The future of Australian property prices

[trainspotter]

Dec Qtr 10 to Mar Qtr 11 Mar Qtr 10 to Mar Qtr 11
Established house prices % change % change

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

Weighted average of eight capital cities -1.7 -0.2
Sydney -1.8 0.8
Melbourne -2.5 1.1
Brisbane -2.5 -3.6
Adelaide -1.0 0.9
Perth 0.5 -3.2
Hobart 0.4 0.6
Darwin -1.0 0.5
Canberra -0.4 1.1

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

http://www.abs.gov.au/ausstats/abs@.nsf/mf/6416.0

Not sure which ABS "The Age" is using as Capital City prices has dropped only 0.2% in 12 months and Melbourne 2.5% in the last 3 months?? But actually gained 1.1% over the last 12 months

 

[greebly24]

Did anyone see the story on Channel 7 news last week about "Altona", a mansion for sale at Point Piper in Sydney? They're asking $60m.

The story bragged how Bono from U2 once stayed there, paying $30,000 per week.

Sounded pretty good until I checked the yield. If Bono stayed there for a whole year, it would cost him $1.56m. On a $60m purchase price, that's still only a yield of 2.6%. Or to put it another way, the purchase price is about 40 years rent.

It sold in 2002 for $28m. It was listed in June 2010 for $45m. So that's abit over 6% annual price growth (assuming it sold then).

But now it seems someone is trying to flip it? $45m in June 2010 to $60m in May 2011. A 33% profit of $15m in less than a year.

Good luck to them. Must have balls of steel

 

[banco]

Dec Qtr 10 to Mar Qtr 11 Mar Qtr 10 to Mar Qtr 11
Established house prices % change % change

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

Weighted average of eight capital cities -1.7 -0.2
Sydney -1.8 0.8
Melbourne -2.5 1.1
Brisbane -2.5 -3.6
Adelaide -1.0 0.9
Perth 0.5 -3.2
Hobart 0.4 0.6
Darwin -1.0 0.5
Canberra -0.4 1.1

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

http://www.abs.gov.au/ausstats/abs@.nsf/mf/6416.0

Not sure which ABS "The Age" is using as Capital City prices has dropped only 0.2% in 12 months and Melbourne 2.5% in the last 3 months?? But actually gained 1.1% over the last 12 months

I think the Age's figures are from the seasonally adjusted numbers?

 

[trainspotter]

SYDNEY, May 25 (Reuters) - GE Capital is selling its A$5 billion ($5.3 billion) Australia and New Zealand mortgages books to Pepper Homeloans as concerns rise over a softening of the Australian housing market and rising cost of funds.

http://www.reuters.com/article/2011/05/25/gecapital-australia-idUSL3E7GP0V320110525

Oh oh ....... is that smoke on the horizon?

 

[Uncle Festivus]

SYDNEY, May 25 (Reuters) - GE Capital is selling its A$5 billion ($5.3 billion) Australia and New Zealand mortgages books to Pepper Homeloans as concerns rise over a softening of the Australian housing market and rising cost of funds.

http://www.reuters.com/article/2011/05/25/gecapital-australia-idUSL3E7GP0V320110525

Oh oh ....... is that smoke on the horizon?

A recession in fact but not in name, at least not yet officially?

Maybe they need to re-define what constitutes 'reccession', or maybe ask some retailers?

It's going to get nasty?

 

[Dowdy]

A recession in fact but not in name, at least not yet officially?

Maybe they need to re-define what constitutes 'reccession', or maybe ask some retailers?

It's going to get nasty?

The media/ politicians/ RBA want to avoid the word reccession for as long as they can. They'll manipulate/ fudge figures/ intoduce stimulus etc.

Half of the Gen Y have never heard of that word or understand its meaning but once it becomes mainstream, watch the prices fall & watch the stores close up

 

[sptrawler]

At the end of the day(to coin a phrase) the two major spends in joe averages life is a car and a house. 20 years ago when the average price for the family car became half the price of a house people bought houses.
Now the price of the family car is less than 1/10th of the house and to rent has dropped to 3% of the value of the house.
Only fools who are relying on a capital gain and tax breaks would be buying, and they deserve any gains they get, it takes guts.

The government has been trying for years to get out of renting, they know there is not a lot of upside to supplying housing to the needy, unfortunately

 

[Mr Z]

Oh oh ....... is that smoke on the horizon?

The lousy retail number have been enough smoke for me, there is plenty of $ pressure out there on the east coast IMO.

 

[Mr Z]

It's going to get nasty?

Yes, too much personal debt out there on the east coast. Plenty of fuel to feed a general recession. In the end property is all about our ability to borrow!

 

[ginar]

Hot of the presses , explains why banks been worked over last week or so


http://www.bloomberg.com/news/2011-...ncies-jump-to-record-on-rates-fitch-says.html

 

[trainspotter]

Here is the real concern IMO

AUSTRALIANS owe almost $50 billion on credit cards as spiralling living costs force them to put everyday expenses and even mortgage repayments on plastic.

Reserve Bank of Australia statistics reveal the national credit card debt has climbed 42 per cent in the past five years to $49.3 billion, with $36 billion accruing interest.

http://www.news.com.au/money/money-...o-50-billion-rba/story-e6frfmd9-1226056643781

And what is the "average" interest rate on the plastic you may ask ??? 19.3% is the answer !!!!!

All unsecured as well ........ I might have to start my own line of credit at this rate !

Zero interest on transfer of balances for the first 6 months and then up to 23% rollover ....... any takers??? No wait ...... Citibank has already done this ... @#$%!@#$%^&*

 

[ginar]

latest RBA speech , very much housing related


http://www.rba.gov.au/speeches/2011/pdf/sp-dg-260511.pdf

 

[againsthegrain]

have had a family member just upgrade to a bigger car, we went to the car dealers and did the usual haggling not expecting more then a few K off the price.

Very very suprised at the desperation of the dealers, each caryard we visited was prepared to undercut the previous, on a 38k 4wd we ended up knocking off 9k!

Not sure if its just crazy markups but the desperation was sure showing through the dealer's poker faces.

Have been hearing heaps of similar stories now, especially with non basic essentials. very hard for retailers to pull in the sales thesedays, looks like the credit cards may have been maxed out 1 too many times.

Oh well Im patiently waiting for those interest rate raises, would be nice to get something in the 6.75 - 7% return on my savings which the negatively geared speculator will pay for.

Don't think rents will compensate for that either, you will just start to see more and more rents being unpaid for 6 months at a time like its common in europe now.

 

[awg]

reported and discussed on ABC radio Newcastle, 0% clearance on auctions last weekend,

although they quoted only 14, and even the real estate spokesman admitted the figures might not include every auction that happened.

I have noticed a softening of prices at the low end now, which up until a few months ago, was holding up ok

 

[Tysonboss1]

have had a family member just upgrade to a bigger car, we went to the car dealers and did the usual haggling not expecting more then a few K off the price.

Very very suprised at the desperation of the dealers, each caryard we visited was prepared to undercut the previous, on a 38k 4wd we ended up knocking off 9k!

Not sure if its just crazy markups but the desperation was sure showing through the dealer's poker faces.

Have been hearing heaps of similar stories now, especially with non basic essentials. very hard for retailers to pull in the sales thesedays, looks like the credit cards may have been maxed out 1 too many times.

Oh well Im patiently waiting for those interest rate raises, would be nice to get something in the 6.75 - 7% return on my savings which the negatively geared speculator will pay for.

Don't think rents will compensate for that either, you will just start to see more and more rents being unpaid for 6 months at a time like its common in europe now.

Two things,

1, Some of the larger vehicle financing companies have really increased commissions and trail incomes to dealers recently, So a dealer may be willing to offer a bigger discount if the finance is through them.

2, The Australian dollar has been really strong in recent months and while they may not be reducing their marked price they may be willing to give larger discounts should the meet with stronger hagglers.

 

[Glen48]

On Sunrise Ch 7 Kockie interviewed some one who tells the housing market is falling which is why Gold and silver is going up.
the housig market only has another 60% + to go down

 

[cynic]

The media/ politicians/ RBA want to avoid the word reccession for as long as they can. They'll manipulate/ fudge figures/ intoduce stimulus etc.

Half of the Gen Y have never heard of that word or understand its meaning but once it becomes mainstream, watch the prices fall & watch the stores close up

No problem avoiding the word "recession", they'll just use artificial stimulus like the US did until it becomes a full blown "depression" instead. Most of us weren't even alive the last time we had one of those!

 

[Dowdy]

On Sunrise Ch 7 Kockie interviewed some one who tells the housing market is falling which is why Gold and silver is going up.
the housig market only has another 60% + to go down

I don't think he said that because if he did Kochie would be laughing in his face. Gold and silver isn't related to the Australian housing market. It's related to, amongst many things, the weakness in the US dollar

 

[TabJockey]

On Sunrise Ch 7 Kockie interviewed some one who tells the housing market is falling which is why Gold and silver is going up.
the housig market only has another 60% + to go down

What are you trying to say? Investors in australia are pumping money into Gold and Silver and not real estate?

Gold in Australian dollars is going nowhere fast and silver is completely speculative.





As far as I know, nobody who knows even remotely what they are talking about would link gold and silver to Aussie resi markets.

60%? I would be in heaven but unfortunately I see very strong support about 20-30% below current price levels.

60% would put houses in my area at about 400k, or 3x the average household income around here. I dont see how it is physically possible for the market to reach that sort of level without some signifcant disruptions to affordability (like unemployment ,high inflation or very high interest rates).

 

[Glen48]

What I meant was the housing market world wide is tanking because a house is a consumerable like a car. TV etc and some people can see a depression arriving one day and looking for security and a hedge against inflation..