The future of Australian property prices

trainspotter said:

Mr. Bernanke, who unlike Mr. Greenspan shuns the Washington social circuit and lacks close ties to conservative Republicans thusly leaving himself open to the attacks on his stewardship. If he had not acted then he would have been criticized for ignoring the slow paced recovery. Lose / lose situation all round really. Raving loony Tea Party and Sarah Palin squawking about printing 600 billion dollars is not helping. It has gone political now.

:topic

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Not off topic at all. The US thingo will be the greatest financial disaster of all time. To stay supposedly solvent for another two years the US will need to create 3 more trillion out of thin air.

The contagion, when it all comes undone will affect every part of the banking system on the planet in my view. The capitalisation of property in Australia will not be spared thisonslaught.

Now in this there is too much to explain but if you do some research you will soon catch on. Prof. Frink put up a very good website the other day as follows on where one could start but you really have to take blinkers off and have a good read of it all.

The link

http://pragcap.com/

againsthegrain said:

Just some funny quotes by robots that I found
:bonk:

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My background:

* been invested in RE for the past 11yrs
* have been awarded an Associate Professorship by Melbourne University for research undertaken on residential property (all self funded to by the way).
* one of only five of the true visionaries of society who have consistently called it.
* interest rate strategist

Just pop me a PM or post any questions you may have on the forum.

Thankyou
Professor Robots

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yeah no worries susuanW, wouldnt have a clue what you on about but oh well

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I couldn't help but to laugh at that comment.

I've looked after preschoolers who have a bigger vocabulary then him and also some that lie better then him too....

I even asked him to share his so called research with everyone as he claimed

my research is and always been on the future of australian property prices and i advise my clients on suburbs, towns and techniques to grow their wealth with property

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as a put up or shut up situation, but he didn't reply.....

I think i would rate him somewhere between a preschooler and a brick. As fun to read and watch as a preschooler with the intelligence that rivals that of a brick

explod said:

Not off topic at all. The US thingo will be the greatest financial disaster of all time. To stay supposedly solvent for another two years the US will need to create 3 more trillion out of thin air.

The contagion, when it all comes undone will affect every part of the banking system on the planet in my view. The capitalisation of property in Australia will not be spared thisonslaught.

Now in this there is too much to explain but if you do some research you will soon catch on. Prof. Frink put up a very good website the other day as follows on where one could start but you really have to take blinkers off and have a good read of it all.

The link

http://pragcap.com/

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It's funny that you should mention that site explod, I would have thought you'd hate it, considering the commentary comes from someone that subscribes to MMT. Learn something new every day I guess!

Back on topic(sort of), what's with the robots hating today??

As another self proclaimed professor, I must say I'm deeply troubled by the questioning of profesor robots and his qualifications.

Don't you people know that if someone on the internet calls themselves a professor, then they must be one in real life!

People on the internet never lie!

You have a very valid point there Professor Frink ! Wow ..... things must be pretty bad if a chap can't falsify a few qualifications here and there in an internet chat site only to be pounced upon by the fellow members. CRUMBS !

#45 is a RIP SNORTER ! Professor robots croooooozing the tracks checking out the property around Frankston

https://www.aussiestockforums.com/forums/showthread.php?t=15066&page=3

trainspotter said:

You have a very valid point there Professor Frink ! Wow ..... things must be pretty bad if a chap can't falsify a few qualifications here and there in an internet chat site only to be pounced upon by the fellow members. CRUMBS !

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LOL

hello,

oh gidday everyone, yeah thanks Trainspotter top stuff

could i put one of those shots of me at Frankston in my signature?

isnt life an absolute blast, walk tall brothers

thankyou
professor robots

Robots has been reading this "market's going to crash" crap for years. It goes back further than this thread.....

Continues to take it all in with a grain of salt and why not! I'd bet more than a few experts have popped in and advised "A crash is upon us" only for him to see them fade away into the oblivion again as property continues on its merry way. Self proclaimed Professor, interest rate strategist, whatever, the guys joking because he's read it all before and none of it disrupted the relentless rise of property values.

Ya gota take his comments in the right perspective.

LOL it's funny..

I don't exactly agree, when the government intervenes and provides higher housing grants and more incentives then its a given prices will rise.

If the government tomorrow announced a FHOG boost upto 50k for buyers then prices would once again start to rise.

nukz said:

I don't exactly agree, when the government intervenes and provides higher housing grants and more incentives then its a given prices will rise.

If the government tomorrow announced a FHOG boost upto 50k for buyers then prices would once again start to rise.

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However, if property is falling it might just level things out!

The "Spotter of Trains" was referring perhaps to the incentives to elude from too much of a property market correction and building will continue.

lol

anyone can be narrow minded to call a bubble for what its effects are for all its worth, but the thread is about the consequences.. the future

can all the property owners check in and get all their value out in one hit? doubt it.

what happens when masses are forced to sell and no one can afford to buy??



once the magic carpet ride is over, the consequence is always ugly.

anyone can see how simple the robots ability to call a bubble during its rise is, man thats not rocket or robot science.. i can do that and be 100% right throughout.. all you need is a latte and a sunday age to tell you how wonderful the bubble is..

the point is, what is the effect of economic strain and hardship??.. can the property sector sustain it year in year out..

45 million us citizens are on food stamps right now, i cant see them consuming us out of this mess, and they have wiped 15 years of economic gains off in 2 years..

and its on with QE2

i think get a grip on reality.. the chinese are keeping costs down for this christmas and giving you a very merry one, with no stress with the 30% rise in cotton, they will take all the heat.. in a few months they will put that 30% on the table, you will pay with the highest consumable, clothing going up 30%

other commodities will rise, all foods..

inflation will arrive soon.. think of the consequences of that in the equation imho before bidding up that next property sale and celebrating how expensive a home you own.. you may not enjoy the lavish lifestyle you have become accustomed to..

go,, get back to that latte machine in the kitchen and perk up another brew.. its chapel street in the lounge room in a kingdom of splendour..

if the property bubble is that sound, and australia is that sound that we are economically invincible, then how come prices are appearing to stall??

imho the cracks are appearing, and the bubble is grinding to a halt.. when nothing has really changed.. we are mighty and invincible...

lol

or are we?

why no 20% growth ???

i sense the faint smell of burnt toast permeating in the market..

there is a massive bubble refusing to grow with the greatest of australian economic might defying the planet and sustaining growth..

who is going to consume the goods as they become priced to oblivion? where will the growth come? whom will buy? how can the households consume with rising costs?

numbers are all wonderful atm.. all in the bubble spectrum, yet the bubble stalled.. with all this prosperity...

i have sense that the market is failing for the developas.. i sense the market is less interested in paying 100k more in 12 months for the same real estate year in year out.. i sense the bubble is not a wonderful place to keep all your wealth right now.. if the $AUS falls and property prices fall all at once, how will you buy that next meal?

just worth

trainspotter said:

#45 is a RIP SNORTER ! Professor robots croooooozing the tracks checking out the property around Frankston

https://www.aussiestockforums.com/forums/showthread.php?t=15066&page=3

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LOL....I can't be a bot hater now. He is so cute, and smartly dressed. Glad he has a special friend to take on train trips (unless he asked a Nigel to take his pic).

Re whether property can crash, until a few months ago I didn't think rates could go over 9.5%. Now I believe it isn't far fetched. Even with a govt guarantee, a US or European slow down or credit freeze will hit Australia as severely as everywhere else. all part of the benefits of Oz being plugged into the global economy. GFC has driven home to me how dependent capitalist societies are on constant credit to drive current and new business, housing, whatever. We all want to consume more than we produce, and then inflate away the debt. Trouble is, everyone else is doing it too.

SusanW said:

Re whether property can crash, until a few months ago I didn't think rates could go over 9.5%. Now I believe it isn't far fetched. Even with a govt guarantee, a US or European slow down or credit freeze will hit Australia as severely as everywhere else. all part of the benefits of Oz being plugged into the global economy. GFC has driven home to me how dependent capitalist societies are on constant credit to drive current and new business, housing, whatever. We all want to consume more than we produce, and then inflate away the debt. Trouble is, everyone else is doing it too.

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Bingo.

In a credit based economy, credit deflation is the same as deflation.

In any market, movements are generated by new money entering the equation. In the case of property, new money is largely in the form of bank loans. If Australian banks get locked out of foreign credit markets (40-60% of all Australian lending depending on who you ask) where will the new loans come from? Are we expecting a magic runup in our household savings rate, fresh deposits for the bank, from the current avg ~$7000 per household with almost 20% of households with no savings?

Are Australians, who are currently running household/personal debt to the tune of $1.2 trillion (a bit more than 1 year of GDP), expected to borrow past their eyeballs to keep the game going?

Sooner or later, simple mathematics kicks in, $50,000 bonus or not. Global credit is contracting at a rediculous rate. It shows no signs of slowing down. Certainly CDS spreads have not played along at all with the so called "green shoots rally" since 2009. So is the trend just going to stop and reverse now because Bernanke announced QE2? QE1 didn't work, why should it's successor!

Due to this steamroller credit contraction, sooner or later the funding basis for new loans is going to be out of range of prospective homebuyers and investors. If anyone has been watching money markets this month, you can plainly see yields on everything going up already. The other option is we have another "unexpected" liquidity crisis and funding simply becomes unavailable, rather than too expensive!

Either way momentum will dry up. Prices would only stagnate if they were well priced. Otherwise the market will very quickly reposition itself to reflect a new pricing structure, one where the assumption of another party with another bank loan to bid up your investment is no longer implicit. All it takes is a few forced liquidations and distressed sellers to get the ball rolling.

Glenn Stevens, March 29 2010

"We can't assume rates will remain low. The relationship between the cash rate and what they pay for mortgages or small business loans is what we think is useful," said Stevens, when asked to define normal rates in an interview with Channel Seven - his first television interview since becoming central bank chief.

"If you look back when the economy was stable and we had low inflation, the cash rate, that is the rate we decide on, the rate has been in the average of 5 per cent," he said, referring to a period since the 1990s.

"It's a mistake to assume a riskless, easy, and guaranteed way to prosperity is just to leverage to property," he said.

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Curious minds can go to the RBA
http://www.rba.gov.au/statistics/tables/index.html#money_credit

and check out the "Bank Lending to Business" series. Organised by interest rate. You can see about $238billion -almost a whole quarter of GDP- is loaned out to businesses at over the current cash rate in variable loans. The range is >5% up to 17%! I didn't even calculate the fixed rate loans in this number.

I wonder what % of household debt is loaned out at > than the current cash rate?

Is anyone actually, honestly under the illusion that these dollars of debt are somehow translating into equivalent dollars of GDP growth when some debtors are paying 5-10% greater than the cash rate?

Good luck.

Hello,

How about you property bears start putting up some hard facts and figures to back up your beliefs? Once again I will put forward the reasons why I think property prices will continue to increase, going forward -

1 Coffee is cheap, lattes are nice
2 Riding on trams is a fun way to fill in your day
3 Stirring the pot without actually saying anything is fun too
4 Bears outnumber bulls on this thread (where are my usual supporters?)
5 Sunshine & lollipops will now get a government grant
6 It will become mandatory to drink beer & play skittles full time
7 Rose coloured glasses will be mandatory for property inspections
8 There will not be a cure for bank managers myopia

Thank you,

Doctor Pollyanna_bots

Then again, if North & South Korea blows up in our faces we might see a huge rise in Korean refugee boats heading for Oz. That would help boost home demand & property prices.

PIIGS might fly, too.

Very good points and information supplied by everyone and would have to say that the grey clouds seem to be forming......

Seems to me the best investment decission i can make at the moment is to invest in the following:

1; Debt collection agencies

2; law firms that deal with insolvency/bankruptcy

3; caravan park's (only place where people will be able to live)

4; push bike manufacturer's

5; tent manufacturer's

6; cash converters/pawn brokers

correction will happen but where it will sit is pure guesstamation...if we are to believe all the experts and if they are anywhere near their stockbroking cousin's re the broker recommendations on stock,the end figure will be(positive or negative) poles apart from what has been stated to this point.

yes food ,utilities,clothing and all the basics (increasing in charges) will be a burden to all households but what has been stated over the last few pages of this thread the whole of the Australian economy will very soon be in a death spiral and will end up worse than the US and the PIIGS......I'll wait and see how bad it will unravel because if it's as bad as some on this thread predict ......

then we are all STUFFED

2 Speed economy !!!!

Mining areas will prosper but Capital cities will drag the rest of the market down with them.

Australian Real estate is the most expensive in the word especially with the high AU$. Overseas investors are running for the exit with the exchange rates and locking in profits.

High inflation and a rising interest rate scenario will tip alot of homeowners over the edge.

This article from Monday full of dire warnings. I have pasted some snippets, curious minds are advised to read the full article.

http://www.smartcompany.com.au/prop...as-unsold-stock-levels-soar-experts-warn.html

Property experts are warning prices will continue to fall into 2011 as the market becomes flooded with unsold properties, as buyers remain hesitant due to higher interest rates.

The warning comes as the market recorded another lacklustre performance over the weekend, with clearance rates still in the 50s in Melbourne and Sydney. But SQM Research founder Louis Christophe says that figure could actually be much lower due to what he say is a flawed method of reporting.

These experts say the lack of demand in the property sector is leaving agents with thousands of unsold properties heading into the traditionally quiet Christmas holiday period. Real Estate Institute of Australia president David Airey says this will only continue to put downward pressure on prices.

"Western Australia is leading the way with what we'd call a significant oversupply, brought about by sales being well under their long-term averages," he says. "And in Melbourne, you have week after week with auctions over 1,000 listings."

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SQM Research director Louis Christopher says the downward pressure on prices will be exacerbated in the upcoming Christmas period, when the demand for auctions will fall. He points to REIV figures showing over 1,000 properties were put up for auction in Melbourne – well above the long-term average.

"There's no question about it," Christopher says. "The group of buyers is very small and we are still seeing a lot of failed stock. We are expecting that prices will fall for the December quarter, and definitely going into next year, we will see more sellers than buyers."

"I don't think we're seeing a panic, but we're definitely heading into what I would call a housing downturn now."

Airey agrees, saying there will be very few buyers in the December-January period. "There won't be a lot of activity during that period at all."

The comments come as the capital cities recorded poor performances over the weekend, with clearance rates at 59% for Melbourne, according to the REIV, and in the low 50s according to Australian Property Monitors.

But Christopher says these figures may not be totally accurate. He points to the APM figures which show that almost half the auctions in Sydney and Melbourne went unreported. Taking those figures into account, he claims the auction clearance rate could be much lower.

"After you take the unreported results, it could be that clearance rates may even be in the low 40% mark.... these clearance rates spell a very weak market."

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Meanwhile APM says their figures are fine, and everything is fine. Performance is commensurate, nothing to see here, move along now.

Your attention is directed to the quote "I don't think we are seeing a panic"...I know I harp on about the "housing price collapse cascade model", but this is exactly perfect behaviour to fit the model.

ABARE-BRS forecasts export earnings for Australian mineral and energy commodities will increase by 29.9 per cent to around $179.9 billion in 2010–11, compared with $138.5 billion in 2009–10. The main contributing factors to this forecast are higher negotiated contract prices for coal and higher export shipments and prices for iron ore. ABARE-BRS forecasts that export earnings for farm commodities will be around $31.4 billion in 2010–11, slightly up from $28.5 billion in 2009–10.

http://www.innovation.gov.au/section/aboutdiisr/factsheets/pages/australia'sexportsfactsheet.aspx

Not all doom and gloom on the Aussie economy?

Thanks MR. ...... you got what I was eluding to on the Guvmint involvement once they open their sleepy eyes as to what is going on.

No doubt about it folks. Property is slanting sideways. Still waiting for the horrendous trainsmash predicted. Normal cycle as usual from what I can see. 1997 Asian economic crisis ring any bells? 1991 economic downturn anyone? 2001 building downturn (GST jitters) is still fresh in my memory. 1987 stockmarket crash?? HUH ??? Anybody?? Or is this the perfect storm that will decimate the housing industry and all that lays before it??

The two speed economy is the killer.

Maybe not everyone is as confident in the mining sector, I have seen a lot of houses listed in country towns that rent to the mines for sale on RE.. ..

Also hear the Chinese are trying to push the Iron Ore price down, cant remember where I read that.