The future of Australian property prices

kincella · 14 March 2010

tyson....there are thousands of people in that position....their modest little houses in the inner suburbs, been living there for 40 plus years, the owners paid around 10,000......years later same house is worth easily 2 million plus...

and guess what....they are entitled to receive the aged pension....the family home is excluded from the criteria
think a single person receives about 670 pf, and 1012 pf for a couple

what some oldies have done is sell up , cash in, and buy a smaller place, even an apartment....which leaves them with a stack of cash left over....

lioness · 14 March 2010

Robots,

Are you around? Can you provide the latest weekend results please. Thanks.

MACCA350 · 14 March 2010

lioness said:
Robots,

Are you around? Can you provide the latest weekend results please. Thanks.

REIV 83%

cheers

UBIQUITOUS · 14 March 2010

There were 673 auctions reported this weekend, of which 561 sold resulting in a clearance rate of 83 per cent. There were 112 homes passed in, of which 70 were passed in on a vendors bid. This is substantially better than this weekend last year when there were 418 auctions and a clearance rate of 74 per cent.

There are around 2000 auctions scheduled over the next two weekends

Interesting. From 673 auctions this weekend to around 2000 over the next 2 weekends. It would appear there is about to be a substantial increase in the number of people wanting to dispose of their assets (probably to pay off their liabilities!).

lioness · 14 March 2010

MACCA350 said:
REIV 83%

cheers

Thanks Macca.

drsmith · 14 March 2010

Tysonboss1 said:
If it is negativly geared it's a liability,

Again you are trying to define the asset status of a property based on factors external to the property itself which is wrong.

The property is an asset and the loan is a liability.

Tysonboss1 said:
Yes an owner occupied home does have value to the occupier, Because it covers the basic human need of shelter at a lower longterm cost than a leased shelter would.

And I know that if I drew up a personal balance sheet then most accountants would let me list my home on the asset side (along with my scuba gear, watches, rings,cars etc.etc).

How ever if you want to analise your true position in terms of wealth or how close to financel independance you are you should not list the items you hold for personal consumption.

Offcourse the owner occupied house if held debt free adds alot to your financel inderpendance because it covers your basic need for shelter for probaly $5000 / year instead of $30,000 / year.

The differance with me is I would include my home on the liability side as a $5000 expense rather than a $400,000 asset If I were trying to get a true idea of my personal finamcel independance. ( I know it's not what they teach at accounting school, but it gives a better picture of whats actually happening)

If one day you did set up some sort of annuity from your home in the form of a reverse mortgage. then by all means add the income from this to the asset side. But not until it is happening.

Assets do not necessarily equate to financial independence. They are just one component of financial independence.

You can define white as black and black as white if you wish but such a definition would be unique to you and of no value to anyone else.

So_Cynical · 14 March 2010

drsmith said:
Again you are trying to define the asset status of a property based on factors external to the property itself which is wrong.

The property is an asset and the loan is a liability.

So if you need the loan to have the asset...how come the asset is not a liability, i mean if you cant have one without the other then there the same thing.

drsmith · 14 March 2010

There is some seriously bad weed going around.

CamKawa · 15 March 2010

It's official, property is for bogans.

Residential Property Investment

gfresh · 15 March 2010

Isn't the boom just around the corner? But wait...

http://www.abs.gov.au/ausstats/abs@.nsf/mf/5671.0?OpenDocument

JANUARY KEY POINTS

JANUARY 2010 COMPARED WITH DECEMBER 2009:

HOUSING FINANCE FOR OWNER OCCUPATION
The total value of owner occupied housing commitments excluding alterations and additions decreased 2.4% in trend terms and the seasonally adjusted series decreased 5.0%.

PERSONAL FINANCE
The trend series for the value of total personal finance commitments decreased 0.2%. Fixed lending commitments fell 1.1%, while revolving credit commitments rose 0.7%.
The seasonally adjusted series for the value of total personal finance commitments decreased 1.5%. Fixed lending commitments fell 2.1% and revolving credit commitments fell 1.1%.

COMMERCIAL FINANCE
The trend series for the value of total commercial finance commitments decreased 1.4%. Revolving credit commitments fell 4.3% and fixed lending commitments fell 0.4%.
The seasonally adjusted series for the value of total commercial finance commitments decreased 1.6%. Revolving credit commitments fell 6.7%, while fixed lending commitments rose 0.3%.

LEASE FINANCE
The total value of lease finance commitments decreased 1.8% in trend terms and the seasonally adjusted series decreased 10.3%.

satanoperca · 15 March 2010

UBIQUITOUS said:
Interesting. From 673 auctions this weekend to around 2000 over the next 2 weekends.

This will be an excellent test of the markets resilience.

Anything less than 75% will in my eyes be considered bearish, above the drive for higher prices will continue for a little while longer.

Cheers

MACCA350 · 15 March 2010

satanoperca said:
This will be an excellent test of the markets resilience.

Anything less than 75% will in my eyes be considered bearish, above the drive for higher prices will continue for a little while longer.

Cheers

I doubt it will drop below 75%, in fact I'd say it won't drop below 80% over the next 2 weeks...........too many international buyers.

Since October last year it's only dropped below 80% once(28/11/09, 997 Auctions, 78% clearance) two weeks later there were 1008 Auctions with an 81% clearance rate..........though I missed two weeks in Feb data I don't recall a drop below 80% (if anyone has the REIV data for the 13th & 20th of Feb, let me know)

I'd agree though that a drop below 75% will be a major break from the current trend.

cheers

Mofra · 16 March 2010

CamKawa said:
It's official, property is for bogans.

Residential Property Investment

Quality

On another tack, interesting article in The Age this morning that points to a planning failures in Melbourne (something pertinant to all major cities) with at least one expert confirming my personal opinion that there is no "single" property market in the big cities (or at least, there wont be):

RMIT University associate professor Michael Buxton, who advised the Victorian government on its planning strategy Melbourne 2030, warns that unless planning changes quickly, Melbourne could evolve into two cities: wealthy inner suburbs with good services, and those in the outer ring, car-dependent and with fewer choices of schools and hospitals.

http://www.theage.com.au/victoria/the-outer-limits-20100315-q9un.html

Beej · 16 March 2010

gfresh said:
Isn't the boom just around the corner? But wait...

http://www.abs.gov.au/ausstats/abs@.nsf/mf/5671.0?OpenDocument

Yes - this data is quite bearish. However it is worth noting that the AFG (mortgage brokers), also published data showing a big drop-off in mortgages written by them in January before the ABS Jan data came out. Since then , the AFG data has shown a strong rebound. So I am currently expecting a rebound in the ABS housing finance data for Feb as well - ie a bit of a statistical blip I think and while there may still be softening in this data over the next few months, I don't think the downtrend will be as severe as the Jan data might suggest on it's own.

satanoperca said:
This will be an excellent test of the markets resilience.

Anything less than 75% will in my eyes be considered bearish, above the drive for higher prices will continue for a little while longer.

I wouldn't be expecting to see any real downwards pressure on prices unless clearance rates drop to 50% and below. Remember what the clearance rates were like in late 2008? We discussed them enough here!

Cheers,

Beej

Beej · 16 March 2010

Beej said:
I wouldn't be expecting to see any real downwards pressure on prices unless clearance rates drop to 50% and below. Remember what the clearance rates were like in late 2008? We discussed them enough here!

Further to my "guestimate" above, and also in relation the often discussed relationship (if any) between reported auction clearance rates and price pressures, check out these charts that Macquarie bank just put together for their 2010 residential housing market outlook.

Spooky yea?? I think these charts show something that Sydney/Melbourne property market followers (where auctions are common and a good/timely indicator of the market action) have always kind of instinctively known.

Cheers,

Beej

satanoperca · 16 March 2010

Cheers Beej for the graph.

So if I'm right it is saying that as clearance rates go up so do prices.

This would seem quite logical.

There must be a clearance range whereby RE agents stop putting properties up for auction and back to private sale.

I assume price leads auction rates, the higher price growth the greater the clearance rate.

Cheers

satanoperca · 16 March 2010

Finally a main stream media publication that draws the facts and costs of rising RE prices and the benefits(cough) to society.

A good read including some of the comments.

http://www.theage.com.au/opinion/politics/dazzled-by-housings-magic-rise-20100315-q9ld.html?autostart=1

Cheers

kolothuk · 16 March 2010

An updated article by Steve Keen.

http://www.businessspectator.com.au...nt&src=mp&is=Property&blog=Keensian Economics

Go Nuke · 16 March 2010

so no retail therapy going on there....consumers are not consuming....not on their cards....they look like they are being safe....having to pay for the 4th rate hike in 6 months....they are not going to lose their shirts, or their houses...
Credit card transactions slump 22pc From: AAP March 12, 2010 12:14PM

THE total value of credit and charge card transactions, including advances, fell by 22 per cent in January, Reserve Bank figures released today show.
Australians spent $17.1 billion on their credit and charge cards, compared to $22 billion in December.

Hmmm no suprise there.....dispite what the government says I see average people all around me doing it tough! Especially after all these rate hikes.

The government is full of BS when they spruke about how well everyone is doing imo.

TOBAB · 16 March 2010

satanoperca said:
Finally a main stream media publication that draws the facts and costs of rising RE prices and the benefits(cough) to society.

A good read including some of the comments.

http://www.theage.com.au/opinion/politics/dazzled-by-housings-magic-rise-20100315-q9ld.html?autostart=1

Cheers

Quite right a good read. The only point I would add is that increased LAND prices ought to encourage multi dwellings where there used to be only 1 (obviously STCA). This better use of our land resources would save a lot in infrastructure costs and perhaps get prices back to realistic levels.

The future of Australian property prices

kincella

lioness

MACCA350

UBIQUITOUS

lioness

drsmith

So_Cynical

The Contrarian Averager

drsmith

CamKawa

gfresh

satanoperca

MACCA350

Mofra

Beej

Beej

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satanoperca

satanoperca

kolothuk

Go Nuke

TOBAB

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