The future of Australian property prices

[trainspotter]

Yes, the baby boomers are going to leave the younglings in a real mess.

Baby boomers, the most selfish, self interested generation in history (and too arrogant to see it)

LOLOL ........ this thread just gets better and better.

The "younglings" are doing a great job of stuffing it up all by themsleves.

Wake me up when property crashes please. ZZzzzzzzzzzzzzzzzZZZZZZZzzzzzzzzz

 

[BigAl]

Anyone have the Auctions Reults?

Haven't seen any figures posted for quite some time now. The Latte Sippers have disappeared underground lately.

 

[zzaaxxss3401]

As long as there is demand for property and limited by supply, property prices will continue to rise. Period. We have an increasing population. We have inflation so wages, food, electricity and house prices will continue to rise. And we have a need to live somewhere.

A crash occurs because either there is limited demand or an over supply.

The US - put very simply - over supply. Why? Because people with already bad credit ratings couldn't afford their mortgage repayments due to unscrupulous lending practices. Houses were already overvalued because credit was so easy but banks were lending to everyone and everyone was buying a home. As more an more people started to default on loans (after introductory rates ended), banks started to repossess houses and dump them at any price. Bank lending to businesses dried up and cashflow problems meant job losses, compounding the problem. An avalanche then occurred. And the demand was swamped by an over supply.

In Australia - if interest rates continue going up: 1) it will stop those that can't afford a loan to stay out of the market - reducing demand, but conversely 2) at the same time cause those that have a mortgage to encounter mortgage stress and be forced to sell. You may not even notice a price change.

In order for a property crash to occur here in Australia, we would have to have a massive disaster (fire / flood / earthquake) down the whole east coast. Or a GFC2 that causes our unemployment to skyrocket to (say) 9-10%.

Prices in some parts of Victoria are cheap now and getting cheaper. That's because people don't want to live there - lack of work opportunities, lack of water, lack of an NBN / WiMax coverage )), remoteness and/or isolation. Supply is outweighing the demand.

If you're trying to compare investments in property v's shares, then it's a personal preference and based on the risk profile of the investor. You don't need much money to get into shares but if you buy Blue Chips then you're probably better leaving it in the bank. If you like Speculative stocks then prepare to make lots or lose lots. With property you either need a large investment initially, or a large mortgage. If your personal circumstances change then you may be forced to sell when you don't want to and sell to the first bidder - regardless of the offer price. Each to their own. Or have a mixture of cash, shares, property.

I don't see any short-term reason why property prices will "crash". Bring on 17-18% interest rates of the 80's and we'll see what happens.

 

[medicowallet]

1,The part you were refering to does not mention rental returns at all.

2, I get what you are saying but what I am saying, But you are thinking about it in the wrong context.

You are using the cashflow (interest) of one investment example ( cash investment ) to argue that it is going to perform better against another investment example, but refusing to take the cashflow of the second investment into account, which in my view is dumb, and gives your analysis bogus results.

You are yet to give a sound reason to why when comparing the probable outcomes of investing in to differrent asset classes that you would use the cashflow from one in your results but ignore the cash flow from the second.

Interest on cash is not capital gain, it is cash flow, A cash investment has zero capital gain period, adding back the interest (net of taxes) is the same as adding back the rent net of taxes and outgoings.

1. I guess you cannot comprehend that I was not using rents etc as IT HAS BEEN DONE TO DEATH BEFORE

2. I NEVER MADE THE RULES FOR THE DISCUSSION, the op did that.

You are barking up the wrong tree tiger, I feel as though I am in an argument with a 12 year old.

Learn to read a post before replying.

I am aware of investments and their pros and cons, which is why I WAS THE ONE TO MENTION RENTS AND OUTGOINGS, please give me a break from your assumptions and beliefs.

so in conclusion, I will say again, IT WAS THE OP WHO GAVE THE CRITERIA, NOT ME sunshine.

 

[Agentm]

Anyone have the Auctions Reults?

Haven't seen any figures posted for quite some time now. The Latte Sippers have disappeared underground lately.

lol

last weeks was 59.7% after a fudged 66% was given to the press

i went to south melbourne markets b4, and passed thru st kilda on the way back, i thought i saw robots with a tin of paint painting his windowsills turning $30 lick of paint into $3000 property improvement

i swore i saw him with a lollipop in the sunshine..

the latte drinkers were out in full force.. contemplating their lives as they watch the bogans walk down ackland street buying ice creams and all the latte drinkers had look in their eyes, you know the one.. the ole "you aint buyin my property bud, your in the wrong postcode" kinda look..

when i wound down my window i could hear the maddness of the ongoing bazillion auctions, all those white shiatsu's and lamp posts and parked cars bidding against the one genuine bidder, as the auctioneers desperately get to that new median price..

but its sunshine and lollipops as usual in the busy inner burbs, thats for sure..

 

[So_Cynical]

As long as there is demand for property and limited by supply, property prices will continue to rise. Period. We have an increasing population. We have inflation so wages, food, electricity and house prices will continue to rise. And we have a need to live somewhere.

The above would also accurately describe the situation in the US and the UK...still does in fact.

A crash occurs because either there is limited demand or an over supply.

The US & UK crashes occurred due to an over supply of credit....asset prices cant form a bubble without the credit needed to build the bubble....supply and demand is a nonsense without the credit to drive it.

If you're trying to compare investments in property v's shares, then it's a personal preference and based on the risk profile of the investor. You don't need much money to get into shares but if you buy Blue Chips then you're probably better leaving it in the bank. If you like Speculative stocks then prepare to make lots or lose lots.

ILU is a ASX100 stock (considered blue chip by many) that has gone up in price by some 250% in the last 18 months...personal preference my ass, TD's and other bank deposits cannot match the returns available in the stocks market, even selective blue chips....there are no self made, term deposit millionaires!

 

[zzaaxxss3401]

The US & UK crashes occurred due to an over supply of credit....asset prices cant form a bubble without the credit needed to build the bubble....supply and demand is a nonsense without the credit to drive it.

An over-supply of credit was the means with which to create the demand. A bubble formed due to a demand for housing - everyone had money to spend... and they spent it. You didn't see a Ferrari bubble. Or a jet-ski bubble. It was a housing bubble based on an over demand for housing. High demand and short supply increases the price - just as it does in the stock market.

If the stock market has low volumes of trade, does it go up or down? Could go either way if the fundamentals are ok. But if there is an oversupply of sellers, dumping shares at any cost, the price goes down. Or are you suggesting that it's because the sellers are simply closing positions and retracting their credit... and has nothing to do with the over supply of sellers.

ILU is a ASX100 stock (considered blue chip by many) that has gone up in price by some 250% in the last 18 months...personal preference my ass...

And TLS is an ASX20 stock that has gone down by around 18% in the last 18 months. What's your point? In this case the investor would have been better leaving their money in cash.

Perhaps you should spend some of your "blue chip" money on reading lessons. I say again - "...it's a personal preference and based on the risk profile of the investor...". Some people shy away from the stock market because they either don't understand it, are worried that their capital may go down or they simply feel they are already exposed enough through their super fund.

 

[Tysonboss1]

You don't need much money to get into shares but if you buy Blue Chips then you're probably better leaving it in the bank.

Can I ask why you would think that stockpiling cash and letting taxes and inflation eat it away is better than owning good businesses.

 

[Tysonboss1]

Learn to read a post before replying.

I am aware of investments and their pros and cons,

I am not sure you do. Any way good luck with things. Let me know when you have loadedup on property after you 20% crash.

It is said that people from the medical profession make the worst investors, I am starting to see why.

Cheers.

 

[zzaaxxss3401]

Can I ask why you would think that stockpiling cash and letting taxes and inflation eat it away is better than owning good businesses.

Why do some people like to take comments out of context? As a member of the ASF, do you think I have stockpiles of cash sitting in the bank doing nothing? Well not just yet anyway. :

It all depends on your risk profile (can you cope if your capital goes down by 20%), how long you want to invest for (6 months, 1 year, 10 years) or whether you're after income v's capital gain.

What if I'd bought: TLS, BXB, and WDC back in 2007. Current prices I'd be down between 30-60% on all stocks. Or are you suggesting that none of these ASX20 stocks are good businesses? Some people prefer bricks-and-mortar, some people prefer shares, some people prefer stocks, some people prefer gold and some people prefer blondes.

 

[So_Cynical]

An over-supply of credit was the means with which to create the demand. A bubble formed due to a demand for housing - everyone had money to spend... and they spent it. You didn't see a Ferrari bubble. Or a jet-ski bubble. It was a housing bubble based on an over demand for housing. High demand and short supply increases the price - just as it does in the stock market.

LOL so you agree that the over supply of credit created the demand, but the bubble formed due to demand for housing? the US and UK populations continue to rise, so why isn't the demand for housing and prices also rising?

There was a Jet-ski and Ferrari bubble too...just ask anyone who brought a Jet-ski or Ferrari in 2006/7 how much they could sell it for in 2009/10

Rising stock prices driven by High demand and short supply? jezz that's just way to simplistic.

If the stock market has low volumes of trade, does it go up or down? Could go either way if the fundamentals are ok. But if there is an oversupply of sellers, dumping shares at any cost, the price goes down. Or are you suggesting that it's because the sellers are simply closing positions and retracting their credit... and has nothing to do with the over supply of sellers.

Again way to simplistic...there's a thousand drivers in the smallest time frame, im really at a total loss to understand the nuances of human behaviour when it comes to the stock market....the prices some people sell me there shares at often leaves me in total amazement.

And TLS is an ASX20 stock that has gone down by around 18% in the last 18 months. What's your point? In this case the investor would have been better leaving their money in cash.

Just like housing, timing has alot to do with your success in the stock market...And if you brought TLS when i suggested it was a potential turn around stock (27/28th-September-2010 - $2.60 approx) you would of done ok.

https://www.aussiestockforums.com/forums/showthread.php?t=4270&p=582950&viewfull=1#post582950
https://www.aussiestockforums.com/forums/showthread.php?t=4270&p=582976&viewfull=1#post582976

Perhaps you should spend some of your "blue chip" money on reading lessons. I say again - "...it's a personal preference and based on the risk profile of the investor...". Some people shy away from the stock market because they either don't understand it, are worried that their capital may go down or they simply feel they are already exposed enough through their super fund.

Agree...however you stated that " if you buy Blue Chips then you're probably better leaving it in the bank" and that's a crock...a nonsense statement totally without foundation in reality.

 

[greebly24]

Thanks for comments/opinions on my earlier post. Found out that median house price is ten times median household wage in my suburb. Ridiculous! Think I'll just keep having fun investing in other asset classes until the bull/bear market direction becomes clearer around here.

Good article in Aust Financial Review today, "Sparkling one day, gloomy the next. The property market in once-popular Noosa Heads is all but dead..."

House prices down 17%, units down 24%. Wow!!! Some people bought units for $750k now worth $570k. $180k gone. Bugger.

Does anyone here think it would be good to leverage up and buy one in Noosa now? Or not? Just interested, that's all.

 

[zzaaxxss3401]

LOL so you agree that the over supply of credit created the demand, but the bubble formed due to demand for housing? the US and UK populations continue to rise, so why isn't the demand for housing and prices also rising?

I'm not really interested in the US or UK property market - I'm not looking to buy. But demand may have dropped due to the rising unemployment, increase in the cost of living (CPI) and severe Government spending cuts painting a very gloomy picture. If people find it difficult to pay for everyday items, they aren't going to risk committing to a mortgage. So demand is declining just like the house prices? Funny that.

Rising stock prices driven by High demand and short supply? jezz that's just way to simplistic.

Why over complicate things?

Just like housing, timing has alot to do with your success in the stock market...And if you brought TLS when i suggested it was a potential turn around stock (27/28th-September-2010 - $2.60 approx) you would of done ok.

As you suggested: "...Worth serious consideration at these prices IMO...". Investors may have considered it, and then seen it decline further to a low of $2.56 in mid-November. That's a great return.

Agree...however you stated that " if you buy Blue Chips then you're probably better leaving it in the bank" and that's a crock...a nonsense statement totally without foundation in reality.

A nonsense statement totally without foundation? Huh? TLS was provided as an example and between September and November it performed worse than cash. Someone was obviously selling at the "low", so they were obviously of the opinion that it was going to go lower... unless they were "shorting it". :

(In future, please use the correct spelling for "brought / bought", "there / their / they're" and "to / too / two" in future. It detracts from the meaning of a sentence.)

 

[robots]

hello,

yeah proper spelling mate,

thankyou
professor robots

 

[Tysonboss1]

. You don't need much money to get into shares but if you buy Blue Chips then you're probably better leaving it in the bank.:

Why do some people like to take comments out of context? As a member of the ASF, do you think I have stockpiles of cash sitting in the bank doing nothing? Well not just yet anyway. :

What if I'd bought: TLS, BXB, and WDC back in 2007. Current prices I'd be down between 30-60% on all stocks. Or are you suggesting that none of these ASX20 stocks are good businesses? Some people prefer bricks-and-mortar, some people prefer shares, some people prefer stocks, some people prefer gold and some people prefer blondes.

I can't see how I took it out of context, You said you are better off having your money in the bank rather than buying blue chips,

I personally think buying a range of good businesses at sensible prices would be much more rewarding.

Secondly every body always mentions TLS, But what about BHP,CBA,WOW,ANZ, woodside, etc.etc there are heaps of blue chips that have had high rates of return.

Please take note the most important part of what I have said is "good businesses" at "sensible prices". You can't buy a mediocre business at a crazy price and expect to do well.

Your example of WDC, yes it is a great business, but in 2006-2007 it was a crazy price, 2009 sensible price.

 

[Tysonboss1]

Just like housing, timing has alot to do with your success in the stock market...And if you brought TLS when i suggested it was a potential turn around stock (27/28th-September-2010 - $2.60 approx) you would of done ok.

Agree with what you say, But I prefer to "pricing" rather than "timing", It's amazing how when you get the price right, you always seem to get the timing right too,

 

[Tysonboss1]

(In future, please use the correct spelling for "brought / bought", "there / their / they're" and "to / too / two" in future. It detracts from the meaning of a sentence.)

Sorry I can't help myself,

Inlight of my comments earlier about the medical profession being the worst investors, Academics don't rate highly either.

 

[zzaaxxss3401]

Sorry I can't help myself,

Inlight of my comments earlier about the medical profession being the worst investors, Academics don't rate highly either.

It's called English. Clearly I need to start a new topic - "Am I illiterate or just lazy because I can't spell for sh*t?"

"...Misspelling and bad grammar do not indicate stupidity, but do usually indicate laziness (except for those for whom the language is not their first language). Spelling pedants may be irritating, but again, what's so hard with proofing a write-up? If you are a student, you proof your work. If you are in any type of business, you proof your work as well. What's so difficult about proofing your work here as well before hitting submit?..." - bozon @ everything2.com

 

[medicowallet]

Sorry I can't help myself,

Inlight of my comments earlier about the medical profession being the worst investors, Academics don't rate highly either.

Darn, I lose out in both fields

 

[medicowallet]

"This weekend there has been a total of 842 auctions reported with a clearance rate of 66 per cent. Of the 842 auctions reported a total of 559 sold and 283 were passed in, 185 of those on a vendors bid."

Last year was 87%

Why is there a difference this year?

I don't know