The future of Australian property prices

[medicowallet]

Add to this the stocklands of the world developing land and trying to move it, as opposed to gouging the consumer. They will offer less when they purchase land parcels, and work on lower margins.

Then the GJ Gardners of the world will continue to offer incentives for people to purchase, then drop prices (and wages) to try entice people to keep building.

More affordable housing = cheaper rents.


Add to this, unemployment rising. Single income families cannot afford to pay $550+ per week, especially as our dollar continues to tank and petrol prices rise.

But we will all be happy, as we sit at home pirating movies over our NBN, powered by 25% green energy power, whilst contemplating a new tax to cool our climate 0.004 C over the next whatever years.


Paradise, and sunshine

MW

PS Where is Robots?

 

[Tysonboss1]

Home owner's who think the market will recover will want to rent out their home and move in with their parents

I don't really get how your joining those dots, Why would a drop in property prices suddenly make people want to move in with their parents?

That could only be likly if massive unemployment was at hand.

But a far more likely out come would be a small % people sell their home and then rent a similar property, inwhich case the net effect on rents would be zero.

 

[medicowallet]

I don't really get how your joining those dots, Why would a drop in property prices suddenly make people want to move in with their parents?

That could only be likly if massive unemployment was at hand.

But a far more likely out come would be a small % people sell their home and then rent a similar property, inwhich case the net effect on rents would be zero.

It is a momentum/snowball effect too.

k,, say prices drop 10%, but the disneyland living dreamers think that their property is "different"

So what happens is clearance rates plummet, and sales rates drop, and purchasers start to look for REAL bargains.

Therefore prices drop further, even with low volumes.

Kind of what is happening now. Purchasers have woken up to the con job that the real estate industry fed them, and the banks went along with.

Painful times ahead for some of us, especially housing brainwashed who purchased anything since 2010.

sunshine and smaller bubbles

MW

PS Where is Robots?

 

[Dowdy]

So what is going to be the driver behind these cheaper rents.

More competition on the market. Simple

Add to this, unemployment rising. Single income families cannot afford to pay $550+ per week, especially as our dollar continues to tank and petrol prices rise.

One thing i got to correct you on - our dollar isn't tanking. Sure i'd like to see it back at 1.10 but i'm sure i'll be up there again sometime soon

 

[robots]

Hello,

thanks Matty77, I just read the site most days

although not much in the last 50 odd pages since I havent been posting, the usual talk on everything not related to australian property prices

cant understand why the mods havent deleted it, oh well life goes on

i have been getting enormous requests for more detailed price info on the Ballarat region, once i can get the suburb data i will post it up for everyone

but my own thoughts from being out on the bicycle doing the on the ground research is that sebastopol, wendouree, redan are good to go

thankyou

professor robots

 

[satanoperca]

although not much in the last 50 odd pages since I havent been posting, the usual talk on everything not related to australian property prices

Hi Prof Robots,

Well the above is not true at all.

Firstly, Property in Victoria has seen a decent decline, Ok >5%. Something that I lost a bet to some time ago.

Secondly, I asked you a question, that you are yet to answer.

Nice to see you posting again.

Cheers

 

[trainspotter]

LOL ...... you guys crack me up !!

 

[Dowdy]

LOL ...... you guys crack me up !!

What are you doing back. You thought we were all a bunch of ignoramus.

Why don't you stick by your convictions...

 

[freebird54]

maybe he is happy just to have a month by month,

My tenants are all on month by months,

They are all longterm tenants, I just can't see the need for constant renewal of the lease, as long as they pay their rent I won't be kicking them out.

From your perspective I agree but wife does not like the instability with 3 kids at home 1 in local school which he can ride to, rest of us working close.

Overseas 3-5 year leases are not unusual.

When I had 2 investment properties [one our own home whilst we were renting] 6m - 12m was the norm.

It still made no difference when I had bad tenants - at least the clean up/repair etc.was only once or twice a year [I did have good tenants occasionally ;-)

And no the agents never managed to recover some monies and landlord protection fund failed too!

 

[Tysonboss1]

More competition on the market. Simple

Wheres the extra competition coming from in the rental market,

example- Family sells home to investor so one extra house is available in the rental market, however the family then goes and rents another home taking one home off the rental market, net effect is zero.

The number of owners vs renters can change, and along with that the capital value of the property, But the rental yield won't change unless more houses are built,

 

[robots]

hello,

good evening everyone, another great day arent we lucky to be alive

oh yeah cleaned up big on that bet satanoperca, nice chicken parmagiana down in sunny st kilda, awesome man

i dont have a clue where australian property prices are headed brother, never have and never spruiked that things only go up and up

just a strong believer in owning a roof over your head,

others disagree and decide to rent, or live in their son's garage, or the bushes at Elwood foreshore, tram stops along st kilda road, a humpy in warburton state forest what ever, thats life

yeah no worries

thankyou

professor robots

 

[explod]

Wheres the extra competition coming from in the rental market,

example- Family sells home to investor so one extra house is available in the rental market, however the family then goes and rents another home taking one home off the rental market, net effect is zero.

The number of owners vs renters can change, and along with that the capital value of the property, But the rental yield won't change unless more houses are built,

Delivered two new single beds to an address today. Two young men lost their jobs in the city and moved back to live with Mum. They were renting independantly, three down to one.

Ah well, more vacancies.

Lolliepops and sunshine brothers

 

[Dowdy]

Wheres the extra competition coming from in the rental market,

example- Family sells home to investor so one extra house is available in the rental market, however the family then goes and rents another home taking one home off the rental market, net effect is zero.

The number of owners vs renters can change, and along with that the capital value of the property, But the rental yield won't change unless more houses are built,

What Explod said.

To add to that.

Real world example: remember a few years ago there were HUGE demand for rental lots. People were queuing for hours to look at a property and people were offering $50-100 above the asking rental rate. Now there's no lines, no bidding up. Pretty much, if you apply to be a tenant for a rental, you're going to get a call back from the owner within a few days.

The competition has reversed. before it was tenants bidding against each other, now its owners bidding against other owners to try and get the tenant.

 

[satanoperca]

Agree with the above.

Chatting to a building super the other day and asked have you had many move outs of the apartment block. He replied, in the next two weeks approx 7 out of the 32 apartments are moving out. Reason, block is controlled by one realestate agent and they had tried to put up everyones rents. The vast majority decided to move onto better pastures. Mind you at $400 for a one bedroom and $560+ for a two bedder not exactly cheap and are located in inner Melbourne.

The block of units bar a few where sold to Malaysian investors. I happen to know the rental agent concerned, saw him have a coffee at the local cafe, on investigation, he stated that he is having trouble leasing out apartment at the current prices that his clients demand, with some properties sitting vacant for several months.

Further investigation of my local area and I was surprized just how many apartments where up for lease. It was only a year or two ago I used to see queues of people waiting to view apartments, they have all disappeared.

Going to be a lot of disappointed landlords over the coming months and with rental yields so low can see a slow rush to the exits for many.

Cheers

 

[Miss Hale]

Has anyone else noticed that the two major internet real estate sites (realestate.com and domain.com) are now advertising on the TV? Never seen that before.

My

We have relocated from the country to the city and are currently renting. In anticipation of buying a PPOR in about nine months when our lease is up I have been spending a lot of time researching properties for sale in our area (Melbourne eastern suburbs), including going to OFIs and auctions. I haven't yet been to an auction where the property has sold at auction, people just aren't bidding they are waiting for it to be passed in and then negotiating from there. Most properties are selling but not at way above the advertised price like they would have a year ago, they are taking a bit longer and often being discounted. I am seeing properties going off the market after a month or so, then coming back on the market with a new agent but at a lower price. I reckon prices in this area are down an average of about 5%. Properties above the $800K mark and below $400K in particular, the ones in the middle are holding up better I think. Because you have to give a name and number when you go to OFIs I am almost being 'harassed' by estate agents at the moment even when I have told them I'm not interested in a particular property or that I am just doing research at the moment (I'm quite up front with them that we are not ready to buy just yet).

Regarding renting, the property we have rented was empty for a month when we rented it in June and we were the only people interested in it. I was stunned as I had been told getting a rental was almost impossible (only wish we'd negotated a lower rent now )

Yes, times are a changing (IMO). We are seriously thinking of continuing to rent for a few years if real estate prices stay flat or continue to drop - why buy an asset that is not going to appreciate? The last thing we want to do is borrow money to pay off something that is going to drop in value

Thanks for all the comments everyone, very interesting to read all the different opinions

 

[FxTrader]

We have relocated from the country to the city and are currently renting. In anticipation of buying a PPOR in about nine months when our lease is up I have been spending a lot of time researching properties for sale in our area (Melbourne eastern suburbs), including going to OFIs and auctions. I haven't yet been to an auction where the property has sold at auction, people just aren't bidding they are waiting for it to be passed in and then negotiating from there. Most properties are selling but not at way above the advertised price like they would have a year ago, they are taking a bit longer and often being discounted.

Welcome to the strange world that is the Melbourne eastern suburbs property market. In search for another PPOR, we tried the tactic of waiting for a particular property to be passed in at auction. Instead, the property sold to a young couple who, in a moment of sheer emotional delirium, paid $40k over pre-sale projection and some $90k above the previous recent sales on the street. This may be the exception now but it still happens.

A pattern has emerged in our search, well presented homes in good neighborhoods are selling near or over the high end of their price range (if under 700k). Poorly presented properties in good neighborhoods are sitting on the market a little longer but eventually move. The sweet spot seems to be in the $550k-$600k range where well presented homes in this price bracket are moving.

I am seeing properties going off the market after a month or so, then coming back on the market with a new agent but at a lower price. I reckon prices in this area are down an average of about 5%. Properties above the $800K mark and below $400K in particular, the ones in the middle are holding up better I think

The issue is all the new or near new stock for sale in outer eastern suburbs like Berwick, Pakenham, Cranbourne and now Officer. The commute is horrible but the price of nice homes are more affordable. Even towns as far out as Drouin are growing, amazing.

Because you have to give a name and number when you go to OFIs I am almost being 'harassed' by estate agents at the moment even when I have told them I'm not interested in a particular property or that I am just doing research at the moment (I'm quite up front with them that we are not ready to buy just yet).

Get use to it, there's a lot of stale property on the market with the usual glut of spring listings on the horizon. Hardly a day goes by that I don't get call from an agent.

Regarding renting, the property we have rented was empty for a month when we rented it in June and we were the only people interested in it. I was stunned as I had been told getting a rental was almost impossible (only wish we'd negotated a lower rent now )

Careful about generalizing here. Nice rental homes in my area are snapped up quickly with many applicants.

Yes, times are a changing (IMO). We are seriously thinking of continuing to rent for a few years if real estate prices stay flat or continue to drop - why buy an asset that is not going to appreciate? The last thing we want to do is borrow money to pay off something that is going to drop in value

Yes, you can hang out for further market drops but population growth in Melbourne is likely to sustain prices into the future here. Here's a quote from the Vic governments 2008 report...

"Projections for Melbourne

Melbourne is experiencing record population growth. It grew by 273,000 between the 2001 and 2006 censuses.

Overseas migration is the main contributor to Melbourne’s growth, with almost a quarter of migrants coming to Australia settling in Melbourne.

Melbourne’s share of Victoria’s population has been increasing reflecting a worldwide trend to urbanisation.

Melbourne is projected to grow from 3.744 million in 2006 to 5.525 million in 2036, an increase of 1.781 million.

The number of Melbourne households is projected to increase by 51 per cent between 2006 and 2036, compared with a 41 per cent increase in population.

The Next Twenty Years

To accommodate this increase, 600,000 extra households will be required in Melbourne over the next 20 years.

Between 2001 and 2006, the City of Melbourne was Australia’s third fastest growing local government area, reversing a trend of losing population during most of the twentieth century. It is projected that the inner city revival of Melbourne will continue, with a projected increase of 120,000 in the City of Melbourne.

In recent years, the population of most established suburbs has increased and this is projected to continue.

Fast population growth is projected to continue in Melbourne’s growth areas – Wyndham, Melton, Hume, Whittlesea and Casey-Cardinia."

This and other reports tell a similar story, Melbourne is growing well into the future and this I must admit does not support the case for a large drop in prices here going forward. Any price drop is likely to be of short duration given future population trends and shortfall of new home construction.

 

[satanoperca]

Any price drop is likely to be of short duration given future population trends and shortfall of new home construction.

No short fall in Melbourne but an oversupply of over 30K> homes
Short duration in falls, ha try over indebtness

What could cause stagnation and falls :

1) Rising unemployment
2) world going into a prolonged recession
3) China crapping itself

But sunshine and lollipops all round

 

[FxTrader]

No short fall in Melbourne but an oversupply of over 30K> homes. Short duration in falls, ha try over indebtness

I am well aware of the various stats on oversupply in Melbourne, Prosper Australia recently put it at 70k. But much of this oversupply seems to be in medium and high density developments not low density detached dwellings - the homes most of us like to live in with some willing to move all the way to Drouin and Officer in VIC to get them. If population growth projections are anywhere close to being accurate, the "oversupply" will be temporary. This is simple math that even a die hard property bear must accept.

As to household debt, I have stated my concerns about this over the last ~50 pages in debates with the likes of trainspotter in case you have't noticed. However, I must concede that, at least for now, the debt bubble has only put marginal downward pressure on house prices in Melbourne. If one believes that prices across the board will fall significantly then by all means wait but current demographics and population growth forcasts simply do not support such a belief in the longer term. People are still paying top dollar for well presented homes in my area of Melbourne's eastern suburbs, simply a fact.

 

[howmanyru]

No short fall in Melbourne but an oversupply of over 30K> homes
Short duration in falls, ha try over indebtness

What could cause stagnation and falls :

1) Rising unemployment
2) world going into a prolonged recession
3) China crapping itself

But sunshine and lollipops all round

4) Wage stagnation
5) Inflation - many homeowners borrowed up to their eyeballs & now massive hikes in food, utilities, insurance etc are equivalent to getting a huge pay decrease - no money to pay the mortgage - house up for sale.
6) Recent property investors bailing out, why hold an asset decreasing in value? On top of that they have to pay Insurance, council rates, water rates, maintenance, agent fees, etc - lots more house up for sale.
7) Retirees dumping investment properties to free up capital because their share portfolios & super have been hammered.
8) The end of cheap easy cash from banks.
9) The end of stupid government first home buyer incentives that just pushed up house prices even further for those buyers.
10) Armageddon

 

[todster]

Delivered two new single beds to an address today. Two young men lost their jobs in the city and moved back to live with Mum. They were renting independantly, three down to one.

Ah well, more vacancies.

Lolliepops and sunshine brothers

Young blokes single beds what century are you from.