do you stick to set suburbs? I.e only buy in 10 different suburbs that you have listed 'good areas' to develop

Yes.
Industrial there are only a few choices South of Adelaide.
Apartment development Southern Beaches---where I live.
Also the end of SA's one way freeway set to become a dual carriage way
thanks to those genius pollies!
And the end of the New Rail link set to be started in 2011.
I look for Corner Blocks big enough for 3 min so that's 1100 Squ mtrs.
Ill demolish if the numbers add up.
I use project builders---I cant build them as cheap as they do!,and I'm a builder.

Its ALL about the numbers!!

 

[trainspotter]

LOLOL singlefished ... I will let my bank balance perform the credence walk in real terms. Everything I own I can trace back to a single house purchased in 1991. That lousy 3 bedroom, 1 bathroom dog box which everyone told me not to buy. Interest rates at 17% ... Hmmmmmmm How stooopid was me ??

Actually everyone else was slashing their wrists to get into property. No one else thought they had missed the boat. FAR FROM IT ! None of them SOLD their asset BTW. AHhahahhahaha ahah a ahahah *gasp* ahhahahhha aa a

I am glad you took note of WHERE AND WHEN TO BUY.

The difference that you seem to struggle with between yourself and Tech/a and myself is that we play the property market similar to the stockmarket. We see an opening and utilise market forces to dictate our goals.

Go and see a bank manager and try and borrow money. What do you think the first words out of their mouths are??? "DO YOU OWN UNENCUMBERED PROPERTY" ....... Ohhhhhhhh yeah babababayayy !!

 

[singlefished]

LOLOL singlefished ... I will let my bank balance perform the credence walk in real terms. Everything I own I can trace back to a single house purchased in 1991. That lousy 3 bedroom, 1 bathroom dog box which everyone told me not to buy. Interest rates at 17% ... Hmmmmmmm How stooopid was me ??

Actually everyone else was slashing their wrists to get into property. No one else thought they had missed the boat. FAR FROM IT ! None of them SOLD their asset BTW. AHhahahhahaha ahah a ahahah *gasp* ahhahahhha aa a

I am glad you took note of WHERE AND WHEN TO BUY.

The difference that you seem to struggle with between yourself and Tech/a and myself is that we play the property market similar to the stockmarket. We see an opening and utilise market forces to dictate our goals.

Go and see a bank manager and try and borrow money. What do you think the first words out of their mouths are??? "DO YOU OWN UNENCUMBERED PROPERTY" ....... Ohhhhhhhh yeah babababayayy !!

Well, good for you!

Please can you contact Treasury, tell them their data was wrong and have them update the figures to reflect your own personal circumstances.

Your swelling bank balance, which I'm sure has now climbed almost as high as your horse, can be the yardstick for all future economic analysis.

 

[trainspotter]

Well, good for you!

Please can you contact Treasury, tell them their data was wrong and have them update the figures to reflect your own personal circumstances.

Your swelling bank balance, which I'm sure has now climbed almost as high as your horse, can be the yardstick for all future economic analysis.

No problem singlefished ... ask the Treasury to contact me by helicopter because I will be at my pearl farm at the time they call.

NO-ONE was doubting what you had posted or the Treasury figures.

PROPERTY DOES FALL. INCOME TO DEBT RATIOS DO FAIL. WE HAVE WRITTEN THIS OVER 30 PAGES !! WE ALL AGREE WITH YOU !!!

My horse and myself are doing fine by the way. Let me know when your horse gets gelded. I fear it is too late. My income from property is actually factored into the statistics of the Australian future economic analysis. If I am failing ... SO ARE YOU !

 

[KurwaJegoMac]

Came accross this chart in Wiki (not the most credible source I know

But for the last 10 years house prices have been 7-9 times average wage, compared with a historic average of 3-4.5. I don't know about you, but I find that a bit scary. If it were a stock chart, it'd look like the peak of a bull run. I have been keeping money in the sidelines for investing in property and definitely know the mantra "the best time to buy was yesterday" but in this particular case i'm not too sure.

Paralysis from over-analysis?

 

[Mr Z]

Interesting

http://www.demographia.com/dhi.pdf

 

[KurwaJegoMac]

Wow... just wow...

Thanks for sharing that Mr Z. That was one sobering paper.

 

[MACCA350]

<waits for Robots to have another hernia about demographia>

Having said that, notice Australia starts rankings at no. 2 in the most unaffordable cities and takes out 6 of the top 10 spots...........by now we've probably taken out top spot.

cheers

 

[tech/a]

Z

Given me some reading for the W/E.

Noticed this though

The only genuine measure of scarcity or abundance is price. The problem is that there is not a
sufficient supply of affordable land, because of the market distortions created by urban
consolidation.

In the body of the text as I was browsing.

Therin lies the problem grab a greenie and show him!

 

[robots]

hello,

is that the site by schiller and stapledon? amazing

they still around, oh well

but Kurwa, dont buy bro, no big deal

no surprise with the results Macca, we on top of the world and as others have indicated its not a supply issue

its called Utopia, paradise, the true democratic society and thanks everybody for making it a great place

thankyou
professor robots

 

[Mr Z]

In the body of the text as I was browsing.

Yes that is true... kinda. (the price thingy)

Price has four components the first two are supply and demand of/for the item in question... that speaks to scarcity of the item itself. The second two are supply and demand of/for the currecny that is used price the item in question... that has little to do with scarcity of the item. Where those four balance price settles, it is rarely at a point that is a pure measure of supply and demand for the item, there is always some monetary component there. So as we have seen (often it seems!), monetary inflation, including credit inflation can distort price in any market. Are we there now?

Hey Tech, what do you think you could build yourself a place for per square. Subbing it all out and going for reasonably good quality?

 

[bellenuit]

But for the last 10 years house prices have been 7-9 times average wage, compared with a historic average of 3-4.5. I don't know about you, but I find that a bit scary.[/IMG]

What I would like to see in the Demographia report is not the comparison of average house prices against the average wage across the various countries, but against the average wage of those that own the houses.

There was an article in the paper today (can't remember which one as I have read 3) where Commonwealth Bank was responding to some of the concerns raised by foreign investors in relation to the impact a housing crises would have on Australian Banks. I'm going from memory, but I thinks these were some of the figures mentioned.

- House prices are on average only 4.5 times the average wage of those that own the houses.
- 70% (seems too high, so I may be wrong) of mortgages are held by the top 20% of income earners.
- Borrowers are on average 7 months ahead on their repayments.
- The fact that US loans are non-recourse was a major contributor to its problems.

 

[robusta]

CBA seems to think everyting is ok and they may be right but it is a bit like asking your stockbroker if it is a good time to buy shares - go on try it anytime.

http://www.heraldsun.com.au/busines...-is-still-robust/story-e6frfh4f-1225917155455

 

[Mr Z]

Yes...

Apparently the Commonwealth Bank cherry picked numbers from Demographia, they chose to use income multiples for Oz from a different source because it supported the argument they wanted to make. Not what you call intellectually honest! Mix and match you data sources to suit, LOL, sounds like Al Gore.

That said I think that the Demographia income multiples are high, from the info I could dig up it would suggest closer to 7 where they have 9.

 

[tech/a]

Hey Tech, what do you think you could build yourself a place for per square. Subbing it all out and going for reasonably good quality?

Ive toyed with the idea a couple of times.
But in the ned I cant believe what these project builders will build a fair home (for an IP) at.
Over here Hickinbothams/Fairmonts/Week Peacock are all around 680/ squ mtr single story and $880 double on around 200 square mtrs.(brick veneer)

And they project manage the build.
Cant beat that.

 

[Mr Z]

Yikes... that is cheap.

Last time I did the exercise it was around 1K sqm for good quality and 1.5K for top draw. I was thinking that was well out of date now! but maybe it is still doable.

I would be very happy with sub 1K for what I have in mind.

Cheers
Z