The future of Australian property prices

[trainspotter]

Australand MD rob pradolin says 30% - 40% of unit developments wont go ahead by the devolpas maate

so all those with cash deposits have to sit out up to 5 years as the sunset clause keeps their cash locked in their greedy hands..

its looking real good now for some sort of a shake up

but as we all know, the usual suspects here will be rallying hard for this bubble to continue and maintain its all good..

imho when the property market corrects, it will impact on the latte drinkin developas and of course will send plenty of cafes broke as their client base can no longer afford to sip lattes all day and be a "developa maate" anymore..

victoria is going great with the falsified weekly auction figures grossly overestimating clearance rates with mysteriously disappearing results never being corrected until friday, long forgotten as everyone believes the false 61% clearance rates touted by the industry desperate to keep this bubble alive

who on earth is going to buy the 50% of the homes not sold at auction these past months?

its curious that the experts in the industry are seeing a different horizon to the rose coloured glass wearing developas, and the supporters of the bubble here on this forum.... in melbourne there are only 33,451 apartment up for sale right now to be built.. thats hardly a problem for the latte sippers i think.. lets see how quickly they clear that stock out..

all good... we will wait and see if 2011 will be a 20% increase in RE value for the developas or will the whole charade fall into a giant hole and a new reality come through for the bubble supporters..

i am tipping a rude awakening beckons..

Can I have whatever drugs you are on please. Care to name a date when the property market will "correct". If so, by how much do you believe in your esteemed opinion?

Coffee shops going broke because developers sit there sipping lattes ??? WTF ... no seriously WTF kind of mind altering substances are you on? Do you know anything about property developing?? They have no time to sit around drinking the caffeine char as they are too busy working/scrambling to get their developments to approval/construction/sale/completion levels.

As for the people to buy 50% of the properties not sold at auction ???? DERRRRRRRRRRRRRRRRRR ... why sell? Or if they do have to be sold if it is due to financial hardship (PPOR) then maybe they should be sold at a reasonable price rather than the ridiculous price the Real Estate Agent has placed on the property!!!!!! HEY ........ how about this for an idea !!!!!!! If they belong to a "property developer" then maybe they could be rented out to the people who prefer to float through life rather than put down some roots and grow an asset base.

You wrote "in melbourne there are only 33,451 apartment up for sale right now to be built" HUH ??!!??! Are they up for sale or are they to be built?? Your posts are frequently not making sense Agentm. Knock off the broad leaf entertainment plant and try some facts instead of opinions in future. You are polluting this thread with rubbish that you are passing off as reputable knowledge. Oh yeah ..... get some diction and grammar lessons or try to use the capital button when talking about oneself in the first person.

 

[againsthegrain]

trainspotter, calm down as bots would say its a beatiful day brother change a light bulb or two and watch the sun shine on all the beatiful creatures

 

[robots]

hello,

Oh gidday everybody, gee no wonder Oprah likes it so much here as she doesnt have to wear those bullet proof vests like in USA, sure is different

Amazing, oh well, look i do hope that people can accept others opinions and beliefs

Like

 

[wayneL]

hey have no time to sit around drinking the caffeine char as they are too busy working/scrambling to get their developments to approval/construction/sale/completion levels.

F### that!!!

What point is there to life if there is no time for a bloody espresso.

La Dolce Vita does not include running your @ss off.

 

[TabJockey]

Bit over the top Train, but I was thinking the same thing.

However I reckon Melbourne property prices will drop calendar year 2011. Maybe 10%, maybe 20%, but not more than that, and maybe not at all.

 

[Dowdy]

My mate is a Real Estate Agent. I saw him about a month ago and asked him how the market was and he said FLAT.

And just a few days ago I got a flyer in the mail from one of the local Real Estate Agents (Stockdale and Leggo) and they are offering a CHRISTMAS SPECIAL!!!

Free for sale board
Free internet marketing
Free professional photography


The market must be struggling if the real estate agents are giving all these BS specials to try and entice people to sell

 

[cutz]

F### that!!!

What point is there to life if there is no time for a bloody espresso.

La Dolce Vita does not include running your @ss off.

Right On.

 

[Agentm]

My mate is a Real Estate Agent. I saw him about a month ago and asked him how the market was and he said FLAT.

And just a few days ago I got a flyer in the mail from one of the local Real Estate Agents (Stockdale and Leggo) and they are offering a CHRISTMAS SPECIAL!!!

Free for sale board
Free internet marketing
Free professional photography


The market must be struggling if the real estate agents are giving all these BS specials to try and entice people to sell

FLAT white???

nice article from keen last night

"So I expect Australia to resume deleveraging during 2011, leading to recession-like conditions in sectors that are not major beneficiaries of the China Boom. We are already seeing the first casualty – retailers are discounting well before Christmas, rather than after it, and the “unexpected” drop in retail sales last month is something I expected to see when the First Home Vendors Boost wore off. Retailers’ pain will only increase through 2011.

My advices to the optimists is to take their eyes of China for a few minutes and take a good hard look at the direction credit aggregate data is moving – it’s down, and unfortunately that’s where two thirds of the Australia’s “three-speed economy” could well move next year.

Lastly, let’s also take a slightly longer term look at the relationship between our exports and imports. We are certainly benefiting from positive net exports right now. But history’s lesson is that that boost can disappear very quickly."

the pillar banks have been telling the senate inquiry they expect at least 100bp rise in the next 12 months that they will pass on.

australia is very much maxxed out in terms of debt to gdp imho

this could be problematic for the bubble to continue..

 

[trainspotter]

LOL@WayneL ....... nothing better than a Caffè macchiato.

Much better post thanks Agentm. Is that Steve Keen the same guy who lost the bet with Macquarie Bank Rory Robertson?? He walked to Mt Kosciousko as he predicted house prices in Australia would drop by 40% !!!!!!

They went up 20% instead. Yep ....... he knows what he is talking about !!

 

[Mr Z]

Now TS... you know being right and timing are two different things. Ask Warren Buffet about it... often right... often to early!

 

[satanoperca]

LOL@WayneL ....... nothing better than a Caffè macchiato.

Much better post thanks Agentm. Is that Steve Keen the same guy who lost the bet with Macquarie Bank Rory Robertson?? He walked to Mt Kosciousko as he predicted house prices in Australia would drop by 40% !!!!!!

They went up 20% instead. Yep ....... he knows what he is talking about !!

It would be naive to discredit his research & he only lost the first part of the bet and was man enough to admit that he was wrong and walk a hell of a long way.

Cheers

 

[damien275x]

Speaking hypothetically, what would be the impact on share prices if the housing market fell sharply? Would shares go down too, or would the realization that real estate investing is no longer the way to go bring people back to the share market, hence pushing prices UP?

 

[cutz]

Speaking hypothetically, what would be the impact on share prices if the housing market fell sharply? Would shares go down too, or would the realization that real estate investing is no longer the way to go bring people back to the share market, hence pushing prices UP?

For obvious reasons, banks and the housing market are closely linked.

 

[skcots]

Speaking hypothetically, what would be the impact on share prices if the housing market fell sharply? Would shares go down too, or would the realization that real estate investing is no longer the way to go bring people back to the share market, hence pushing prices UP?

Depends on how its handled. I imagine it would be very negative. A sharp fall on the financial sector would most likely carry on to every other sector, the dollar and the economy in general.

 

[explod]

Speaking hypothetically, what would be the impact on share prices if the housing market fell sharply? Would shares go down too, or would the realization that real estate investing is no longer the way to go bring people back to the share market, hence pushing prices UP?

Anecdotally down here on the Mornington Peninsula good quality investment properies rose around 30% in the 12 months following the GFC in 2008. Solid money is still moving into it here as we speak.

This was conservative smart money shifting out of stocks but importantly also, concern at the devaluation of paper money. It is for the same reason that we see gold on the rise, even against the Aussie dollar.

Investing in all clases and types of things requires in my view a total view of economics.

To answer your question directly shares related to property would go down. That could include a wide raft if mortgagees start going to the wall or stop spending. Stocks attached to necessities like food usually hold their own and funnily enough stocks associated with gambling usually go up.

 

[Mr Z]

Speaking hypothetically, what would be the impact on share prices if the housing market fell sharply? Would shares go down too, or would the realization that real estate investing is no longer the way to go bring people back to the share market, hence pushing prices UP?

Investment money would look for whatever is working, if that is stocks then they will do well. I don't think you can talk generically about stocks in this environment, certain stocks would benefit benefit from any flight from investment real estate while others, like the banks, should suffer. Real estate is only a good inflation hedge in times of mild inflation, if inflation rises rapidly then it tends to suffer basically because it is difficult for rents to keep up and in a time of rapidly rising prices the marginal income left to pay the mortgage diminishes. After all it is largely a debt dependent market, so you typically find that real estate lags in harsh inflations even though it is a tangible asset. Toward the end of the inflation cycles it seems to play catch up.

 

[indeck]

54.9% clearance rate in melb last weekend.

http://www.rs.realestate.com.au/cgi-bin/rsearch?a=ars

 

[FxTrader]

Anecdotally down here on the Mornington Peninsula good quality investment properies rose around 30% in the 12 months following the GFC in 2008. Solid money is still moving into it here as we speak.

This was conservative smart money shifting out of stocks but importantly also, concern at the devaluation of paper money.

Let's have a look at that "conservative smart money" for a moment. Let's say those smart punters pulled their money out of the stocks in 2008 to invest in property and achieved a 30% return a year later.

Hopefully those smart money property punters used what investment money they had left over and jumped back into the market in Mar09 when the All Ords sat at 3091. In Sept09 that index sat at 4653. The gain in the index alone over that 6 month period was 50%! However many individual stocks performed much better (e.g. Rio +70%) over that period. Of course the use of margin leverage would have seen profits in excess of 100% on many stocks.

Let's not even mention being long using CFDs, options or warrants over that period since the profits in those instuments would have been staggering given leverage of 50:1 to 100:1 depending on your risk profile and choice of instrument. Not a conservative investment of course.

Assuming that "smart money" did not liquidate their investment property purchases to buy back into the stock market (extremely likely), then just how smart was it actually?

 

[GumbyLearner]

Let's have a look at that "conservative smart money" for a moment. Let's say those smart punters pulled their money out of the stocks in 2008 to invest in property and achieved a 30% return a year later.

Hopefully those smart money property punters used what investment money they had left over and jumped back into the market in Mar09 when the All Ords sat at 3091. In Sept09 that index sat at 4653. The gain in the index alone over that period was 50%! However many individual stocks performed much better (e.g. Rio +70%) over that period. Of course the use of margin leverage

That's where you lost me

 

[FxTrader]

That's where you lost me

Use of a margin lending facility through your broker Gumby (otherwise known as trading on margin). On some stocks (e.g. big four banks) you can borrow up to 75% of the price of the stock towards the purchase. The size of this facility is limited by what you qualify for given your assets and income of course.