The future of Australian property prices

satanoperca · 9 March 2010

Got to love news articles.

http://www.news.com.au/business/breaking-news/investors-grab-bigger-share-of-home-loans/story-e6frfkur-1225838677078

Investors grab bigger share of home loans

As a percentage yes as FHB leave the market. The first step in the ladder is eroding away.

But the most important facts :

The number of loans dropped 18 per cent over the same 12 months, to 6294 from 7673.

The figures showed the total value of loans recorded by AFG remained below year-ago levels, with $2.275 billion of new mortgages in February 2010 compared with $2.674 billion a year before, a fall of 15 per cent.

are often overlooked.

So number of loans is down, total value of loans is down but dont worry the market is going to keep on going up.

And then this

UPDATE: James Glynn DRAMATIC growth in job advertising and a surge in business confidence have lifted the chances of another interest-rate rise in April.

Bring it on.

Happy debt induced comas are coming to a house near you.

Cheers and have a good evening.

Trembling Hand · 10 March 2010

Poor stats on home loan approvals. Biggest month on month decline in a long time. For a boom there's not much business being done?

trainspotter · 10 March 2010

Could be a housing bubble coming up ? OR it could be the best time to buy?

UBIQUITOUS · 10 March 2010

I'd say that it's a good time to sell. I wonder how FHBers who succumbed to the bribe are now feeling? Expect quite a few reposessions in the outer suburbs of many cities this year.

joeyr46 · 10 March 2010

So number of loans is down, total value of loans is down but dont worry the market is going to keep on going up.

Simple its Supply/ Demand
No supply plenty of demand will drive prices up as the bulls keep saying
2004 or there abouts I can remember looking in the local RE office and there was 1 house for sale everything else in the window was either sold or under contract, but there is plenty for sale at the moment so it can't be caused by lack of supply and plenty of demand

Cheers and have a good evening.[/QUOTE]

bellenuit · 10 March 2010

joeyr46 said:
So number of loans is down, total value of loans is down but dont worry the market is going to keep on going up.

I haven't looked into the detail, but loans could be down because there isn't enough land being made available to build on, hence low demand for loans. But demand for established houses can still be high keeping the price up.

I read today that blocks available to build on in WA is way down on just a few years ago.

satanoperca · 10 March 2010

More good news.

Where is Robots?

http://www.heraldsun.com.au/business/cba-tightens-screws-on-lending/story-e6frfh4f-1225838448648

CBA tightens screws on lending

The bank has written to mortgage brokers advising them that loan to value ratios will be reduced to 80 per cent from 90 per cent on a range of investment home loans.

Only 10% change in LVR's or 50% change in borrowing capacity.

Cannot see those investors flooding back to the market as everyone predicted.

This year is going to be fun.

FHB, KRUDD has suckered you into the biggest ponzi, not productive scheme in Australia and it looking like you will pay more than the free money you recieved.

How long before the rest of the four pillars of greed follow suit?

Abbott could have funded his proposed maternity leave with the KRUDD's FHBG for four years or more.

High property prices are a false illusion of wealth.

Cheers and have a good evening.

chops_a_must · 10 March 2010

bellenuit said:
I haven't looked into the detail, but loans could be down because there isn't enough land being made available to build on, hence low demand for loans. But demand for established houses can still be high keeping the price up.

I read today that blocks available to build on in WA is way down on just a few years ago.

Why on earth would they be releasing land when demand in Perth is the lowest in a decade and vacancy rates are the highest in 15 years?

bellenuit · 10 March 2010

chops_a_must said:
Why on earth would they be releasing land when demand in Perth is the lowest in a decade and vacancy rates are the highest in 15 years?

The Urban Development Institute's Deborah Goostrey says more land should be released as the population jumps in Perth and demand increases.

http://www.abc.net.au/news/audio/2010/03/10/2841657.htm?site=perth

jbocker · 10 March 2010

chops_a_must said:
Why on earth would they be releasing land when demand in Perth is the lowest in a decade and vacancy rates are the highest in 15 years?

Hi Chops,
Where have you heard this from? Not challenging it - just hadnt heard anything about that. Mind you I havent opened a paper or turned on a TV for a couple of days....

bellenuit · 10 March 2010

chops_a_must said:
Why on earth would they be releasing land when demand in Perth is the lowest in a decade and vacancy rates are the highest in 15 years?

Land in short supply as the population jumps

Updated March 10, 2010 11:06:00
The State Government is coming under pressure to release more land for housing as the state enters another mining boom.
The Urban Development Institute says there are currently fewer than 1400 blocks of land for sale in Perth.
The Institute's Debra Goostrey says that's 40 per cent fewer than in the last boom in 2006, when people were camping out for weeks to try to secure a block of land.
"We need to keep the supply up to keep the prices down. Just like happened last time, as soon as you start to run into short supply the prices start to go up."
She says demand will escalate as there are 1200 people a week moving into Western Australia.
But, the Real Estate Institute believes there are a lot of speculators sitting on land waiting for prices to improve before releasing them for sale.
REIWA's President Alan Burke says the shortage will impact on prices.
"We're not going back to the boom. It will be a good year for anyone owning a home, their value will improve but it won't skyrocket out of control."

http://www.abc.net.au/news/stories/2010/03/10/2841587.htm?site=perth

chops_a_must · 10 March 2010

jbocker said:
Hi Chops,
Where have you heard this from? Not challenging it - just hadnt heard anything about that. Mind you I havent opened a paper or turned on a TV for a couple of days....

http://www.markhay.com.au/news-opin...-vacancy-rate-at-14-year-high---September-Qtr

bellenuit said:
Land in short supply as the population jumps

Updated March 10, 2010 11:06:00
The State Government is coming under pressure to release more land for housing as the state enters another mining boom.
The Urban Development Institute says there are currently fewer than 1400 blocks of land for sale in Perth.
The Institute's Debra Goostrey says that's 40 per cent fewer than in the last boom in 2006, when people were camping out for weeks to try to secure a block of land.
"We need to keep the supply up to keep the prices down. Just like happened last time, as soon as you start to run into short supply the prices start to go up."
She says demand will escalate as there are 1200 people a week moving into Western Australia.
But, the Real Estate Institute believes there are a lot of speculators sitting on land waiting for prices to improve before releasing them for sale.
REIWA's President Alan Burke says the shortage will impact on prices.
"We're not going back to the boom. It will be a good year for anyone owning a home, their value will improve but it won't skyrocket out of control."

http://www.abc.net.au/news/stories/2010/03/10/2841587.htm?site=perth

I'm not sure about the 1200 people a week. That sounds like a copy and paste job from 2007 numbers.

jbocker · 11 March 2010

Thanks Chops_a_must. I can see Bellenuits quotation too. Interestingly both from the same REIWA President Oct'09 and Mar'10. His comments seem to reflect the state of flux that Australian (Perth at least) property is currently experiencing, largely I daresay impacted by the FHOG status. I find it hard to fathom where things will go from here, debt is a major issue, but I think this is across the board in all investments. No doubt people have been stung badly with shares and super and maybe turne to investing in good old 'bricks and mortar'. Are the prices over inflated, I dont know, if they are inflated I suspect that capital growth may stagnate for quite some time (which it periodically does in cycles anyway). Maybe this time for a little longer, I dont see a major collapse in prices, because Aussies tend to hang on and ride it out. Yep they are going to go without, go hungry, they will be tested and there will be some pain.

I did exactly the same as a FHB nearly 28 years ago. My parents the same 30 years before that. It has never been easy.

UBIQUITOUS · 11 March 2010

The spruiking media articles are almost daily now. I smell a combination of Fear and BS

http://www.smh.com.au/business/sydney-house-prices-tipped-to-push-higher-20100311-q0em.html

Sydney house prices tipped to push higher
March 11, 2010 - 12:21PM
Property prices in Sydney’s inner and middle rings could rise by up to 10 per cent this year, according to an industry association.

The Real Estate Buyer’s Agents Association of Australia said much depended on the effect of rising interest rates and tighter loan conditions.

But property prices will rise in key centres in Queensland, NSW, Victoria, South Australia and Tasmania, with Sydney in particular set to benefit from pent-up demand and increases of up to 10 per cent, it said.

Soft Dough · 11 March 2010

Mortgage pain on the increase

http://www.theage.com.au/business/mortgage-pain-on-the-increase-20100311-q0q3.html

Add to this, LVR changes and decreased access to capital and it looks like the government fuelled ponzi scheme is coming nearer to an end.

Where is robots and his commentary?

Perhaps he is suffering mortgage stress and can't afford his internet connection?

Happy days cashed up brothers

Paradise

TOBAB · 11 March 2010

jbocker said:
Thanks Chops_a_must. I can see Bellenuits quotation too. Interestingly both from the same REIWA President Oct'09 and Mar'10. His comments seem to reflect the state of flux that Australian (Perth at least) property is currently experiencing, largely I daresay impacted by the FHOG status. I find it hard to fathom where things will go from here, debt is a major issue, but I think this is across the board in all investments. No doubt people have been stung badly with shares and super and maybe turne to investing in good old 'bricks and mortar'. Are the prices over inflated, I dont know, if they are inflated I suspect that capital growth may stagnate for quite some time (which it periodically does in cycles anyway). Maybe this time for a little longer, I dont see a major collapse in prices, because Aussies tend to hang on and ride it out. Yep they are going to go without, go hungry, they will be tested and there will be some pain.

I did exactly the same as a FHB nearly 28 years ago. My parents the same 30 years before that. It has never been easy.

Agree with these sentiments. People do not hand over the keys to banks readily. Banks do not want to accept the keys either. WE have full recourse loans. Prices may continue to increase or they may stagnate, perhaps even fall a little.

Have yet to hear anything that has convinced me a collapse is going to occur.

TOBAB · 11 March 2010

Soft Dough said:
Mortgage pain on the increase

http://www.theage.com.au/business/mortgage-pain-on-the-increase-20100311-q0q3.html

Add to this, LVR changes and decreased access to capital and it looks like the government fuelled ponzi scheme is coming nearer to an end.

Where is robots and his commentary?

Perhaps he is suffering mortgage stress and can't afford his internet connection?

Happy days cashed up brothers

Paradise

Hi Soft Dough,

A 90% LVR would seem very risky, no wonder banks are cutting back (as they should!)

Do you really believe in the ponzi scheme - a home is clearly an asset? What sort of fall are you predicting and where?

I do believe that prices are high - a good time to sell. A collapse is a bit far fetched though (a period of stagnation more like it) and your desire for one is frankly quite disturbing?

satanoperca · 11 March 2010

What is a collapse exactly?

More than 50% off current prices

A correction?

Between 0-20%

A fall?

20-50%.

Need to have a sticky on this thread with a guideline as to what exactly determines these things.

Cheers

explod · 11 March 2010

satanoperca said:
What is a collapse exactly?

More than 50% of current prices

A correction?

Between 0-20%

A fall?

20-30%.

Need to have a sticky on this thread with a guideline as to what exactly determines these things.

Cheers

In the US about 80% in worst effected areas in the last six years. Not suggesting that sort of thing here, but that was a crash for you.

Soft Dough · 11 March 2010

TOBAB said:
Hi Soft Dough,

A 90% LVR would seem very risky, no wonder banks are cutting back (as they should!)

Do you really believe in the ponzi scheme - a home is clearly an asset? What sort of fall are you predicting and where?

I do believe that prices are high - a good time to sell. A collapse is a bit far fetched though (a period of stagnation more like it) and your desire for one is frankly quite disturbing?

Well obviously different areas will experience hugely different problems ( eg gold coast and cairns have been stuffed for years already), holiday destinations and investment areas are always the next to go, then closer to home.

I think 20% is definately on. That is unless the government decides to go into more debt to keep the bubble inflated until the election is over.

Housing growth is being driven by credit growth, credit growth that is unsustainable.. People rely on higher and higher LVR to fuel increasing prices. Also, the way LVRs work means that 90 -> 80 makes a HUGE dent in what someone can borrow, just as it made for huge increases on the way up.

This coupled with decreased lending, removal of the first home vendors boost ( which was geared up multiple of times ) and increasing interest rates is something I would not like to be a part of. In fact if the prices only stagnate, it could be for a whole economic cycle.

What is wrong with a house price crash?

It makes housing more affordable, makes living costs and conditions better. The kinds of things an uncontrolled boom ( being artificially stimulated by a deluded prime minister ) destroys.

The future of Australian property prices

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