The future of Australian property prices

[greebly24]

What I love about property is that it never drops in price or goes down. Never ever. It only "softens".

Australian Financial Review, Property Section, Friday 7th January 2010:

"...softening property market..." "...cooling market will not collapse..." "softness in demand..." "...back to a slower market..." "overhang of stock led to a collective intake of breath among vendors..." "...might need a price adjustment to come to terms with the market..."

See!!! Property never goes down. There might be an "increase in price" but never ever a decrease. Impossible. Won't happen. Doesn't happen. Can't happen. It might just get a lot softer and cooler, that's all.

The article, entitled: "Melbourne's surge loses force" also includes the tag line "The median home price has risen $50,000 in a year..."

I wonder what the median income is in Melbourne? Anyone here know? If it's less than $50k then all those wage slaves working for a living are morons. Quit your job tomorrow. Just buy and sell a house every year and you'll make more than the median income. Simple. And 365 days a year off.

Just cos it stopped working in the US,UK and Europe doesn't mean it won't work forever here.

 

[robots]

hello,

good evening, anyone seen BigAl?

surely now the forum must adopt the recommendations i put forward regarding being able to participate in this thread, its just a joke what gets posted, trolls

how is the median going Ubiquitous? great posts as usual Kincella, legend man, yeah that pea sized brain sure is getting handed around a fair bit hehehehehehehehe

thankyou
professor robots

 

[Vicki]

Well said Greebly,
Also, what would happen to home values, if the government allowed the further development of rural land around major cities...Something they might have to consider, If they estimate a large increase in our population in coming years?

Vicki

 

[AzzaB80]

hello,

good evening, anyone seen BigAl?

surely now the forum must adopt the recommendations i put forward regarding being able to participate in this thread, its just a joke what gets posted, trolls

how is the median going Ubiquitous? great posts as usual Kincella, legend man, yeah that pea sized brain sure is getting handed around a fair bit hehehehehehehehe

thankyou
professor robots

Troll? Now there is the pot calling the kettle black. I've sent you this link before robots but here it is again for a refresher.
http://en.wikipedia.org/wiki/Troll_(Internet)

Sound familiar?

 

[robots]

hello,

sure does, probably applies to 90% of the posters in this thread

which is why i suggested 3 requirements to be able to post up here

anyone who supports property is verbalised, just amazing

oh well

thankyou
professor robots

 

[explod]

Well said Greebly,
Also, what would happen to home values, if the government allowed the further development of rural land around major cities...Something they might have to consider, If they estimate a large increase in our population in coming years?

Vicki

Yeh, good idea, the last of the vegetable land. Cities were built along rivers, streams and the coast for water and to farm nearby. When it is gone perhaps we can eat the thin air, it will have enough solids in it by then. A nice lead sandwich perhaps with frothy smoke on top.

We cant allow that urban sprawl to stop though, can we?

Anyway, its lolliepops here in far far away land

 

[Vicki]

hello,

sure does, probably applies to 90% of the posters in this thread

which is why i suggested 3 requirements to be able to post up here

anyone who supports property is verbalised, just amazing

oh well

thankyou
professor robots

I don't think anyone harbours any annimosity towards you [I think].

Just interested in your point of view, on the subject of Oz r/e in the near future.

Vicki
p.s. what were these three requirements you mentioned?

 

[nunthewiser]

great posts as usual Kincella, legend man, yeah that pea sized brain sure is getting handed around a fair bit hehehehehehehehe

thankyou
professor robots

yeah he been posting a bit of late i noticed.

good to have hans christian anderson back online bro :

 

[GumbyLearner]

yeah he been posting a bit of late i noticed.

good to have hans christian anderson back online bro :

It will be great to hear what the robot doyen of the thread has to say when RE values tank and the over leveraged start to sweat.

But I'm sure the resident robot will be posted somewhere else to encourage others for marketing purposes. On ya pollsters!

 

[Sdajii]

What I love about property is that it never drops in price or goes down. Never ever. It only "softens".

Australian Financial Review, Property Section, Friday 7th January 2010:

"...softening property market..." "...cooling market will not collapse..." "softness in demand..." "...back to a slower market..." "overhang of stock led to a collective intake of breath among vendors..." "...might need a price adjustment to come to terms with the market..."

See!!! Property never goes down. There might be an "increase in price" but never ever a decrease. Impossible. Won't happen. Doesn't happen. Can't happen. It might just get a lot softer and cooler, that's all.

The article, entitled: "Melbourne's surge loses force" also includes the tag line "The median home price has risen $50,000 in a year..."

I wonder what the median income is in Melbourne? Anyone here know? If it's less than $50k then all those wage slaves working for a living are morons. Quit your job tomorrow. Just buy and sell a house every year and you'll make more than the median income. Simple. And 365 days a year off.

Just cos it stopped working in the US,UK and Europe doesn't mean it won't work forever here.

I know what you mean! I was talking to a woman recently, in conversation it came up that she was a property developer and I was into the stock market. She said that real estate was a better investment than shares, because shares can go down in value but properties never do.

I cited cases where property has indeed gone down in value (not like there is a shortage of examples). She said I was wrong. No, property never goes down in value, it's just that sometimes there is a lack of higher offers, so lower offers and made and sometimes these lower offers are accepted. Without getting into detail, yes, I do understand why she tried to make that claim (I assume she meant land is land, you basically can't make more of it, the population of humans isn't going down, etc), but c'mon! If there is a lack of high offers and low offers are being accepted, surely your portfolio is worth less whether it's stocks or property. If the fundamental value of stocks goes up but the share price goes down we don't brag about how much our portfolio has increased. If someone opens a brothel or factory next door to your residential property, the value is going to decrease.

Property folk are sometimes very strange!

 

[againsthegrain]

I recently heard a woman at work say "property great investment, you can never lose on these things" and just a few weeks before that I saw a article posted here about some couple in sydney that lost 1.5 mil on a 3 mil property development they bought in bondi.

With people like that its a 1 way conversation,

- property, you can never lose
- oh yea but i know of a few examples where it has lost?
- yea thats right see you can't lose
... loop continues

 

[FxTrader]

What I love about property is that it never drops in price or goes down. Never ever. It only "softens".

Australian Financial Review, Property Section, Friday 7th January 2010:

"...softening property market..." "...cooling market will not collapse..." "softness in demand..." "...back to a slower market..." "overhang of stock led to a collective intake of breath among vendors..." "...might need a price adjustment to come to terms with the market..."

See!!! Property never goes down. There might be an "increase in price" but never ever a decrease. Impossible. Won't happen. Doesn't happen. Can't happen. It might just get a lot softer and cooler, that's all.

At first I thought this was sarcasm or humor but just in case you're serious (as some believe you are) here is just one of many articles for you to consider...

From the Australian 2 December 2010...

A LOSS of $4.5 million in only two years on a Gold Coast mansion tells the grim story of the diving property market on the coast.

The "Beach House" at No 247 on the glamour strip of Hedges Avenue on the beachfront near Surfers Paradise was sold at auction last weekend for $5m.

Melbourne investors John Rose and Timothy Rice bought the three-level mansion for $9.5m in February 2008, but it has been on the market since the end of last year.

The house went to auction in January this year with bidding starting at $5m and quickly rising to $6.25m, at which time Mr Rice raised the selling price to $6.45m.

If he'd have taken the $6.25m on offer in January he would have been $1.25m better off, and probably saved himself the hassle of a year waiting expectantly for the market to recover at a time when it kept going down.

In August, the owners and agents were again over-optimistic about the strength of the Gold Coast high-end market, with the house listed for sale at $7m. The property's history over the past decade charts the high-end Gold Coast market well.

It was bought in 1998 by Gold Coast shopping centre developer Norm Rix for $1.815m, and he sold it in 2003 to Canberra developer Barry Morris for $5.35m.

In September 2007, the house was sold to then 26-year-old IT tycoon Daniel Tzvetkoff for $10.25m, but he kept the house for only a matter of months before selling it in February 2008 to Walnut Peak, a company controlled by John Rose and Timothy Rice.

They probably thought they were getting a good deal by buying it at $750,000 less than Mr Tzvetkoff had paid for it only six months previously, but in retrospect Mr Tzvetkoff had form in paying well over the going price.

He sold 247 Hedges Avenue because he bought further up the avenue for $27m, but 2008 was the end of the good times for the man who that year made Business Review Weekly's young rich list with an estimated fortune of $120m.

Mr Tzvetkoff was arrested in April while at a Las Vegas internet billing conference and, if convicted, could face a 75-year jail term over an alleged $500m money laundering scheme.

Perhaps this article would interest you...

http://www.news.com.au/money/property/interest-rates-pressure-forces-house-sales/story-e6frfmd0-1225963682684

Hmm, if 10% of home owners think they could be forced out of their home by further interest rate rises what would that do to property prices I wonder.

 

[tech/a]

Extreme cases used as normal argument. Interesting

If 10% of home owners will be in stress if interest rates rise this will be no different to the 10% of home owners who were under stress when interest rates rose above 8% last time.

What happened to house prices will happen again.

They stalled then they continued forward.
Have done for around a century.

But this time is DIFFERENT---isn't it!

Be sure to let me know when it IS time to buy property---somehow I get the idea we wont see that EVER on this thread.

My industrial development is going well.
Despite the doom and gloom Ill pull a good drink from it while the majority here ponder on why THEY and I shouldnt!

Thats OK you ponder Ill plunder.

 

[robots]

hello,

you going on about Biffing again Explod,

its just probably time the forum introduced some tough rules to get the trolls out of the thread, so proper discussion can remain, I suggest:

* only people who have their name on a title can post in any property thread (if company owned director proof)

* 100 points of identification (eg. medicare card, D/L No., bicycle victoria card, debit card, no centrelink/jobstart cards accepted)

* must have 1000 posts and have been long standing member of ASF for 3yrs minimum

I reckon this a good start.

Thankyou
Professor Robots

Hello,

Here it is Vicki, gee its great reading all the previous posts, superb, lots of names you dont see again, oh well

my view on property, make sure you holding a piece of real estate when you 55+, how you get there i couldnt give a stuff, whether its through shares, gold, silver, job, property flipping, property holding, property investing etc etc

thankyou
professor robots

 

[FxTrader]

Extreme cases used as normal argument. Interesting

Extreme in terms of loss but the argument is the same, buying at the top of the property cycle in any market segment is a mistake.

If 10% of home owners will be in stress if interest rates rise this will be no different to the 10% of home owners who were under stress when interest rates rose above 8% last time. What happened to house prices will happen again. They stalled then they continued forward. Have done for around a century.

Ah, normalcy bias once again. What has happened in the past must surely continue into the future. But tell me tech/a, is the debt situation for households and govt the same now as in the past?

Be sure to let me know when it IS time to buy property

When others are selling their overpriced properties in droves, bottom of the cycle.

 

[TabJockey]

Commercial property is a different market, its on the up. Residential is a very strange beast and I am very interested to see what happens.

 

[Dowdy]

Commercial property is a different market, its on the up. Residential is a very strange beast and I am very interested to see what happens.

What makes you think it's on the up. Just want to hear your analysis on it...

 

[tech/a]

Extreme in terms of loss but the argument is the same, buying at the top of the property cycle in any market segment is a mistake.

Dont know about that.
If that's the only time something I WANT is for sale then I will buy it regardless of market.

Ah, normalcy bias once again. What has happened in the past must surely continue into the future. But tell me tech/a, is the debt situation for households and govt the same now as in the past?

Relative to earnings years gone by ---no different.

When others are selling their overpriced properties in droves, bottom of the cycle.

Just be sure to let me know when that is.
Ill bet you wont be able to pick it.
You DONT HAVE TO---if you know what your doing.

I bought 4 bedroom houses in 1995 at $90K
and there were NO SELLERS finding a property was pretty difficult.

Commercial property is a different market, its on the up. Residential is a very strange beast and I am very interested to see what happens.

It is How so?
I must be missing something---please enlighten me.
I've been doing this for 30 yrs and always looking to
learn more.
To me both are very simple.

Correct gearing /tennent/hold/or liquidate for further opportunity.

Those who do nothing more than postulate make it complex---they "think" it is thats why it scares the beejeezes out of them---frozen by fear of loss.

It's not hard!

 

[TabJockey]

What makes you think it's on the up. Just want to hear your analysis on it...

Commercial property, and by that I mean Retail, Office and Industrial property is driven by different factors than Residential.

There are some great detailed research reports out there, I only looked into Melbourne with any depth so I cant really speak for the rest of Australia (sometiems I forget we are talking nationally in this thread).
To answer your question Dowdy:

In my view Retail prices are supported fundamentally but as everyone probably knows, retail business is probably not in for a great year this year and is unlikely to recover with a kick. So I put that aside for the moment.

Office and Industrial property however are undervalued by up to 30% on fundamentals at the moment according to several reports, with key indicators trending up such as rent per m2, building approvals and vacancy rates down.

These sectors on the improve from funamentally low prices is in my view something to look at as a buying opportunity.

To answer your question TA:

I agree that your simplified strategy would certainly work long term with any real property class but surely you dont argue that Commercial property prices and Residential prices are significantly interdependant?

As land goes up, as it will because it is a finite resource, both these classes will trend up, but in the medium term one can be booming and one can be lagging, presenting opportunities that will differ from class to class.

I believe Melbourne Office and Industrial property is underweight looking at a 5-10 year time frame and Melbourne Residential property is overweight in the same time frame.

You wont loose any money on either though if you hold through the noise!

 

[So_Cynical]

Commercial property is a different market, its on the up. Residential is a very strange beast and I am very interested to see what happens.

What makes you think it's on the up. Just want to hear your analysis on it...

Ill put up some observations here...2 of the real estate stocks i hold (DXS & ALZ) have recently re-valued there portfolios in an upward direction (after 2 years of falling valuations) also there's been a substantial drop in new building construction and a substantial drop in commercial/retail/industrial construction in general over the last 2 years.