The future of Australian property prices

[robots]

hello,

yes, just people securing a rare commodity and coughing up the $ required to get your name on the title

the LVR's, wage to price ratio's are no different to 10yrs ago, links are always thrown up to indicate houses can be bought to satisfy this apparent birth right

its all hype and about bringing down fellow man

thanks
robots

 

[So_Cynical]

hello,

yes, just people securing a rare commodity and coughing up the $ required to get your name on the title

the LVR's, wage to price ratio's are no different to 10yrs ago, links are always thrown up to indicate houses can be bought to satisfy this apparent birth right

its all hype and about bringing down fellow man

thanks
robots

Robots...Just for the record are there any negatives at all for Australian residential property investors? can anything go wrong? are there any negatives?

Is an investment in Australian residential property a risk free investment?

 

[robots]

hello,

apologies for the delay had to complete the dishes

no, no negatives for Aussie residential property

there are issues or shall we call them "micro" factors that may determine outcomes for different properties

paradise man

thankyou
robots

 

[UBIQUITOUS]

hello,



no, no negatives for Aussie residential property



thankyou
robots

BULL!!!
Of course I mean to say that you are Bullish and no way full of bull. Yes thats definitely what I mean. There is no insulting of other points of views here no matter how wrong

 

[satanoperca]

its all hype and about bringing down fellow man

A little bit dramatic don't you think

there are issues or shall we call them "micro" factors that may determine outcomes for different properties

& markets which is what the discussion is often about.

Housing commitment starts up is fantastic news whether you are bear or bull.

Adding to the supply is always good news but at what cost present and future is debatable.

Cheers

 

[Dowdy]

BULL!!!
Of course I mean to say that you are Bullish and no way full of bull. Yes thats definitely what I mean. There is no insulting of other points of views here no matter how wrong

Well, the guy is a robot, after all. Should probably think about upgrading his cpu

 

[Macquack]

Housing commitment starts up is fantastic news whether you are bear or bull.

Cheers

Satanoperca, I dont know about that. Some of the permabulls around here would probable prefer if not another single dwelling were constructed in Australia. That way housing prices would keep rising forever. I think this concept is referred to by robots as "paradise", man.

 

[Beej]

Thanks Beej

Some interesting reading on that link and googling Dr David Gruen the chart author.

Here,s another one of his charts (and comment) from this document.

http://www.treasury.gov.au/document...s_Economists_Annual_Forecasting_Conf_2009.pdf

....

So it would seem obvious that its these people, the recent first home owners who are the most at risk when it comes to falling house prices, and i imagine its also obvious that its these people being forced to sell that would drive the overall market lower.

Because people not selling or under any pressure to sell have little or no impact on prices, as we recently saw in the stock market crash...Now if we consider for just a moment that with interest rates raising and the economy hitting a short term peak, if there's any broad event that gives us a little knock backward and these FHO start selling and have to sell at a loss.

Then its easy to see how the banks will just stop any marginal lending and that will accelerate the fall...because the recent rises are unquestionably based on handouts and easyish credit (rising, holding prices)

No matter how you try and dress up the recent housing debt numbers...its still a matter of you just putting a positive spin on a negative (for housing) event....there's just no way around that.IMO

All fair enough comments, and the FHB surge of the past year is certainly clear - the only point I disagree with you on is the likely impact on prices in your scenario of rising interest rates.

Firstly, interest rates, while likey to rise yes, are probably only going to rise fairly slowly from here, maybe 1% in the next year is being touted, and what happens after that will really depend greatly on the global economy. Remember only 18 months ago we had mortgage rates just a bee's dick under 10%, compared to ~6.5% now, and maybe 7.5% by late next year. So I don't think those levels will be enough to start a wave of forced selling, even on the FHB margins. As others have stated the banks have been stricter in their lending criteria in the past 18 months compared to the prior 5 years.

Secondly, we have seen what happens already when high LVR FHBs get squeezed by rising interest rates - it happened in western and south western Sydney through 05/06/07. What happens is prices in the lower ranges come off a bit, so I would agree that could happen next couple of years for the same reasons, if rates got high enough fast enough (say 8%+ variable rates). However the mid range and top end kept steaming along nicely, as FHB forced sellers do not drive the market further up the ladder - they are selling to get out, so the fact they got less money does not effect prices in the next tier. So what happens is the "gap" get's stretched. Now in 08, the top end and mid range properties were hit with bigger price falls than the low end, and then the low end rose strongly due to FHB boost/low interest rate driven demand etc. So the "gap" narrowed. In your scenario, IMO all that will happen is that gap will widen again - so it really depends what price range you are looking at as to whether you would benefit or not from that rising interest rates/recent FHB forced selling scenario. - which like I said I think is unlikely to occur in the next year anyway.

My opinion anyway! Good discussion.

Cheers,

Beej

 

[robots]

hello,

as all the noise continues on, please landlords keep increasing those rents collectively

3-4% per annum at least and if someone wants to re-sign lease get at least a 10% rise

its all about getting a return on your investment

the new property thread is going really well, great stuff

thankyou
robots

 

[DB008]

I personally think that it's good to have a "mix" of both property and shares.
If l really wanted to toot my horn, l would be bragging how I'm up over 110% on RIO at the moment and 1 of my investment properties is also up around 80% too, all bought within 5 years.
To pick out 1 single spec stock and say, yeah, l bought BCC 2 months ago at 4cents and sold at 16cents, IMO, is just stupid. That could have easily have just gone the other way and ended up with nothing. It would be like buying a cardboard box and selling it for a huge 400% profit. I hear so many people on these forums saying, yeah, l'm up 100% on this and 120% on this. Ok, on how much capital? I think that if your serious about shares, you need at least 100k-200k in something and a decent return, like 10%p.a. to keep up with a property investment.

The biggest sticking point with shares, is volatility! ANZ compiled data from the last 20+ years on property and shares. They both came to within the same returns over a time period, but with a volatility factor put in, property won, hands down. Some people like to buy an investment and can sleep better at night knowing that it ain't going to crumble to nothing when they wake up in the morning, which shares can easily do. But, therein lie the big opportunities too.
Now, using the above example, of BCC, l know people who bought units in Cottesloe, W.A, beach front in early 2000 for around 100k, now worth over a million, and not to mention receiving rent in the mean time.

I've heard arguments on both sides of the fence;
1) Friend of mine bought shares, he's down 30% at the moment
2) Friend bought shares, he's up over 100%
3) Friend got a unit, he's down 15%
4) Friend got a house, he's up 75%

The property was in different parts of Australia, much like the shares, which were in different sectors.

What do l think personally about property prices. Sydney+Melbourne are going to surge because they've been stagnant for the last 5 years and there isn't a lot of construction happening. With demand rising, and not much supply entering the market, prices only have 1 way to go, up.
Brisbane l think will have a little boom like W.A. did because there is a lot of natural resource+LNG projects that are starting to take shape in the next few years.

The housing council of Australia estimates that we need to build something like 150,000 houses a year and we are only building something like 120,000. So, a little bit of a shortfall at the moment.

Just my thoughts, please don't kill me.

 

[UBIQUITOUS]

To pick out 1 single spec stock and say, yeah, l bought BCC 2 months ago at 4cents and sold at 16cents, IMO, is just stupid.

Read my post just after that one and then judge whether my post is stupid or not (the one where I explain that I was making a hypothetical point). Besides, I think it is extremely naive, but common, to class some stocks as speculative and other not. Is there no specuation with RIO? Are investors, such as yourself, not speculating that China's demand for Iron will continue?

What do l think personally about property prices. Sydney+Melbourne are going to surge because they've been stagnant for the last 5 years

I don't usually lol....but just for you....LOL!!!! Can this technique be applied to all investments? or just real estate????

 

[DB008]

Read my post just after that one and then judge whether my post is stupid or not (the one where I explain that I was making a hypothetical point). Besides, I think it is extremely naive, but common, to class some stocks as speculative and other not. Is there no specuation with RIO? Are investors, such as yourself, not speculating that China's demand for Iron will continue?
I don't usually lol....but just for you....LOL!!!! Can this technique be applied to all investments? or just real estate????

Don't be so hard on yourself. I was just using BCC as an example too. I did read your next post and did in fact understand that it was just an example.
It's pretty naive to "LOL" on an issue about property considering some parts of the East Coast have NOT moved in a very long time. Sooner or later, they have to move, oh yeah, that's right, they are starting to move... Let's just wait and see what happens instead of turning this into a "I said, he said/tit 4 tat" game.

 

[nth brisbanite]

I personally think that it's good to have a "mix" of both property and shares.

The biggest sticking point with shares, is volatility!

Just my thoughts, please don't kill me.

I've been following this thread for a long time as I am predominantly a property investor although I have few bucks in shares. To do well in shares, you either have to be lucky or put a lot of work into it and even then, there is no guarantee that you'll do well.

I've found that by being a buy and hold investor :in both quality shares and well located houses (not apartments) that I've been able to have a balanced life. I have a job that I enjoy, sleep well at night, have a family life and pursue other interests.

DB008, your post made a lot of sense and no, I won't kill you

 

[kincella]

invest $10 each in the latest mags...Investment Property Jan 2010, and Property Investor Jan 2010...for the FHB...get Your Mortgage....$10...

all 3 have the hottest suburbs for 2010... between 20-40 Australia wide....
stacks of info and tips for all...
++++ including the $100,000 NRAS grants...from the govt for investors in new homes, yes thats tax free money, returned to you over 10 years, per house... wow....its worth looking into....

and then there are the capital growth returns per suburb,,,,some are returning 14% pa and over 40% + in 3 years....

happy investing

 

[Gerkin]

What do l think personally about property prices. Sydney+Melbourne are going to surge because they've been stagnant for the last 5 years and there isn't a lot of construction happening.

No disrespect, but have you seen Melbournes property prices over the past 5 years?? Stagnant, I think not.

 

[So_Cynical]

No disrespect, but have you seen Melbournes property prices over the past 5 years?? Stagnant, I think not.

And the 10 years before that?...Melb is the Aussie capital of stagnant.

 

[Gerkin]

And the 10 years before that?...Melb is the Aussie capital of stagnant.

Over 15 years, many suburbs are about 4 x growth and more. Many investors only expect prices to doubles every 10 years, they've had a good run.

 

[Fleeta]

What do l think personally about property prices. Sydney+Melbourne are going to surge because they've been stagnant for the last 5 years and there isn't a lot of construction happening. With demand rising, and not much supply entering the market, prices only have 1 way to go, up.

I bought a house in Melbourne in Jan 2004 for $420k and sold for $520k in July2007...and its prob worth $570k now. Please explain how is that a stagnent market???? nice 3 bedroom house in inner city melbourne now hard to find for under $1m - I can't see why it would keep going up unless we had some serious wage inflation. There are plenty of housing developments out west of Melbourne. I think it is Chinese investors pushing prices up and when the banks start to reign in the credit, not sure where the next greater fools will come from.

 

[MACCA350]

Sydney+Melbourne are going to surge because they've been stagnant for the last 5 years

That's a 5 year chart for Melbourne median..........Up $100,000 almost 30% including the GFC...........Up over 16% in the last 6 months...........not what I'd call stagnant, looks a tad volatile over the last 3 years.

cheers

 

[kincella]

whats old is new again....recall following the year 2000....they did it then, they will do it again...
some investors have had enough of the global financial con jobs, so dont count on a reprieve after the FHB grant reduces after today.....in 2010 it will be investors returning to the markets, add the foreign investors for competition....
I note Porter Davis homes have $43000 for FHB's....enjoy
..................................
Punters prefer property and shun shares
By Sara Rich From: The Australian December 30, 2009 11:22AM

Shares and managed funds are the least popular investments, a new survey shows.
AUSTRALIANS' love affair with property shows no signs of faltering, with 74 per cent believing now is a good time to invest in bricks and mortar.

According to the latest Citibank Australian Wealth Report, most people feel an investment property is the best place to park their money, followed by a savings account, fixed-term deposit or cash management trust (68 per cent) and superannuation (63 per cent),
Shares and managed funds were the least popular (less than 50 per cent). Citibank's survey was conducted by Newspoll, with a national sample of 1085 people aged 25 and over

http://www.news.com.au/money/punters-prefer-property-and-shun-shares/story-e6frfmdr-1225814658194