The future of Australian property prices

[Go Nuke]

Wavesurfer, thank you very much for sharing your thoughts mate.

I see now how you got to be where you are today.
I was like the 95% of young people...spend too much money on cars,drugs, ladies and grog
Houses were always something for "old" people to be interested in

I feel lucky in some scence that by the age of about 27 I grew out of all the stuff I mentioned above (I'm 31 now). Some of my mates are still at it. Guess thats fine because they are living life how they want.
For me the prospect of renting and starting a family is NOT where I want to be.

Thanks once again.

 

[WaveSurfer]

Wavesurfer, thank you very much for sharing your thoughts mate.

I see now how you got to be where you are today.
I was like the 95% of young people...spend too much money on cars,drugs, ladies and grog
Houses were always something for "old" people to be interested in

I feel lucky in some scence that by the age of about 27 I grew out of all the stuff I mentioned above (I'm 31 now). Some of my mates are still at it. Guess thats fine because they are living life how they want.
For me the prospect of renting and starting a family is NOT where I want to be.

Thanks once again.

Cheers buddy. I was a tad intoxicated when I wrote it, but it still makes perfect sense today hew:

I hear you there on the being young. I certainly was no angel myself and my life wasn't always this rosy. I was just lucky that I woke up early. I now find (from Uni) that "statistically" the way I started in life I should have either been dead, in jail or a smack addict by the time I was 18. Good old statistics hey....

Realising that I could achieve my goal sooner rather than later by doing it tough for a while is hard to swallow at the time, but you will reap the rewards in the long run.

Congrats on growing up early yourself. You might think it's late, but it's not. I know people much older than us both who still haven't grown up. They most likely never will.

Let me just throw a bit of dirt in the mix here. Sure property prices have exploded in the past few years. But do remember that a lot of this bubble is contained in the idealistic areas. The range across Sydney is a good example. Here in some areas you have property worth millions. Others lucky to be 200k-300k. It's these idealistic areas that have caused the median line to shoot up (because everyone wants a piece of the action). I like Tom Williams' take in regards to the markets "THE HEARD MENTALITY". No-one wanted to buy in Redfern, they all wanted Darling Point.

It's the fall in these areas that will cause the price to come back towards the median. Majority of people in the __most popular__ areas are like I mentioned, mortgaged to the hilts, trying to compete with Joe next door with his spankin new SS and the PowerCat sports fisher parked for all to view in the driveway. All owned by the bank mind you

 

[newbie trader]

Wave,

I'm still young also and my mindset is that if I put my head down and work work work in the short term then hopefully the long term will be a bit more relaxed than others my age who go out and party 4 or 5 times a week (spending hundreds).

I was flicking through the paper today and was startled...it had 5 pages or so of the median house prices from 2009 with 3, 5 and 10 year forcasts for each area (a few hundred suburbs were listed). I'm 18 now and i'm not sure when i'll want to buy my own home but the 2009 price for the areas in which i'd like to live are about 500-800k...in 10 years however all the prices in most suburbs seem to be between 1.1-1.6m...are these prices relative to what people will be earning in 10 years? Or is the dream of owning my own home fanciful?

N.T

 

[explod]

Wave,

I'm still young also and my mindset is that if I put my head down and work work work in the short term then hopefully the long term will be a bit more relaxed than others my age who go out and party 4 or 5 times a week (spending hundreds).

I was flicking through the paper today and was startled...it had 5 pages or so of the median house prices from 2009 with 3, 5 and 10 year forcasts for each area (a few hundred suburbs were listed). I'm 18 now and i'm not sure when i'll want to buy my own home but the 2009 price for the areas in which i'd like to live are about 500-800k...in 10 years however all the prices in most suburbs seem to be between 1.1-1.6m...are these prices relative to what people will be earning in 10 years? Or is the dream of owning my own home fanciful?

N.T

I read that article also. No one can predict the future, the article in my view is fanciful rubbish and no doubt driven by the Real Estate Industry. We have in the last few years had a servere stock market correction. There are signs that interest rates have furthern to rise. It is getting harder to borrow money also and there are many other signs that indicate the surge in property for instance cannot continue without considerable change.

In the great crash of 1929, things came good for a couple of years and then in the early 1930's everything crashed again; and in fact there is so much to that period that it is worth Googling or reading up on it.

In my view there is as much chance of property going up as reported in that article as there is a crash.

 

[IFocus]

I'm a student of the markets and will be for the next 10-15 years.

Very few come to the market with this time frame in mind you stand a fair chance of success.


Good luck

 

[Go Nuke]

Back to the question at hand... The future of Australian property prices.... imo I think wages need time to catch up to real estate.

Due to the GFC I'm sure alot of salaries/wages were either frozen or not inline with the real cost of living ( that being rent/morgage, electricity, rates, toll road {SE QLD anyway}.

If interest rates contine to climb, surely people are so highly leveraged that they will either have to,

a) Find a better paying job (thats me)
b) find a second job
c) sell their house and downgrade to something more affordable
d) put of having kids in order to fund the house/unit so desired, because they can't manage to do both pay a morgage AND have children

I think realestate will continue to hum along but not like it has over the last 5 years.
Though I do think it wouldn't take much to tip the balance for people already under morgage stress or close to it. I think its very real thing to factor into the future as a possible risk.
It will be like what happened in Western Sydney only worse.
That would then have me worried about the massive exposure our big 4 banks have to the morgage market. POP.

Affordability is the big issue here.

I'd like to know that my kids don't need a Phd one day just to earn enough to buy a house in this country.

Time will tell.
In the mean time, I don't plan on over extending myself

 

[Bronte]

Average Perth house to cost $1 Million in ten years.
http://www.perthnow.com.au/news/wes...lion-in-10-years/story-e6frg13u-1225843172776

 

[Investor82]

Average Perth house to cost $1 Million in ten years.
http://www.perthnow.com.au/news/wes...lion-in-10-years/story-e6frg13u-1225843172776

Dont stress - the report was prepared by the Sunday Times. You watch in the next two weeks there will be a similar report on Today Tonight and ACA - you can ignore those also.

 

[drsmith]

Slightly off topic but.

So true about the Titanic...however we are in a minerals super cycle and its got at least 10 years to run, maybe 15 :dunno: not to say there wont be stumbles along the way.

All booms have further to run at the top or so most think.

I have no idea where the top will be but it will be interesting to see where we are in, say, a couple of years.

 

[Tysonboss1]

That's due to the fractional reserve banking system which is a flawed system.

“Paper money eventually returns to its intrinsic value ---- zero.” - Voltaire (1694-1778)


You do need some debt for investment (ie starting a business) but if we keep running up these high leveraged housing mortgages then we will have a depression

A growing economy isn't necessarily a productive one, epically if it involves government schemes - housing scheme, insulation scheme and now the school rebuilding scheme is starting to find holes in it

Flawed or not it is the system we have, And by design we need the capital that is created by debt.

Housing is the most basic of human needs so we will always need to be encourging people to continue to build more, and we will always have to encourge investors to own more properties to rent out.

After a person has taken out a loan to buy a house worth $300,000. The total money supply is increased by $300,000. However as loans are repaid, the money supply is decreased by that amount.

If the total debt started to decrease, then so would our money supply which would lead to deflation and we would head into depression as banks shut down and people horded $$$,

Remember People hording $$$ = Bad
People spending $$$ so others can earn them = Good.

An economy that slowly inflates it's money supply discourages hording, and encourges investment in real things.

An economy that deflates it's money supply discourges spending and encourages hording and usary which brings about social unrest and economic collapse.

Hording money is not productive, So you have to have a system that discourages it. Private hording of the money supply was a big factor in the fall of rome.

 

[Tysonboss1]

I'd rather the banks didn't have any of my savings. But they do. I didn't know two years ago that banks could lend out so much more than deposits! Because of this so many FHB's etc. Are forced to pay such high prices.

Can't wait to see the day that the majority of my savings are removed from the bank.

you may enjoy this video, it's number 2 in a series of 5

http://www.youtube.com/watch?v=sanOXoWl0kc

When you remove your money from the bank what are you going to do with it. You should really spend it. Money is not somthing that a person should hold for very long.

Money is supposed to be used as a shorterm store of value to be used as a medium of exchange. The idea that savers should be some favoured class that produce high risk free earnings by simply holding a portion of the money supply is flawed. Hence the reason usary is outlawed in the bible.

( I am not saying spend all your cash on personal comsumption, I am saying buy assets with it )

 

[Tysonboss1]

Affordability is the big issue here.

I'd like to know that my kids don't need a Phd one day just to earn enough to buy a house in this country.

Time will tell.
In the mean time, I don't plan on over extending myself

They will if the want a 1/4 acre block 10kms from the CBD like their great grand parents generations idea of normal was.

It constantly amazes me how people who know that the population of australias capital cities has grown steadily over the last 50 years are some how shocked that the price of land also increased steadily.

Obviously the average persons home is going to have to take up less land (town houses and apartments), Offcourse houses will still exist, But they will become more and more expensive as the total amount of people who want to live in one increases, while the total supply shrinks as they are bulldozed to make way for high density structures.

The simple answer is if you really have your heart set on a large home on a decent sized block, You will have to move out side the capital cities.

You can't expect to have the same housing that was available in a city when it had a population of 1 million to still be available when it has a population of 3 million of 5 million or 10 million, At some point and average joe is not going to be able to out bid his rivals for a decent slice of land and he will have to lower his expectations or get out.

 

[Wysiwyg]

Back to the question at hand... The future of Australian property prices.... imo I think wages need time to catch up to real estate.
Due to the GFC I'm sure alot of salaries/wages were either frozen or not inline with the real cost of living ( that being rent/morgage, electricity, rates, toll road {SE QLD anyway}.

And with raised salaries comes increased prices for products and services as companies raise prices to compensate. Something of an endless circle but asking for more money isn't necessarily going to make things more affordable.

Maybe avoiding the Briz tolls or Briz altogether would help.

 

[SM Junkie]

This topic makes me reflect on Asian countries. High density living, high proportion of renters and many that cannot afford to own housing. Is this what our future will become as land becomes more scarce and our cities continue to grow. As the single dwelling becomes more unaffordable, the cheaper alternative is usually units. Young people (with the exception of our younger members here) seem to delay thinking seriously about settling down until they are in their 30's. Are we seeing the gap between the have and have not continue to widen, hell a social change might just be upon us.

 

[MR.]

And with raised salaries comes increased prices for products and services as companies raise prices to compensate. Something of an endless circle but asking for more money isn't necessarily going to make things more affordable.

Raised salaries increases inflation and then perhaps interest rates. Work longer hours perhaps?

All booms have further to run at the top or so most think.

I have no idea where the top will be but it will be interesting to see where we are in, say, a couple of years.

Will be very interesting.

When you remove your money from the bank what are you going to do with it. You should really spend it.

Should hide it under the house. That’ll upset the banking apple cart.

We were just on a roll bagging banks in that post you responded to. It doesn’t matter who holds what money, it all ends up back in the banks hands. IMO low interest rates have made property prices what they are today. Supply and demand were reasons but prices escalated by the low interest rates and promotion.

Money is supposed to be used as a shorterm store of value to be used as a medium of exchange.

I agree

The idea that savers should be some favoured class that produce high risk free earnings by simply holding a portion of the money supply is flawed. Hence the reason usary is outlawed in the bible.

Savers are a “favoured class”? Huh?

Good you’re up on the bible! If usury is outlawed in the bible what does it say about landlords renting houses to the poor for financial gain? Employers that profit from their employees? Consumers buying exports from poorer countries? Share trading?

I am saying buy assets with it

Cheers.

 

[Tysonboss1]

Good you’re up on the bible! If usury is outlawed in the bible what does it say about landlords renting houses to the poor for financial gain? Employers that profit from their employees? Consumers buying exports from poorer countries? Share trading?


Cheers.

Usury refers more to making money by simply holding money, which is not the same as holding a productive asset which contributes to the economy such as other forms of investment.

Even banks are under pressure to spend their interest earnings on real things like wages, dividends and other investments rather than compound their total holding of our money supply.

And we saw in the GFC that once banks started to hoard their cash rather than pass in on they were subjected to huge pressure from government bodies,

 

[Tysonboss1]

This topic makes me reflect on Asian countries. High density living, high proportion of renters and many that cannot afford to own housing. Is this what our future will become as land becomes more scarce and our cities continue to grow. As the single dwelling becomes more unaffordable, the cheaper alternative is usually units. Young people (with the exception of our younger members here) seem to delay thinking seriously about settling down until they are in their 30's. Are we seeing the gap between the have and have not continue to widen, hell a social change might just be upon us.

In Australia Land is not scarce (except for the capital cities), We have the most sparcely populated land mass on earth. All people have to do is get out of the idea that they are trapped in the capital city.

There are so many fantastic towns dotted around Australia that would provide great quality of life to famililes outside of the cities.

 

[WaveSurfer]

Wave,

I'm still young also and my mindset is that if I put my head down and work work work in the short term then hopefully the long term will be a bit more relaxed than others my age who go out and party 4 or 5 times a week (spending hundreds).

Hey NT, nice one mate. Your mindset is right on-track there. You're doing better than majority already.

I was flicking through the paper today and was startled...it had 5 pages or so of the median house prices from 2009 with 3, 5 and 10 year forcasts for each area (a few hundred suburbs were listed). I'm 18 now and i'm not sure when i'll want to buy my own home but the 2009 price for the areas in which i'd like to live are about 500-800k...in 10 years however all the prices in most suburbs seem to be between 1.1-1.6m...are these prices relative to what people will be earning in 10 years? Or is the dream of owning my own home fanciful?

N.T

No and No mate.

The average wage now is like 50k (or round abouts). Take note of the comments on that article though.

WOW - what job pays that, where can I apply. Where these figures come form is beyond me.

As I pointed out in the last post in relation to the popular areas skewing the mean, it's probably the massive earners skewing the results there. Statistics can be futile. Large deviations from the mean can distort the real picture. I'd say in reality the actual figure is more likely around the 30-40k mark.

I can't see that increasing too much in 10 years. I'm no expert on this so, what's a deer with no eyes? lol, yer get my point I hope.


Is your dream fanciful? No, it's as fanciful as you make it. Believe you will achieve it, and chances are that you will. Believe it's the impossible and it will be just that.

It was the end goal that drove me and kept me in focus. No matter how far out of reach it felt.

Not saying that "wishful thinking" and sitting on your backside will get you over the line (i.e. hoping to win the 10mil lottery one day). Willingness to do anything (within reason of course) to get you there, goes a long, long way buddy. When the 110% determination is present, you start to see all these pathways that were not (apparently) present before.

Take if from a high school drop out. I have (still am) been told by the "experts" that I was destined to be dead, in jail or a smacky by the time I was 18. Chances are zip that I'd even pass a Uni degree (hmmm, last set of results we're all HD's).

As they say, actions speak louder than words.

I'm not smart, by all means. I don't have a photographic memory and have to read stuff numerous times before it sinks in to this block head. Bottom line is that I work hard, never lose sight of the end goal, and it pays.

 

[WaveSurfer]

Very few come to the market with this time frame in mind you stand a fair chance of success.


Good luck

Cheers mate. I know I'll succeed. Won't stop until I do

That could be a costly assertion

 

[Beej]

Tysonboss1 - just catching up on posts over the past few days, but wanted to say to you "great posts" and I agree with what you have written. It is very important that people actually understand the system in which we live and how you make the most of it.

Cheers,

Beej