The future of Australian property prices

[UBIQUITOUS]

..and here the monthly pre RBA meeting pleading from the Ponzi Posse.

http://www.smh.com.au/business/new-home-sales-drop-for-fourth-month-20100929-15wji.html

New home sales drop for fourth month

September 29, 2010 - 1:28PM

Sales of new homes have fallen for the fourth month in a row, prompting a peak housing construction organisation to warn of the risk to the industry if interest rates are pushed up too soon.

The reality is the landlords won't be able to jackup the rents to offset the loan repayments and capital depreciation.

 

[wayneL]

Hello,

hehehehe, spruikers, yeah i agree WayneL some posters

goldmans sach says overvalued, so come buy into one of our managed funds and we give you 5.5% p/a over the next 10yrs with no obligation to ever return your money

hahahahahahahahahaahahahhahhhhhhahahaaaaaaahhhaaaaaaahhahhahahhhhhhahhhhhhhhahhhhaaaaaaaaaahahahahaha

got any hard disappointments on the property front gloomers?

thankyou
robots

***wonders the mental age of some of the posters in this thread.

Honestly folks, can we keep the tone of the thread slightly more dignified than kindergarten style taunting?

Facts, figures, educated guesswork etc would be good.

 

[robots]

Hello,

no worries,

* property prices well higher then PRE-GFC after the biggest financial meltdown the world has seen since 1929

* new home sales drop for the fourth month

thankyou
professor robots

 

[wayneL]

Hello,

no worries,

* property prices well higher then PRE-GFC after the biggest financial meltdown the world has seen since 1929

* new home sales drop for the fourth month

thankyou
professor robots

Thanks

But as the thread is about the FUTURE of Australian property prices, some prognostications, predictions, soothsaying etc is probably more on topic.

 

[nukz]

Credit ratings agency Fitch says it will stress-test the impact of steeper home prices on Australian banks' debt, sending shudders through financial stocks.

Fitch this afternoon said it’s probing the potential impact of a spike in mortgage defaults or drop in house prices on the portfolio of Australian residential mortgage-backed securities and banks it rates.

"Over the last few months, Fitch has received numerous enquiries as to the sustainability of Australian residential property prices and the possible impacts of a correction,” said Ben McCarthy, managing director for Australia.

“While over the short-to-medium term, a downturn is not Fitch's central expectation, the agency is performing its stress test exercise on ratings impact under the hypothesis of an imminent housing market correction.”

Australia’s capital city home prices have risen 41 per cent since June 2006, on official Australian Bureau of Statistics data. Over the same period prices plunged in the US, UK, Ireland and Spain.

An estimated 60 per cent of Australian banks’ loan books is secured by residential property, leading pundits and international investors to question the sustainability of house prices.

The announcement this afternoon put pressure on Australian bank stocks, according to CMC Markets.

“The banks seemed to be weighed upon by this news, with all four in the red following being in positive territory in the morning," said CMC Markets institutional equities dealer David Barrett-Lennard.

Bank stocks closed down 0.8 per cent for the day, as the benchmark S&P/ASX 200 index dropped 0.5 per cent, or 24.8 points, to 4645.

"A housing bubble is the one overhang of the Australian economy, with proponents arguing that with Australian banks having 60 per cent of their loan books secured by residential property, the entire Australian economy is very highly leveraged to a domestic asset bubble," he said.

There is growing wariness internationally about Australian house prices.

Several months ago The Economist published a report on the local real estate market saying prices were the most overvalued in the world. And investment bank Goldman Sachs last week said Australian house prices were overvalued by up to 35 per cent.

The Fitch report on the outcome of its stress-test analysis is due later this year.

 

[electronicmaster]

Credit ratings agency Fitch says it will stress-test the impact of steeper home prices on Australian banks' debt, sending shudders through financial stocks.

Fitch this afternoon said it’s probing the potential impact of a spike in mortgage defaults or drop in house prices on the portfolio of Australian residential mortgage-backed securities and banks it rates.

"Over the last few months, Fitch has received numerous enquiries as to the sustainability of Australian residential property prices and the possible impacts of a correction,” said Ben McCarthy, managing director for Australia.

“While over the short-to-medium term, a downturn is not Fitch's central expectation, the agency is performing its stress test exercise on ratings impact under the hypothesis of an imminent housing market correction.”

Australia’s capital city home prices have risen 41 per cent since June 2006, on official Australian Bureau of Statistics data. Over the same period prices plunged in the US, UK, Ireland and Spain.

An estimated 60 per cent of Australian banks’ loan books is secured by residential property, leading pundits and international investors to question the sustainability of house prices.

The announcement this afternoon put pressure on Australian bank stocks, according to CMC Markets.

“The banks seemed to be weighed upon by this news, with all four in the red following being in positive territory in the morning," said CMC Markets institutional equities dealer David Barrett-Lennard.

Bank stocks closed down 0.8 per cent for the day, as the benchmark S&P/ASX 200 index dropped 0.5 per cent, or 24.8 points, to 4645.

"A housing bubble is the one overhang of the Australian economy, with proponents arguing that with Australian banks having 60 per cent of their loan books secured by residential property, the entire Australian economy is very highly leveraged to a domestic asset bubble," he said.

There is growing wariness internationally about Australian house prices.

Several months ago The Economist published a report on the local real estate market saying prices were the most overvalued in the world. And investment bank Goldman Sachs last week said Australian house prices were overvalued by up to 35 per cent.

The Fitch report on the outcome of its stress-test analysis is due later this year.

I suppose the whole world wants to see a Australian housing price correction then?

Look what Goldman Sachs had to say about housing prices in that article. Is that an attack threat on Australian Housing, Banks and (effect) security Markets?

 

[So_Cynical]

I've been thinking that perhaps the bubble wont burst, that perhaps some contrarian thinking mite be required :dunno: Can the bubble simply deflate over time by levelling off...i mean if a trend line shifts sideways and simply waves along going sideways (over time) then the bubble is no longer.

Perhaps the combination of the mining boom, china, our strong domestic economy, our dollar, immigration hangover, under supply of new house starts etc will be enough to stop the bubble popping (falling of a cliff ) and a couple/few years of general sideways movement in house prices will follow.

Just a thought.

 

[jbocker]

I've been thinking that perhaps the bubble wont burst, that perhaps some contrarian thinking mite be required :dunno: Can the bubble simply deflate over time by levelling off...i mean if a trend line shifts sideways and simply waves along going sideways (over time) then the bubble is no longer.

Perhaps the combination of the mining boom, china, our strong domestic economy, our dollar, immigration hangover, under supply of new house starts etc will be enough to stop the bubble popping (falling of a cliff ) and a couple/few years of general sideways movement in house prices will follow.

Just a thought.

Hopefully if the bubble were to 'deflate', the general sideways movement would be more manageable all round than a confidence sapping bursting.

 

[Mofra]

I've been thinking that perhaps the bubble wont burst, that perhaps some contrarian thinking mite be required :dunno: Can the bubble simply deflate over time by levelling off...i mean if a trend line shifts sideways and simply waves along going sideways (over time) then the bubble is no longer.

Perhaps the combination of the mining boom, china, our strong domestic economy, our dollar, immigration hangover, under supply of new house starts etc will be enough to stop the bubble popping (falling of a cliff ) and a couple/few years of general sideways movement in house prices will follow.

I thought that had already been happening in certain areas.
AWOTE has been running at close to double the headline inflation rate since 07 so even matching inflation the true household income to servicing ratios should decline which will reduce the stress rate (even using the low 30% rate as the benchmark).

I'm assuming prices will remain flat in the short term and medium term as well, with the market waiting for the next bottom of the interest rate cycle (which appears to be years away) to be formed for any real upward pressure on prices.

 

[prawn_86]

Building approvals down 4.7% compared to expecations of data being flat

 

[trainspotter]

Building approvals drop prompts rates warning

The Master Builders Association says the latest housing figures send a clear warning to the Reserve Bank of Australia (RBA) to not raise interest rates.

Figures released by the Australian Bureau of Statistics (ABS) reveal total building approvals across the nation fell by a seasonally adjusted 4.7 per cent in August to 13,049 units.

The data shows demand to build new homes plunged in August as fewer people sought to take out a mortgage.

By state, New South Wales suffered the worst decline, down 16 per cent.

Building approvals for homes in Western Australia, however, rose 12 per cent, but Masters Builders Association executive director Michael McLean says the housing market is flat and the increase in WA is off a low base.

http://www.abc.net.au/news/stories/2010/09/30/3026065.htm?section=business

RBA hints rates will move up

The RBA has hinted interest rates will move up as policy makers manage a 'robust economic upswing'. Reserve Bank governor Glenn Stevens also said, in a speech today, that while Australia's economic growth should be above trend in 2011, the low rate of inflation seen over the past two years was near its trough.

Read more: http://www.news.com.au/money/intere...ba/story-e6frfmn0-1225926825229#ixzz10yu76E8u

 

[trainspotter]

***wonders the mental age of some of the posters in this thread.

Mental age test result
Your mind is 37 years old ...... Hmmmmm and I am 42 chronologically. Go figure?

http://en.nienteansia.it/tests/mental-age-test.html

 

[trainspotter]

Seasonally-adjusted Aussie home values decline

Australian capital city home values declined -0.2 per cent (seasonally-adjusted) in August (0.0 per cent in unadjusted terms) while the ‘Rest of State’ markets realised 0.0 per cent growth (seasonally-adjusted and raw). Total gross returns remain positive with improving yields on units (4.9 per cent) and houses (4.0 per cent).

In August the seasonally-adjusted RP Data-Rismark Capital City Home Value Index fell by 0.2 per cent. On a non-seasonally adjusted basis the index remained unchanged in August. (Residential data are ‘seasonally-adjusted’ to remove the influence of the seasonal swings that occur at various times of the year.) Since the market peak in May 2010, the RP Data-Rismark Capital City Home Value Index has declined by 1.2 per cent (raw and seasonally-adjusted). Over the year to end August 2010, capital city home values have risen by 8 per cent. The median dwelling price in all capital cities is $457,000.

Thank you RP DATA

 

[Quincy]

Building approvals drop prompts rates warning

The Master Builders Association says the latest housing figures send a clear warning to the Reserve Bank of Australia (RBA) to not raise interest rates.


http://www.abc.net.au/news/stories/2010/09/30/3026065.htm?section=business

Housing figures are only part of the mix that the RBA would take into consideration with regard to their position on interest rates.

Notwithstanding that it is the Master Builders Association making the statement, to say in isolation that the latest housing figures should send a clear warning to the RBA not to raise interest rates is in my opinion a very narrow minded and ignorant postion to take.

 

[sinner]

I've been thinking that perhaps the bubble wont burst, that perhaps some contrarian thinking mite be required :dunno: Can the bubble simply deflate over time by levelling off...i mean if a trend line shifts sideways and simply waves along going sideways (over time) then the bubble is no longer.

Perhaps the combination of the mining boom, china, our strong domestic economy, our dollar, immigration hangover, under supply of new house starts etc will be enough to stop the bubble popping (falling of a cliff ) and a couple/few years of general sideways movement in house prices will follow.

Just a thought.

The point is it doesn't matter anymore.

Housing pop or not, Australians can expect a decrease in their standard of living whatever happens, mostly thanks to current/past Government policy coupled with voter apathy to this knowledge, or perhaps even antipathy to anyone who would dare rock the boat.

The mathematics is on the wall, the capital is already misallocated, so to speak. Our collective futures have been sold downriver to keep housing in this country going, so whether or not a few manage to eke a couple of % of yield over the coming years is completely irrelevant.

The attitude of many of those participating in this thread can only be labelled with one word:

HUBRIS.

In Miami, Ron Shuffield, president of Esslinger-Wooten-Maxwell Realtors, predicted that a limited supply of land coupled with demand from baby boomers and foreigners would prolong the boom indefinitely.

"South Florida," he said, "is working off of a totally new economic model than any of us have ever experienced in the past" according to a realtor who predicted that a land shortage will support higher prices indefinitely."

New York Times. March 29, 2005

Now Florida has tent cities to cope with all the homeless, and Florida is a lot bigger than just the Miami-Dade area. At least our mate Ron Shuffield was 100% right about the "new economic model than any of us have ever experienced in the past".

It's like everyone has forgotten those stupid Commonwealth Bank ads in the late 90s early 00s "Equity maaaaate". If Australia is so different to the US housing market, why did we have those ads? I bet people here treated their home value like an ATM just like their US brethern. In the end it isn't about the financially responsible ones, because it is the financially irresponsible ones who start the big ball of **** rolling downhill.

 

[Mofra]

Now Florida has tent cities to cope with all the homeless, and Florida is a lot bigger than just the Miami-Dade area. At least our mate Ron Shuffield was 100% right about the "new economic model than any of us have ever experienced in the past".

With non-recourse loans and abysmal lending standards, it was never going to end any other way. Australia is well ahead on both counts.

 

[robots]

hello,

further on the US:

abysmal everything over in that joint, crack, 9mm stuffed down every cats pocket, fat asses galore, oh yeah lets invade another country because they have weapons of mass destruction and Saddam in charge of a powerful army

look out, saddam was found in a hole in the ground, the joints pathetic and surely the mods need to start deleting any articles which are posted regarding that place

who gives a stuff about florida, "the future of australian property prices"

thankyou
professor robots

 

[Dowdy]

hello,

further on the US:

abysmal everything over in that joint, crack, 9mm stuffed down every cats pocket, fat asses galore, oh yeah lets invade another country because they have weapons of mass destruction and Saddam in charge of a powerful army

look out, saddam was found in a hole in the ground, the joints pathetic and surely the mods need to start deleting any articles which are posted regarding that place

who gives a stuff about florida, "the future of australian property prices"

thankyou
professor robots

Wow, you seem to know so much about the USA. I find that comment interesting. Have you ever been there?

 

[UBIQUITOUS]

Wow, you seem to know so much about the USA. I find that comment interesting. Have you ever been there?

Give the chap a break. He'd get a nosebleed if he left Melbourne. Besides, you don't have to go there to know what it's all about. Just tune into Judge Judy and Cops.

 

[robots]

Wow, you seem to know so much about the USA. I find that comment interesting. Have you ever been there?

hello,

no, and just to remind everybody the thread is about aussie property prices, not spain, italy, ireland, US, Uk or New Zealand

so hopefully those posts with data/info regarding any of the above listed countries is swiftly removed from the thread to keep it on track

otherwise a "mega" property thread maybe an idea, although the true visionaries of society will probably still get victimised

thankyou
professor robots