The future of Australian property prices

[medicowallet]

http://www.brisbanetimes.com.au/bus...ne-housing-market-plunges-20110131-1aaht.html

"Brisbane property analysts have said prices are expected to fall a further 10 per cent in the next 12 months, in the wake of the flood, before a resurgence in the first quarter of 2012."

That could put a few under pressure to sell, what with grocery prices, fuel prices, insurance premiums, a new levy, electricity price rises etc. Could be a very interesting 12 months in SEQ, and this could start a run for the gates. Thank goodness I own no properties in Brisbane.

 

[explod]

http://www.brisbanetimes.com.au/bus...ne-housing-market-plunges-20110131-1aaht.html

"Brisbane property analysts have said prices are expected to fall a further 10 per cent in the next 12 months, in the wake of the flood, before a resurgence in the first quarter of 2012."

That could put a few under pressure to sell, what with grocery prices, fuel prices, insurance premiums, a new levy, electricity price rises etc. Could be a very interesting 12 months in SEQ, and this could start a run for the gates. Thank goodness I own no properties in Brisbane.

Did they say why there would be a resurgence ?

 

[explod]

C Unit....I am afraid if you rely on the wrong information...you have no hope of understanding the market...
the sub prime were the ninja loans....to people with ...no income, no jobs, no assets...
in fact it was Barack Obama as a lawyer that brought in the NINJAS loans...using the concept of racial discrimination as the excuse....so the banks and lenders were forced to give unemployed people loans....

moving on...interest rates played a part in the bust.....but the bust was inevitable, if people were allowed to buy houses, they could not afford....had no hope of meeting the committments....
but there was a get out of jail free card, they could throw the keys back and walk away...
that is not the case here...
plus we had the high interest rates....or didnt you notice....up to 10% by August Sept 08....
and our house prices plunged with the higher rates.....to 3% drops
all those newbie stock guru's in the US, were counting on their paper profits to pay for the houses, they borrowed against the house and the stocks...they lived like millionaires....with the paper profits in tow....when the music stopped, no profits....zilch
plus most of the so called cities in the US are nothing more than regional towns here in OZ, with a population of 100,000 at best....
people gave up their day jobs...to play the stock market, and the property market....
like sheep, they all lined up, for the trip over the cliff...
all looking for the easy money, the easy way out.....that is not how one accumulates assets or wealth

Yep in Australia it was much different, (Financial Storm just one) with the spruikers and the books (101 properties in five years, etc.)

There is an enourmouse amount of people (and I know some of them) who have leveraged into many properties with a very small equity base. Most of these people are in denial and are not prepared to sell below what they owe in each case. Of course the RBA and many others are indicating that things will soon pick up. I wonder, and what if they do not.

But anyway the banks and the govmint will not let it happen and of course it is different this time; and in Australia, "no worries"

The great depression did not have effect on the whole world but it was devestating on the developed world. It began about 1928 and did did not really recover till about 1955. Wont' happen, maybe not, but what if it does? And what if it is worse.

And if replying do not scoff at the assertions, be objective and answer the possibilities

 

[Tysonboss1]

i would like to know what the difference the same house built for 200k in one suburb or town compared to one thats exactly the same for 400k. House prices are always determined by how much someone is willing to pay.

The land it is built on,

the "house" price is actually made up of a combination of the value of the structure ( houses ) and the land.

for example if a house is selling for $350,000 it may mean the house is worth $150,000 and the land is worth $200,000. So if the same house is selling in bondi for $1M then you would assume the house is still worth about $150,000 however the land is worth $850,000.

 

[Bill M]

The great depression did not have effect on the whole world but it was devestating on the developed world. It began about 1928 and did did not really recover till about 1955. Wont' happen, maybe not, but what if it does? And what if it is worse.

And if replying do not scoff at the assertions, be objective and answer the possibilities

Very good question explod and one that I have asked myself many times. Apart from holding a lump of gold hidden somewhere on your property and having heaps of canned baked beans in your garage and trying to grow your own vegies in your yard there isn't much left.

I kind of figured it this way. I do not believe there will be a another great depression or a major property crash. So to better protect myself for the remote possibility that it could happen I chose to sell some stocks late in 2009 in order to buy another house (where I live now). I kind of figured that in a real bad crisis at least I can still rent an inner city apartment, even if I had to drop the rent somebody would take it. I also thought that if we ever did have a similar depression like 1928 then we would all be stuffed, totally, game over. However who would find the game the toughest? The guy who owns his property outright or the guy who is renting or on the street? In a depression it doesn't matter how much money you have you will all be on rations. I would rather be on rations and in my own home than having no where to live. So in this case (worst case scenario) I would still rather being a home owner than not. This of course would only be favourable to the person who owns their home outright, cheers.

 

[robots]

hello,

oh gidday everyone, great day

i reckon you spot on Adds4, adelaide is a great place with plenty of upside

oh well not much happening today, IR on hold, the sun still shining

i would just like to congratulate myself for getting it right again, this time with Ballarat

i thought it would take would 5yrs, but oh well, just a lot early, well done brother

and look, can people please refrain from linking the FHBG with government intervention, stamp duty just for buying a humble home still over shadows the grant, should be 1=1

thankyou
professor robots

 

[kincella]

Hi there all,
yes congrats Robots...for getting it right again...and again

about the great depression...
my mother told me the story about her parents family....they had a property out Lancefield way in Vic....they were farmers, beef growers, grew all their own vegies, had orchards, milked the cows, chooks for eggs.....they were totally self sufficient anyway, before the depression hit....
when the depression came, they handed out food to so many poor buggars, who came along begging for food, they took some of them in, and gave them shelter....in the shearers quarters, they gave some jobs whenever they could.....
her family still earnt a good income from the farm...from all the produce they produced.....

.....just noting one can become self sufficient, if you really wanted to.....in lots of cases, the women stayed home and looked after the farm, while the men took to the road searching for laboring jobs...but these were country people

it would have been much harder for the city folk to be self sufficient, with barely room for a few chooks in the backyard.......
after the depression came WW2, then the men went to war........and the women went to work.....
that was the beginning of the so called dreaded 'double income family' that some scoff at, as not being the norm these days....its been going on for over 70 years

ps I think we are in for a 'double dip' recession

 

[Bill M]

.....just noting one can become self sufficient, if you really wanted to.....in lots of cases,

I hadn't lived in a house with a yard for a long time but I decided to try grow some veggies. I planted some cucumber seeds in spring only to see them eaten by snails or just not want to grow. Then recklessly I tried 2 more seeds during summer, blow me down I got cucumbers for about 3 weeks more than what we could eat. I also haven't bought tomatoes for 3 weeks either. This winter I plan to did up some of the lawn in corner and get into this growing stuff a bit more.

Thanks for the story on the depression, my Mum also told me stories of that time. I also met and old timer in 2009 who was a boy through it and he said the GFC was nothing compared to that.

ps I think we are in for a 'double dip' recession

We haven't had the first one yet, what you talking about? Or are we going to get them both at once.

 

[Bill M]

Getting back on thread, hasn't anyone thought of all this new money being printed overseas. QE1, now QE2 $trillions being released into overseas markets? Some Australian economists are saying we get some follow on from all this money printing. They have said it will flow into mining stocks and other Australian stocks. They also say we will get higher inflation here is Australia because of it. So wouldn't that mean some of that money will flow into real estate? There are extreme views regarding either inflation ahead or deflation. I personally think we will get inflation and much higher levels of it. This could also mean higher real estate prices. So what does everyone think? Inflation or deflation? house prices even higher or lower. Where is all this extra printed money going to go?

 

[white_goodman]

Getting back on thread, hasn't anyone thought of all this new money being printed overseas. QE1, now QE2 $trillions being released into overseas markets? Some Australian economists are saying we get some follow on from all this money printing. They have said it will flow into mining stocks and other Australian stocks. They also say we will get higher inflation here is Australia because of it. So wouldn't that mean some of that money will flow into real estate? There are extreme views regarding either inflation ahead or deflation. I personally think we will get inflation and much higher levels of it. This could also mean higher real estate prices. So what does everyone think? Inflation or deflation? house prices even higher or lower. Where is all this extra printed money going to go?

I would suggest you go have a look at the money supply (m3) of the US over past few years and whether inflation is really gonna be an issue... the lack of bank lending in the US constricted the money supply, basically the Fed was filling the void (didnt wanna recommit past sins ie Depression). I think the question is, if theres no more Fed printing, will the banks start lending enough again to stop contraction in money supply?

 

[medicowallet]

"This weekend there had been 149 auctions reported with a total of 91 selling resulting in a clearance rate of 61 per cent. Of the 149auctions held a total of 58 were passed in, 42 of those on a vendors bid."

Clearance of 61%, down from 85% last year on higher volume (181 auctions)

I don't have any idea what this means. I am just posting it to see what others think.

Medicowallet.

Sunshine, lollipops, fairies, disneyland and bubbles.

 

[medicowallet]

ps I think we are in for a 'double dip' recession

If people aren't planning for this potential shock, then they only have themselves to blame.

 

[SusanW]

Getting back on thread, hasn't anyone thought of all this new money being printed overseas. QE1, now QE2 $trillions being released into overseas markets? Some Australian economists are saying we get some follow on from all this money printing.

Real estate is a function of credit supply.
For the last 20 years, Australia has increased it dependence on foreign credit from 12% to almost 30%.

Most of this credit is used by Aussies to compete for housing stock.

This chart




imho is one of the most telling re the future of property. It reveals since the mid 90s a rapid increase in the growth of credit relative to the growth in GDP. Considering credit attracts interest, it is not a healthy or sustainable trend for credit to grow without growing GDP at a similar rate. Why? because the interest bill will end up consuming a larger portion of GDP. Some argue this isn't an issue when credit is sourced domestically. However, when the interest heads offshore, that's a different kettle of fish.

And the interest on foreign credit paid by Australians is represented in the primary account of the current account.



And Australia's primary income account has grown more negative in the last few decades, and now offsets our positive trade balance, thus rendering our cash flow with the rest of the world negative. Treasury and RBA boffins will tell you Australia can sustain a current account deficit indefinitely. Maths will tell you that's bunk.

 

[kincella]

the US will be devalued, together with hyperinflation....a combination of both
applies to most other currencies
...devalued dollar itself creates inflation....
and inflation devalues the dollar....
is it 6 of one, or half a dozen of the other...

http://www.silverbearcafe.com/private/02.11/omg.html

if you read this article.... the US fed is already devaluing the dollar
interesting, food for thought....
those bears going on about the increasing prices of houses...have not considered or looked at the other side of the coin...the constant devaluation of our dollar....

last time I looked, our dollar was worth only 5% of its value, compared to either 50 (or 100) years ago....forget which
so, lets say your $50,000 held for 50 years, has the buying power of $2750 today
all that inflation each year, erodes the dollar value....
of course, one may believe that the same devaluation should apply to houses, or any other commodity...
but the inflation factor is that which erodes the dollar value
the materials costs, and labor rises with inflation, so in fact it costs more to build the same house, as it did over 50 years ago.....you need more of those devaluing dollars to build the house....

the constant money printing that has been conducted by both the US and AUS govnuts, must erode the value of the dollar ......together with the huge borrowings...

I believe we are currently seeing the most number of corrupt and incompetent govnuts world wide, in our history....throwing money around like confetti.....not a fiscal conservative in sight.....with the stockmarket, the next in line as the fiscal donkey...

the dreamers universe, of easy and quick trading profits on the markets, will wipe out a few more players in the next couple of years...

ps we did have a small recession, that wiped out a lot of businessess....it was overshadowed in the media with all the govt money thrown at everything.....but this time, there is no surplus money to throw around......plus we have the huge natural disasters costs to contend with....I would say Aus is almost bankrupt....if not already bankrupted....all that mining money tax, will dissapear this year....with the natural diasters, and no infrastructure spending....that was urgent, is now ended....

it will take some time for the full effect, truth to come to light.....expect a first taste by July 2011, some other facts will be delayed....it may take a year or more...
our economy is not rosy, will not have a budget surplus next year, and will take years to recover, or get back to the good years....
all simply my opinion.....just like everyone else has an opinion....
lets see how the facts eventually stack up...
I would be very careful how I spend my dollars.....

 

[c-unit]

Completely agree Kincella re the state of the Aus economy. We are in a lot of trouble imo. I take it you are of the belief that Aussie property will hold firm because printing press inflation needs to go somewhere, and why not property? We are already seeing it in commodities right now. I'm not quite sure that devalued currencies will support our Aus property though. Look at the US, a deflated USD has done nothing to support the housing crash. The "safe as houses" mentality has vanished over there, the only perceived safety is commodities.

Aus is in a position similar to the US in 2006 in terms of credit card debt, mortgage debt, lack of a manufacturing base etc. I think for our housing market to "crash" we need a spike in unemployment, which I wouldn't be suprised to see very soon. Tourisms is hurting, as is education, natural disasters... multifactor productivity has been falling since 2002...the only industry really pumping is mining. But a few cracks are appearing in China

Swanny is dreaming if he thinks he can give us a surplus. But word is they are looking at taxing banking "super profits" now so I guess there is always industries that he can steal from to cover his spending addictions.

 

[kincella]

Hmmm, I think the US is stuffed....too many dodgy bros at all levels of business and govt's....
regarding houses....
the US housing crash was excasturbated by the dodgy business of on selling the mortgages (MBS).....I believe that circus has come to a halt.....and probably big compensation claims will eventuate....
ie the last mortgage holders, in a long line, of deals, were too far removed from the original deal....and in the court cases so far....the mortgagors could not prove they were the holders....so were unable to sell the houses....
prior to this case, every one just sold the houses to recover the money, regardless ....

currently those who purchased foreclosed homes, thinking they had a bargain now look like they were burnt....due to the legal title being questionable.....so they cannot sell, or move on, until these cases are resolved.....
so the US housing market, together with the high unemployment, looks stuffed to me for years to come....

one might have to look closer to home, or not glued to the US as has been the case in the past....they are no longer the leaders, or financial guru's , that you should look to for advice, or use as a mentor....
the US will be a great example for 'not what to do'.....and the implications of the GFC will hang around for years to come
this is copyright....so just read it
http://problembanklist.com/court-ru...spiral-into-full-blown-financial-crisis-0278/
I agree China can hiccup and stall....they have their own problems, and a few of the dodgy bros to boot
Unemployment in OZ supposedly dodged a bullet, due to all the govt BER and surplus spending....which is about to come to a sudden halt...
the employment numbers could have survived with real infrastructure spending...but that has all been shelved due to the floods....
the rebuilding stemming from the floods and cyclones....will be a hotch potch...imo not enough money to fast track real deals, in the interim probably plenty of work for tradesman....if the home owner had some insurance....for those without insurance....I have no idea....neither do the state or fed govts
I do not have any answers, very few would have.....
all I can say is.....we are in the middle of a La Nina event, it still has a few months to run....there can be more floods and cyclones before this is over....
I stated this after the first floods, before the cyclone....when the feds thought a flood levy would suffice.....
cyclones double in number during la nina....so instead of 4.7 they could have 9.4.....then all the run offs into the other states.......as we in vic have just experienced....
it could just repeat these last 6 weeks again, and again before this is over...for now...
ridiculous the feds have stopped the real backlogs in infrastructure that was required....

 

[kincella]

get a load of this....the Wodonga council, on the nsw/vic border, have allowed building approvals on a flood plain....they built the access road, and the agents have their tiny little lots marked out...
luckily for the would be home buyer....the recent weekend floods will show them just how close a flood will come to their houses...
its just down from the main drag, on the old melbourne highway.....
the bike track has been demolished, and stack of evidence of the flood, with mud and trees down, about a metre below...the road....
trick or treat.....love to know who was responsible for this....thank god no one appears to have taken up the ridiculous offer....(no sales signs on the lots)

buyers be warned....just because council allows development...does not mean it is safe to build there...just ask all the brisbane ...ites
(but the Wivenhoe dam, did the most damage)
oh, btw...went for a drive out to the Hume Dam, expecting to see a huge display of water coming out from the spillway.....you know it was full, then all the rain at the weekend....so they should be letting water out...well my simple mind thought so
to my horror, there were no gates open....and appears to be work going on up there...with machinery up there....hmmmm
another Wivenhoe in the making ????
I mean leaving it too late to release the water, then having to release humungeous amounts to an already flooded area

 

[So_Cynical]

I personally think we will get inflation and much higher levels of it. This could also mean higher real estate prices. So what does everyone think? Inflation or deflation? house prices even higher or lower. Where is all this extra printed money going to go?

Printing money = inflation

It just cant work any other way.

 

[BigAl]

It's been a little quiet here in the last few days, even the eternal optimists are ducking for cover in the face of unrelenting data pointing towards the Australian dream quickly turning into the Great Australian Nightmare.

The market is shot here in WA.

The equilibrium point for a healthy market has been around the 12,000 Properties for Sale mark. Perth has been running at 17,500+ for a long time now. Real Estate figures confirm that 2,000 Properties have been removed from the market since XMas due to disgruntled sellers. Me Thinks the Sellers still believe the Ponzi Scheme is still on the upwards.

Real Estate figures confirm that 1 in 6 properties is taking 6 months+ to sell. A deplorable situation here.

I remember my old duck trying to sell her property in the early 90's, in Perth, 800sqm block, 8 minutes from the beach. No one would buy, no takers, no offers. Took 15 months to sell.

What any of the eternal optimists fail to ever answer is, if the market always goes up and never goes down, where is the continual increase in Credit (exponential Mortgage increase) going to come from? Where is the point where the Average Consumer cannot borrow a $1 more? Where is this point?

IMO, that was a year ago.

The latte set would say never and this time it's different.

I hope the Gov Nuts responsible for leading the FHG like lambs to the slaughter in the Great Ponzi scheme, take a good hard look in the mirror.

 

[BigAl]

hello,

good evening brothers, a wonderful day

apologies for the late reporting:

melbourne clearance rate 81%, massive run now with i think 18 weeks of above 80%

paradise

peace out to all

thankyou
professor robots

A post back in Nov 09, my how times have changed.

NOT ANYMORE