The future of Australian property prices

[trainspotter]

Robbots are you ok? Are you needing to work overtime? can't afford the train?

Trainspotter you sold yet?

Don't shoot until you see the whites of their eyes - Colonel Prescott

Buy when the blood runs in the streets - Baron Rothschild

 

[medicowallet]

Don't shoot until you see the whites of their eyes - Colonel Prescott

Buy when the blood runs in the streets - Baron Rothschild

"When things are going good, your bank manager is your best friend"

"When you have limited equity, price falls destroy it faster than if you paid down your debt"

"Never truly believe the person who sells the product and makes commission"

"When you see the tears in their eyes as you purchase their house for 30% less than they purchased it for, make an offer for their car at the same time"

all by medicowallet

 

[Julia]

1. Property is now seen as the no-risk bet by the majority of the population.
2. The property market has generally been going up since the 40’s as credit increased manifold.
3. No-one knows they are in a bubble until it pops. If other assets can have serious corrections every few years, that risk is a much higher probability than not after ~70.
4. If the market tanked my capital is trapped in the same illiquid exit as too many others.
5. The return on equity is extremely low and probably negative if I am forced to hold.
6. I would have reduced equity to put into buying cheap assets should they exist as the LVR will be reduced and banks likely property-shy.
7. I am left with an asset of unknown lower value for ‘x’ time.

Good summary and the reason I've stayed out of property with the exception of own home in recent years.

However, for some reason, perhaps just because they can identify more easily with property, inexperienced investors will buy an IP before they will buy shares.
I suspect most don't even do the calculations and reasoning above.

 

[trainspotter]

"When things are going good, your bank manager is your best friend"

"When you have limited equity, price falls destroy it faster than if you paid down your debt"

"Never truly believe the person who sells the product and makes commission"

"When you see the tears in their eyes as you purchase their house for 30% less than they purchased it for, make an offer for their car at the same time"

all by medicowallet

LOLOL ........ go you good thing. I prefer Kenny Rogers myself .......

You got to know when to hold 'em, know when to fold 'em
Know when to walk away, know when to run
You never count your money, when you're sittin' at the table
There'll be time enough for countin', when the dealin's done.

Marriage break ups and deceased estates are my specialty

 

[medicowallet]

Marriage break ups and deceased estates are my specialty

lmao

 

[Agentm]

omg!!

omg omg omg....

did you see the melbourne auction results!!

777 properties!!! 113 no results.. 400 sold.. thats 61% brother!!!


thats an absolutely magic, totally magnificent and fully sick 61 % clearance rate brother...

WOW

man they must have been jumping all over those excel spread sheets for hours trying to get the magic 61% figure

so how do to get a 61% clearance rate??

lets walk through it

first you have to lower the overall auction figure.

we all know 940 properties went on auction.. well thats what the reiv have declared for the weekend, the figure is higher, not all actions are declared.. figures over 1000 can make the market look like its overheated on the sell side and in a panic selling mode here..

so the first problem for the reiv is the first figure that hits them at the bottom of the page.. 940 properties and 400 sold.. hmmmmm... 42.5% clearance rate.. thats not going to look good. that is not good at all... no sir.. have to change that around big time..

ok.. lets do the first thing that we always do..

lower the total auctions, and on this occasion by about 17%.. that takes care of 163 unsold properties.. so new total.. 777 properties

thats 57.9% clearance rate.. phew!! much better.. but thats not going to get you the magic figure you want.. has to be over 60% .. thats critical

what now?

ok, lets make another 14% disappear off the new auction total by declaring them as unreported.. so take out 113 from the calculations.. so we now will report 113 as unreported auctions.. thats going to work nicely.. so we have changed the status of 113 unsold properties as properties being unreported..

so what is left??

of the 940 properties we have deleted 163 properties totally.. we just evaporated them..

and now we have 777 properties with a further 113 taken off, now we have a nice base of 664 properties to work with.. so 940 properties auctioned, 664 is what we will use in the calculations

so 664 divided by the actual properties sold, which is 400 = hocus-pocus 60.24%


but thats not sounding too good...lol...

lets round it up to 61%


thats how the reiv make a 42% clearance rate into 61%

magic lesson ends...

 

[MACCA350]

I think you've got it nailed there Agentm, be careful though, REIV will be sending you job offers with such a display of you're knowledge in creative accounting

Cheers

 

[Agentm]

the weekly garbage the real estate columnists churn out week in week out fails to even notice the fraud going on.. as if!!!

they love the 2 or sometimes 5 page spreads of how your local post code is going up YoY.

they misguided are under the impression there is an under supply of properties and they fail to tell their dear readers that there is so little demand for new properties and house and land packages in melbourne that the major developers have offices in asia (china) selling half of the new house and land packages to the upper echelon of china and to the criminal asian ponzi real estate schemes..

"MAJOR builders and developers on Melbourne's urban fringe are selling up to half of some new housing estates to overseas investors"

reported in the age last month on feb 7th..

lol ,,, just one voice in the slimy pond of real estate hocus-pocus

sunshine and lollipops for the happy melbourne readers..

most now think a lick of paint and cleaning the windows is a major reno maaaattte !!

totally sick mate, we did a goood job brother.. painted the windows sills and she come up a treat mate.. mi girlfrend did the garden.. you know, some mulch from safeway mate.. should get back 250k easy mate.. bigtime.. maaaate... you know, property is real hot now mate, makin a killin now mate.. the real estate agent said he can sell it easy for 650, and i got it for 400.. mate this is easy mate!!

lol

just think what will happen in melbourne if half of the new house and and packages cant be sold to the chinese?? should that evaporate.. what then?? how do you keep the bubble going up? what will they think of next? go the way of usa pre the 2008 crash? crazy loans?

smoke and mirrors.. more hocus-pocus to come i think

 

[trainspotter]

Bwahaahahha haha a a aa hha........ you guys should be on a stage *pause* coach. Tish boom.

Report to me when clearance rates get below 20%. Then we can really do some creative maths to get it up above the 60% mark,

Remember you are talking about Melbourne only where the result contrasts to this weekend last year when there was 1073 auctions and a clearance rate of 85 per cent.

Let's apply your hocus pocus to these fugures as well shall we? Using your maths REIV has sold 110% of the property in Melbourne in one weekend. Legendary stuff. And I even rounded the number down

Agentm wrote - "selling half of the new house and land packages to the upper echelon of china and to the criminal asian ponzi real estate schemes."

Expect a knock at the door from the Yakuza for the disrespect to their dragon.

 

[kincella]

Everything just changed....

the slowing down of the housing market was brought to a dramatic halt last night....

I doubt too many on here would recognise the reason for the change...

so here is my prediction....
the dissatisfaction and despair associated with the high taxing, pigs might fly attitude, of both state and federal labor was the main cause of our recent post gfc depression...with ever increasing high energy, food and all other basic costs....

now that has all changed....with the recent changes in Vic govnut, now the NSw changes....

people felt safe under the liberals and Howard.....they have never felt safe since labor came to office....state labor has been out of control....

watch the shift, change in attitude....it will be dramatic....

if in any doubt....take notice of this....what was formerly the labor heartland...is now liberal

when Sydney's west became conservative last night, and ditched the labor nanny tag....there is something rather significant happening out there....the gentrification of a former lowly suburb....in this case hundreds of suburbs...
and it was just not the west....massive changes all over nsw....
people will feel confident again...now the rot has been removed....

 

[Agentm]

Cranbourne local George Zhang, originally from China's Guangdong province, purchased three new houses, a pizza shop and a convenience store in Melbourne in his quest for permanent residency.
''A lot of Chinese people are trying to immigrate to Australia,'' he said. ''Buying property is the first stage of coming to live here."

what chance does a first home buyer have when they are competing against ponzi schemes out of china and chinese millionaire immigrants buying everything up in a quest to get some better health services and better standard of living for them and their entire extended family that comes here?

sure immigration boosts productivity, and it is keeping the melbourne building sector employed since 2008.. but the bubble is still there.

what would happen if the chinese equation was removed from the real estate market in melbourne?

 

[mazzatelli]

what would happen if the Chinese equation was removed from the real estate market in Melbourne?

Not just Melbourne, but pockets here in Sydney as well. Hurstville, Campsie, Eastwood, Chatswood etc. come to mind. No racism here, just there is some truth in affluent families from Asia are purchasing a lot of property here. As to how they have the money....:

 

[tech/a]

So instead of taking advantage of the situation everyone comments on it like its a freak of nature and should be removed.

Derrrr.


We are currently involved with 5 major sub divisions in Adelaide--4 more are in the tender pipeline.
The duplication of the Southern Expressway and the new rail link to Seaford are absolute Motzza's for major increases in Demand and Infrastructure---hence Price.

But 99% just complain about development and sit and watch it happen---and IT HAPPENS!

Opportunity is staring you in the face.
but hey its a bubble always has been always will be!!

 

[Agentm]

2800 auctions to come over the next 3 weeks in melbourne..

volumes are up this year.. 5500 auctions thus far this year .. 5300 in 2010

looking good.. looking good..

 

[Reasons]

However, for some reason, perhaps just because they can identify more easily with property, inexperienced investors will buy an IP before they will buy shares.
I suspect most don't even do the calculations and reasoning above.

Hi Julia

Most people if they have not bought shares or ever got caught in a liquidity trap don't understand the risks. You don't know what you don't know, unless it is by experience or you take the time to do the risk analysis. In reality first hand experience with capital loss leads to understanding what risk analysis means to your ongoing wealth creation.

I have got good returns out of property as well as equities over time. What I eventually learnt like many others was never to become even slightly emotively tied to any asset; before, during and after ownership.

It just comes down to fear and greed. Like shares, if property corrects, by the time the majority realises it, it will be too late to exit without taking a significant bath on what they could have got a short time ago. That is when you learn about illiquidity and fear-based supply and demand.

When someone asks me about property prices, my only response is along the lines of - if property prices go down say ~30% do you care? Will you still get the cashflow or ROI you require or are you counting on the capital gains to sell down the property and to put into equities or whatever to get better returns? (if they even realise such options exists ).

There was an article in The Australian a few weeks ago that said that of those over 60 about ~73% of their wealth was in their own home. This indicates to me that most Australians are high risk speculators, not investors, as they are highly weighted to one asset. But it makes perfect sense because that is where the Govt. tax incentives have been made for many years. It also makes sense why the majority consider housing to be a no-risk bet, and they could well be right.

As many senior Australians will need a continually appreciating value asset in their own home to draw down on in retirement, the Govt. as a key promoter of the tax scheme will have little choice but to try to continue to prop up the values they have helped the banks establish. Past practice means that will likely mean high FHBS incentives to encouage and put the risk on those first home buyers who have time to eventually recover should something go wrong, in order to/try to stablise the market.

For my purposes, there are good returns on less risky assets elsewhere.

Cheers

 

[tech/a]

There was an article in The Australian a few weeks ago that said that of those over 60 about ~73% of their wealth was in their own home. This indicates to me that most Australians are high risk speculators, not investors, as they are highly weighted to one asset. But it makes perfect sense because that is where the Govt. tax incentives have been made for many years. It also makes sense why the majority consider housing to be a no-risk bet, and they could well be right.

How on earth does it indicate that!
It clearly shows that capital appreciation has added to the cost of the home.
Its NOT increased their wealth one CENT.
They still have to pay for a home of equal value if they moved or rent one at an appropriate rate if they liquidate their "Asset".

There are basically NO tax incentives for PPOR.

There people are "highly geared to one asset' by DEFAULT---not design.

Those who have multiple IP's are indeed investors.
Those who flip IP's are speculators
These two get all the tax benefits---and so we should!

As many senior Australians will need a continually appreciating value asset in their own home to draw down on in retirement,

An option but unless your 85--not a smart one!
FHBG is about employment and lack of resource.---housing

 

[wayneL]

So instead of taking advantage of the situation everyone comments on it like its a freak of nature and should be removed.

Derrrr.


We are currently involved with 5 major sub divisions in Adelaide--4 more are in the tender pipeline.
The duplication of the Southern Expressway and the new rail link to Seaford are absolute Motzza's for major increases in Demand and Infrastructure---hence Price.

But 99% just complain about development and sit and watch it happen---and IT HAPPENS!

Opportunity is staring you in the face.
but hey its a bubble always has been always will be!!

I've said this before but I think it is dangerous to equate a business venture in development with residential property investment.

It's two different things.

These opportunities staring everyone in the face demand knowledge, expertise, connections etc. Not everyone has the wherewithal to participate in such opportunities.

Plenty of smart people work in fields completely alien to property and I suggest to you that such people might make calamitous mistakes if attempting development without some sort of mentor, right contacts etc.

What seems obvious and relatively simple to a civil engineer might be foreign and dangerous to a nuclear physicist.

 

[tech/a]

I've said this before but I think it is dangerous to equate a business venture in development with residential property investment.

It's two different things.

These opportunities staring everyone in the face demand knowledge, expertise, connections etc. Not everyone has the wherewithal to participate in such opportunities.

Plenty of smart people work in fields completely alien to property and I suggest to you that such people might make calamitous mistakes if attempting development without some sort of mentor, right contacts etc.

What seems obvious and relatively simple to a civil engineer might be foreign and dangerous to a nuclear physicist.

Wayne.

We are subcontractors for the Civil Works NOT the developers.

I'm not suggesting developing.

Im suggesting and very loudly that buying a house in Seaford /Mc Claren Vale/Pt Noarlunga/Willunga/Pt Willunga/Aldinga/Maslins/Moana anywhere at the end of the freeway/Rail line will double in price in the next 5 or so years.

I have housing and have just purchased Industrial---there are no more Industrial properties in the Seaford district left.

Rents are currently around 5%
Demand even now is far out stripping supply.
Rents will increase as fast as housing prices.

Anyone can do it the average 3 bed house is $270-$330K in most areas
Pt Noarlunga is a little boutique but still have $300K bargains.
Many Vic and NSW investors are here buying as well as O/S buyers.
If people cant see opportunity then they are blind and crippled by fear!

Lets have a look back here in 5 yrs time.


and if anyone wants to do their own research go here.

http://www.rs.realestate.com.au/cgi-bin/rsearch?a=sp

I visit this thread each month and its the same old same old.
Those that are crippled carrying on about why Property is doomed and then the 3 % who are doing.
Will never change---but if your sick of being one of the 97% DO SOMETHING!!

 

[wayneL]

Im suggesting and very loudly that buying a house in Seaford /Mc Claren Vale/Pt Noarlunga/Willunga/Pt Willunga/Aldinga/Maslins/Moana anywhere at the end of the freeway/Rail line will double in price in the next 5 or so years.

So 600-800K for a pile all the way down there in 5 years?

Nothing is impossible I guess, but I'll sit that one out... I just can't comprehend why anyone would want to pay that much to live anywhere in SA, now or in 2016. ::

I visit this thread each month and its the same old same old.
Those that are crippled carrying on about why Property is doomed and then the 3 % who are doing.
Will never change---but if your sick of being one of the 97% DO SOMETHING!!

Not all of this "3%" want to invest in resi property. There is a place for it, wayneL is actively in the market right now as a matter of fact and continue to own prop in the UK.

But DOING SOMETHING!! might not include resi prop for any number of reasons. There are other avenues for building wealth. It is noted that you have never had the balls to put a substantial section of your wealth into the stock market. Others do... would that be counted as DOING SOMETHING?

 

[robots]

"Saturday 26th March 2011

With around 2700 auctions expected over the next three weekends conditions shifted slightly in favor of buyers again today with a clearance rate of 61 per cent reached, down from last weekends 63 per cent.

There was a total of 777 auctions reported this weekend of which a total 474 sold and 303 were passed in, 197 of those on a vendors bid.

Further results will be reported tomorrow.

The result contrasts to this weekend last year when there was 1073 auctions and a clearance rate of 85 per cent"

81% last year and 61% this year.

Don't know what this means.

Robots are you ok? Are you needing to work overtime? can't afford the train?

Trainspotter you sold yet?

hello,

gidday brothers, yes i am fine thanks, no overtime just planting the money trees at my new project up in Ballarat

its just fantastic in Melbourne's no.1 regional town, total spin out after 15yrs in st Kilda i tell you, amazing

thankyou
professor robots