The future of Australian property prices

[Agentm]

http://www.debtdeflation.com/blogs/2011/08/27/the-chopping-block/


keen is explaining it all too clearly yet again

nice article

this update also helps

http://www.debtdeflation.com/blogs/2011/08/28/updated-credit-accelerators/

 

[Dowdy]

my speciallity on the other hand, is in providing the roofs over your heads...or providing the real estate for the shops that you may frequent, to spend some of those zillions that you earn....

where is all the angst you express.. coming from...
we are all in this together...are we not ?
meanwhile...out there in the real property world ......
oh, why bother...you cannot see the woods for the trees anyway...
so why bother......
you would be hard pressed to find any of the stock gurus, ceo's that you diligently follow....
are renters
or against property investments
or do not hold an impressive property portfolio

Well then i'd like to thanks you for contributing to the oversupply now that we have which is now driving prices down.

Please keep building - takes the worrying out of my game.



I just smile in pity now every time I drive pass a multi development or a high rise getting built, it just shows how blind and desperate developers are and are just increasing the chances of a price crash.
What house shortage?! There never was one to begin with

 

[Aussiejeff]

Well then i'd like to thanks you for contributing to the oversupply now that we have which is now driving prices down.

Please keep building - takes the worrying out of my game.



I just smile in pity now every time I drive pass a multi development or a high rise getting built, it just shows how blind and desperate developers are and are just increasing the chances of a price crash.
What house shortage?! There never was one to begin with

Exactly.

It's timely to reflect on this "expert" quoted commentary from Nov 2010 -

Property Monitors chief economist Dr Andrew Wilson said housing demand and prices would pick up in mid-2011 on the back of wages and population growth and the resurgent mining sector.

"What we are seeing in Melbourne is a pause in the market, mostly caused by a fall off in the bottom end of the market, but it's not a bubble," Dr Wilson said.

"The market was unsustainable because it couldn't be sustained by incomes, but now we are starting to see wages growth that will again fire up demand."

http://www.theaustralian.com.au/bus...-homes-stockpile/story-e6frg9gx-1225957998574

I wonder what the good Dr would be saying NOW, with no mid-year 2011 pick up in housing demand and prices, middle to high range property auctions & sales slumping (let alone the "bottom end") and inventories of unsold, overpriced properties still soaring? Perhaps he could do a refresher course with the good Professor ProBots to bring him up to date on the Real state of Real Estate?

 

[Bigukraine]

Exactly.

It's timely to reflect on this "expert" quoted commentary from Nov 2010 -

http://www.theaustralian.com.au/bus...-homes-stockpile/story-e6frg9gx-1225957998574

I wonder what the good Dr would be saying NOW, with no mid-year 2011 pick up in housing demand and prices, middle to high range property auctions & sales slumping (let alone the "bottom end") and inventories of unsold, overpriced properties still soaring? Perhaps he could do a refresher course with the good Professor ProBots to bring him up to date on the Real state of Real Estate?

Maybe the doc should go for a stroll up mt Kosi ...... LOLMROF

 

[Agentm]

aussiejeff

what i found remarkable about the thread, is that the pro property "sunshine and lollipops" posters largely spoke of their triumphant successes, which is what the bubble was creating.. returns per year greater than income.. and despite pointing out that what they were experiencing was the fruits of a bubble, they blindly could not acknowledge the bubble was in play

whilst singing their own praises, the attempts to let them know that the "this bubble is different" argument, or indeed the "this one is not a bubble at all" argument were both very unrealistic appraisals of what the indicators that people like keen were pointing out year after year with monotony.

the alarm of the rise of property for a decade is now there for all to experience, with most australians now infected with high debt and limited spending capacity,, retail is now in a death spiral, generating some pressure on unemployment numbers..

imho tourism must be stressed with a high aus $

i cant see the government looking to drive up the property prices again with another program, but i wouldnt put it past them.. these guys are capable of anything..
'
the bubble is as big as they could pump it imho, but its not outside the realms of insanity for a state or federal program to be initiated to perhaps crank the pumps up again..

lets hope it can ease back 40% and we see property affordability again and spending power available again to the households.. generating a healthy nation of consumer spending.. might take a few decades, and a catastrophic global financial event may induce an accelerated path for it.. but imho a rational and well timed few decades of easing of this hyper housing property price bubble is well and truly overdue and needs to be allowed to occur without interference..


all imho and dyor

 

[Tysonboss1]

aussiejeff

what i found remarkable about the thread, is that the pro property "sunshine and lollipops" posters largely spoke of their triumphant successes, which is what the bubble was creating.. returns per year greater than income.. and despite pointing out that what they were experiencing was the fruits of a bubble, they blindly could not acknowledge the bubble was in play

Gee, what about all those people saying I was an idiot back in 2007, because I had bought a few houses a few years earlier at a fair price and just planned on holding it and collecting rent with the belief that over time both my income and property value would hold pace with inflation.

I was considered dumb because the stock market was the place to be, thats where all the growth was etc.etc. They were the ones who failed to see a bubble.

Meanwhile my properties have more than exceeded expectations, and could fall and still more than outperform the target I had.

I bought property in the early 2000's with the idea that it would earn around 4% income after costs, and My income and capital would rise along with inflation, It has far exceeded this in both income and capital value.

 

[FxTrader]

Gee, what about all those people saying I was an idiot back in 2007, because I had bought a few houses a few years earlier at a fair price and just planned on holding it and collecting rent with the belief that over time both my income and property value would hold pace with inflation.

I was considered dumb because the stock market was the place to be, thats where all the growth was etc.etc. They were the ones who failed to see a bubble.

Meanwhile my properties have more than exceeded expectations, and could fall and still more than outperform the target I had.

I bought property in the early 2000's with the idea that it would earn around 4% income after costs, and My income and capital would rise along with inflation, It has far exceeded this in both income and capital value.

Looking in the rear view mirror once again Tyson? The recent past will be the future for property prices? Need you and the other property advocates here be reminded about the title of this topic yet again? "The future of Australian property prices". Do you have any evidence at all supporting your "belief" (faith) that property prices will "hold pace with inflation"?

A rising tide of household debt has lifted all house prices and that was certainly the case post 2007 for property. Problem is that tide is now receding, unsustainable household debt levels are being wound back, unsold housing inventories are rising and unemployment outside the resources sector is increasing with momentum. So the future direction of property prices in general looks down, down, down. Unless the RBA or government comes to the rescue, this downward trend in property prices will continue apace.

 

[Tysonboss1]

Do you have any evidence at all supporting your "belief" (faith) that property prices will "hold pace with inflation"?
.

Based on the prices i paid for the property I own, I can't see them falling to below an inflation adjusted amount equal to my purchase costs, and I can't see the rental yield falling below an inflation adjusted rental return it was recieving when I bought it.

If you want to trash a "Bubble" make your way to the many threads disscussing Gold.

Do you have any facts that show that property prices will return to the levels of 2001 or that the rental yields will drop to those levels, It seems very unlikly to me considering the inflation during that time and the fact that prior to 2001 there was already a period of stagnation which in itself added to the boom,

Part of the boom we had is speculative froth,

But a larger part

- was a correction from years of stagnation prior
- was a result of steady inflation since
- was the result of growth in number of house holds (population growth etc).

So offcourse a there is a good chance some of the spec froth will disappear, but any fall or stagnation outside of that would be an over reaction and again intime create an opportunity.

 

[satanoperca]

But a larger part

- was a correction from years of stagnation prior
- was a result of steady inflation since
- was the result of growth in number of house holds (population growth etc).

Come on.

How about a massive expansion of debt to leaves us more indebted per household than the US.
A belief that it can continue on forever, well that belief is soon to become a nightmare for many who will be left scared for decades.

But you go ahead Sunshine and keep believing, there needs to be someone leading the lost cause.

Cheers

 

[The Falcon]

I VERY much dislike how that graph tries to superimpose America onto it, inferring a decrase to 50% of peak prices.

This type of graph is NOT what I am suggesting for australia, but more of a slow, plateau slightly declining (20% of real loss (of which we have seen 5% over the past 6 months)) then a tack up slowly, along a more reasonable course.

Anyone who thinks properties will halve here, is very brave, but a pullback is inevitable, as prices cannot and will not continue to grow faster than inflation.

I agree with this position.....there are a lot of people that dream of 50% drop but its never going to happen. On the other hand, if you expect to see much growth in the next decade you are going to be very dissapointed. As always the property market is really many markets and some will fair better than others, regional coastal markets will take a bit of a hammering i think.

 

[Tysonboss1]

But you go ahead Sunshine and keep believing, there needs to be someone leading the lost cause.

Cheers

I will, I have have little debt and low expectations,

As I said, All I want is my capital preserved against inflation (based on my entry costs) and a rental return that will grow over time with inflation.

I believe my property investments will meet my expectation because I only buy when it makes sense based on a value model ( hence why I haven't bought for years).

But as I said I wouldn't mind buying another one, So I eagerly await the correction that the doomsayers predict, However as I said I question the severity given a number of factors.

 

[satanoperca]

So I eagerly await the correction that the doomsayers predict, However as I said I question the severity given a number of factors.

Why are they doomsayers if they are only predicting a correction and not a crash.

Bulls are just as extreme it seems as bears, both over exaggerate.

High property prices do not benefit society as a whole. Massive debt erodes our standard of living.

Cheers

 

[Glen48]

The Falcon you are correct there are a lot of people that dream of 50% drop but its never going to happen
you need to pray it stops at 50 because it will be going down for years just like USA is still doing after 4 yrs.
In 2035 you can look at the depression ending and thing turning.
Gold is predicted to go to $1330 so cash in when it does.

 

[The Falcon]

The Falcon you are correct there are a lot of people that dream of 50% drop but its never going to happen
you need to pray it stops at 50 because it will be going down for years just like USA is still doing after 4 yrs.
In 2035 you can look at the depression ending and thing turning.
Gold is predicted to go to $1330 so cash in when it does.

thanks for the tip Glen. : I wont be doing any praying though.......preying possibly

 

[medicowallet]

OH NO!!!!!

I have to purchase a house in 3 months time... probably gonna crash in 4 months lol..

Darn kids and needing places to live and all

 

[Tysonboss1]

Why are they doomsayers if they are only predicting a correction and not a crash.

Bulls are just as extreme it seems as bears, both over exaggerate.

High property prices do not benefit society as a whole. Massive debt erodes our standard of living.

Cheers

Because I was refer to the correction " they" predict (50% drop) in contrast to the one I predict (10%max drop with some stagnation).

 

[medicowallet]

I was taking the train into work today and noticed a newspaper on the seat.

So I was a little bored, I normally get all my news from ASF,

this was, no joke!!, the first article I read

http://www.theage.com.au/business/house-prices-extend-falls-in-july-20110831-1jkvh.html

So 1.4% for the month in Melbourne drop, for July, before a lot of negative sentiment came through,

so for a person with 10% deposit, they lost 14% for the month, OUCH, someone with 50% equity, and annualised 30%ish loss, oucho!!

Can't wait for August, september and November figures to come through to give us an idea what is really happening

I don't know what this means, just keeping it real for the true believers.

MW

Sunshine, lollipops, and even less bubble.

P.S. Has anyone seen Robots?

MW's almost certainly certain Kill List on ASF

1. Robots

 

[Tysonboss1]

I normally get all my news from ASF,

This explains alot. :

 

[Tysonboss1]

So 1.4% for the month in Melbourne drop, for July, before a lot of negative sentiment came through,

So hows that compare to some one that invested in the all ordinaries with 10% deposit over the same time frame.

if they had held to the 8th of Aug it would be down nearly 10%,

yikes!!!!! they just lost 100%, and probally wouldn't have the option of just riding it out they would be a forced seller through a margin call.

 

[satanoperca]

So hows that compare to some one that invested in the all ordinaries with 10% deposit over the same time frame.

The vast majority don't leverage up that high with shares.

How many people do you know that have a 90% LVR on their share portfolio.

Not many, if any.

Cheers