The future of Australian property prices

[drsmith]

Currently up here we have mineworkers doing 2 on 1 off ...on there week off they are driving taxi,s , working at a roadhouse and others forgoing there week off just to make ends meet ......... There partners are also having to work fulltime ..........childcare centres are benefitting tho.

All this while intrest rates remain low


Sunshine and lollipops ? or a case of biting off more than one can chew?

Looks like the "great australian dream" has turned into more of a nightmare for a few of our younger familys.

Lucky country?

It's seriously fantasy land up there.

http://www.realestate.com.au/proper...eal+estate-+port+headland+port+hedland/zpcayz

An asking price of almost $1mil for a dog box in need of TLC.

 

[skcots]

I went to visit an old mate on the weekend who recently got married. He's a first home buyer and he went and bought a 400K home and his wife is unemployed.

Why do first home owners want everything now? Start off small in a 2br home and work your way up. I highly doubt anyone will live in their first home until they retire and that's the mentality that alot of first home owners have...

At the moment, the cheapest 2 bedroom house on the market in my not very desirable area is $365,000.

 

[drsmith]

Around 3 million for this...quite an interesting house...

http://www.theherald.com.au/news/lo...ad-between-stroud-and-bulahdelah/1756260.aspx

N.T

How much would that cost to build ?

 

[newbie trader]

to be honest i would have thought a lot more than 3 million hahaha...it has a tennis court, lift, indoor pool etc etc etc etc etc etc etc etc etc etc

N.T

 

[Go Nuke]

Nun
Interesting comments - I have a couple of friends up north, they moved there about 5 years ago cos he landed a good job. Between the two of them they are on about $350k/pa. They are running around investing like mad, with a goal to quit working forevever within the next 3-5 years (before she hits the ripe old age of 30 no less).
Its interesting that I came through the "white collar" system (uni - office job - management etc) and did very well at it. Meanwhile most of my mates took the "blue collar" system (tech school - trade - apprentiships), and now all earn double (sometimes tripple) my salary and only work 50% of the year. Meanwhile I was putting in 60-70hour weeks and would get 4 weeks leave (if I was lucky).

I guess Im just pointing out that there is always a flip side!

Regards
82

I'm a boilermaker, 31 and am on $53K/year {38hr week} (though earnt slightly more with O/T...so there is yet another flip side to your argument

Not all blue collar works get the big dollars your quoting. Only the ones that go to the mines.....the rest of us who work in the city earn alot less.

I can’t begin to explain the absurdity of house prises rising over the past 12 months. Among other things a major contributor was the fact of lower interest rates. I can’t comprehend loaning near 400k but do understand any disappointment that you might have with high and higher prices.

To my demise the RBA might just stop raising interest rates from where they stand. "Kincella" appears to have the same instinct. This will no doubt help with your endeavours if rates are now held steady. However probability equates to, houses will keep rising if rates stay where they are. Not right away, but sooner rather than later once the change of tone sets in of rates being steady. The outcome would conclude in rates rising further if the economy is sound. If the banking sector can curve property investment by revising LVR’s etc, this may do the trick to cool the property market.

Just my opinion.

Thanks for your thoughts MR

The shame is its been a double edged sword. Trying to save a decent deposit whilst absorbing the ever increasing rent from landlords over the last couple of years.
My wages certainly haven't kept up with the cost of living.

The other thing is....

However probability equates to, houses will keep rising if rates stay where they are. Not right away, but sooner rather than later once the change of tone sets in of rates being steady.

this....is what lured first home buyers in.
As someone who has been looking to buy for 18months+ now, its the one thing I heard again and again...."Just buy something...get into a property" we got told. They wont go down much...only up because of supply demands"

We have had a stoke of lucky with the block of land my partner and I are buying. We have part of the contract signed but due to all the rain, it keeps getting pushed back till registration...we we have secured the block but had 3 extra months to save our arses off whilst not paying a morgae of the block yet.

Its all less we have to borrow from the bank :>

New job with more $$$$ this year anyway. Thats my goal anyway.

 

[Go Nuke]

It's seriously fantasy land up there.

http://www.realestate.com.au/proper...eal+estate-+port+headland+port+hedland/zpcayz

An asking price of almost $1mil for a dog box in need of TLC.

Yeah but rent it out at $1200/week, and that $62400K/yr!
Single guys in the mines team up and rent it together. 2 guys $600 each, on say $2K/ week each...that leaves em with $1400 for everything else.

Still not bad money.

If your an investor already, you might have enough equity is other homes to cover some of the costs.

 

[Go Nuke]

I went to visit an old mate on the weekend who recently got married. He's a first home buyer and he went and bought a 400K home and his wife is unemployed.

Why do first home owners want everything now? Start off small in a 2br home and work your way up. I highly doubt anyone will live in their first home until they retire and that's the mentality that alot of first home owners have...

This is why...

http://loanmarket.com/?p=2741

The age of first home buyers is increasing.
I again take myself as a classic example. My partner and I are in our 30's.
We want to start a family and not raise kids in a unit...but something with a backyard... and a sandpit for the kids...something like I grew up with (like many of us in our 30's)

We have NO intetion of moving anytime soon. What we are buying now will be our home for years to come.

Beside...I'm helping the economy by building a new house...doin my bit for Australia

Just a suggestion as to why we want the best now.

 

[WaveSurfer]

I went to visit an old mate on the weekend who recently got married. He's a first home buyer and he went and bought a 400K home and his wife is unemployed.

Why do first home owners want everything now? Start off small in a 2br home and work your way up. I highly doubt anyone will live in their first home until they retire and that's the mentality that alot of first home owners have...

Bought my first home for 81k. Spent 20k on reno's. Sold it for 260k.

Did it again 3 times and bought a 600k home outright. I'm only 31 too.

So we're not all like that

It was painful, we lived in one for 3 months with one liveable room (tiny bedroom), one power point, no bathroom/toilet/shower/kitchen and a wad load of dust.

Gave me enough leverage though to quit my job as a builder and go to Uni.

 

[Go Nuke]

Bought my first home for 81k. Spent 20k on reno's. Sold it for 260k.

Did it again 3 times and bought a 600k home outright. I'm only 31 too.

So we're not all like that

It was painful, we lived in one for 3 months with one liveable room (tiny bedroom), one power point, no bathroom/toilet/shower/kitchen and a wad load of dust.

Gave me enough leverage though to quit my job as a builder and go to Uni.

Well done mate!
You made the right choices in life.

Helps being a builder with the reno's though doesn't it :> Most people have to pay for laboour cost.

Well done once again

 

[WaveSurfer]

Well done mate!
You made the right choices in life.

Helps being a builder with the reno's though doesn't it :> Most people have to pay for laboour cost.

Well done once again

Cheers Nuke. You're not wrong about the choices mate.

I wanted a nice home, but didn't want to pay the bank for the next 30 years to get it. Suffered the pain of living in a dog box (almost literally for bit there LOL) and have not looked back since.

Building is in the blood which made it a little easier. The old man had me sweeping floors on his sites from the age of 6, so I had enough background to get the job done at minimal cost. Makes it easier dealing with the other tradies (plumbers, electricians etc..) to make sure you get the most bang for your buck.

That said, I have a few friends (with no carpentry/building skills whatsoever) who did much the same and still came out well on top. So it's definitely the choices mate, all about choice.

Cheers again buddy.

 

[moXJO]

Gave me enough leverage though to quit my job as a builder and go to Uni.

What did you study at uni?

 

[WaveSurfer]

What did you study at uni?

Still there plugging away moXJO. Studying health science and computer science (major in software engineering).

 

[drsmith]

Yeah but rent it out at $1200/week, and that $62400K/yr!
Single guys in the mines team up and rent it together. 2 guys $600 each, on say $2K/ week each...that leaves em with $1400 for everything else.

Still not bad money.

If your an investor already, you might have enough equity is other homes to cover some of the costs.

There should be a sign on the approach roads saying "Welcome to the boom town".

God help the poor fools that buy anywhere near the top because it will be a long, hard and fast ride down from those stratospheric rents and prices.

 

[GumbyLearner]

There should be a sign on the approach roads saying "Welcome to the boom town".

God help the poor fools that buy anywhere near the top because it will be a long, hard and fast ride down from those stratospheric rents and prices.

Well at least someone has said it.

 

[drsmith]

to be honest i would have thought a lot more than 3 million hahaha...it has a tennis court, lift, indoor pool etc etc etc etc etc etc etc etc etc etc

N.T

If what's around it is typical suburban housing then it does appear to be, well, slightly (cough) overcapitalised.

 

[nunthewiser]

God help the poor fools that buy anywhere near the top because it will be a long, hard and fast ride down from those stratospheric rents and prices.

Yep.

Its looking fairly obcene up thataway...........yet the dollars keep rollin ......

for now

 

[Dowdy]

This is why...

http://loanmarket.com/?p=2741

The age of first home buyers is increasing.
I again take myself as a classic example. My partner and I are in our 30's.
We want to start a family and not raise kids in a unit...but something with a backyard... and a sandpit for the kids...something like I grew up with (like many of us in our 30's)

We have NO intetion of moving anytime soon. What we are buying now will be our home for years to come.

Beside...I'm helping the economy by building a new house...doin my bit for Australia

Just a suggestion as to why we want the best now.

That's fair enough, it's your decision but one thing I should point out.

An economy grows by savings and then using that savings to buy assets. Did you leverage up to the max to buy your home. If you did, as with many other first home buyers do then it isn't helping the long term economy.

 

[Tysonboss1]

An economy grows by savings and then using that savings to buy assets. Did you leverage up to the max to buy your home. If you did, as with many other first home buyers do then it isn't helping the long term economy.

Sorry you are wrong on that point.

Savings do not help grow the economy as much as you would think.

If you took all the debt out of the economy we would suffer a depression larger than the great depression.

If all the debt was repayed in Australia our money supply would shrink to about 1% of what it currently is. and it would result in a shrinking economy.

 

[SM Junkie]

There should be a sign on the approach roads saying "Welcome to the boom town".

God help the poor fools that buy anywhere near the top because it will be a long, hard and fast ride down from those stratospheric rents and prices.

I'm happy to be called a fool. But given properties are achieving $2,500 pw and are positively geared it's sitting good at the moment.

As for dropping, no chance in hell. I've watched this market for 10 years and it has never been so stable and secure. There is a hell of a lot of money flowing in through the States Royalties for Regions scheme and from the mining companies.

Then there is the current plans to turn Pilbara towns into cities. Currently Port Hedland has plans for a new town centre, new marina, new hotels a new hospital is currently being built. BHP has funded rapid expansion 6. Port Authority is expanding the number of berths (obviously hightly sought after, see Atlas Iron and Aurox merge). Council are increasing zoning density to try and cope with demand for housing. Rationalisation Plan has identified possible areas where land could be released in Port Hedland, which is finite.

The financial crisis has basically paused this market and any drop in rents or prices has since corrected back to to pre crisis levels. The only thing I'm really noticing is that those that are trying to get into these towns are having a hard time with the banks, lots of finance falling through.

Long term I think this ticks all the boxes for an investor. So this fool is more than happy to put it's money into the Pilbara property market.

 

[Tysonboss1]

Long term I think this ticks all the boxes for an investor. So this fool is more than happy to put it's money into the Pilbara property market.

Atleast for the life of the mining projects and other sources of high paying jobs.

I wouldn't invest in this asset class myself because I don't have a clear understanding of these mining towns. But it sure does seem to be alot of cash being made by people that got in early.

The main risk I can see is the supply demand risk. If part of these new "cities" you say they are planning includes construction of alot of new modern dwellings in the form of apartments with all the mod cons, then you may find downward rental pressure on the older style houses, and if you over paid thinking the ultra high rents were guranteed for life you may find that positively geared buffer shrink along with the asset price.

But offcourse if you got in early and paid a low price the ultra high rents would be fantastic.

Last time I was in port hedland (passing through on a military op), it seemed like a bit of a hole. However if you look forward say 30 years, it would not be unlikely that a town will develop in northern WA that could be of a scale of townsville.