The future of Australian property prices

Even driving around my area, to the gym, pool, train station etc, it is really noticeable the number of for sale signs starting to go up. Things certainly aren't as rosy as the REIV would like us to believe.

Even Uncle Wayne and Auntie Julia have noticed cracks in the housing market, and have decided it needs reinforcement by increasing their investments in RMBS by $4bn to $20bn. Doesn't it feel great knowing that our taxpayer funds are in such good hands?

W. Swan released some more info on the reforms that will be coming our way soon

Under the government's reforms, home loan exit fees, which can run into the thousands, will be banned from July 1, 2011 and the Australian Competition and Consumer Commission will be given the power to investigate price collusion among banks.

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Will this include "break fees" and/or other penalties?

I had to refinanced a few years ago and it was $8k to break a previous 180k investment loan with RAMS. I would happily refinance away from BoQ in a heartbeat, but am reluctant to do so because of the penalties l will get slugged with. BoQ are way above the big 4 banks on their home loan rates, but l had no choice at the time l signed to them.

If REIV is claiming 60% clearance rates, you can be pretty sure that the true figure is well south of 40%, with unreported auctions, dweller bids, properties withdrawn, etc., all featuring.

I have just sold my home in the middle suburbs and my agent confirmed that things are slow and I was lucky to get a good price with only 1 offer despite 20 visits and having lowered my "asking price" to attract more interest. Other agents on commission confided that they may be looking for new jobs in the near future.

We are also seeing $1.5+million properties going for 30-40% less than the reserve, and similarly 10-20% less in the 800,000-1,000,000 range. Some of these sellers will now be in a severe debt situation, for which the banks are not entirely blameless.

Why are housing prices in a decline? One reaon has do with the actual or anticipated increase in the "cost of living", especialy with debates about bank rates and fees in the media just about every day. However, there are also real cost of living adjustments with increases in electricity prices coming in. So, housing is not as affordable and people are maintaining tight budgets.

Next, the toe-cutters are back in vogue in many organisations and so, people's jobs are not as secure, especially among middle managers. Senior execs won't give up their humble salaries and bonusus, and the people nearest the site of the actual generation of cash (e.g. miners, factory workers, tradesmen, front-line staff, etc) cannot be removed over night. So the logical decision is to cut a swathe through middle management, the very people who historically have supported housing prices, especially in the school-located middle suburbs.

Finally, there is an important distinction in housing. A "home type" property is one where the home suits the owner and there is less motivation or compulsion to sell, unless a developer comes along with an offer too good to refuse (it has happened to me only once in a lifetime and I made 100% over 1 year!). However, suck god luck is unlikely in a depressed climate unless his name is Bond and has an affection for yachts!

The other type of property is an investgment property, a stictly investment property let out for rental (currently, this favours renters), or an "owner-occupied lifestyle property" which offers much in excess of the owner's needs.

We see the latter developments advertised, usualy at the expensive end, and with an emphasis on "lifestyle". These are most sensitive to changes in the financial fortunes of the potential or actual owner.

Then, as in my case, I found that I was living in a "lifestyle property by default", with 2 bedfooms, a formal lounge and a formal dining toom, which I never used.

So I decided to sell now and rent over the next 12 months while I observe the market. But even then, I will probably buy a smaller property more suited to my needs, unless I can find a real bargain.

I should quickly mention several international contributors to volatility in confidence which feeds through to people's concerns about their future lives and pushing them to more cautiom, a culture of thrift, shopping for cheaper goods, etc, when it comes to spending large money.

The US is currently printing money, with the implication of rising inflation rates and a debased currency; the Europeans are catching a similar disease, called "bailing out the PIGS" using their European reserves, but raising the question of who bails out Europe when those reseves evaporate?; the nice North Koreans are again demonstrating their friendship and solidarity with the South; and the effect of US behaviour is to export inflation to China - as China is now paying with debased US dollars - while China is already facing internal social crises due to food shortages, low incomes and increasing prices, plus having just gone through a period of historic property speculation, whose coming crunch will reverberate across the world.

I just thought it useful to add those happy ideas to provide background to what is or may happen to housing prices and the cost of living in Australia. Even BHP will not be immune if - for a period - China savages its iron ore imports. Expect to see some bargains on the stock markets as share prices fall, not due to poor fundamentals, but a slowing in broker-expected growth rates.

socrates44


Join Date: Dec 2010
Posts: 1 Re: The future of Australian property prices

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If REIV is claiming 60% clearance rates, you can be pretty sure that the true figure is well south of 40%, with unreported auctions, dweller bids, properties withdrawn, etc., all featuring...

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Geeeeesssszzz

Our little botty will not like this.

I don't think he likes philosphers either,

yor'e infor rit

hello,

yeah its tuff C-unit,

i have had to deal with taxpayer funds going into wasteful areas like farming, manufacturing, motor industry, textiles, Oprah Winifrey for many many years

just amazing, i say it again, isnt that what you all want, the socialist model, equality for all, and surely RE is part of the community

but not sure if you REALLY want the bludger in the office getting the same $ as you, you know the guy or girl going out for 20 smokes a day, or the one sitting on the toilet for an hour at a time,

oh well

were you a corrupt copper Explod?

thankyou
professor robots

robots said:

hello,

oh well

were you a corrupt copper Explod?

thankyou
professor robots

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Of course botty, you know how it is, parties, wonderfull BLF demonstrations, sunshine and lollypops.

Ran foul big time in aiding and abbetting the cause of homeless youth and organising rehabilitative interactives with junior constables and drop outs.

Our ole mate Jeff Kennet could not see it as a joke so they had to let me go.

Oh well, cast away down here on the Mornington Peninsula where I can do no harm to anyone.

Onya botty, what a great ole pal. Keep those numbers coming, a bit late last week, in fact I did not see yours. Encouraging and working through others is a wonderful thing.

robots said:

hello,

i have had to deal with taxpayer funds going into wasteful areas like farming, manufacturing, motor industry, textiles, Oprah Winifrey for many many years

professor robots

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Think you missed the most important waste of tax payers money :

FHBG & RMBS

Cheers

I apologise if I offend anyone, but I thought this might be an intelligent forum.

Instead, this thread seems populated by incestuous nincompoops!

Therefore can I ask those who have nothing of substance to say, to say nothing. Better there is silence than random noise.

socrates44 said:

I apologise if I offend anyone, but I thought this might be an intelligent forum.

Instead, this thread seems populated by incestuous nincompoops!

Therefore can I ask those who have nothing of substance to say, to say nothing. Better there is silence than random noise.

Click to expand...

THIS IS THE INTERNETS

socrates44 said:

I apologise if I offend anyone, but I thought this might be an intelligent forum.

Instead, this thread seems populated by incestuous nincompoops!

Therefore can I ask those who have nothing of substance to say, to say nothing. Better there is silence than random noise.

Click to expand...

Your posts are very much appreciated by some, so persist with the good work.

Vested interests trying to railroad constructive discussion need to be dealt with on the spot.

robots said:

hello,

yeah its tuff C-unit,

i have had to deal with taxpayer funds going into wasteful areas like farming, manufacturing, motor industry, textiles, Oprah Winifrey for many many years

just amazing, i say it again, isnt that what you all want, the socialist model, equality for all, and surely RE is part of the community

but not sure if you REALLY want the bludger in the office getting the same $ as you, you know the guy or girl going out for 20 smokes a day, or the one sitting on the toilet for an hour at a time,

oh well

were you a corrupt copper Explod?

thankyou
professor robots

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Wasteful areas like farming! We have to eat!

my view on the future of australian property prices remains bearish

china is the key for australia, i think the previous australian leaders have made china the most critical and single most important market, and to the detriment of all other trading partners and markets.

currently only 5% of gdp in china is exports

60% + of GDP is construction

imho the 12 to 15 million residential units being built in 2011 in china, at prices the same as the USA, will just add to "empty cities" that china has already, and only add to the problems they face. their pozi real estate scams continue unabated


you have south china shopping mall ... empty..



"The South China Mall, which opened with great fanfare in 2005, is not just the world’s largest. With fewer than a dozen stores scattered through a space designed to house 1,500, it is also the world’s emptiest – a dusty, decrepit complex of buildings marked by peeling paint, dead light bulbs, and dismembered mannequins. “They set out to be the biggest, and hoped that being the biggest would be the attracting factor,” says David Hand, a retail analyst at Jones Lang LaSalle in Beijing, who has followed the project. “It hasn’t delivered.” "







in the southwest there is Chenggong

a vast city of empty buildings




right now china is pressing ahead with further expansions, more empty buildings, more retail and commercial constructions, and all in a failing global economy

how long can china afford to continue this way?

bubbles are bubbles.. we all are certain china is the one thing that kept the majority of the GFC pressures off the australian economy, which boomed with the massive demand china has put out on construction..

chinese consumption to gdp has declined from 40% to 35% over the past 10 years.. their bubble is entirely construction based

lets see how long the amazing china bubble continues and whether 2011 will remain as prosperous for the bubble in australia.

enjoy the bubbles while they last.. the chinese themselves think their real estate is overvalued by some 70% in the major cities..

of course we have no bubble in australia.. lol

Thanks for the post Agentm. Very interesting.

Read through todays Melbourne Herald Sun at the coffee strip from cover to cover and for the first time in my memory I did not see one item on the property market.

Similar to this thread.

For those enticed into the market at the top I feel very sorry.

A house near to me in Mount Marthat changed hands for $730,000 Four years ago they purchased it for $210,000. It was just a holiday shack, spent $70,000 on an upgrade including an extension with some new gravel in the drive. And good luck to them.

A 400 square metre vacant block at the rear (subdivision by owners for a bit of cash) and with side drive entrance for $470,000 two weeks ago.

We have insanity in this market IMHO.

australia is different.. lol



its a religion!!

very nice work.

socrates44 said:

I apologise if I offend anyone, but I thought this might be an intelligent forum.

Instead, this thread seems populated by incestuous nincompoops!

Therefore can I ask those who have nothing of substance to say, to say nothing. Better there is silence than random noise.

Click to expand...

Residential property is typically slow moving in comparison to other investment markets so, often, there is much less to say.

I appreciated your contribution and read it in full.

Great first post socrates44. Welcome to ASF where the incestuous nincompoops dance with gay abandon with the lunatics on the grass. I especially liked this part of your post:-

"unless a developer comes along with an offer too good to refuse (it has happened to me only once in a lifetime and I made 100% over 1 year!). "

I concur with the rest of your post as well.

Agentm said:

australia is different.. lol



its a religion!!

very nice work.

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I saw this the other day - gold!

hello,

good evening everyone, well great day, getting a bit closer to christmas

socrates44 said:

I apologise if I offend anyone, but I thought this might be an intelligent forum.

Instead, this thread seems populated by incestuous nincompoops!

Therefore can I ask those who have nothing of substance to say, to say nothing. Better there is silence than random noise.

Click to expand...

explod said:

Your posts are very much appreciated by some, so persist with the good work.

Vested interests trying to railroad constructive discussion need to be dealt with on the spot.

Click to expand...

hehehehehehe, like how funny are these 2 above posts, nunthewiser has gone over this time and time again, respect other peoples opinions and beliefs

you could be spot on Explod, i reckon the thread should be around 100 posters less if things were dealt out like you reckon, good stuff

did you deal out a bit of Biff on the spot when you in the uniform Explod

6yrs going on strong socrates44,

oh well

thankyou
professor robots

hello,

yeah welcome Socrates44, this was an early post which lists a few of the intelligient members of ASF, look out for any post by these Kings man

robots said:

hello,

spot on, thats a common theme with most of the posters in this thread, its all about me

then you have the likes of Professor Robots, Kincella, Beej, Trainspotter who share their ideology, visions, skills, investing experience with the goal of assisting others in life

i know the above have achieved some great results with fellow brothers

thankyou
professor robots

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thankyou
professor robots