The future of Australian property prices

[Quincy]

A quarter of Australian home borrowers will be under severe financial stress or forced to sell their homes if interest rates rise by another 100 basis points next year, research shows.

One in 20 said they’d be forced to sell, with baby boomers under the most stress - 15 per cent of borrowers aged 50 to 65 years say they’d have to sell.

http://www.smh.com.au/business/mortgage-stress-to-intensify-if-rates-jump-20101112-17qwd.html

ohh dear !

 

[MACCA350]

Money Morning headline:

Aussie House Price Crash Has Begun

Are we starting to see the media turn bearish? If statements like that start popping up in mainstream media it will have an effect on both buyers and sellers, almost like a self fulfilling prophecy.
Market sentiment can have a profound effect, just as the 'get in before you're priced out of the market' thinking pushed buyers into a feeding frenzy forcing prices up.

One interesting graph shows mortgage debt has risen since 1990 from 17% of GDP to a whopping 90% of GDP.
That sounds bad to me, but what does it really mean? Is it really a bad situation, is it sustainable, have we overextended, or is it simply a useless comparison that has no real value?

Cheers

 

[explod]

Looking for that clearance rate for the weekend there Professor.... ole pal.

Usually get our kick before this. Was I far out with my 58% prediction?

 

[nukz]

Where is robots while all this is going on? lol

 

[Mr Z]

That sounds bad to me, but what does it really mean? Is it really a bad situation, is it sustainable, have we overextended, or is it simply a useless comparison that has no real value?

We owe too much, it means we are not going to be that resilient when our economy receives its next real shock. Interest rates? Direction seems to have changed despite QEII efforts.?! We have no room to move, lets hope we don't have to.

 

[explod]

Where is robots while all this is going on? lol

Could be out organising a few sales before the Crissy break.

Got to keep the bubbles flowing and the birds singing in the trees, oh and did you hear our ole mate Doyle is going to bring in the owls to chase out the possums around the city. Great stuff Brothers/sisters.

Of couse its mostly doomsayers like yours truly that have caused it all.

 

[robots]

hello,

great day brothers, looking forward to new ASF as i am mobile at the moment brothers

So a bit difficult, i wont run like a bear

Thankyou
Professor robots

 

[Quincy]

Interest rates? Direction seems to have changed despite QEII efforts.?! We have no room to move, lets hope we don't have to.

Higher funding costs eat into big four's margins - Big four banks may opt for more rate rises

By Danny John - November 16, 2010


THE threat of further bank-imposed rate rises is unlikely to disappear for at least another nine months as higher funding costs continue to erode the big four's profit margins.

With billions of dollars of cheap debt from pre-global financial crisis days still to be refinanced at more expensive levels, the banks could opt to raise loan charges above any Reserve Bank increase to bridge the financing gap.

The possibility of another rate rise arose yesterday after the Commonwealth Bank disclosed a further reduction in its retail banking arm's margins because of the higher premium being demanded by overseas debt providers.

http://www.smh.com.au/business/higher-funding-costs-eat-into-big-fours-margins-20101115-17ucu.html

A quarter of Australian home borrowers will be under severe financial stress or forced to sell their homes if interest rates rise by another 100 basis points next year, research shows.

http://www.smh.com.au/business/mortg...112-17qwd.html

=> The future of Australian property prices IMO over the next 12 - 24 months ? :bad:

 

[MR.]

The week before the 13/11/2010 weekend the REIV claimed there would be 920 auctions on the 13/11/2010 weekend. Only 836 were reported. What happened to the other 9% or 84 houses? Does this always occur?

The average over the last 6 weeks has a discrepancy of 10.5% per week, from what was said to be auctioned the following week, to what took place. What happened to these 10.5% of homes? Were they taken off the market or sold prior?

Five months ago the average over 6 weeks from 6/6 to 10/7 produced a discrepancy of just 6.8% per week. It appears the discrepancy has risen since then by approximately 50%.

IMO the increase could be from vendors cancelling, postponing or changing to private sale. If these properties are being postponed or becoming a private sale there must be a build up of stock appearing! (not good for property bulls)

Professor of REIV long time, winner of countless years, or other vanishing property bulls. What is your take apart from the REIV has changed their calculation methods of late?

 

[Mofra]

Professor of REIV long time, winner of countless years, or other vanishing property bulls. What is your take apart from the REIV has changed their calculation methods of late?

I'm not sure if I qualify as a bull anymore given my comments on likely short term moves in prices, but they are clearly fudging the figures (or attempting to).
The story of the revision down to 58% last week after a bunch of agents "forgot" to post their results is a pretty flimsy excuse in anyone's language, and means even less coming from Enzo.

 

[cutz]

Hi MR,

There's a bit of a burst in this article regarding the discrepancies, http://www.news.com.au/money/proper...y-auctions-slump/story-e6frfmd0-1225952955621

 

[Mr Z]

....but they are clearly fudging the figures (or attempting to).

Awwwwww come now, the next thing you will be telling me is that the goobermint fudges CPI numbers.

I suppose you wanna have a go at Santa and the Easter Bunny as well! :

Damit I will not have it!

 

[trainspotter]

Lotta white noise and palava so far. As reported before ... some areas will slide due to mortgage stress and other areas will continue to bracket creep. Monetary tightening and Guvmint interference is starting to bite hard. Post GFC jitters means the proletariat have gone weak at the knees when it comes to spending. The recession we have to have perhaps? Cost of living is going through the roof and Princess Joolyah is STILL spending stimulus money like an American Sailor on shore leave. Double whammy all round.

Will the property prices collapse similar to the other Western civilised democracies? Unlikely IMO. Banks are solid profit makers, history of Aussie battlers in the mortgage belt selling Grandma before defaulting, many and varied reasons which have been covered previously in this thread.

The RBA also has enough capacity in rates to DROP them if necessary to soften the blow. The Guvmint does not want to cause the banks stress who hold the $$$ and the mortgages to the future prices of Australian property.

Yes there will be a fair bit of road kill on the highway of life. It will depend on how quickly the scavengers can clean up the carcass's to keep it constant.

Lest we forget these numbers: ESTABLISHED HOUSE PRICES

Quarterly Changes

Preliminary estimates show the price index for established houses for the weighted average of the eight capital cities increased 0.1% in the September quarter 2010.
The capital city indexes increased in Melbourne (+2.7%), Perth (+0.4%) and Darwin (+0.3%), and decreased in Sydney (-0.9%), Brisbane (-2.1%), Adelaide (-1.4%), Hobart (-1.4%) and Canberra (-0.4%).

Annual Changes (September quarter 2009 to September quarter 2010)

Preliminary estimates show that the price index for established houses for the weighted average of the eight capital cities increased 11.5% in the year to September quarter 2010.
Annually, house prices rose in Melbourne (+18.8%), Sydney (+11.0%), Canberra (+11.0%), Darwin (+9.8%), Perth (+9.4%), Adelaide (+6.3%), Hobart (+4.2%) and Brisbane (+3.0%).

http://www.abs.gov.au/ausstats/abs@.nsf/mf/6416.0

 

[satanoperca]

Will the property prices collapse similar to the other Western civilised democracies? Unlikely IMO.

But not impossible.

Banks - hmmm solid profit earners as long as the govnuts give them a helping hand. Be interesting in round 2 if the govnuts have to support them again and the public outcry this time after they all raised rates above the RBA.

Cheers

 

[moXJO]

Damn it, am I the only one living in an area that just keeps going up. The house sold two doors up in less than 3 weeks. The house across the road from that sold in two days. In fact most are only lasting 1-4 weeks on the market. And the prices are just ridiculous. Something has to give; I am seeing places that use to be slum areas selling in the $700 thousand range. And all while I was trying to buy.

There are heaps trying to sell at the moment. Even my parents are selling two (going on market next week).

 

[satanoperca]

And the prices are just ridiculous. Something has to give; I am seeing places that use to be slum areas selling in the $700 thousand range. And all while I was trying to buy.

There are heaps trying to sell at the moment. Even my parents are selling two (going on market next week).

Hmm wouldn't that be the definition of the peak of a high volume upthrust, can see those strong hands selling into those weaker ones.

Just a thought, it is all about volume, price spread and time, this bar is only at half time.

Cheers

 

[Aussiejeff]

http://www.news.com.au/money/proper...estate-in-sydney/story-e6frfmd0-1225954693751

Major real estate firms are cashing in on the trend, promoting Australian properties in Asian hubs like Hong Kong and Singapore, luring cashed up investors with promises of safe, secure growth opportunities.

The most recent figures from the Federal Government's Foreign Investment Review Board, collected during the worst of the global financial crisis in 2008-09, reveal foreigners picked up $23.4 billion in Australian real estate assets including 3639 new and existing homes, and 988 parcels of land.

Those figures were BEFORE the full effect of the massive RE industry bailout courtesy of FHBG & state grants. I wonder how much of THAT cash has/is being soaked up by "foreign interests"? I'd love to know the figures right NOW rather than 2 year old crap.

 

[Quincy]

Damn it, am I the only one living in an area that just keeps going up. The house sold two doors up in less than 3 weeks. The house across the road from that sold in two days. In fact most are only lasting 1-4 weeks on the market. And the prices are just ridiculous. Something has to give; I am seeing places that use to be slum areas selling in the $700 thousand range. And all while I was trying to buy.

There are heaps trying to sell at the moment. Even my parents are selling two (going on market next week).

As a matter of interest moXJO, do you know whether the purchasers are from around the area (locals) or are they overseas' buyers ?

 

[wintermute]

Damn it, am I the only one living in an area that just keeps going up. The house sold two doors up in less than 3 weeks. The house across the road from that sold in two days. In fact most are only lasting 1-4 weeks on the market. And the prices are just ridiculous. Something has to give; I am seeing places that use to be slum areas selling in the $700 thousand range. And all while I was trying to buy.

There are heaps trying to sell at the moment. Even my parents are selling two (going on market next week).

No not the only one moxjo, my supberb has gone up around 30% in the last 12 months (but then it had been stagnant for about 8 years, so in reality it is just playing catch up). Properties have been selling the day they are listed. We looked at one decided we would like to put an offer on it (the day it was listed) and we were told we were too late deposit had already been taken, and we only left it for about 3 hours to make that decision... any house in our area with good presentation sells VERY quickly.

We ended up deciding to buy a brand new 1.5 bed as an investment. 435K ouch... I have been wary about property falls for too long (no doubt will tank now we have bought) settle tomorrow, tennant moves in Sunday 12 month lease. $495/week rent... absolutely crazy!! We were thinking $400 / week would be ok and even that seemed a lot (though not a lot compared to the price of the unit).

Paid down the morgage on the our place and overall after fees etc our repayments should be around the same as they were before (even with the latest interest rate hike) so I'm feeling reasonably comfortable.

Our decision was to buy for future income, not for capital gains. unless the rental market tanks I think we should be ok we will be paying off our own place as aggresively as possible without cuasing stress.

Tony.

 

[MR.]

The RBA also has enough capacity in rates to DROP them if necessary to soften the blow. The Guvmint does not want to cause the banks stress who hold the $$$ and the mortgages to the future prices of Australian property.


Lest we forget these numbers: ESTABLISHED HOUSE PRICES

Quarterly Changes

Preliminary estimates show the price index for established houses for the weighted average of the eight capital cities increased 0.1% in the September quarter 2010.
The capital city indexes increased in Melbourne (+2.7%), Perth (+0.4%) and Darwin (+0.3%), and decreased in Sydney (-0.9%), Brisbane (-2.1%), Adelaide (-1.4%), Hobart (-1.4%) and Canberra (-0.4%).

Our high interest rates might just save all our bacon. The RBA does have alot of room to move.

Melbourne is propping up the countries average! As for the year on year figures, think you're in the wrong thread!