The future of Australian property prices

medicowallet · 26 September 2011

ROE said:
Mr A has an income of 50K and his expense is 30K a year
is far wealthier than Mr B with 100K income and expense of 90K

Yes, if they are just blowing money on consumables.

But if the person with 100k income spends 30k on living expenses and 60k on interest on investments, then it is he who controls the assets.

Just like many of us have done with property.. just as many of us have done with shares.

and as long as they go up in value we are ok, but if we are leveraged too high and they go DOWN, then we are in trouble.

So I agree with you to a point, but the other poster makes a great point too.

MW
PS Where is Robots? what are his predicitons?

PPS (edit) ie if I clear $100k and have a 60k interest bill on my $6million property portfolio which I own 2 million equity, surely I am wealthier, but if it drops 20% to 4.8 million, oops, I am in trouble.. (please do not take these figures literally, they are just an over the top illustration)

freebird54 · 26 September 2011

schnootle said:
Completely crazy. Yet if you have $10000 to your name but its in cash and lose your job you will be told you have too many liquid assets and need to spend that and come back when its gone.

A mate in the UK has 6 properties and gets full pension - you can have unlimited assets!!!

drsmith · 26 September 2011

FxTrader said:
Interesting reading indeed drsmith. One notable quote...

The insanity and price distorting effect of an unlimited negative gearing subsidy exposed in an RBA publication. Investors crowd out owner-occupiers and push up prices. Less property investor activity = lower prices for everyone, note that Aus governments (federal, state and local) aren't listening and actually support this market distortion - for different reasons. Housing affordability relative to income will always be an issue where tax policy/subsidy favours property speculation.

This and population trends are the reason why I have become a bit less bearish on housing prices in Aus. Tax advantaged IP will continue to appeal (and support/distort housing prices) in the wake of what is likely to be prolonged negative or poor returns in equity markets and stable or lower interest rates. So what if your leveraged IP only returns 3%, when equities are at -20% you're feeling good as a property investor.

I suspect that while unemployment remains low, nominal housing prices will be broadly maintained. An investor (leveraged or otherwise) with a 3% return won't go backwards under this scenerio, but higher geared investors with net negative income may and this will eat away at their wealth over time.

The problem will be if unemployment rises. With a backdrop of interest payments/household disposable income still near historical highs, residential real estate is highly vulnerable to any shock in employment, in my view. In a poor economic envoronment, I suspect governments will stimuluate as much as the can to prevent this from happening, including painting all those school halls white if necessary to maintain employment.

Whether that works or not is another matter.

Julia · 26 September 2011

freebird54 said:
A mate in the UK has 6 properties and gets full pension - you can have unlimited assets!!!

It's the same in New Zealand. Pension is not means tested.
It is, however, taxable, so some of it will be clawed back.

FxTrader · 26 September 2011

drsmith said:
The problem will be if unemployment rises. With a backdrop of interest payments/household disposable income still near historical highs, residential real estate is highly vulnerable to any shock in employment, in my view. In a poor economic envoronment, I suspect governments will stimuluate as much as the can to prevent this from happening, including painting all those school halls white if necessary to maintain employment. Whether that works or not is another matter.

There's little doubt that unemployment at some higher level will impact on housing prices due to persistently high household debt for recent entrants. How much of impact, in what price brackets and in what locations is another matter.

Another factor for Melbourne is demographics. If population growth trends continue and projections are correct then supply will be an issue over the next two decades. Population growth and age distribution in the population are very important to sustained or rising house prices.

For those interested, Harry Dent gives an excellent presentation on this subject...
https://docs.google.com/leaf?id=0B7vkEsQc02zdYzA2NmMwODctOWMxNC00YTZmLTlmNTEtOWRiZmI2NjlhYTkw&hl=en_GB

Dent explains quite well what property investment boosters like trainspotter and robots just don't understand, population demographics vs asset prices.

trainspotter · 26 September 2011

Go and read post #5484 before you use my name in vain. It's a DOOOOZY !

TabJockey · 26 September 2011

trainspotter said:
Go and read post #5484 before you use my name in vain. It's a DOOOOZY !

Is there an easy way to goto post numbers? because im not clicking through 500 pages of mostly garbage (medico im looking at you ).

Miss Hale · 26 September 2011

TabJockey said:
Is there an easy way to goto post numbers? because im not clicking through 500 pages of mostly garbage (medico im looking at you ).

Not that I know of but it's about 1/4 of the way down page 275.

Clearance rate was low again this week in Melbourne, 53%. Mind you with the footy finals on September might not be an acurate reflection of the spring property market ( no clearance rate with be issued next weekend due to the Grand Final and there being only 50 auctions scheduled!). Will be interesting to see what October brings.

trainspotter · 26 September 2011

TabJockey said:
Is there an easy way to goto post numbers? because im not clicking through 500 pages of mostly garbage (medico im looking at you ).

Here ...... I will paraphrase it for you.

I can easily see CERTAIN areas dropping 20% in RESIDENTAIL housing ...... no wait .... parts of NOOSA and the GOLD COAST has already done that. Also parts of my area have done the same and Mandurah has dropped 40% on apartments. Hmmmm ...... I can see mortgage defaults increasing to 0.9% and retail figures dropping quicker than a wh0res drawers ........ no wait ........ this has already happened.

Interest rates increasing and unemployment following suit will certainly drive the nail in the coffin of RE in Australiallalaa land. FHB will be the first to go and mortgagee repos will be the new black for the remaining investors picking up a bargain. No wait ..... this is already happening in CERTAIN areas.

I can easily see 10% OVERALL reduction of the WEIGHTED AVERAGE OF CAPITAL CITIES in a 5 year timespan.

And somehow this makes me a property bull ...... I showed all of you the warning signals in regards to retail and unemployment figures and the effects it will have on residential property prices 1000 + posts ago ....... GEEEEEZUUUUUUUUUUZ

trainspotter · 26 September 2011

Here is another to chow down on from post #5133

You see, house prices only fall when people are forced to sell their homes. Otherwise, households choose to simply remain in their home and wait things out. Property investors are loath to realise their capital loss.

A true collapse in house prices would indeed require some large external shock - a doubling of unemployment or interest rates - to trigger the wave of forced home sales that it would take to provoke house price falls.

Read more: http://www.smh.com.au/opinion/politi...#ixzz1JvHdekdJ

BULL written all over this post as well

TabJockey · 26 September 2011

trainspotter said:
Here ...... I will paraphrase it for you.

And somehow this makes me a property bull ...... I showed all of you the warning signals in regards to retail and unemployment figures and the effects it will have on residential property prices 1000 + posts ago ....... GEEEEEZUUUUUUUUUUZ

Not exactly oracle level stuff yet mate. Its all bears in here you know. You can find similar posts by myself and about 5 other property bears in here.

Appreciate the views though.

medicowallet · 26 September 2011

trainspotter said:
BULL written all over this post as well

A lot of your posts are bull... but, a bull you are not.

medicowallet · 26 September 2011

TabJockey said:
Is there an easy way to goto post numbers? because im not clicking through 500 pages of mostly garbage (medico im looking at you ).

Just keeping it real for the true believers brother.

Sunshine and lollipops

MW
(the original robot dismantler)

FxTrader · 26 September 2011

trainspotter said:
And somehow this makes me a property bull ...... I showed all of you the warning signals in regards to retail and unemployment figures and the effects it will have on residential property prices 1000 + posts ago

How amuzing, TS the chameleon has shown he can colour his arguments to show he's right given any market condition. Let's see, he's a property investor but doesn't necessarily advocate buying IP. He thinks property bears like Steve Keen are idiots but then he can also be bearish. He routinely lambasted and derided anyone here who dared to make the bear case for buying property (or disagreed with him) but he warned us 1000 posts ago about POSSIBLE weakness in property. LOL, all things to all people, a man for all seasons. One can only wonder which TS will show up in his next post, the defender of the IP faith and bear slayer or TS the property bear. Flip-flop, double twist with pike. Make up your mind which camp your in.

satanoperca · 26 September 2011

FxTrader said:
How amuzing, TS the chameleon has shown he can colour his arguments to show he's right given any market condition. Let's see, he's a property investor but doesn't necessarily advocate buying IP. He thinks property bears like Steve Keen are idiots but then he can also be bearish. He routinely lambasted and derided anyone here who dared to make the bear case for buying property (or disagreed with him) but he warned us 1000 posts ago about POSSIBLE weakness in property. LOL, all things to all people, a man for all seasons. One can only wonder which TS will show up in his next post, the defender of the IP faith and bear slayer or TS the property bear. Flip-flop, double twist with pike. Make up your mind which camp your in.

I am a bear and have been since this thread started, however I think you are being a little unfair on TS. His has presented his opinion often with evidence to support his views. I do not see anywhere at the start of the thread that a person is not allowed to changed the opinion as facts come to light.

Seems that we have a room full of bears that all believe they are right now the market has turned.

If everyone is a bear on this thread, going to get might boring.

Cheers

IFocus · 26 September 2011

drsmith said:
I suspect that while unemployment remains low, nominal housing prices will be broadly maintained. An investor (leveraged or otherwise) with a 3% return won't go backwards under this scenerio, but higher geared investors with net negative income may and this will eat away at their wealth over time.

The problem will be if unemployment rises. With a backdrop of interest payments/household disposable income still near historical highs, residential real estate is highly vulnerable to any shock in employment, in my view. In a poor economic envoronment, I suspect governments will stimuluate as much as the can to prevent this from happening, including painting all those school halls white if necessary to maintain employment.

Whether that works or not is another matter.

One more is the availability of credit, rapid easy credit availability raises house pricing on the other hand tightening credit constricts the numbers able to buy.

This is whats happening in the US where they are shocked at having to put 20% down LOL.

trainspotter · 26 September 2011

FxTrader said:
How amuzing, TS the chameleon has shown he can colour his arguments to show he's right given any market condition. Let's see, he's a property investor but doesn't necessarily advocate buying IP. He thinks property bears like Steve Keen are idiots but then he can also be bearish. He routinely lambasted and derided anyone here who dared to make the bear case for buying property (or disagreed with him) but he warned us 1000 posts ago about POSSIBLE weakness in property. LOL, all things to all people, a man for all seasons. One can only wonder which TS will show up in his next post, the defender of the IP faith and bear slayer or TS the property bear. Flip-flop, double twist with pike. Make up your mind which camp your in.

Nope ... not a chameleon at all. I have maintained the stance that CERTAIN areas will fail and have validated my point of view over a 3 year period and have explained my position to the nth degree OVER AND F@RKEN OVER. I have shown subject matter at hand where commercial properties are viable and will still return over 18% WITHOUT CAPITAL GROWTH on a positively geared property.

STEVEN KEEN IS AN IDIOT !!!!!!! Sell your property NOW as it will go down 40% .... what happened ?????????? Property in Australia went up 20% ......... IDIOT !!!!!!!

I am wondering YET AGAIN why I even bother to explain it to the so called erudites in this thread.
I TRADE PROPERTY FOR A LIVING.

Do you?

Go and read the posts and you MAY and I stress you MAY get an understanding of what it takes to have the balls to do what I do. Nope ..... instead you lick every post with a grain of salt. I am trying to explain to you what it takes to trade property and what do I get in return ........... Hmmmmmmmmmmmmm ???????

Good one boys and girls.

P.S. .... learn how to spell amusing ...... kindegarten stuff again.

P.P.S. ...... go and buy an IP in CERTAIN areas depending on how your gearing and income is strategised. IDIOT

medicowallet · 26 September 2011

trainspotter said:
STEVEN KEEN IS AN IDIOT !!!!!!! Sell your property NOW as it will go down 40% .... what happened ?????????? Property in Australia went up 20% ......... IDIOT !!!!!!!

In defence of Keen, he did not know the government was going to bail out house vendors and property developers and builders.

Also, be careful what you say atm, property is under all sorts of pressure, and the government has less ammo.

MW
(the original robot dismantler)

trainspotter · 26 September 2011

medicowallet said:
In defence of Keen, he did not know the government was going to bail out house vendors and property developers and builders.

Also, be careful what you say atm, property is under all sorts of pressure, and the government has less ammo.

MW
(the original robot dismantler)

I stand corrected MW ....... Keen is still an IDIOT !!!!!!!!!!!!!

Property has always been under pressure from every angle FFS. Interest rates too low, over supply, under supply, interest rates too high, no rentals, too much Guvmint interference, banks lending criteria too high/low Keystart. FHOG, greedy developers, Asian influence, no capital growth etc etc etc BLAH BLAH BLAH ....... seen it all before.

Yes yes yes it is different now ....... same as before.

If this was a share thread ...... what is different? Do you buy shares without doing due diligence or do you buy them on a whim? Do you get a gut feeling or do you make an informed decision? Do you buy because your "broker" told you to or was it the TV?

satanoperca · 26 September 2011

trainspotter said:
STEVEN KEEN IS AN IDIOT !!!!!!! Sell your property NOW as it will go down 40% .... what happened ?????????? Property in Australia went up 20% ......... IDIOT !!!!!!!

I disagree with you there TH and it would seem that George Soros also disagrees with you after granted Steven Keen $125,000 to further his research.

Cheers

The future of Australian property prices

medicowallet

freebird54

drsmith

Julia

In Memoriam

FxTrader

trainspotter

TabJockey

Miss Hale

trainspotter

trainspotter

TabJockey

medicowallet

medicowallet

FxTrader

satanoperca

IFocus

You are arguing with a Galah

trainspotter

medicowallet

trainspotter

satanoperca

Similar threads

The future of Australian property prices

In Memoriam

You are arguing with a Galah

Similar threads

Privacy & Transparency

Privacy & Transparency