The future of Australian property prices

[cutz]

SM Junkie,

Do the claims of skyrocketed rent back in 85 only come from the property industry ?

Do you have ABS data that can support your claim ?

I was too young to remember what impact changes to negative gearing had back then but articles I have come across mention that rent was relatively flat after 85 and changes were abolished in 87 due to property industry lobbying.

 

[SM Junkie]

Cutz, I haven't looked that far into it. Just picked up on FxTrader's post that it was reintroduced, which I thought was interesting, then just went looking for some more info. Not my claims, just quoted some info that I came across.

I've noticed there is a thread already on Abolishing Negative Gearning. Had a read of that, Couldn't get much from that discussion.

 

[FxTrader]

Interesting argument and discussion. So why was negative gearing reintroduced when the research showed its removal didn't impact on rent.

"The Hawke Government abolished negative gearing for property in 1985 only to have it reinstated in 1987. During that period rents increased by 57.5% in Sydney, by 38.2% in Perth and by 32.0% in Brisbane. At the same time building approvals fell by 13.8%,"

In 1985 the Hawke Government attempted to try and abolish Negative Gearing. It meant that people taking positive steps to fund their retirement were unable to recoup any losses and were left out in the dark.

As a result, the rental market virtually closed down! Rents soared, and the cost of renting was unachievable. Investors started dumping their properties and we were faced with a social disaster.

No doubt the abrupt termination of government subsidy (like taking heroin away from a junkie) would cause a great deal of short term pain and disruption. That's why it's so politically difficult to implement now, much more so than in 1985. IMO, the government should introduce limits on the negative gearing subsidy (like they do with other subsidy programs) instead of abolishing it outright. Instead of an open ended system where there is no distinction between an investor with 1 investment property or 100, why not say place a limit on the number of investment properties that can qualify for the subsidy.

As an investor, I know how to exploit govt tax subsidy to maximum advantage and have done so on many occasions. However, in doing so I must acknowledge that other Australian taxpayers are footing the bill for my speculation. I'm also certain that encouraging such a large proportion of private savings into property speculation is not putting such savings to their most productive use in the economy and potentially over exposes Australian's savings to one largely unproductive asset class, property. As aptly demonstrated in other countries today, reversion to the mean after a property bubble can have terrible financial consequences for a society.

 

[robots]

SM Junkie,

Do the claims of skyrocketed rent back in 85 only come from the property industry ?

Do you have ABS data that can support your claim ?

I was too young to remember what impact changes to negative gearing had back then but articles I have come across mention that rent was relatively flat after 85 and changes were abolished in 87 due to property industry lobbying.

hello,

oh yeah, here we go the usual spam sneaked in again

listen go and buy a house and live in the US, UK, Spain or Ireland if its soooo good as you buy a joint for 40k, get a flight over easy

if you want to live here in paradise you can pay the dollars to the ones who hold the title, dont like that then rent a place

the first thing that needs abolishing is stamp duty, cut stamp duty and cut all the grants and bonuses then it will be a level playing field, at this point the grant just offsets the stamp duty a little

stop underestimating the importance of the property market in our economy, most just dont like property so they believe its unproductive ( but really its because they dont earn the $ to buy a home even with how affordable they are)

thankyou
professor robots

 

[robots]

hello,

HEY HEY HEY HEY:

http://www.heraldsun.com.au/news/vi...he-way-on-houses/story-e6frf7kx-1225979744423

oh well looks as though top still going, oh well

surely its time these office flogs who keep posting were given a holiday and my requirements to post in this thread are introduced ASAP

its just tough having to deal with all the spam that gets posted on this thread throughout the day

oh well Happy New Year

thankyou
Professor Robots No. 1

ps. hang on, i know we going to get a well written post by Explod now which will end with in my view property prices are on the way down

 

[FxTrader]

stop underestimating the importance of the property market in our economy, most just dont like property so they believe its unproductive ( but really its because they dont earn the $ to buy a home even with how affordable they are)

Just a few sweeping generalizations backed up with no evidence there robots (that fits in with my definition of spam). Since I am a property investor I like property just fine thanks. Yes, the property market is important to the economy, far more important than it should be. Building new houses does provide economic activity but most of the housing finance today is for existing dwellings. Property speculation by investors buying existing property is largely an unproductive activity of very little benefit to the economy, that's the point.

Since we are tossing in articles here, have a read of this one bots...

http://www.theaustralian.com.au/news/nation/house-prices-tipped-to-slip/story-e6frg6nf-1225979670600

 

[electronicmaster]

hello,

HEY HEY HEY HEY:

http://www.heraldsun.com.au/news/vi...he-way-on-houses/story-e6frf7kx-1225979744423

oh well looks as though top still going, oh well

surely its time these office flogs who keep posting were given a holiday and my requirements to post in this thread are introduced ASAP

its just tough having to deal with all the spam that gets posted on this thread throughout the day

oh well Happy New Year

thankyou
Professor Robots No. 1

ps. hang on, i know we going to get a well written post by Explod now which will end with in my view property prices are on the way down

Fantastic Robots

Keep selling while you can :bananasmi


Those ponzi journalists just keep on pumping


I have another source that states this:-

Australian home prices in major cities dipped in November, from October, as
higher mortgage rates took some further heat out of the housing market.
Figures from property consultant RP Data-Rismark showed home prices eased
a seasonally adjusted 0.2 percent in November, from October when they rose 0.3
percent. Prices were still up 5.2 percent on November last year, though that was
slowest pace of annual growth in 17 months.
Home prices outside the major cities dipped by 0.1 percent in November,
compared to October when they rose 0.2 percent. Annual home price growth slowed to
2.4 percent.
The Reserve Bank of Australia (RBA) lifted its cash rate by 25 basis points to
4.75 percent early in November, and the commercial banks raised their mortgage rates
by more.
The central bank has lifted its cash rate by 175 basis points since October
2009 in part to restrain a surge in home prices.

Oh yes The International Forecaster

 

[Vicki]

Hi Robots,
Had a quick look at that site & it does indeed appear property rose .5% or some such.
Also, I managed to find these comments, [below] on the same page.

Rismark International joint managing director Ben Skilbeck forecast weakness in home prices in the months ahead due to the impact of a rise in mortgage interest rates after the Reserve Bank of Australia raised the cash rate on Melbourne Cup Day.



There is also a build-up of properties for sale, with 23 per cent more homes available for sale now than there were were 12 months ago.

``The escalation in stock levels is due to the combination of a higher than normal number of homes being added to the market at a time when market activity is slowing,'' Mr Lawless said.

``The result has been a fairly rapid increase in the number of homes for sale.

``That's great news for buyers who can take their pick and negotiate hard, but for sellers this is far from an ideal time to be listing your home.''


But who knows what to believe?

Affordable?...What would be considered the average household income p/w?
Also, what would be considered the average p&I mortgage payment on say 400k p/w?

Any people reading that know, could possibly give some figures.

Vicki

 

[FxTrader]

Affordable?...What would be considered the average household income p/w? Also, what would be considered the average p&I mortgage payment on say 400k p/w?

Vicki, have you read of the Demographia survey on housing affordability published last year?

http://www.demographia.com/dhi.pdf

Have a look at tables ES-3 and ES-4. Australia has 12 of the top 20 most unafforadable housing markets in the survey and 3 out of the top 4. As a nation, Australia ranks as the most unaffordable housing market in the survey by a significant margin and that was a year ago! How long can this continue I wonder.

 

[againsthegrain]

When this thread opened bears were highly outnumbered by bulls, seems like the situation has totally reversed now.

If I was to use the posters and their views on this thread as a random sample of the population and their views on Australian property one could come to the conclusion that Au property market is no longer a bull market.

Affordability, rates, clearance rates, living in paradise all make for good speculative points in the overall theory. However it is quiet clear that property has now became a long term play at best for those wanting to make money on it.

A very large number of people who bought into property in the last 1 - 2 years were those that had no clue about the economy, inflation rates etc They bought in on the media hype and word of mouth. Yes just like the market driven by emotional factors.

Once the promise of guaranteed per ann value increase is blown away, more and more current affair stories about struggling Aussies not being able to afford "the dream" the same motivation that made the sheep follow the pack will make them exit with the pack. Scary thought buying on top is a deadly game especially if you are locked in for 30yrs.

Alot of naive fhob are about to get screwed over and get a reality shock. Robot if you bought your ip last year you will not be seeing quick riches anytime soon.
You can sit on anything long enough to see its value rise up again but at what opportunity cost?

You haven't been drinking lates lately, putting money away for the coming rate raises?

 

[TabJockey]

This may be a scary thought, but there is no universal law that states that land in and around a major city has to be affordable to the average person. There is a mania with home ownership in Australia and the USA that borders on irrational.

It is blindly encouraged in government policy and social society. Im not saying this encouragement is wrong, it has definately been proven right in Australia over the last 20 years, but you would be foolish to believe that it will always be this way.

People believe that you should be able to afford your own home if you work hard enough, which can be a great goal to have but is not the be all and end all of financial security its often made out to be.

What it is, is an easy to understand all encompassing passive investment strategy for the average family. Subsidised by the government and encouraged by your peers.

Buy your house, forget about dealing with a land lord, pay your mortgage and one day you will collect a massive sum of money on which you will pay 0% tax.

Sounds like an excellent plan, but something about the whole situation makes me feel uneasy.

 

[robots]

When this thread opened bears were highly outnumbered by bulls, seems like the situation has totally reversed now.

If I was to use the posters and their views on this thread as a random sample of the population and their views on Australian property one could come to the conclusion that Au property market is no longer a bull market.

Affordability, rates, clearance rates, living in paradise all make for good speculative points in the overall theory. However it is quiet clear that property has now became a long term play at best for those wanting to make money on it.

A very large number of people who bought into property in the last 1 - 2 years were those that had no clue about the economy, inflation rates etc They bought in on the media hype and word of mouth. Yes just like the market driven by emotional factors.

Once the promise of guaranteed per ann value increase is blown away, more and more current affair stories about struggling Aussies not being able to afford "the dream" the same motivation that made the sheep follow the pack will make them exit with the pack. Scary thought buying on top is a deadly game especially if you are locked in for 30yrs.

Alot of naive fhob are about to get screwed over and get a reality shock. Robot if you bought your ip last year you will not be seeing quick riches anytime soon.
You can sit on anything long enough to see its value rise up again but at what opportunity cost?

You haven't been drinking lates lately, putting money away for the coming rate raises?

hello,

yes look at what the likes of Debtdeflation, Jenman, Demographia and all the other blogs have "COST" people over the past 5yrs, mega coin

no worries

thankyou
professor robots

 

[nukz]

Isn't there a bubble mentality going on here? in that when in a bubble one does not see it?

This was the same for people living in Canada whos property have just started dropping as well. The reason i used Canada as a example is they are almost identical to Australia and when they start to drop we will follow very soon.

 

[FxTrader]

yes look at what the likes of Debtdeflation, Jenman, Demographia and all the other blogs have "COST" people over the past 5yrs, mega coin

So analysing trends and doing statistical and comparative analysis is just a waste of time bots? I recall that the likes of Peter Schiff in the U.S. were scoffed at and derided for declaring the U.S. housing market was a bubble ready to crash using similar analysis only to be proven correct. Those who listened to his and others advice and analysis not only saved themselves "mega coin" but can now repurchase property at a substantial discount and are probably not collecting food stamps or bankrupt.

My sister and brother in law in Hawaii thought as you do, property is a safe investment and values will just keep rising as they have in the past (normalcy bias). They could have sold their house for a profit a year after they purchased it. Now they have stopped making payments and are just waiting for the eviction notice. Please don't waste time telling me how debt laden Australia is different, a special case, reversion to the mean just won't occur here and statistics on affordability and debt mean nothing.

As for Demographia and Debtdeflation, why not enlighten everyone here as to how their extensive analysis is flawed.

Of course other property investors need blindfolded property bulls like you to keep buying into IP while we move to reduce exposure to what is now a risky asset class. Keep holding onto your investment properties for dear life bots and spreading the message of eternal profit and reward for property investors so I and others still have eager investors to sell to.

 

[robots]

hello,

gee that first paragraph is pretty much the reverse of what happened in australia, true visionaries (although not many of them around) alluded to how beautiful australia is and the $ flowed in, amazing

the situation in US is also pretty much as predicted, people woke up to the pathetic joint it is, you need a 9mm just make it out alive from a trip to Walmart, stupidity (go back to 2004 when the original property thread started, another one right)

gee, i need an investment newsletter to sell to all the sheeple hey Explod! no. instead log into ASF for the free advice, helping out fellow man

thankyou
professor robots

 

[Dowdy]

hello,

gee that first paragraph is pretty much the reverse of what happened in australia, true visionaries (although not many of them around) alluded to how beautiful australia is and the $ flowed in, amazing

the situation in US is also pretty much as predicted, people woke up to the pathetic joint it is, you need a 9mm just make it out alive from a trip to Walmart, stupidity (go back to 2004 when the original property thread started, another one right)

gee, i need an investment newsletter to sell to all the sheeple hey Explod! no. instead log into ASF for the free advice, helping out fellow man

thankyou
professor robots

Not to rein in on your paradise bot, but didn't you say you were bashed a few months ago and has made you scared ever since......doesn't sound like paradise to me.


And speaking of the US - I walked down to the local Walmart nearly every day in my last week in the USA past the so called bad neighborhood that my aunty told me to stay away from, at sometimes 9pm at night, by myself and never felt my life threatened. Actually it was quite a nice walk since it was so quiet and not hearing a single hoon on the road

 

[FxTrader]

gee that first paragraph is pretty much the reverse of what happened in australia, true visionaries (although not many of them around) alluded to how beautiful australia is and the $ flowed in, amazing

And the money will just keep flowing into paradise will it bots? Nothing wrong with affordability or debt, no bubble here. All those foreign investors buying houses here, keeping them empty and counting on endless speculation to keep prices high are true visionaries?

the situation in US is also pretty much as predicted, people woke up to the pathetic joint it is, you need a 9mm just make it out alive from a trip to Walmart, stupidity (go back to 2004 when the original property thread started, another one right)

Predicted by who bots, those property bears you don't listen to? Your detailed analysis with respect to the U.S. property market is quite thought provoking and balanced! LOL So Hawaii is a "pathetic joint" is it? Clearly you have never been there.

As usual here, you refuse to address the tough questions and instead point to the past as if it will always apply to the future. Keep buying into the bubble bots, it's a sure thing.

 

[indeck]

http://www.finnewsnetwork.com.au/Display.aspx?Site=FNN02

First time I can recall hearing someone from RP data acknowledging prices will likely decline or stay stagnant for over a year.

 

[c-unit]

http://www.finnewsnetwork.com.au/Display.aspx?Site=FNN02

First time I can recall hearing someone from RP data acknowledging prices will likely decline or stay stagnant for over a year.

No offense to the host, but she has to be the worst presenter/reader I have seen!

Interesting video though thanks for the post.

 

[Beej]

When this thread opened bears were highly outnumbered by bulls, seems like the situation has totally reversed now.

How the heck do you figure that???? I've been reading/posting on this thread and the other epic property threads here for years! Bear to bull ratio has always been about 20 to 1!! Bullish property views/posts have NEVER outnumbered bearish ones on any ASF property thread for the past 6 years!

For years 90% of this forum were telling anyone who would listen that the big Aussie property crash of 40%+ was happening, or about to happen - dozens of these posters have disappeared never to be seen since only to be replaced by new bear posters spouting the exact same predictions/data/naive views with all the time frames moved + 1 year. If there has been a drop off in bullish postings it's simply because most of us "non crash believers" who simply commentate on normal/historical property market action and fundamentals (which seems to make you a property bull on the internet), have grown tired of having the same old arguments with each new crop of wet-behind-the-ears bearish posters who keep popping up as the old ones fade away with their tails between their legs.......

Cheers,

Beej