The future of Australian property prices

[c-unit]

i dont know what is happening around the rest of the country. But i have bought a block of land in adelaide, and mananged to get 20% off the asking price. Go back a few yrs this didnt happen. People are desperate to sell, and there are no buyers anymore. If someone signs up subject to finance usually it falls through. One block i was looking at had been bought 5 times subject to finance, and all fell through, its been on the market for one yr now. Its for sale for $200k, so not big $.

if people dont think its a correction happening now, they are in the land of the fairies. My advice is to bargin hard and some bargins can be bought.

this notion of a land shortage is just crap, australia doesnt have the population growth of 3 yrs ago, its halved now. The only country with land shortage is the vatican.

Interesting stuff, thanks for sharing that.

As robots would say, "good news from the ground, man."

As an aside, what do people think the chances are of tipping into technical recession if/when house prices deteriorate? Given so much of our GDP is consumption spending, and this spending grows when we have high house prices and feel wealther, am I the only one that thinks we will go into recession as soon as house price falls are recognized by the general public?

 

[Tysonboss1]

As an aside, what do people think the chances are of tipping into technical recession if/when house prices deteriorate? Given so much of our GDP is consumption spending, and this spending grows when we have high house prices and feel wealther, am I the only one that thinks we will go into recession as soon as house price falls are recognized by the general public?

I can't see how a correction in house prices would cause a recession, Most people have no idea how much their houses are worth and they don't really kept track of them like share prices. It's not like you can sit at a computer and watch you house price update every 20minutes.

I mean I have an idea of what my properties are worth within $50K each way, but you never know so the majority of people would have no emotion to a correction.

I can see how a recession might bring about a decline in houses prices, but not the other way around.

I mean it's just like share prices, if share prices crashed >10% would it mean the country would dive into recession. Probably not. But if the country did head into recession then share prices would probably "crash" by more than 10%.

 

[white_goodman]

I can't see how a correction in house prices would cause a recession, Most people have no idea how much their houses are worth and they don't really kept track of them like share prices. It's not like you can sit at a computer and watch you house price update every 20minutes.

I mean I have an idea of what my properties are worth within $50K each way, but you never know so the majority of people would have no emotion to a correction.

I can see how a recession might bring about a decline in houses prices, but not the other way around.

I mean it's just like share prices, if share prices crashed >10% would it mean the country would dive into recession. Probably not. But if the country did head into recession then share prices would probably "crash" by more than 10%.

its not as unforeseeable as u think...

if theres a whiff of interest rate rises or china failing and unemployment increases...

 

[Tysonboss1]

its not as unforeseeable as u think...

if theres a whiff of interest rate rises or china failing and unemployment increases...

Thats what I was saying when I said "a recession can cause a price decline" but "A price decline can't cause a recession"

 

[Bill M]

this notion of a land shortage is just crap, .

That is just nonsense. There are areas around the whole country where there is no more land available. Where my unit is in Sydney there is no land left. The state government is forcing the local council to work towards facilitating multi high rise apartment developments to the tune of thousands. Where is all this land you are talking about here on the Northern Beaches?

 

[CamKawa]

REIV clearance rate was just 51% yesterday. That's the lowest level I've seen since I started tracking it in June 2008.

 

[Agentm]

REIV clearance rate was just 51% yesterday. That's the lowest level I've seen since I started tracking it in June 2008.

the good thing for the pro/no bubble folk here is that despite the 50% clearance rates since mid last year, the housing price bubble is increasing with out any sign of exhaustion.

the bubble keeps on growing and even the massive backlog of stock yet to be sold is having zero effect of it..

full steam ahead..

 

[Dowdy]

I can't see how a correction in house prices would cause a recession, Most people have no idea how much their houses are worth and they don't really kept track of them like share prices. It's not like you can sit at a computer and watch you house price update every 20minutes.

I mean I have an idea of what my properties are worth within $50K each way, but you never know so the majority of people would have no emotion to a correction.

I can see how a recession might bring about a decline in houses prices, but not the other way around.

I mean it's just like share prices, if share prices crashed >10% would it mean the country would dive into recession. Probably not. But if the country did head into recession then share prices would probably "crash" by more than 10%.

You analogy with shares is wrong mainly because of the amount of money involved and leverage. Mum and dads who are in the share market don't buy shares on 1:100, 1:50 or even 1:10. They buy them outright as opposed to houses. They also don't invest 400-600k on one share


Here's a real world example that happened around SEP-OCT last year:

A house near me was selling for 620k. It was on the market for about 4 months and sold for 540k. 80k seems like alot of money but it's only a 13% price drop!

Do you think someone who bought on leverage could afford an 80k price drop?

 

[white_goodman]

That is just nonsense. There are areas around the whole country where there is no more land available. Where my unit is in Sydney there is no land left. The state government is forcing the local council to work towards facilitating multi high rise apartment developments to the tune of thousands. Where is all this land you are talking about here on the Northern Beaches?

that argument is retarded, sydney cbd also has a land shortage if u look at it that way... i know northern beaches folk dont realise theres a world outside that north of the harbour bridge


(I live on nth beaches)

 

[white_goodman]

REIV clearance rate was just 51% yesterday. That's the lowest level I've seen since I started tracking it in June 2008.

clearance rates are not as reliable as one would think for either lack or increase in demand

 

[Dowdy]

clearance rates are not as reliable as one would think for either lack or increase in demand

They're more an indication of confidence.

And as with all ponzi schemes if confidence goes.........

 

[adds4]

That is just nonsense. There are areas around the whole country where there is no more land available. Where my unit is in Sydney there is no land left. The state government is forcing the local council to work towards facilitating multi high rise apartment developments to the tune of thousands. Where is all this land you are talking about here on the Northern Beaches?

Most people that build a new house in sydney dont build it in the northern beaches? Most of the new (net increase in housing supply) would come from the growth area out west i would think. Inner city population growth (housing supply) is harder to obtain. It means one house has to be removed and more than two dwelling need to be put on the same land. Costly and takes time

Here in SA we are building way too many houses for our population growth. Where are these houses and who owns them. They are holiday houses. The amount of people i know that have bought a holiday house in the last eight yrs is amazing. I have an uncle that lives in adelaide that has a house he lives in one part of adelaide, and has a holiday house only 50km away, in another part of adelaide. So for two people they use up two houses. Theres your housing shortage. What would happen if he decides to put one house on the market because he can afford two, and people like him do the same?

Im sure in sydney you would have people that have holiday houses down the coast empty? or actually have a holiday house on the northern beaches, but live in inner sydney?

 

[adds4]

Most people that build a new house in sydney dont build it in the northern beaches? Most of the new (net increase in housing supply) would come from the growth area out west i would think. Inner city population growth (housing supply) is harder to obtain. It means one house has to be removed and more than two dwelling need to be put on the same land. Costly and takes time

Here in SA we are building way too many houses for our population growth. Where are these houses and who owns them. They are holiday houses. The amount of people i know that have bought a holiday house in the last eight yrs is amazing. I have an uncle that lives in adelaide that has a house he lives in one part of adelaide, and has a holiday house only 50km away, in another part of adelaide. So for two people they use up two houses. Theres your housing shortage. What would happen if he decides to put one house on the market because he can afford two, and people like him do the same?


Im sure in sydney you would have people that have holiday houses down the coast empty?

read this from westpac http://www.westpac.com.au/corporate-banking/research/property-market

 

[robots]

Most people that build a new house in sydney dont build it in the northern beaches? Most of the new (net increase in housing supply) would come from the growth area out west i would think. Inner city population growth (housing supply) is harder to obtain. It means one house has to be removed and more than two dwelling need to be put on the same land. Costly and takes time

Here in SA we are building way too many houses for our population growth. Where are these houses and who owns them. They are holiday houses. The amount of people i know that have bought a holiday house in the last eight yrs is amazing. I have an uncle that lives in adelaide that has a house he lives in one part of adelaide, and has a holiday house only 50km away, in another part of adelaide. So for two people they use up two houses. Theres your housing shortage. What would happen if he decides to put one house on the market because he can afford two, and people like him do the same?

Im sure in sydney you would have people that have holiday houses down the coast empty?

hello,

so what, you own it, so use it how you like not how the socialist crew want you to

oh yeah, let the freeloaders get in there

thankyou
professor robots

 

[cutz]

That is just nonsense. There are areas around the whole country where there is no more land available.

Really,

Last time I flew out of Melbourne I did notice massive parcels of undeveloped land as far as the eye could see, same with Perth, Sydney, Brisbane.

Although I do have to agree with adds4, Vatican City looks pretty tight.

 

[KurwaJegoMac]

hello,

so what, you own it, so use it how you like not how the socialist crew want you to

oh yeah, let the freeloaders get in there

thankyou
professor robots

:O but Robots, I shouldn't have to work hard and save up to buy a house. The damn greedy government and damn greedy investors should stop stealing my houses!! I should be able to buy my mcmansion in a prestegious suburb using a pathetically low income whilst driving around in my brand spanking new financed car!

And dont get me started on the RBA and the banks, greedy fat bankers making squillions in profit, raising interest rates all the time how dare they! It should be fixed by the government at 1% so us aussie battlers can buy the house we deserve!!

*end sarcasm*

I dont understand where people get this sense of entitlement from. No one owes you anything. Good things should and do come from those who work harder and/or smarter. All people do is whinge and whine and hope for things to change. But hardly anyone speaks about how to find a way to make things work now, in this current climate.

Ive missed your posts mr Robots

 

[kincella]

well well well,
I must admit, been spending too much time in the country retreat.....I will have to make that decision very soon....its far too expensive having two homes.....
am getting used to the slower pace in the country....and different interests taking over up there....I can still work from home wherever I am, so no big deal there
the city life is very convenient....but convience is not the greatest driver....or lifestyle required....its a cop out, an easy way...
I really like the idea of the new houses, just north of Melb city....not in the heavily treed, fire risk areas though, 2 mins to the toll/freeways, 20 mins from the city and work...
20+ square metres, 4 beds 2 baths etc, huge living areas....below $300k's

couple of points re the market.....

noticing a load of low priced houses selling in my watch list areas....so that will bring the median price down, and fool the kids to believe the whole thing is dropping...
the upgraders have not been moving on....they have stalled, no wonder, with the media hype to support the banks, to increase interest rates, with no justification whatsoever...
so the middle price market is stalled.....for now....but it will move again, as usual

I do not believe there will be a house price crash in Syd or Melb , inner city prices, for decades to come....no ifs, buts etc....
but the inner city houses or prices are not for the fhb's club.....only apartments are affordable for fhb's
....
there could be a time in the future, where some boomers, decide to sell the inner city dog boxes, and retreat to a tree or sea change location....for a third of the price...leaving the city, to become a ' yuppy slum'.....thats where I see it going anyway.... but not in the near future.....
until these new age yuppies wake up, they can buy a house double or triple the size for the same price, further out......

heard yesterday, people around Brissy are offering $500 more pw than the asking price, to rent near the city.......assume they are checking its above the flood levels of 2011
..........................................................................................................
I posted this on another house price crash forum today....
I reckon OZ had its house price drop....correction and most of them missed it....
***check out this chart
the year to Sep 2010 Melb rose 18.8% etc
***but look at the 2nd chart below...see the dip down 3% in the 2008 year....
http://www.abs.gov.au/AUSSTATS/abs@.nsf/allprimarymainfeatures/A50B6B8CF85F0474CA25722900179E3F

so there it is...a 3% drop in 2008....not 30%, or 50% etc



from my recollection ,it was when the labor govnut came to office and swan raised interest rates every month from Jan 08 thru to about August 08....right smack in the middle of the GFC...
then by about Sep or Oct 08 they had to drop the rates by 3%....
the raising of interest rates was gross stupidity.....
dont bother saying it was not swan but the rba....swan egged on the rba....whilst pounding his chest, as a great economic manager....truth is he had absolutely no idea what he was doing

prior to the gfc, there was no bubble, we were in the middle of a mining boom, with low unemployment, thanks to the Howard govnut .....
astute people saw the GFC mid 2007, tightened their belts, and took no notice of the hot air about how great the OZ economy was....
the high rates cruelled and closed small business, and dampened the housing market.....rates went from about 7-10% in a few months...

its over...been there done that, some were so busy hyperventilating, they could not see the woods for the trees.....
the warning if it sounds too good to be true....run a mile

this forum is all about a 'too good to be true story'...a ie; a price crash so huge...every man and his two dogs will make a killing

***now here is an old chart, from 1986 to 2006...the fhb's club house in 86 was 67,400....by 2006 it was 350,000....

who is kidding who, about how good it is for the kids...the mortgage reduces each year...probably commenced at around 56,000...compared to mv of 350,000...I bet none of them complained....

http://www.aph.gov.au/library/pubs/RN/2006-07/07rn07.pdf


fast forward that chart to today....the fhb value of 350,000 is probably closer to 400ks...
but note the established house index in 86 was 425k's...today about 500-600 going by recent news

todays FHB's can get a brand new 20 plus squares, 4 bdr, 2 bathroom for around 350-400, 20 minutes from Melb CBD on the outskirts of the city, on the new toll/freeways...

or choose a 8-10 square,.....pad in the city....
plenty of units and apartments cater for the fhb or lower incomes in the city....but most seem to want a big house, with a big backyard in the city.....they are just not there..or way out of your league
its all about supply and demand....
then loads of rubbish articles.... some by stock promoters to get the kids money...to gamble on shares

other articles compare the highest priced inner city pads, (that are not the domain of the fhb's club)....and squeal about the wages comparison...its like comparing duck eggs, to emu eggs....
waiting to see the year to Dec 2010 figures come out....we had a competition here last year with estimates of growth...mine was the highest at 20%....for Melb
looks like I may have won...with 18.8% to Sep...only needed a further 1.2 for Dec
summary....
the great house price crash the bears were wailing for...has been and gone at 3% in 2008...
prices will only keep rising for 2011....for the inner city

the rest of the country will do what it has always done....
dips and troughs, but overall a modest increase after 10 years.....
just use the 1986 to 2006 year charts...for the fhb's club figures, for a guide to regional areas growth forecasts...
for the next 20 years...
ps beats inflation everytime....compared to leaving cash sitting idle, being eaten up by inflation of 10% pa

and for those gambling on the stock market to get the cash to buy a house, believe the odds are against you....
two very different types of investments.....should never be mixed....
hence the GFC in the US...people gambled on the stockmarket...the bubble of all bubbles....they thought the paper profits would convert to wealth....they borrowed more, spent the paper profits on housing etc....when the party stopped, there was no profits, but massive losses...

--------------------------------------------------------------------------------

 

[KurwaJegoMac]

Thank you Kincella for sharing, as always it's a well informed and educated post. Of course you'll get flamed for it, most people don't like to be told that the great crash they've been waiting for is unlikely to happen. But hey, lets listen to the journos coz they obviously know what they're talking about since they publish articles in a newspaper.

 

[TabJockey]

Thank you Kincella for sharing, as always it's a well informed and educated post. Of course you'll get flamed for it, most people don't like to be told that the great crash they've been waiting for is unlikely to happen. But hey, lets listen to the journos coz they obviously know what they're talking about since they publish articles in a newspaper.

I have only read positive articles in the mainstream media in regards to the real estate market. The AFR predicts flat or 0.5% drops.

 

[KurwaJegoMac]

I have only read positive articles in the mainstream media in regards to the real estate market. The AFR predicts flat or 0.5% drops.

Depends on what your perspective of positive is - from an investors point of view it's very positive. Largely the articles are commenting on a lack of affordability, lack of housing supply, rental being pushed up, etc. Most then infer from this that it's a housing bubble, further feeding the hopefuls that a big 'correction' is due to
take place and they'll finally be able to jump into property.

The thing is prices have been forever trending up, with small pockets of pullbacks or flat prices. This is the nature of this asset class. On balance prices will increase exponentially, as they always have and always will.

As they say, the best time to buy a house was yesterday. People should focus less on timing an illiquid, and ever increasing market and focus more on HOW to get in profitably and have appropriate controls in place to mitigate the effects of any stgnant periods.