The future of Australian property prices

[prawn_86]

Rental market not to rosey down here in sunny Melbourne, Bill M.

Yeh i am am considering a move down to Melbs later this year and am absolutely loving the value you can get as a renter down there. Like for like (ie same style and building age) you would have to live 5 - 10km from the Sydney CBD for the same price, compared to in Melbs you can live walking (or 5 min tram) to work.

Sydney has a definite undersupply of apartments and the rents here are ridiculous. My basic research shows Bris and Melbs both have an over-supply so renters are getting amazing deals

 

[nth brisbanite]

Sean Quinn, formerly Ireland's richest man worth $4.7 billion Euros, has been declared bankrupt. Lost the lot on Irish property development and bank shares. Bugger. Now his wife's trying to argue in court she didn't know what she was signing when she went guarantor. D'oh!

But even weirder is the former yellow Wiggle, Greg Page, having to rejoin the band. After 15 years of Wiggles' earnings and a $50m severance, he lost the lot developing RE in Sydney. Probably going to have to sell the mansion ($7M) and the Elvis memorabilia collection ($4M) too. Retired a multi-millionaire at 35 due to ongoing illlness, now broke and back to work at 40.

What are you trying to prove? You are using 2 extreme cases to show that investing in real estate can cause untold damage. There are thousands of property investors (like myself) who are not having any problems with their investments. Mine may have gone down 5% over the last year or two but over a long time period, I have done really well.

 

[Bill M]

Sydney has a definite undersupply of apartments and the rents here are ridiculous. My basic research shows Bris and Melbs both have an over-supply so renters are getting amazing deals

And that is exactly right (for the Sydney situation). When my agent puts my unit up for rent he gets several applicants, the market is tight, the rents are high. This is why I can't see dramatic price decreases. More in the following article:
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THE median price of renting in Sydney has hit $500 a week for the first time, an industry report has revealed.

While the national asking price rose by a modest 1.1 per cent for houses and 1.4 per cent for units in the December quarter, houses in Sydney jumped 4.2 per cent and apartment rents skyrocketed by 4.5 per cent in the same quarter, the Australian Property Monitors Rental Report shows.

Link here to article in The Telegraph
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[trainspotter]

Sean Quinn, formerly Ireland's richest man worth $4.7 billion Euros, has been declared bankrupt. Lost the lot on Irish property development and bank shares. Bugger. Now his wife's trying to argue in court she didn't know what she was signing when she went guarantor. D'oh!

But even weirder is the former yellow Wiggle, Greg Page, having to rejoin the band. After 15 years of Wiggles' earnings and a $50m severance, he lost the lot developing RE in Sydney. Probably going to have to sell the mansion ($7M) and the Elvis memorabilia collection ($4M) too. Retired a multi-millionaire at 35 due to ongoing illlness, now broke and back to work at 40. Bugger.

Anyone know how you can lose $50m+ on RE in Sydney???

RE: The Wiggle thing.

Just goes to show how easy it is when you do not know what you are doing !

 

[YELNATS]

Sydney has a definite undersupply of apartments and the rents here are ridiculous. My basic research shows Bris and Melbs both have an over-supply so renters are getting amazing deals

Re Sydney, it is patchy and there are some notable exceptions, like in the Rhodes mid-western suburbs area, where I have a 5 year-old 2-bedder investment unit and where, like many landlords, I can't find a tenant.

Harry Trugaboff's Meriton has flooded the market with new lower cost units in the last couple of years, many of which are still unsold/empty.

 

[prawn_86]

Re Sydney, it is patchy and there are some notable exceptions, like in the Rhodes mid-western suburbs area, where I have a 5 year-old 2-bedder investment unit and where, like many landlords, I can't find a tenant.

Harry Trugaboff's Meriton has flooded the market with new lower cost units in the last couple of years, many of which are still unsold/empty.

I like Rhodes but transport infrastructure there is a nightmare. No way i would ever drive to work in Sydney, and there is no direct train from Rhodes to the CBD, so instantly it rules it out for me as a renter

 

[sptrawler]

Re Sydney, it is patchy and there are some notable exceptions, like in the Rhodes mid-western suburbs area, where I have a 5 year-old 2-bedder investment unit and where, like many landlords, I can't find a tenant.

Harry Trugaboff's Meriton has flooded the market with new lower cost units in the last couple of years, many of which are still unsold/empty.

I just googled Meriton apartments, I see what you mean there are lot on the website. Reading the papers they are always going on about a rental shortage in Sydney?

 

[satanoperca]

Re Sydney, it is patchy and there are some notable exceptions, like in the Rhodes mid-western suburbs area, where I have a 5 year-old 2-bedder investment unit and where, like many landlords, I can't find a tenant.

Harry Trugaboff's Meriton has flooded the market with new lower cost units in the last couple of years, many of which are still unsold/empty.

And stock on the market has doubled since the start of last year.

http://sqmresearch.com.au/graph_stock_on_market.php?postcode=Rhodes&t=1

Seems there is no shortage or a shortage because no one is willing to pay the price anymore.

 

[YELNATS]

I like Rhodes but transport infrastructure there is a nightmare. No way i would ever drive to work in Sydney, and there is no direct train from Rhodes to the CBD, so instantly it rules it out for me as a renter

Rhodes has infrastructure aplenty, that's not the problem.

The Rhodes railway station is about a 5 minute walk away which goes straight to the city, as is the new modern Rhodes shopping centre, including Ikea, cinemas, restaurants, etc. The Parramatta rivercat is nearby, plus schools, sports and recreation facilities.

It's actually a great place to live, but at the moment there's a glut of available accommodation.

 

[Bill M]

Re Sydney, it is patchy and there are some notable exceptions, like in the Rhodes mid-western suburbs area, where I have a 5 year-old 2-bedder investment unit and where, like many landlords, I can't find a tenant.

Harry Trugaboff's Meriton has flooded the market with new lower cost units in the last couple of years, many of which are still unsold/empty.

Ahh, that's the difference. Mine is on the Northern Beaches, has water views, 5 minute walk to beach, 2 minutes walk to Coles, Woolworths, several speciality shops and main bus stop where you can get a express bus to the city every 5 Minutes and renters want that. Not much new stuff being built up here for now and what there is is just too expensive anyway.

 

[prawn_86]

Rhodes has infrastructure aplenty, that's not the problem.

The Rhodes railway station is about a 5 minute walk away which goes straight to the city, as is the new modern Rhodes shopping centre, including Ikea, cinemas, restaurants, etc. The Parramatta rivercat is nearby, plus schools, sports and recreation facilities.

It's actually a great place to live, but at the moment there's a glut of available accommodation.

Hmm, when i looked at it i didnt think they had a direct train. I do like the area though, it is nice and modern, unlike most tired Sydney suburbs

 

[kid hustlr]

Rhodes has a nice appearance, that modern feel will appeal to a lot of people I would have thought.

Any thoughts on the the lower north shore? st leaonards/wollstonecraft etc?

From a buying perspective it looks like you can get a new apartment in one of those higher density places around the station at st leonards for a similar price as one of those older medium density stle apartments in wollstonecraft. Yet rent prices seem to be much higher at st.leonards?

Does this suprise anyone?

 

[Bill M]

From a buying perspective it looks like you can get a new apartment in one of those higher density places around the station at st leonards for a similar price as one of those older medium density stle apartments in wollstonecraft. Yet rent prices seem to be much higher at st.leonards?

Does this suprise anyone?

No it doesn't, reason being is the levys. Those high rises apartment blocks charge whopping levys, the owners will have to recoup that from higher rents. If I had to make the choice I would choose St. Leonards over Wollstonecraft simply for the location. Buses up and down the main drag to Manly, City and Chatswood, plus the trains, handy for me as I use the airport a bit. Also you have all the shopping like Coles and Wollies about, many restaurants and cafes too, hospital next door too. In Wollstonecraft you will have to walk up that hill to Crows Nest to do the shopping, some people don't like that, although Wollstonecraft would be quieter.

 

[Bill M]

I have a gut feeling house prices will be rising again this year. Interest rates are coming down, still chronic shortages in Sydney (can't speak of other areas) and Japanese Banks may soon be entering the market offering lower interest rate loans. Here's a couple of articles worth reading.

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Aussie house prices could be on the rise again. Christopher Joye

Wiser readers will realise that this is history repeating itself: the same individuals expressed the same opinions during the global financial crisis only to see Aussie house prices surge over 2009 and 2010.

And now we have mounting evidence that the housing market is staging a slow recovery, as I’ve projected in these pages for some time.

Link to full story here: http://www.propertyobserver.com.au/...the-rise-again-christopher-joye/2012012453137
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and

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Japan's mortgage shake-up

Boyd says the Japanese banks have a competitive advantage which could see them smash our local rates.

Based on a speculated rate of 4.5 per cent from the Japanese banks, Mickenbecker crunched the numbers on what it could mean for home owners.

Link to full story here: http://au.news.yahoo.com/today-tonight/article/-/12696121/japan-s-mortgage-shake-up/
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Will be an interesting year, cheers.

 

[finnsk]

If home loans at 4.5 per cent from the Japanese banks, what about the official interest rate from the RBA, will that not mean that they will have to lower there official rate to below 3%.

 

[sptrawler]

If home loans at 4.5 per cent from the Japanese banks, what about the official interest rate from the RBA, will that not mean that they will have to lower there official rate to below 3%.

It will be very interesting, Japan savings deposit rates are really low in the order of 1%, I think.
Therefore it will be really dificult for our banks to compete, unless they drop the rate they give savers for deposits.
It will be interesting to see if the government has to put in some form of regulation.

 

[prawn_86]

The whole rumours of the Japanese banks offering low rate loans is BS.

If it was as easy as borrowing in one currency and lending in another then everyone would do it. What all the media pumping this up conveniently forget is that the interest rate differential between the 2 countries is taken into account by the difference in currencies, or when you book forward to hedge. IE if you borrow in JPY and lend out in AUD then any gain from low cost borrowing is offset by the high purchasing cost of the AUD.

Unless you remain unhedged, which blew up a lot of people/banks back int he early 90's as far as i recall

 

[ROE]

Ahh, that's the difference. Mine is on the Northern Beaches, has water views, 5 minute walk to beach, 2 minutes walk to Coles, Woolworths, several speciality shops and main bus stop where you can get a express bus to the city every 5 Minutes and renters want that. Not much new stuff being built up here for now and what there is is just too expensive anyway.

Bill what do you think area near the Darling Harbour, Ultimo and the opposite side like
Kent St and Shelly St on King St Wharf etc..?

What do you think price action wise there for the next couple of years? you reckon it could drop 10-15% from today price?

 

[Bill M]

Bill what do you think area near the Darling Harbour, Ultimo and the opposite side like
Kent St and Shelly St on King St Wharf etc..?

What do you think price action wise there for the next couple of years? you reckon it could drop 10-15% from today price?

My wife and I are always thinking about living somewhere new. We looked at high rise apartments in that area but the levies being so high quickly put that idea to rest. Around Ultimo and Darling Harbour you have some 3 story newer type blocks, I haven't looked into them. They could be good but depends again on the levies. I like the area, handy to everything, city, Central rail, Uni's, Casino etc.. Great for city workers and students and I don't it would be that hard to rent. I don't know about the prices going up or down for that area as I don't follow it.

 

[Bill M]

The whole rumours of the Japanese banks offering low rate loans is BS.

If it was as easy as borrowing in one currency and lending in another then everyone would do it. What all the media pumping this up conveniently forget is that the interest rate differential between the 2 countries is taken into account by the difference in currencies, or when you book forward to hedge. IE if you borrow in JPY and lend out in AUD then any gain from low cost borrowing is offset by the high purchasing cost of the AUD.

Unless you remain unhedged, which blew up a lot of people/banks back int he early 90's as far as i recall

John Symonds and Mr Bouris said a similar thing, will be interesting to see how it pans out.

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But Mr Bouris and Aussie Home Loans founder John Symonds doubt that Japanese banks could sell mortgages much cheaper than major Australian banks. Mr Symond said after factoring in foreign exchange costs a Japanese bank would be making a loss on Australian mortgages.

Link here to story:http://afr.com/p/national/juicy_margins_enough_to_attract_N1pavYHuKcXHSkzSbZc41J
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