The future of Australian property prices

[trainspotter]

lol
Disagree entirely. The cheapest best value places will be closer to the CBd than all those places where the battlers will be trying to hold on to their over priced mc mansion.

Most people are too brain dead to think outside the square

You are not quite with it are you then? Post some research and facts up to evidence this asinine statement. Opinions are a dime a dozen from people who smoke the broad leaf entertainment plant and most of them have delusions of grandeur.

 

[trainspotter]

It's nothing to do with Boomers, Gen X, Y, Z.

The only fundamental is credit.

Loose credit => house prices boom

Tight credit => house prices plateau/fall

Everything else is a side issue

Spoken like the true guru he is. I think we discussed this about 213 pages ago to the nth degree when the credit squeeze started.

 

[Mrmagoo]

I think most of the baby boomer hate comes from lack of understanding of the above quoted statement. Increase in house prices is not due to their investment genius but due to a credit boom, and prices were cheaper back when they were FHBs. I think these are all clear facts.

Some of my friends who have bought recently have taken on INSANE amounts of leverage for places which were half the price a few years ago.

If credit is not expanding I can't see that the next buyer will be saving 400k deposit on their 1000 pw income of which they pay 300 of in rent ...

 

[trainspotter]

I think most of the baby boomer hate comes from lack of understanding of the above quoted statement. Increase in house prices is not due to their investment genius but due to a credit boom, and prices were cheaper back when they were FHBs. I think these are all clear facts.

Some of my friends who have bought recently have taken on INSANE amounts of leverage for places which were half the price a few years ago.

If credit is not expanding I can't see that the next buyer will be saving 400k deposit on their 1000 pw income of which they pay 300 of in rent ...

Clearly your myopic view of RE is misguided by your own sense of comprehension of the matter at hand. Prices WERE NOT CHEAPER back then. You really need to do some research before posting.

In 1991 the average median house price was $121,125 http://www.econ.mq.edu.au/research/2004/Abelson_9_04.pdf

In 1991 the average income was $17,614 http://www.abs.gov.au/AUSSTATS/abs@.nsf/0/66B7AF146D7F99E3CA2575010014EAF3?opendocument

So therefore this would be 7 times the average income in 1991. So what has changed?

EASY CREDIT ...... you could get a house and land package deal with $500 deposit and a job. Financiers would loan you 95% LVR and compound the interest and the LMI into the loan taking borrowings past 100%.

But you know all of this because you have studied and trade in RE .......

 

[Mrmagoo]

So therefore this would be 7 times the average income in 1991. So what has changed?

The year is not 1991. A single average figure, from a single year, from a single paper is not going to convince me. (also their data collection methods are not clearly reliable or necessarily of high quality)

If you can show me reliable and accurate statistics and not a single data point I am more than open to changing my point of view on property. But I still won't invest in it.

Show me how income relative to prices is the same now as it has been consistently for the last 20 years.

Not just two data points.

Anything could have happened in 1991 to cause that ratio to occur.

I also find it interesting that this was the start of a fall in property prices (according to the index provided) and stagnation over the next few years... indicating, wow, I don't know A RECESSION.

 

[trainspotter]

The year is not 1991. A single average figure, from a single year, from a single paper is not going to convince me. (also their data collection methods are not clearly reliable or necessarily of high quality)

If you can show me reliable and accurate statistics and not a single data point I am more than open to changing my point of view on property. But I still won't invest in it.

Show me how income relative to prices is the same now as it has been consistently for the last 20 years.

Not just two data points.

Anything could have happened in 1991 to cause that ratio to occur.

I also find it interesting that this was the start of a fall in property prices (according to the index provided) and stagnation over the next few years... indicating, wow, I don't know A RECESSION.

The links I provided evidence property and wages from 1970 to 2010 and not just one data point. An ability to read and understand facts is essential.

ALSO one of the links is to the Australian Bureau of Statistics. WHAT more do you want .... are you saying the data is flawed from the ABS??

The other link uses the ABS as a reference point as well. Once again the ability to comprehend what is being posted is an advantage.

In 1991 rates were coming down from 17% and property had stagnated. Unemployment was at 10% ... Yes yes yes ..... "The RECESSION WE HAD TO HAVE" by Paul Keating.

After that if you read the data, prices consistently increased on a mean average and wages kept pace. Same situation we are having now. I have seen this cycle 3 times already and am aware of the nuances that are involved.

If you do the research you will get it eventually. So DON'T invest in property.

 

[Mrmagoo]

The links I provided evidence property and wages from 1970 to 2010 and not just one data point. An ability to read and understand facts is essential.

ALSO one of the links is to the Australian Bureau of Statistics. WHAT more do you want .... are you saying the data is flawed from the ABS??

The other link uses the ABS as a reference point as well. Once again the ability to comprehend what is being posted is an advantage.

In 1991 rates were coming down from 17% and property had stagnated. Unemployment was at 10% ... Yes yes yes ..... "The RECESSION WE HAD TO HAVE" by Paul Keating.

After that if you read the data, prices consistently increased on a mean average and wages kept pace. Same situation we are having now. I have seen this cycle 3 times already and am aware of the nuances that are involved.

If you do the research you will get it eventually. So DON'T invest in property.

1) 1997-2003 for property
2) Yes ABS data is flawed, everyone knows that
3) Income in recession vs income in skills shortage... hmmm
4) As I said you haven't show any ratios in the intermittent years, making the comparison pointless, especially if you say there is a 7 year seasonal patternm based on a 20 years ago number.
5) Averages on their own are not useful because if I don't have the ability to be 20 million people at once. A statistical distribution is much more useful.
6) Property scares me, used care salesman types, constant spruiking about gains, people keen to get you to buy (why if it has such great returns) and smug people talking about gains they made based on 10 years ago prices.

 

[trainspotter]

You see I don't have to do the research for you. I have covered this topic for over 2 years and 300 pages already. Please whatever you do Mrmagoo DON'T invest in property. Good luck in your endeavours. Over and out.

 

[Mrmagoo]

Oh wait - I just did, 4 seconds on a google search, here is another "report" which talks about house price to income ratios.

I'm sure I could find 5 more which give a different indicator.

Rather than your cherry picked 2 data points based on data which probably had innacurate collection methods and an irrelevant comparison.

Clearly, there has been a significant increase in the ratio of house prices to income over the last 15 years. Unfortunately, this trend has meant that first home buyers have found it increasingly more difficult to transition from the rental market into home ownership.

http://economics.hia.com.au/media/House price to income ratio - FINAL.pdf

And that came from a property spruiking group ....

 

[young-gun]

Exactly.

Young gun, your attitude is so defeatist it's unbelievable. The only person you're hurting by this negativity and failure to have a bit of 'get up and go' is yourself.
As long as you believe yourself to be a victim, so shall you be. And don't expect anyone to come and take you by the hand and say, 'ah, come on then, I'll fix it all for you".

Stop blaming baby boomers. Many of us still have children living at home, essentially sponging off us, whilst we support our elderly parents. We're not whining about this, just getting on with managing what we need to.

As TS has said, buy something that you CAN afford. When prices improve, you'll be able to trade up to something more in line with what you actually want.

My first home was on the outskirts of the city, in a mediocre but not awful area, on leasehold land so that I didn't have to find the money for the block, and was a very ordinary 40 year old two bedroom bungalow. A bit of work and creating a magical garden saw 100% profit in a couple of years.

So maybe stop focusing on what's hard and instead think about what is achievable.
And please, please stop whining about baby boomers.!

If you knew me you would know i have a far from a defeatest attitude, i have a great work ethic, im pulling 60 hour weeks week after week. i am saving like crazy, and i then come home and work on starting up our own business(my fiance and i). the circumstances when most of you bought houses (when average prices where 3 times that of income) is not comparable today by any means. i don't require any one to take me by the hand, nor would i ever expect them to. I will get to where i want or need to be through hard work and determination. this, however, does not change the climate in which i am trying to achieve my goals. my attitude or opinion on something is completely different to how i act. i will by no means lay down and say this is to hard.

I'd like to see you buy this so called "mcmansion" for 300k in brisbanes outter suburbs that most are striving for, do some research. as i said i am in a position that i have already been out, built a house in the outter suburbs, payed a small fortune for it, only to sell it 14 months later as i failed to see the point in blowing so much money on sky high interest repayments.

for those of you that think this is typical gen y wanting everything brand new, ill have u know it was an investment strategy as i received the 21k from the government in doing so, 21 grand is alot fo money, but barely makes a dent in interest repayments.

why can't you boomers just accept what you have created? through greed and unnecessary luxuries? i can admit im a victim of it, why is it so hard for you to?

as for your bungalow, congrats on your 100% profit in a couple of years, think we will see a return like that even in the next 10 or so years? i doubt it.

and to tyson if you had of bought just a year or two later your story would have been a whole lot different. 2001 had not seen the price hikes of 5-8 years furhter down the track.

anyway like i said, i see myself as being in a good position, and ready to buy again at the drop of the hat. but once again there are very few gen y's in this position. i will not be buying anytime soon, but will continue renting while it collapses in on itself.

 

[young-gun]

How do you reason this out?

How do you know it wasn't high flying, 'I want it, I need it all now', gen Y's who inflated the market.



So you don't think the Baby Boomers weren't in the same position you are now?

HAHA because gen y cant afford to get into the market let alone inflate it! with all the government stimulus gen y were BARELY able to sustain the ridiculous prices let alone push them higher.

and NO baby boomers absolutely were not in the same position we are now. please do some research into house prices before the boom. my parents picked up a 4 bed double bath house for 170k(thats right 170k!) in 1999 just 20 minutes from the cbd on a 600m2 block!! at the time that would have been possibly just over 3-4 times my fathers salary. that same house today is worth half a mill! maybe a little less due to the poor market.

it is truly laughable that any boomer can compare their first home purchase with that of gen y's today. unless the boomer bought 2004 onwards which would be unusual.

 

[young-gun]

Getting really tired of advice from people who rode the credit expansion by investing in real estate. Well done to you all, seriously, well done. But what happened has not much to do with now.

unless -

Can you tell me that growth in property prices is going to continue the same growth trend as the last ten years ? If not then your anecdotes of " I borrowed every cent possible and bought a house, 2 years later it doubled in value " aren't useful.

+1..it's a relief to have someone else understand what our generation is facing. my house that i built in 09 increased by a measely 20k over 14 months. and some could argue that that was simply the gain you get from building your own house. 14 months in the boom period probably would have seen a return of 100k plus.

 

[Whiskers]

HAHA because gen y cant afford to get into the market let alone inflate it! with all the government stimulus gen y were BARELY able to sustain the ridiculous prices let alone push them higher.

and NO baby boomers absolutely were not in the same position we are now. please do some research into house prices before the boom. my parents picked up a 4 bed double bath house for 170k(thats right 170k!) in 1999 just 20 minutes from the cbd on a 600m2 block!! at the time that would have been possibly just over 3-4 times my fathers salary. that same house today is worth half a mill! maybe a little less due to the poor market.

it is truly laughable that any boomer can compare their first home purchase with that of gen y's today. unless the boomer bought 2004 onwards which would be unusual.

There are a number of things you have to consider and allow for when making simple comparisons, like x times salary as a guide for house prices... not the least of which is the stage in the cycle of development/growth or recession of a particular area, better transport and services etc which allow for you to have the same convenience as your parents close to the city, but from a further distance where the house prices are lower.

Also the culture of the city has significantly changed such that whereas the center of the city used to be the center of business and social activity, the development of undercover shopping centers and malls with a large range of businesses under one roof has introduced the notion of satellite cities where you can get the convenience and service of most things much further from the traditional city center.

I don't know how old you are, but I'm assuming about mid 20's.

Obviously your parents were quite a bit older than you in 1999 when they bought that house. I'd say they worked and saved and waited for the right time in all the cycles of things to buy the house. There's a clue!

You demonstrate my point about want it, need it now mentality of some, particularly associated from surveys with gen Y.

You will not be able to do what your parents did and get the same results, for numerous reasons. All the things that make the world go around have changed and will keep changing.

I'd get the chip off my shoulder and start doing some simple maths, and logistic planning to see how you can best meet your life goals given the prevailing conditions and limitations.

 

[choofer]

You are not quite with it are you then? Post some research and facts up to evidence this asinine statement. Opinions are a dime a dozen from people who smoke the broad leaf entertainment plant and most of them have delusions of grandeur.

A personal insult?

 

[robots]

You are not quite with it are you then? Post some research and facts up to evidence this asinine statement. Opinions are a dime a dozen from people who smoke the broad leaf entertainment plant and most of them have delusions of grandeur.

Hello,

no, all clear

what another great day brothers

thankyou

professor robots

 

[wayneL]

Spoken like the true guru he is. I think we discussed this about 213 pages ago to the nth degree when the credit squeeze started.

Yes.

No guru savant-ness required. Like the climate change thread, we go around in circles here.

Some of the characters change, some egos bigger than others, some more rude than others, some both, but the same ol' same ol'.

 

[trainspotter]

Yes.

No guru savant-ness required. Like the climate change thread, we go around in circles here.

Some of the characters change, some egos bigger than others, some more rude than others, some both, but the same ol' same ol'.

You forgot to mention that some actually will learn from the more experienced posters in this thread who use property as an income/investment deriving tool and others will remain internet experts beacuse they can google in 4 seconds the information they think is required to make them proficient in trading RE. :

 

[satanoperca]

You forgot to mention that some actually will learn from the more experienced posters in this thread who use property as an income/investment deriving tool and others will remain internet experts beacuse they can google in 4 seconds the information they think is required to make them proficient in trading RE. :

Well said.

 

[choofer]

Negative growth of median house prices over the next 3-5 years?

Nah could never happen

Looks like you've taken one too many in the ring pirate pete.

 

[Julia]

I'd like to see you buy this so called "mcmansion" for 300k in brisbanes outter suburbs that most are striving for, do some research.

My point was that why do you need the McMansion???? As a starter buy a two brm unit somewhere, something you can actually afford.
Why can't you get what so many of us are trying to say here? i.e. that your expectations of initially having the bloody McMansion are totally unrealistic, not to mention unnecessary!