The future of Australian property prices

[tech/a]

It wont come as a surprise to either of you that I don't agree with your comments in direct respect to myself. Cant speak for others.

Thanks Captain Obvious? Of course the profitable will remain profitable and the unprofitable will remain unprofitable in all markets of supply and demand. But what is your take on the future of Australian property prices, tech/a?

To everyone - these are the sort of things we should be talking about:

* Do you believe markets like housing to be long-term cyclical in nature? Do you think house prices viewed cyclically are overbought or oversold?
* What are the contributing factors to the current upward trend, are these factors simple or complex, are they sustainable?
* What are the current mitigating factors on this trend? Are they going to increase or decrease in severity?
* Acknowledging we can't predict the future, but also the value of evaluating possible likely outcomes: What are the consequences of this upward trend continuing (and at what velocity)? Are always uptrending house prices actually good? What are the consequences of this upward trend ending/reversing (and at what velocity)? Will a correction be rough or soft, will it be healthy or unhealthy?

Trotting out pundit quotes, anecdotes and even statistics are useless if you are just bringing them here to win a tick for "your side". The data needs to be framed in the context of the above questions, as an aide in trying to answer them.

We should all try harder.

My take is the obvious which if not that obvious I'm happy to expand.I believe most people over analyse opportunity.They complicate a simple scenario.Complication leads to confusion, hesitation and often lost opportunity at best and fear of making any decision at worst.

You see it doesn't matter what I think in general terms.What does matter is what I do with an opportunity when it presents itself to me.
For everyone else it is the exact same for them as it is for me in my own reality.

Nothing is ever so black and white, them and us.

I've known plenty who have "prospered" in property go broke, and those afraid of risk eventually take the plunge and change their circumstances.

There are a whole gamut of results due to skill, lack of skill, good timing, bad timing, and just plain old randomness.

Wayne in my world EVERYTHING is either black or white.
In any endeavour I'm either right or wrong.If wrong I get the hell out of the wrong as quick as possible.If right I stay there as long as I remain so or favour another opportunity. I'm wrong more often than right but the small % of rights far outweigh the higher % of wrongs.
Making a decision is a snap and I never procrastinate.Something I have consciously trained myself to do when I was much younger.

I agree with what your saying but for me it remains black or white right or wrong regardless of "how" the situation has come about.

 

[kincella]

Tech I do agree with you...
Quote
"You see it doesn't matter what I think in general terms.What does matter is what I do with an opportunity when it presents itself to me.
For everyone else it is the exact same for them as it is for me in my own reality.

Wayne in my world EVERYTHING is either black or white.
In any endeavour I'm either right or wrong.If wrong I get the hell out of the wrong as quick as possible.If right I stay there as long as I remain so or favour another opportunity. I'm wrong more often than right but the small % of rights far outweigh the higher % of wrongs.
Making a decision is a snap and I never procrastinate.Something I have consciously trained myself to do when I was much younger.

I agree with what your saying but for me it remains black or white right or wrong regardless of "how" the situation has come about.ch...I agree with you.... end Quote

 

[kincella]

NEWS OF MASSIVE FRAUD BY US BANKS ON MORTGAGES....FORECLOSURES STOPPED IN 23 SATES....GFC NO 2 AND NO 3 WILL HIT
so the freefall in the US housing market was due to the banks process of foreclosing, and forcing down the house prices......now it is revealed the foreclosures were based on fraud..........

news finally seeping out about the massive mortgage fraud in the US....it will hit the US banks...world wide affects to seep thru.....
will labors budget withstand this next night mare....
swan, why has he been silent....I guess he ...as usual...has no idea...
some of the big US banks have stopped foreclosures in some 23 states.....judges are stating it is fraud...

and some 60 million home owners in the US may be able to keep their homes....and not have to repay the banks....
all due to the massive fraud....
watch out below.....
this subject will have massive ramifications and reactions world wide.....
the labor budget will be affected....our banks might have to look at their own books.....
I believe some of our banks use a similar processing facility...like the MERS system in the US at the heart of the problem....
I know RAMS used a service providor to handle their mortgage process.... with one of my loans.....they made several mistakes, including sending me another borrowers mortgage and details.....
http://www.examiner.com/real-estate...test-action-and-inaction-on-foreclosure-fraud

and this one
http://www.msfraud.org/law/lawarticles/Could62MillionHomesBeForeclosure-Proof.pdf

--------------------------------------------------------------------------------

 

[KurwaJegoMac]

NEWS OF MASSIVE FRAUD BY US BANKS ON MORTGAGES....FORECLOSURES STOPPED IN 23 SATES....GFC NO 2 AND NO 3 WILL HIT
so the freefall in the US housing market was due to the banks process of foreclosing, and forcing down the house prices......now it is revealed the foreclosures were based on fraud..........

news finally seeping out about the massive mortgage fraud in the US....it will hit the US banks...world wide affects to seep thru.....
will labors budget withstand this next night mare....
swan, why has he been silent....I guess he ...as usual...has no idea...
some of the big US banks have stopped foreclosures in some 23 states.....judges are stating it is fraud...

and some 60 million home owners in the US may be able to keep their homes....and not have to repay the banks....
all due to the massive fraud....
watch out below.....
this subject will have massive ramifications and reactions world wide.....
the labor budget will be affected....our banks might have to look at their own books.....
I believe some of our banks use a similar processing facility...like the MERS system in the US at the heart of the problem....
I know RAMS used a service providor to handle their mortgage process.... with one of my loans.....they made several mistakes, including sending me another borrowers mortgage and details.....
http://www.examiner.com/real-estate...test-action-and-inaction-on-foreclosure-fraud

and this one
http://www.msfraud.org/law/lawarticles/Could62MillionHomesBeForeclosure-Proof.pdf

--------------------------------------------------------------------------------

I don't think this will go so far as to cause a "GFC 2 or 3" - a lot of the downwards pressure on American homes is due to the high rates of defaults and subsequent foreclosures. If mortgage owners' homes were/are being incorrectly foreclosed, then all this will serve to do is lower the number of houses being foreclosed and reverse existing foreclosures and therefore reduce housing supply and bank 'fire sales' of foreclosed property. This will potentially start to put a floor on house prices and therefore start to slowly stabilise consumer confidence.

That being said, if the banks get hit with a class action, they will probably have to pay damages but even so, doubtful it'd be enough to cause a GFC 2 - only hamper the bank's bottom line for a bit.

 

[TabJockey]

I don't think this will go so far as to cause a "GFC 2 or 3" - a lot of the downwards pressure on American homes is due to the high rates of defaults and subsequent foreclosures. If mortgage owners' homes were/are being incorrectly foreclosed, then all this will serve to do is lower the number of houses being foreclosed and reverse existing foreclosures and therefore reduce housing supply and bank 'fire sales' of foreclosed property. This will potentially start to put a floor on house prices and therefore start to slowly stabilise consumer confidence.

That being said, if the banks get hit with a class action, they will probably have to pay damages but even so, doubtful it'd be enough to cause a GFC 2 - only hamper the bank's bottom line for a bit.

Agreed, nobody in the USA is too eager to smack thier banks around too hard.

 

[Agentm]

the old "this bubble is different" talk that always floats about in every bubble scenario keeps rearing its ugly head, with the rba and its new mandate from swan keeping up appearances

i wonder if they have been reading this book?

 

[KurwaJegoMac]

the old "this bubble is different" talk that always floats about in every bubble scenario keeps rearing its ugly head, with the rba and its new mandate from swan keeping up appearances

i wonder if they have been reading this book?

You know you're in trouble when books like that are popping up...

Still, house prices accelerate and plateau all the time. People's fascination with focusing on an ever increasing median house price and shouting "the sky is falling - house prices are double what they were 10 years ago and triple what they were 15 years ago!!!" have obviously never heard of the exponential function.

 

[UBIQUITOUS]

**Newsflash**

Rates on hold.


**Newsflash**

Robots and Kincy still hiding behind the sofa

 

[Mr Z]

although hang on, havent heard from MrZ for a while, so 21, oh well

Sorry bots... its cash making season in gold stocks I'm busy skinning bears... get back to me around May next year.

 

[trainspotter]

I believe most people over analyse opportunity.They complicate a simple scenario.Complication leads to confusion, hesitation and often lost opportunity at best and fear of making any decision at worst.

Genius level tech/a. I used to procrastinate once but now I am not so sure.

 

[robots]

hello,

oh fantastic, well done Kincella superb effort brother

well there you go

thankyou
professor robots

 

[explod]

Still, house prices accelerate and plateau all the time. People's fascination with focusing on an ever increasing median house price and shouting "the sky is falling - house prices are double what they were 10 years ago and triple what they were 15 years ago!!!" have obviously never heard of the exponential function.

Good point, gold has done more than that in eight years. More than trippled since 2002 and looking stronger by the day. By the discussions here there appears to be some doubts creeping in about property prices though.

Anyway, if you have a home and own it outright, no worries.

 

[Agentm]

worth a watch if you dont know much about the subject


http://www.cnbc.com/id/15840232?video=1607245632&play=1

 

[KurwaJegoMac]

Good point, gold has done more than that in eight years. More than trippled since 2002 and looking stronger by the day. By the discussions here there appears to be some doubts creeping in about property prices though.

Anyway, if you have a home and own it outright, no worries.

True - but what if you're a young man who doesn't own your own home? Well in my case i'm biting the bullet and buying an investment property - not getting a PPOR yet, will look at getting one in a few years. Right now just focusing on investment properties and ensuring i have appropriate risk margins in my loans and income to cover excessive interest rates.

 

[wayneL]

Still, house prices accelerate and plateau all the time. People's fascination with focusing on an ever increasing median house price and shouting "the sky is falling - house prices are double what they were 10 years ago and triple what they were 15 years ago!!!" have obviously never heard of the exponential function.

That's not really the point. We all know house prices will increase as the currency is debased via inflation, but what housing bears point to is relative value. This is unquestionably above trend.

 

[KurwaJegoMac]

That's not really the point. We all know house prices will increase as the currency is debased via inflation, but what housing bears point to is relative value. This is unquestionably above trend.

How is it not the point? YoY growth of Australian property has approximately averaged 9% from 1950's-2009* ! Adjusting for inflation that equates to about 3.1% YoY*. So hardly some scary number even without adjusting for inflation. Look at the price of most consumer goods and services and they've been averaging 6-8% inflation per year. People see a graph of historic house prices and start frothing at the mouth and whip themselves up into a frenzy as they watch the line on the right climb so steep relative to the last 50 years.

But what they fail to account for is simple arithmatic. If you understand the exponential function and apply it to house prices and the average prices of consumer goods you'll see they're largely in line and hardly anything scary.

As for house prices being relative? Relative to what? The price of a house or any other asset is determined by how much value a person places in the worth of that asset. What asset is relative to a house? Only other houses. It boils down to supply and demand. It doesn't matter how expensive it becomes, if there is insufficient supply to meet demand prices will remain expensive.







*Published paper: http://search.informit.com.au/documentSummary;dn=062035829122703;res=IELBUS

 

[wayneL]

How is it not the point? YoY growth of Australian property has approximately averaged 9% from 1950's-2009* ! Adjusting for inflation that equates to about 3.1% YoY*. So hardly some scary number even without adjusting for inflation. Look at the price of most consumer goods and services and they've been averaging 6-8% inflation per year. People see a graph of historic house prices and start frothing at the mouth and whip themselves up into a frenzy as they watch the line on the right climb so steep relative to the last 50 years.

But what they fail to account for is simple arithmatic. If you understand the exponential function and apply it to house prices and the average prices of consumer goods you'll see they're largely in line and hardly anything scary.

As for house prices being relative? Relative to what? The price of a house or any other asset is determined by how much value a person places in the worth of that asset. What asset is relative to a house? Only other houses. It boils down to supply and demand. It doesn't matter how expensive it becomes, if there is insufficient supply to meet demand prices will remain expensive.

Well you aren't familiar with the arguments here, c'est la vie.

Good luck with it.

 

[KurwaJegoMac]

Well you aren't familiar with the arguments here, c'est la vie.

Good luck with it.

Excuse me! There's no need to be so arrogant and presumptious! I've been following this thread closely and I am aware of the arguments presented here. This is a forum and I am allowed to disagree with general consensus and present MY view on property prices.

You present no debate or adequate resppnse to ideas that challenge your own, merely posting that you disagree and that's end of story.

 

[hobo-jo]

As for house prices being relative? Relative to what? The price of a house or any other asset is determined by how much value a person places in the worth of that asset. What asset is relative to a house? Only other houses.

How about the price of a house is relative to how much it costs to rent it...?

Recently while the capital gains tap has been flowing many buyers have been happy to pay the premium to buy over rent as they will make the difference back and more via capital growth. What happens when that scheme starts to fail and buyers are instead looking at stagnant prices (or even falling ones), do you think they will still be prepared to pay the premium to buy over rent?

Houses in capital cities currently have an average rental return of 4% on purchase price.... with mortgage interest rates around 7% and ongoing costs to buy running in at over 1% on purchase price this means that renters can live in a home for approximately half the cost of buying.

Some smart cookies (myself included) have sold property to rent while it makes sense to do so, investing capital into more prospective opportunities waiting for the right time to buy again.

 

[wayneL]

Excuse me! There's no need to be so arrogant and presumptious! I've been following this thread closely and I am aware of the arguments presented here. This is a forum and I am allowed to disagree with general consensus and present MY view on property prices.

You present no debate or adequate resppnse to ideas that challenge your own, merely posting that you disagree and that's end of story.

Dude!

• Nobody said you couldn't disagree
• Nobody said you couldn't present your view
• I've debated throughout this thread, no point going over old ground.
• I wished you good luck, and that was genuine.

Sheesh! Take a Valium mate!