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The future of Australian property prices

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ginar said:
anyone with less than 20% down is forced to pay insurance to provide the banks with cover against the risks of having " no fat " to take up market price fluctuations
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Yes I know... it is the general effect on the market that I think is irresponsible as much as anything. See the 50K example above, Keen has it right IMO.
 
I repeat ...... 95% LVR has been around for 20 plus years. Look at the carnage this has caused. Just LOL on this chestnut. But but but this is different this time. No different to all the other times IMO.
 
sinner said:
That is simply not how it works.

Those "holding out" for todays prices will end up selling for much less when they finally capitulate IMHO.
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Yes - I meant from the perspective of greedy real estate agents though

Ie. Wouldn't it be in their interest to persuade people to hold in order to try and stop the prices from going down as rapidly and inspiring a panic.

But it's just my theory, I'm no expert
 

No,

their job is to make sales.

They con the seller into a lower than reasonable price, then try to con the purchaser into paying it.

Whenever I sell a property I list it at a price I want and NEVER EVER EVER tell the R/E agent what I'd accept for it, otherwise that is what you get offered.

Sneaky snakes the lot of em.
 
Well they put it to use, whether or not its 'good' is another thing .
Yes, Australian banks do not have a central bank enforced reserve requirement ratio. I understand that they have various 'capital' requirements though, as per 'Basel III'.
Of course a lack of an enforced reserve ratio has never allowed banks to 'go nuts', since they need to ensure that settlement demands from customers and other banks can be met (otherwise runs and bankruptcy ensue).
Amazingly under free-banking in Scotland it turned out that this ratio was about 2% , and that the financial system was very stable. Most of the stability can be attributed to the fact that the banks would all hover around this level of credit expansion, and the monetary base (gold) changed very little. So in aggregate, the level of credit remained very stable, as opposed to ballooning into various bubbles and then collapsing as bank runs occurred. A non-expanding monetary base makes all the difference .
 
ginar said:
anyone with less than 20% down is forced to pay insurance to provide the banks with cover against the risks of having " no fat " to take up market price fluctuations
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Is this the same as saying that you believe there will be a 20% price fluctuation? If they still have their job and are meeting repayments why would they sell? For fear of a greater drop on your "investment" ? So therefore there will be a greater than 20% drop and people will be quitting their homes in record numbers? Investors are not buying so who would take up the slack? What happens to all these homes on the market? Does the bank just simply write this off as bad debt? Does the bank go to a mortgagee sale who then in turn gets the shortfall from LMI who then in turn sues the Valuers indemnity insurance for their shortfall?

So much conjecture. What is different to this time as to when interest rates went to 17% and unemployment went to 10% under Keating??? Did the sky fall in on Australian house prices then? Did banks get the speed wobbles and sell everyone up? Why are banks offering under 8% for a 10 year FIXED period if they are squawking that "wholesale funds" are costing more to them. Why are so many people still borrowing to buy a house?

So many questions. Too much conjecture.
 
trainspotter said:
What is different to this time as to when interest rates went to 17% and unemployment went to 10% under Keating??? Did the sky fall in on Australian house prices then?
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No not quite.

We did have that "recession that we had to have", house prices did gradually decline over a period of approximately ten years.

It may be worth noting that many borrowers were still enjoying the protection of the13.5% interest rate ceiling that had only just been abolished a few years prior.
 
trainspotter said:
I repeat ...... 95% LVR has been around for 20 plus years. Look at the carnage this has caused. Just LOL on this chestnut. But but but this is different this time. No different to all the other times IMO.
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Twenty years of a one way market, I think you are premature in your derision oh wise one.
 

Did they really? Ummmmmmm ........ guess again.

June 1989 17% 1R average house price $138,600 .... June 1999 6.5% IR average house price $204,600.

 
Mr Z said:
Twenty years of a one way market, I think you are premature in your derision oh wise one.
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Nope ..... market has cycled three times in the last 20 years with periods of stagflation. 1991, 2001 and present day.
 


Agreed again, I dont gear more than 80% not only cause of the mortgage insurance issue, but because I feel 20% price swings are entirely possible at any time.

Furthemore to those reasons, I do not like over-gearing in general, due to the potentially awful impact of "counter-party risk".

Slightly of track I know, and I got kicked in the head when suggesting 99% gearing on various derivatives is a bad idea.

In business I have more than once seen how one counter-party not paying up can lead to a chain of liquidity issues
 
House prices didn't go up more than usual maybe a few % over the years, we had a greed driven gambling spree, the game has closed down some lost, some had a win.
Now we have to wait until the gambling tables open again in about 10 yrs time to find out the results.
 

I'll tell you why. Because the real estate industry is corrupt. The spruikers running this ponzi scheme lie through their teeth, tell you anything, in order to keep the bubble inflated for just a little bit longer. I take any media report about property with a pinch of salt, lending figures, capital growth, rents through the roof etc etc. All nonsense.

Take auction clearance rates for example. They're published every week in the MSM and every week they "appear" to be rising even though they're not really. How do they do this? Well first of all as explained here: Auction Clearance Rates Fudged, they falsify the initially reported figures by not including most of the failed auctions when calculating the initial clearance rate, so they might report an initial clearance rate of 61%. Then later in the week they quietly revise this down to maybe 54% when the failed auctions are reported.

Then next week they do the same and report the clearance rate has risen from 54% to 60% or whatever their initial falsified figure is, rinse and repeat. Clearance rates always going up! It's a total sham, like the rest of the real estate market!

Zoran.
 
So according to Zoran Theorom it is the Real Estate Agents fudging figures that is keeping the bubble afloat?

I have to agree that Real Estate Agents are not worth a pinch of bovine exreta and will bend the truth to get you to sign because if they do not sell then they do not eat. Part of the sale process is to get the listing/auction/paperwork signed etc but surely this is not the only factor keeping this massive Ponzi scheme airborne?
 
trainspotter said:
Did they really? Ummmmmmm ........ guess again.

June 1989 17% 1R average house price $138,600 .... June 1999 6.5% IR average house price $204,600.
Click to expand...

It appears that another creative redefinition of a commonly used English word has emerged. It would seem that the word "guess" has now been equated to the expression of conclusion/s drawn from participation in, and observation of actual verifiable events in the real world/universe.

Yes those four residential houses that I purchased between the years of 1988 and 1998 were just "guesses".

I didn't get to buy any houses after my last "guess" in early 1998 because by then, prices were starting to inflate beyond my preferred target range.

Did that table enable those vendors that I personally witnessed ("guessed"!) to recoup their losses when they purchased and subsequently resold at lower prices during that approximate decade?

Did I only "guess" that the realtor whom, based upon an erroneous entry in a State Government report, verbally challenged my ownership of one of my houses?

Were any of your precious "tables/graphs", perchance, founded on data derived from such a "reliable" government source (i.e. one that is evidently capable of reporting "phantom" sales), or did the data originate from our friendly realtors whom seem to have earned such a longstanding reputation for "honesty" and "integrity" in their various business dealings?

To date my "guesses" have proved to be profitable as is evidenced by my real estate portfolio and my various trading and bank account balances. These results could not have been achieved on bank interest and meagre wages alone - the residential property decline that I reported in my post was critical to my successes as it placed me in "positive gearers heaven" and provided much needed start up capital for my trading activities.

I commend any investor whom courageously chooses to confide in the various statistical and economical reports whilst failing to pay due regard to observable real phenomena. Such behaviour will undoubtedly increase the probability of me "guessing" my way onto the winning side of naive investors' losing transactions.

P.S. I'm "guessing" that somebody is going to want me to produce the evidence to support my dissertations, so my response in advance is that I already know what I saw and I don't owe anyone proof (any sentient being is capable of manufacturing evidence!) of my own personal discoveries! So just keep on believing those pretty charts, statistics, theories tabloid articles etcetera whilst I keep "guessing" my way to greater profitability.
 
ERMmmmmmmm ....... just a coupla questions cynic.

1) How can you become positively geared in a declining property market?

Rental income greater then repayments would come about if the interest component was lesser due to declining rates but not if the value of the property was in reverse? Surely rents would go down if property prices are falling? The much needed capital that you stated to begin your trading activities ........ did this come from the leftover rental money?

2) If property declined during this period why did you not sell up this poor investment?

3) How much did it decline and where was your stop loss point?

If property prices declined over a 10 year period when interest rates were at 17% from 1989 - 6.5% 1999 then why is it that every single chart or statistic says differently?

Evidence on the other hand correlates to the uptick. Land titles office reports straight to the ABS btw so pretty hard to dodgy the numbers when the land transfer has gone through.

You seem like a person of your word there cynic so no need for proof or otherwise.

P.S. Congratulations on your property portfolio, various trading and bank account balances.


http://www.aph.gov.au/library/pubs/rn/2006-07/07rn07.htm
 
Cynic
You have done well which is possible on some property and I guess you have sold all at a profit and now looking at the next bubble PM's I guess?
 

http://www.theaustralian.com.au/bus...t-the-gold-coast/story-e6frg9gx-1226071929048

(If you build it they will come)

This may well be a turning point for the future of property prices on the Gold Coast. Both Sydney and Melbourne (certain parts) have seen a huge influx of Chinese purchasers over the past few years. Maybe the next "hot spot" for the Chinese will be the Gold Coast ?
 

http://www.theaustralian.com.au/bus...a-may-be-popping/story-e6frg90x-1226072284347


The above statements (in bold) are the key points that could create the flow on effects to our economy and in turn affect Australian property prices.
 
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