The future of Australian property prices

trainspotter · 13 February 2011

nunthewiser said:
Might wanna have a look in ya own backyard then mate

Builders goin bust, building quotes getting cheaper by the month.

blocks sitting unsold in some major% in newerly built subdivisions

established house listings stagnant with new listings by the day but older ones still sitting from upto 3 years ago.

prices getting slashed in the ads on a daily basis throughout the listings.

rental prices dropping by the week just to get a bite.

that nun fella shaw picked that top a bewty i reckon.....

sunshine and lollipops till the fat lady sings they say

The above is based on the Midwest WA

thankyou

Absolutley there Nun ....... we are talking about the Midwest of WA specifically. These things are entirely happening.

One builder has gone bust and fled town and the other is winding up it's operations due to loss of tradespeople to another firm who have undercut the main players by 15% trying to gain market share. The others have shown significant downturn. Building stats from the council dont tell fibs.

Developed land sitting there unloved and untouched by human hands and wallets. I can see an auction coming up soon on this one.

Spec home sold in Seacrest after 2 weeks of listing. Me no complain. Other ones that are overpriced still sitting there ........ Oh well, Depends on how much percent you want to make I guess?

Have been flooded with "private" rentals on my homes in Midwest WA ??? Maybe I am renting them too cheap?

Fat lady got fat somehow and I bet it wasn't from starving in the RE world.

Mate of mine in local RE Agency still pinging his 4 a month in both commercial and residential??? An exception to the rule of course. Lots of others not as successful.

Just my opinion of course.

TS

BigAl · 14 February 2011

My Favourite Land Developer is Offering even more Discounts in Perth today,

Back in Jan 10, this 400 Lot Site, 20km North of City Development, was being sold in following conditions:
- Finance Pre-Approved Before Deposit
- 20 Blocks released a month
- Phone Ballot System, Miss the 1st lot and you're back to square one in 2nd release, etc..
- Land Developers never returning calls
- Block Average Size 500sqm with 60% Build Ratio for $350K

Fast Forward to a few days ago:
$5K Prepaid Visa
$20K Builders Discount

Fast Forward to today:
$10K Prepaid Visa
$20K Builders Discount
50% of Normal Deposit on Land

Fruit Tingles, Lollipops, Sherbet Fizz, Sunshine and a swig of Whiskey in my Latte. If you ask really nicely I can even conjur up a report on native birds, throw $2 at the report and I'll make you $6, it's that easy. What that's got to do with the property market, I have no idea, but I like the sound of making $3 for $1, better than any Ponzi scheme I've seen.

moXJO · 15 February 2011

Man what happened to this bust that was suppose to be coming. Houses in my area just keep moving up. It's not even that nice of an area. But the Sydney siders must love it as they are pumping the prices of what were 120k homes 11years ago to 700k and above. Even 2mil homes popping up in what were the druggie suburbs. Crazy stuff.

Aussiejeff · 16 February 2011

moXJO said:
Man what happened to this bust that was suppose to be coming. Houses in my area just keep moving up. It's not even that nice of an area. But the Sydney siders must love it as they are pumping the prices of what were 120k homes 11years ago to 700k and above. Even 2mil homes popping up in what were the druggie suburbs. Crazy stuff.

Maybe you should re-term that "Shanghai siders"?

Not surprising given the huge boost to Oz city RE prices by a flood of immigrants over the past couple of years with bulging wallets. Here's a smattering of background to the trend..

From 2009 -

Chinese buyers are snapping up some of the best luxury properties in Sydney including big homes on the harbor, and new condominium developments.

Real estate brokers and developers said Chinese buyers are most interested in hot properties in the inner-city and by the beach. They are attracted by new foreign ownership rules, a favorable exchange rate, and the relative stability of the Australian property market.

After the UK and New Zealand, China is third in the lineup of countries that sends immigrants to Australia. Last financial year, more than 70,000 Chinese arrived in Australia to live permanently, including a steady stream of business migrants and a growing number of students.

"In many cases, Chinese immigrants to Australia are buying into key lifestyle markets, which are characterized as being close to the ocean or within the inner-city," said Tim Lawless, national research director at RP Data, a property and analytics information company.

http://www.chinadaily.com.cn/bizchina/2009-08/22/content_8602900.htm

From 2010 -

In Sydney, too, there are anecdotes of auctions dominated by Chinese bidders, of well-to-do Chinese families arriving at real estate agents, their teenaged children acting as interpreter, and snapping up multimillion dollar units close to the city.

Ewan Morton, the managing director of Morton & Morton, says 16 per cent of last year's sales at his Pyrmont office were to buyers from China who liked ''certain types of product: purpose-built, newish, brick and concrete construction, and on land''. The buyers were ''not interested in the wharf developments''.

and FIRB rule changes to boot.....

For example, the rule that foreigners had to be restricted to 50 per cent of units in a development marketed off the plan has now been scrapped.

Temporary visa holders with 12 months' validity do not require approval to buy established real estate as their residence. The 2008 changes lifted the $300,000 cap that applied to student purchases, and foreigners are no longer required to sell when they return home, which means it is much more attractive to buy. At the same time there has been a big increase in temporary visas. But the managing director of BIS, Rob Mellor, says the overwhelming factor driving property prices in Sydney is the failure to build enough dwellings to keep up with population growth.

''I have been following the property market for 30 years, and this is the worst level of pent-up demand I've ever seen,'' he said.

However, in some markets money from China is probably having a disproportionate impact.

Christine He, a real estate agent with Century 21 Hurstville, said she noticed a huge increase in interest from China at the beginning of last year.

Three months ago she sold a three-bedroom unit in Railway Parade, Hurstville, to a Chinese student in his early 20s for $530,000. Another young Chinese student bought a three-bedroom unit at St George Parade for $483,000 with the help of his parents, who are living in China, she said.

At the top end of the market there is also increased interest from foreign investors, mainly from China, says John McGrath, the chief executive of McGrath Real Estate.

http://www.smh.com.au/national/chinese-whispers-theyre-driving-up-housing-prices-20100402-rjyf.html

Plenty of articles about this growing trend if you Google enough

So, no. No real surprise as to why prices are still rising in Oz cities. Shortage of particular property (mainly inner city & suburban) + increasing pressure from wealthy foreign demand = PRICES GO UP! Until the FIRB rules are changed again, expect the Asian R/E Tsunami to continue building...

Happy daze, Botty!

aj

Agentm · 16 February 2011

huge push on the aussie bubble atm on the cities..

in melbourne i think simmonds homes said they sold 50% of their new properties directly O/S.. and then later in the article i saw they had many agents in china, so i guess when they say asia, they mean only china, but it looks better when you say asia.. but the idea of guvment reform in protecting new properties from o/s investors is not going to happen, they snap it all up, and the prices keep on bubblin along!!

with food prices going viral..

"World Bank President Robert Zoellick says global food prices have hit "dangerous levels" that could contribute to political instability, push millions of people into poverty and raise the cost of groceries."

and with jp morgan only having 8 trading day looses in 2010 96% success rate..

then one thing is certain.. the aussie bubble is going to remain until the fan is struck with that sticky stuff globally, and when "the inflation" is so big a problem that no amount of changing of the parameters (ala china yesterday with their cpi) will disguise the need for the interest rates hikes.. then i think you may see some scrambling for the sell button in r/e

and we all know global banks are all liquid and safe.. there is so much printing of the worthless currencies they cant go wrong..

but the future is now all sunshine and lollipops for the time being.. jump in and join the gang of latte drinkers imho..

explod · 17 February 2011

I dont' know,

hired help is not the same these days.

Come on there Botty, where are those clearance rates from last weekend. The unadjusted will be okay as we have learned to drop off 5 to 10% for the mean.

Notice the bubbles are going up a lot of late and I never liked lollies anyway.

robots · 19 February 2011

hello,

oh gidday, yeah well great week as usual

no crash this week, so a put a line through it on the REIV 2011 calender oh well

my apologies Explod,

thankyou
professor robots

medicowallet · 19 February 2011

robots said:
no crash this week, so a put a line through it on the REIV 2011 calender oh well
professor robots

That is great news.

However, may I suggest next time you purchase pens, not only get a couple of black ones like normal, but also get a couple of red ones.... might come in handy in the near future.

magnums, splices, callipos, paddlepops and bubble-o-bills... outstanding.

So_Cynical · 19 February 2011

This Months Smart investor magazine has the cover story.

"Why prices will fall"

http://www.afrsmartinvestor.com/edition.aspx said:
The great Australian property dream appears to be turning into a property nightmare. In case you haven’t heard, Australia is now one of the least affordable property markets in the world.

~

medicowallet · 19 February 2011

"This weekend there has been 646 auctions reported with a total of 417 selling resulting in a clearance rate of 65 per cent.

This is a healthy result which indicates demand is consistent with results achieved in the last quarter of 2010.

This compares to this weekend last year when there was 723 auctions and a clearance rate of 85 per cent."

Seems to me to be stable at around 60-65%.

Anyone know why it hasn't returned to the 80%??

I don't know why we post this stuff, but I do it to keep everyone informed.

Cheers, and friends, and idol and POP-stars.

Bill M · 19 February 2011

So_Cynical said:
"Why prices will fall"
~

It's a bit like good stocks, you buy on the dips, right? I'm hoping, wishing but it just doesn't seem to be happening, never mind....:dunno:

JTLP · 20 February 2011

medicowallet said:
magnums, splices, callipos, paddlepops and bubble-o-bills... outstanding.

Streets Brand fan?

What are people's honest thoughts about where IR could end up? I'm not talking maximum - probably a longer term average. I remember a poster (i think Tech/A) saying historically IR's have been north of 10% - does anybody have an average figure?

Cheers

medicowallet · 20 February 2011

JTLP said:
Streets Brand fan?

What are people's honest thoughts about where IR could end up? I'm not talking maximum - probably a longer term average. I remember a poster (i think Tech/A) saying historically IR's have been north of 10% - does anybody have an average figure?

Cheers

I see two problems

1. You can't trust companies and governments to give honest representations of how they are performing, so people who predict IR are doing so on potentially misleading data.

2. A high proportion of people with debt are ignorant, or can't remember the times when IR were high. They are not prepared for increases and their loan service reflects this.

Interest rates will go high again, I just don't trust economists to get it right over the longer term as my experience with trusting them has been negative.

explod · 20 February 2011

robots said:
hello,

oh gidday, yeah well great week as usual

no crash this week, so a put a line through it on the REIV 2011 calender oh well

my apologies Explod,

thankyou
professor robots

No apology needed there Botty, just glad I put you onto silver coins a few months back, you are already up by 20%.

Streets Brand fan?

What are people's honest thoughts about where IR could end up? I'm not talking maximum - probably a longer term average. I remember a poster (i think Tech/A) saying historically IR's have been north of 10% - does anybody have an average figure?

Cheers Yesterday 07:53 PMBill M

Since my time of property investement intrerest rates have seen a high of aroung 18% and a low of about 6%. Could we expect 12% average in the long term?

The big talk was that we had deflationary effects holding interest rates down, it appears the reverse is becoming the case. I think more rises will come due to a money squeeze from lenders.

tech/a · 20 February 2011

Historical Interest rates.
You'll notice that the mean is around 10%
It will eventually return to the mean and oscillate toward the higher end.
You'll notice though that rates spend most of their time trending to or away from the mean---The mean is hardly ever maintained.The average is only afforded to those who are in the market long term.

http://www.loansense.com.au/historical-rates.html

If there is someone who would like to pace the figures in Excel we could get the number of years interest rates are at x% plus a whole heap of other interesting stats.

Those waiting for lower prices may get them with higher interest rates.
But 5,4,3,years ago you'd have had lower interest rates AND lower prices.

Waiting is not a sound investment option as you never know how long is enough----

Bill M · 20 February 2011

JTLP said:
What are people's honest thoughts about where IR could end up? I'm not talking maximum - probably a longer term average. I remember a poster (i think Tech/A) saying historically IR's have been north of 10% - does anybody have an average figure?
Cheers

Not exactly an average figure but here goes. From 1959 until now some 42 years later interest rates have ranged from 5% to 17.5%. During that time it was at or over 10% for around 18 years. It has not been over 10% since 1996.

My personal gut feeling tells me rates will be going up, without a doubt, but not over 10% for the immediate future. Having said that it is just pure speculation and anything can happen.

You might find the chart on this website a good guide:

http://www.loansense.com.au/historical-rates.html

EDIT: tech/a beat me to a similar post with links, apologies.

robots · 20 February 2011

explod said:
No apology needed there Botty, just glad I put you onto silver coins a few months back, you are already up by 20%.

Since my time of property investement intrerest rates have seen a high of aroung 18% and a low of about 6%. Could we expect 12% average in the long term?

The big talk was that we had deflationary effects holding interest rates down, it appears the reverse is becoming the case. I think more rises will come due to a money squeeze from lenders.

hello,

no worries explod, i'm just glad i put a few onto property back in 2005, and its still a good BUY

a few got on board and many knocked it and suffered the consequences, oh well

really happy i helped many, something i am very proud of

thankyou
professor robots

FxTrader · 20 February 2011

tech/a said:
Waiting is not a sound investment option as you never know how long is enough----

Sound, value based investment is all about making judgements about whether or not an investment opportunity is over/under priced and waiting until price reaches a level where investment makes sense from a value and/or income (ROI, ROE etc), perspective. Buying into the peak of a property price boom (bubble) can hardly be considered a "sound investment option."

white_goodman · 20 February 2011

FxTrader said:
Sound, value based investment is all about making judgements about whether or not an investment opportunity is over/under priced and waiting until price reaches a level where investment makes sense from a value and/or income (ROI, ROE etc), perspective. Buying into the peak of a property price boom (bubble) can hardly be considered a "sound investment option."

i think the falling of China bubble and world baby boomers retiring will bring value back, im sidelined till i see some rationale

robots · 20 February 2011

FxTrader said:
Sound, value based investment is all about making judgements about whether or not an investment opportunity is over/under priced and waiting until price reaches a level where investment makes sense from a value and/or income (ROI, ROE etc), perspective. Buying into the peak of a property price boom (bubble) can hardly be considered a "sound investment option."

hello,

in your opinion, and thanks for it

thankyou
professor robots

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