The future of Australian property prices

[KurwaJegoMac]

I'm not trying to be selective but would like the discussion to be more balanced. Well located and well priced properties appear to be doing well. I own a Kedron unit which is close to the soon to be completed northern busway. There appears to be a big demand for the units in the complex. About 4 units have come onto the market recently and have all sold at great prices within a few weeks of listing.

Brisbanite, many of us would like the discussion to be balanced but it never will be - there's much too much confirmation bias occuring. Most like looking at the results for overall median figures or an individual suburb or a friend's sister's cousin's brother's neighbour and then extrapolate that to the entire market. It provides comfort and an excuse for those too afraid to make a move. As you have pointed out some suburbs are doing very well, and will continue to do so. Some suburbs will/have crashed and will continue to do so.

What if we change the asset class - if the stockmarket is sideways or falling does that mean all stocks are/will be? Of course not. If an industry 'suburb' is falling, does that mean all stock within it are too? Of course not. But property is different right? It doesn't behave the same as other asset classes right? You can't have anomolies in the property market, it's all one big, homogenous market.

There are a lot less opportunities and you need to work harder, but good opportunities do exist.

 

[nth brisbanite]

There are a lot less opportunities and you need to work harder, but good opportunities do exist.

I totally agree with you. There are always opportunities even in a falling market. When shares were dirt cheap in the middle of the GFC I bought as many shares as I could afford. My son was given the chance to buy an inner city Brisbane house next to the one he currently owns. Together the 2 properties will be worth a lot of money as they zoned in an area which is zoned for 10 storey units.

To get back to the thread, I believe that prices will continue to fluctuate, as they always have, with no large falls in the immediate future unless the Australian economy completely "tanks". Within this homogenous market there will be plenty of opportunities as long as you research well and don't listen to all the doomsayers out there.

 

[KurwaJegoMac]

Some areas are getting hit hard - predominately 'non-traditional' housing (seasonal, coastal, regional, etc) but in 'mortgage belt' areas there's a lot of mixed results. Generally speaking those that have skyrocketed due to being in vogue are coming off their highs but the more steady areas are still chugging along nicely.

I think we will have this continue for a while yet (mixed results, lots of sideways movement but an underlying positive trend, weaker than what we've had in the last 2 decades). The economy is not growing at a blistering pace but neither is it performing badly (unless you compare it relative to the boom years).

I'm still supporting a rate cut in upcoming months, which will boost prices. I was derided a few pages back on this thread for going against what Glenn Stevens was touting to the media - surprise surprise he's cut growth forecasts and is not as supportive of a rate rise. The global economy is still weak (I believe mostly owing to overly irrational fear) but watch US manufacturing take off in the next few years - the currency is so devalued that companies will switch from imports to producing. Up goes inflation, debt whittles away.

I think the whole thing is dodgy personally but ey, might as well go along for the ride.

/end off-topic ramble

 

[Knobby22]

Some areas are getting hit hard - predominately 'non-traditional' housing (seasonal, coastal, regional, etc) but in 'mortgage belt' areas there's a lot of mixed results. Generally speaking those that have skyrocketed due to being in vogue are coming off their highs but the more steady areas are still chugging along nicely.

I think we will have this continue for a while yet (mixed results, lots of sideways movement but an underlying positive trend, weaker than what we've had in the last 2 decades). The economy is not growing at a blistering pace but neither is it performing badly (unless you compare it relative to the boom years).

I'm still supporting a rate cut in upcoming months, which will boost prices. I was derided a few pages back on this thread for going against what Glenn Stevens was touting to the media - surprise surprise he's cut growth forecasts and is not as supportive of a rate rise.

Good call. I agree with you but reckon the local economy is mainly slowing due to lack of confidence in my opinion and so could easily take off again if this improves. The world is on the way out so I can't see the big recession here yet. Maybe in a few years.
Do you agree?

 

[KurwaJegoMac]

Good call. I agree with you but reckon the local economy is mainly slowing due to lack of confidence in my opinion and so could easily take off again if this improves. The world is on the way out so I can't see the big recession here yet. Maybe in a few years.
Do you agree?

I see two main areas of slowdown: Investment in various asset classes and discretionary spending.

Regarding investment: People are more risk averse after the GFC and many have concerns about the Eurozone, Aus reliance on Asia and the US debt - property sales have slown, business lending is down and our stockmarket has not rebounded as much as say the NYSE, although this may be due to the high AUD making AU equities expensive for foreign investors and low USD making US equities cheap. I'm not too convinced by that argument as the US economy has been very sluggish yet they have experienced a greater return than our ASX since the lows of the GFC.

Regarding spending: It's a mixed bag but a lot of retail has gone down - the key culprits appear to be those companies which sell easy to import goods. Think books, clothes, dvds, gadgets, etc - most retailers who are experiencing sluggish sales are selling these sort of goods (makes sense that they'd be down considering they dont adjust their price to the same extent as the appreciating AUD and so consumers just buy them over the internet). On the flip side spending on meals, cinema, coffee and those sort of things are still experiencing great sales - stuff that people don't import with the high AUD. Also rate of savings have increased slightly but not drastically. So what does that tell us? If the economy was as bad as the papers like to make out, then people would be cutting back on everything from coffee to books, to alcohol. Yet they're not - they're buying easy to import goods over the net and still continuing with normal spending habits.

A slowdown in retail is never a good thing, people's jobs will suffer but the situation is no where near as bad as the papers try to make it out. After all, a shocking headline attracts more people. I don't see coles, woolworths, village cinemas, etc having a whinge - only the retailers.

I agree with you in that it could easily rebound - and it will - the question is when? I see it building up as a coiled spring and expect flat/slightly positive times ahead. My only real concern is that fear overwhelms the markets and we get a credit squeeze and quick deleveraging. Then we'll see asset prices hammered just like they were in the US during the GFC. But with markets pushing our currency up past the $1 market, our banks having strong balance sheets (albeit tied to RE) and interest rates with room to move in the event of a slump we're a lot better placed than many believe.

 

[Knobby22]

At the risk of sounding like a mutual appreciation society, I reckon you are right on the ball.

 

[trainspotter]

I wrote this on the 23rd August 2010

Personally in my opinion I reckon the property price for Australia for the long term is down nationally overall. Not the raving lunatic harbringers of doom and gloom style but more of a deflation than a massive POP. 3 - 5 % would be realistic terms.

This being said there will be places that will suffer Chernobyl style meltdowns. Ipswich in Brisbane for one is going through "mortgage stress" right now. DYOR.

Also there will be isolated pockets that will keep ticking over and returning modest returns. Pick places on the coast that are not entirely overheated and maybe have a future plan of infrastructure type projects in front of them.

I know this is sitting on the fence style of running commentary and not really telling everybody what they don't already know. The truth is we really will not know for another few years as the market levels out. Lotsa factors to consider from outside influences that will determine whether it is flight or fight time for the RE housing regime of Australalia. (no that is not a typo ... announciate it in your head)

BWTFWIK - So nothing has changed in the 12 months then? Business as usual

 

[kincella]

I believe the biggest most profound problem with our economy is the current govnut.
You will not see an improvement, or confidence until they are kicked out.
All that wasteful spending by rudd, then the people struck with fear of his Ets, that ETS stalled any confidence that was already in a shambles. Then to cripple what was left with any confidence in the mining industry, he effectively wiped it out with his mining tax.
In the middle of all this, swan kept raising interest rates, when every other developed country had dropped their's to zero....I say swan, because the rba has not been independent, and stevens kept up the ridiculous idea that the country was hot,,,,it was a farce, to support swans 'chest thumping antics' that swan alone had saved us from the GFC...
Stevens and swan raised rates non stop right thru the GFC, then by mid 2008 when the disastrous figures came out, they dropped them 3%...
History is repeating, they raised the rates 8 times in the past year, effectively crippling
the economy.
The banks stopped lending to small business in late 2007...(when stevens again, in his support of labor, raised rates to counteract the claim that rates stayed low under a liberal govnut...if you recall he raised them leading up the the 2007 election, 6 months into the GFC)
Then to wipe out any semblance of common sense , she came in....and its simply been, one major disaster after another, almost a new case of hit the voters where it hurts, on a weekly basis.
I have thought the rising of our dollar against the US, is simply that we now enjoy junk bond status in line with the US...we are on the same footing, with huge borrowings, and nothing to show for it, no infrastructure, improvement in health etc...just wasted money that has to be repaid...let alone the mounting interest repayments on those debts..
No wonder housing is flat, the people have no confidence in what this govnut will do next. I note they have been spending 36 billion on reno's alone....they are not upgrading to buy the next house, they are staying put, and upgrading their existing homes....but they will be in a prime position, when the economy recovers.
We are not seeing the US style of huge drops in prices....and there are good reasons for that...
As others here have stated, some places are flat, some are growing up to 30%...and there is still buyer activity out there....interest rates around 7% are attractive....
Everytime the stock market takes a beating, you will see investors move away from stocks, and back into bricks and mortar.
The govnut has not kept stock of the foreign buyers, so who knows how active they have been, and what rorting has gone on there.
I am expecting bad figures out again by the end of July, and a drop in interest rates as in 2008.
Confidence will return when we get rid of this govnut, and get a sane, sensible, conservative govt back in office.
In the meantime, pray for your jobs if you are employed by a small business. SME's have been doing it exceptionally hard, with the finance needed to cling on, wiped out by the banks.
The carbon tax has had an effect where small business are closing down now, before it has come in, rising energy costs have put paid to any hope of hanging in there.
The backlash expected from this gabfest tomorrow, should seal labor's fate, and most of us pray they will be gone within a few months.
The alternate of a CT will be total disaster for Australia.

 

[UBIQUITOUS]

Well well well. Here it is...in black and white...in the msm - shonky reporting practices outlined. REIV attempts to defend what it is left of their integrity.

http://www.theage.com.au/victoria/agents-withhold-house-price-data-20110709-1h859.html?from=smh_ft

Agents withhold house price data

Chris Vedelago and Cameron Houston
July 10, 2011
Comments 15

Nearly 30 per cent of auction results published by the Real Estate Institute of Victoria in June were missing critical information.
MELBOURNE real estate agents and vendors are increasingly withholding or manipulating data provided to the Real Estate Institute of Victoria, prompting calls for the mandatory reporting of all property sales to protect consumers.

A Sunday Age investigation has found that 27 per cent of all auction results published by the industry body in June were missing critical information - including the sale price, passed-in price or the reserve. Many auctions were not reported at all, distorting clearance rates that are used by buyers and sellers to gauge market strength.

Nearly one in five properties sold at auction are now reported to the REIV with the price marked ''undisclosed'' - a significant increase from last year's property boom, up from 11 per cent then to 18 per cent now.

Advertisement: Story continues below
The investigation also revealed that 43 per cent of properties scheduled for auction in June had no published quote range, further frustrating buyers' attempts to obtain basic information. With Melbourne's clearance rate slumping over the past year - only about half the properties on offer are selling under the hammer - agents are increasingly refusing to disclose information about failed auctions. The passed-in price, vendor's reserve price or both were withheld for 20 per cent of all properties that were passed in last month.

At the peak of the boom in March last year, when auction clearance rates regularly topped 80 per cent, only 15 per cent of properties passed in were missing this key information.

Real estate agents and vendors have been accused of deliberately omitting auction information to conceal poor results and create a more positive perception of Melbourne's ailing property market.

Last month, agency RT Edgar sent a newsletter to clients warning there was a ''serious question mark'' over media reporting on the market because many agents were withholding sale prices and passed-in results. RT Edgar director Michael Ebeling said agents who were doing the right thing were being disadvantaged

because their competitors' clearance rates seemed better because they withheld information.

''We cannot see how the media is getting reliable sales statistics, and as a result are reporting misinformation about the market,'' the email said.

Despite conceding that the reporting system is a ''bit rubbery around the edges'', the Real Estate Institute of Victoria has refused to back calls for compulsory reporting of all auction results.

Prominent real estate agent Barry Plant backed calls for mandatory reporting of all auction results to promote transparency.

''What happens at a public auction is obviously in the public domain. So rain, hail or shine, whatever happens on the day, the sale price must be included in all auction reports,'' he said.

He said agents often refused to disclose the price of a house sold at or after auction when the results were below vendor expectations. ''There's a lot of agents who have been embarrassed by the falling market because they've told a vendor they could get a certain price and failed,'' Mr Plant said.

''The trend is more pronounced at the top end of the market, and I know of several agents who are doing this as policy.''

REIV head Enzo Raimondo defended the institute's voluntary reporting methodology, saying the ''small increase'' in the number of undisclosed results did not affect the integrity of the system.

''It is not the role of the REIV to force home owners to publicly declare the amount for which their homes sell. If a person really wants to know the price for which a home sells, they can attend the auction,'' Mr Raimondo said.

But buyers advocate Christopher Koren said many agents were resorting to ''sneaky behaviour'' to mislead buyers over the true state of the market and that mandatory reporting was ''an obvious and necessary reform''.

''When agents and vendors are selling a property, they want the world to know it's on the market.

''But when it fails to sell or doesn't get the price they want at auction, we start seeing smoke and mirrors,'' Mr Koren said.

He criticised the REIV for its failure to introduce tougher reporting measures and called on the state government to take action.

But Minister for Consumer Affairs Michael O'Brien said the government had no plans to intervene. ''Mandatory disclosure would jeopardise the privacy of many people,'' he said.

The data collected by the REIV is regularly used by media organisations, including The Sunday Age, to assess the state of the property market.

The Baillieu government made a surprise decision last week to relax regulations protecting consumers from agents who buy a property they have been hired to sell despite the obvious conflict of interest.

Mr O'Brien said the onus should be on real estate agents to self-regulate.

 

[trainspotter]

Non reporting has been going on for years UBI. Get used to it. Enzo enjoyed it. The ABS goes by bank standards as well as Land Titles Office measurements. Can't fudge the numbers when the Land Transfer Office has been paid and settlement has occurred into another name by the bank who owns the mortgage. State Revenue Department has a say in it as well. If you have purchased another property you have to pay stamp duty on it. These are the figures that count. Not the Enzo variety.

These are the figures to take notice of.

 

[Aussiejeff]

Non reporting has been going on for years UBI. Get used to it. Enzo enjoyed it. The ABS goes by bank standards as well as Land Titles Office measurements. Can't fudge the numbers when the Land Transfer Office has been paid and settlement has occurred into another name by the bank who owns the mortgage. State Revenue Department has a say in it as well. If you have purchased another property you have to pay stamp duty on it. These are the figures that count. Not the Enzo variety.

These are the figures to take notice of.

Yes, but Ubi still has a point.

REIV is a party to actively promoting the dissemination of mis-leading information to consumers.

Apparently, Minister for consumer Affairs O'Brien cares not a toss about this - apparently, he feels safe enough ensconced in his Ivory Tower to withstand the slings & arrows heading his way from a growing band of disgruntled consumers & RE agents alike - for now.

Fair suck, if businesses promote products and or services through false advertising, they can expect to be hauled over the coals by the ACCC. So, why is this Minister (as have previous Ministers) showing such dis-interest in what amounts to false advertising practices in the RE sector with respect to auction clearance rates? I think we can all guess the answer to that - Enzo has many "friends" in high places?

Well, the VIC gumint places a HUGE emphasis on the ongoing health & "buoyancy" of the RE housing sector - look at all the handouts they are throwing at the moment (very generous FHBG's & stamp duty rebates etc..) from the Public purse (a fair bit of everyone's taxes to support a privileged few). That's right. I said privileged. If you are fortunate enough to own outright or are in the process of purchasing a home I consider that a fine "privilege", and well done you.

IMO it's a hoary myth that pollies keep banging on about how it is every Australian's "right" to own a home. Those "rights" vanished quite some time ago, and were last seen fast disappearing towards the never-never.

Consumers consume more than physical goods & services. In this day & age, INFORMATION consumption is big business and becoming increasingly so. Pollies should be concerned at the veracity of that information - especially for a sector that has such a profound impact on the local and wider economies. Consumers deserve better than this shoddy fob-off by O'Brien and Co. If that is the best he can offer, electors should boot him out of his seat come next election.

IMO, of course

 

[freebird54]

RE. Mortgage stress

in posts above - many areas like Ipswich have homes sold by seminar and as we know those prices could be loaded up by huge amounts.

Re. Published research by "experts"

"He who pays the piper calls the tune" - lots of it is rubbish and not only in real estate.

If one of SE Queenslands most experienced agents "allegedly" pays way too much for a beachfront property sold to him by another top agent what hope is there for the rest of us?

http://www.goldcoast.com.au/article/2010/10/13/262641_crime-and-court-news.html

but of course the truth may never come out - Just google the people involved

http://www.ozripoff.com/report-view/1429-rod-lambertthe-real-truth

or

http://www.theaustralian.com.au/new...of-mermaid-beach/story-fn6tcs23-1225872727258

 

[Glen48]

Rod Lambert is my cousin. His Father David opened up a nursery called Evergreen on the G. coast in the 70's when they were trendy.
Dave did the right thing by all and died, the 3 kids ended up collect the dividends from the sale of the nursery some years ago and are now all bankrupt.

The joys of real estate.

 

[trainspotter]

Yes, but Ubi still has a point.

REIV is a party to actively promoting the dissemination of mis-leading information to consumers.

Apparently, Minister for consumer Affairs O'Brien cares not a toss about this - apparently, he feels safe enough ensconced in his Ivory Tower to withstand the slings & arrows heading his way from a growing band of disgruntled consumers & RE agents alike - for now.

Then this matter should feel the full force of the law.

The Real Estate and Business Agents Act 1978 clearly states that misleading and deceptive representations is illegal. Get Today Tonight to put a fright up them.

 

[trainspotter]

Rod Lambert is my cousin. His Father David opened up a nursery called Evergreen on the G. coast in the 70's when they were trendy.
Dave did the right thing by all and died, the 3 kids ended up collect the dividends from the sale of the nursery some years ago and are now all bankrupt.

The joys of real estate.

So the kids went bankrupt and not the land?

 

[financialdonk]

House next door to my parents in small coastal mid-west WA town has been decreasing price dramatically over the past 6 months.

2 storey, right on the ocean started at 840k...then 799...then 720...then 650...now 599!

29% reduction and not sold yet

1 storey houses at the bottom of the hill with no ocean views were selling for more 3 years ago.

Town has next to no employment growth opportunities in the immediate area. Can't see it returning to its peak for a loooong time.

 

[KurwaJegoMac]

So the kids went bankrupt and not the land?

Didn't you know that bankruptcy occuring several years post-sale of real estate is the fault of real estate speculation?

The joys of real estate indeed!

 

[KurwaJegoMac]

New figures for May - Dwelling sales fallen by 0.1% since April, slight decrease in investor purchases but slight increase in owner-occupier purchases. Aside from the 2009 GFC spike things look pretty ordinary.

Business as Usual it seems.

http://www.abs.gov.au/ausstats/abs@...mmary&prodno=5609.0&issue=May 2011&num=&view=

*EDIT: Gotta love the 'seasonally adjusted' figures. 2.9%? Possible owing to the winter months but seems a bit high to me personally.

 

[trainspotter]

Didn't you know that bankruptcy occuring several years post-sale of real estate is the fault of real estate speculation?

The joys of real estate indeed!

AHA ! Right you are indeed.

 

[Glen48]

Buying Land is like a casino token it has no value like Gold .
You pay for land or a token and speculate you will make more than the seller some times you do,
Like any gambling or have to know the profit is maxed out and bail out.