The future of Australian property prices

[trainspotter]

What about this information? Irrelevant?

Oviously !! Don't you know ..... the ABS statistics are flawed. Everyone says so on this thread.

 

[Junior]

Yes it is irrelevant , most people do want more bedrooms than people in the house, most people I know have, guest rooms, studies, storage etc etc in what would be called a bedroom on the plans.

Having lived in a one bedroom apartment, I know how much easier it makes life to have a few extra rooms

Oh ok, so most people you know want more bedrooms than people in their house, THEREFORE you conclude that going forward, indefinately, Australians will never increase the average number of occupants per home?

I really should stop responding to your posts.

 

[Mr Z]

Classic static linear projection, kills them every time.

 

[Tysonboss1]

Oh ok, so most people you know want more bedrooms than people in their house, THEREFORE you conclude that going forward, indefinately, Australians will never increase the average number of occupants per home?

I really should stop responding to your posts.

Well there is no evidence to say it is reversing.

to say that the majority of people are going to start living in houses where all bedrooms are occupied seems crazy to me, it's just not practical.

Are all the bedrooms occupied in your house, I can't see people giving up their studies, home offices, guest rooms, grankids bedrooms etc etc

Remember just because some statistic says that there are 3 bedrooms but only 1 being used as a bedroom does not mean the rooms are not being utilized. there are hundreds of reasons people choose to have extra space.

 

[Mr Z]

Money changes everything.

 

[Aussiejeff]

So....

How does homeless people squatting in repo'd IPs no one wants to buy sound ?

Sounds like the UK atm to me...

LOL....

 

[Glen48]

Ireland has 300,000 vacant houses, Spain has something similar where are the tenant's there.
There is talk of demolishing the never lived in proprieties due to the strain on council budgets.

Once the recession kicks in peoples spending will contract on every thing including renting.
Cake shop, Take away's, Pizza's etc will feel the pinch and so the contraction will continue.

 

[Tysonboss1]

Ireland has 300,000 vacant houses, Spain has something similar where are the tenant's there.
There is talk of demolishing the never lived in proprieties due to the strain on council budgets.

Once the recession kicks in peoples spending will contract on every thing including renting.
Cake shop, Take away's, Pizza's etc will feel the pinch and so the contraction will continue.

Offcourse places that have massively over built will have an over supply issue, and the pain will be felt in that market, eg. the over supply of units on the gold coast will put a cap on rental yield in that market for a while, But it will have no effect on the rental market for 3 bedroom houses in brisbane, It is very localized.

People will be cutting back on all sorts of things before they cut back on rent, and as I said earlier if things get bad it is the high end that suffers, rental yields in lower income property generally strengthen and vacancy rates vanish.

When is this recession meant to be starting, So far so good.

 

[Junior]

Well there is no evidence to say it is reversing.

to say that the majority of people are going to start living in houses where all bedrooms are occupied seems crazy to me, it's just not practical.

Are all the bedrooms occupied in your house, I can't see people giving up their studies, home offices, guest rooms, grankids bedrooms etc etc

In my house we have 3 occupants, and 3 bedrooms, no study. Most of my friends use all their bedrooms as they are late 20s, unmarried, living inner suburbs of Melbourne. As rents/cost of living is high most can't afford, or don't need/want the luxury of spare bedrooms. Certainly if I moved further from the city I could have spare bedrooms, but I choose to pay more to live near work and friends.

The above is just the case amongst my social group, but it proves that you can't just take your personal situation and extrapolate that onto the whole population.

For example what about some immigrants, working as taxi drivers in Melbourne. Many reside in the outer suburbs, 5 to a bedroom, in order to minimise costs and maximise how much $$$ they can send home to their families. No spare bedrooms there.

 

[Mrmagoo]

Well there is no evidence to say it is reversing.

to say that the majority of people are going to start living in houses where all bedrooms are occupied seems crazy to me, it's just not practical.

Are all the bedrooms occupied in your house, I can't see people giving up their studies, home offices, guest rooms, grankids bedrooms etc etc

Remember just because some statistic says that there are 3 bedrooms but only 1 being used as a bedroom does not mean the rooms are not being utilized. there are hundreds of reasons people choose to have extra space.

They won't but what will happen is that those who don't have those things now, won't ever get them.

At current house prices if I were to buy I would ALWAYS be renting out a spare room. Most likely 2 rooms.

A decade ago this would only have been the case for the first few years.

How can you not understand that $700 per week is a LOT of money ?

I know, I know, you saved up 200k by age 12 and had a 200k a year salary as a doctor by age 13 .....

 

[Tysonboss1]

1, They won't but what will happen is that those who don't have those things now, won't ever get them.

2, At current house prices if I were to buy I would ALWAYS be renting out a spare room. Most likely 2 rooms.

3, How can you not understand that $700 per week is a LOT of money ?

4, I know, I know, you saved up 200k by age 12 and had a 200k a year salary as a doctor by age 13 .....

1, I don't think so,

2, You may do that while your in your 20's with no kids, But i doubt you would contiune to do it once married and having kids, and I doubt you would do it once the kids have moved out,

3, yes it is, But have you looked at how much it costs to rent for 50years, it's alot more than the cost of buying especially when you factor in inflation adjusted rents, and you don't have a home to sell later.

4, no real need for sarcasm, at 12 I was only earning about $50 dollars a week delivering papers and picking fruit, all of which I saved and invested.

 

[young-gun]

4, no real need for sarcasm, at 12 I was only earning about $50 dollars a week delivering papers and picking fruit, all of which I saved and invested.

wish i had of invested at 12, i wouldve rode the dot com boom and the roaring mid 2000's and dont get me started on property....

 

[Tysonboss1]

1, wish i had of invested at 12, i wouldve rode the dot com boom and the roaring mid 2000's and dont get me started on property....

Remember hindsight is a wonderful thing,

Most people that rode the tech bubble were wiped out, the companies were worthless, then the share market went in a bear phase for a few years after, Are you sure you would have the nouse to go against the public opinion and pull out in time just when every one is going nuts saying we are on the cusp of the next big thing, I dont think so if the hype got to you enough that you put money behind these rubbish companies you would have held and been wipede out too.

Then the stagnation and bear market after that probably wouldn't have inspired you to put more money in the market so you would have missed the boom.

And on property, would you have really ignored all the talk about property being a dog that had gone no where for 10 years and invested your funds ( if you had any after the tech wreak) into property investment. I don't think so.




to be honest during the dot com boom I avoided all technology companies, Not because I had any idea it would end as badly as it did, it was just my personality lead me to invest in industrial companies And I sat and watched as the companies that I bought, which were "Old economy" stocks went down and stagnated and luckily after the tech wreak they turned out to be bargains and eventually went up and I made a killing.

then against every ones advice I apparantly "Over paid" by buying a 4 bedroom house in castle hill (brisbane) for $218,000.

It just goes to show you have to be doing the opposite of the consenses opinion. If people are aggreeing with you, your heading in the wrong direction.

 

[VSntchr]

Remember hindsight is a wonderful thing,
It just goes to show you have to be doing the opposite of the consenses opinion. If people are aggreeing with you, your heading in the wrong direction.

FWIW, alot of people (with little to no property knowledge) keep telling me that now is the time to buy/invest in property.

It seems that because all they have seen (these people are between 20 - 25ish) is a boom property market...they see a year or two of stagnant growth and think "BARGAIN!".

I don't know which way property is headed...but I thought that was an interesting correlation to what you said..

 

[Tysonboss1]

FWIW, alot of people (with little to no property knowledge) keep telling me that now is the time to buy/invest in property.

It seems that because all they have seen (these people are between 20 - 25ish) is a boom property market...they see a year or two of stagnant growth and think "BARGAIN!".

I don't know which way property is headed...but I thought that was an interesting correlation to what you said..

Well the property market of 2011, is not the market of 2001. That's for sure.

I am not rushing to buy property at the moment, there is to many people dumping quality shares, so that's where the bargain is,

I would only buy property if it was fir personal use, or if it was the only way to stop myself wastingmy weekly paycheck.

 

[Mrmagoo]

If I bought an asset for 200k and it was worth 400k after 4 years I would feel good about it.

HOWEVER, the other side of the coin is that someone who wants to buy that asset now will need to pay 200k more than they would have 4 years ago.

An increase of 4% would have risen the price by nearly 17% over that same period, so would you be happy to pay 400k for someone which you think is only worth 234k ?

That is the property market right now.

 

[Tysonboss1]

If I bought an asset for 200k and it was worth 400k after 4 years I would feel good about it.

HOWEVER, the other side of the coin is that someone who wants to buy that asset now will need to pay 200k more than they would have 4 years ago.

An increase of 4% would have risen the price by nearly 17% over that same period, so would you be happy to pay 400k for someone which you think is only worth 234k ?

That is the property market right now.

The true underlying value of an asset like property will grow steadily over time as the population grows, and inflation devalues the currency,

But as you correctly pointed out, the market price does not simply grow by a small percentage each year,

Instead property and most other asset classes tend to have their market price stagnate for years before experiencing a surge (boom) which gets over done and leads to more stagnation,

The value of that property bought for $218,000 in 2001 had stagnated for 7 years prior to 2001, this stagnation fueled the boom from 2001 to 2005, since 2005 till now there has been much more modest growth and a small fall, we could easily have a few years of further stagnation from here.

 

[Mr Z]

Any property that stagnated through the second half of the 90's must have been a dog, I have never had making money so easy! Even the delays on my developments made me money!

 

[Tysonboss1]

Any property that stagnated through the second half of the 90's must have been a dog, I have never had making money so easy! Even the delays on my developments made me money!

not in the brisbane market they didn't,

My Dad bought our family home in 1992 for $200,000 in 2000 it was valued at $195,000.

The northern brisbane market went no where for years, offcourse during that time there was inflation, and population growth, so when the boom happened dads property went from $195,000 to $425,000 within 3 years.

Now any one looking at that growth rate might think it is part of a bubble, and no doubt there is some froth there, but when you factor in all the stagnation of prior years there is much less froth than appears at first glance.

 

[Mr Z]

Not great but not backwards.