The future of Australian property prices

SM Junkie · 22 March 2010

Tysonboss1 said:
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.

And a lot of land that is not inhabittable. Then there is the cost of living in these towns.

Agree we do have a lot of great towns and I in particular am one that could not return to city living, but for most people country living is not where the work is (except for mining of course). So although some will complain about the affordability of housing, they are unlikely to move to locations where although they can afford a house, they may not get employment.

What do our younger members here think? Is moving to the country on your plan if you could not afford a house within transit distance to the city?

Same issues apply to Asia, people still flock to the cities from regional areas to get work.

wayneL · 22 March 2010

SM Junkie said:
And a lot of land that is not inhabittable. Then there is the cost of living in these towns.

Agree we do have a lot of great towns and I in particular am one that could not return to city living, but for most people country living is not where the work is (except for mining of course). So although some will complain about the affordability of housing, they are unlikely to move to locations where although they can afford a house, they may not get employment.

What do our younger members here think? Is moving to the country on your plan if you could not afford a house within transit distance to the city?

Same issues apply to Asia, people still flock to the cities from regional areas to get work.

Yep.

And the towns where there is plenty of work are still very expensive... or relatively very expensive compared to local wages.

Dowdy · 22 March 2010

Tysonboss1 said:
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.

Our money system doesn't work like that

http://www.youtube.com/watch?v=vVkFb26u9g8

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

Hording money is not productive, So you have to have a system that discourages it.

The only time hording is bad is when you keep it under the bed. Putting money in the bank is not considered hording

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.

You talk about social unrest and economic collapse happening in an economy that deflates it's money supply but you contradict yourself if you just look at the world around you. US, EU, Dubai - what do you think caused their situation??

NOW BACK ON TOPIC

Anyone sense any irrational madness in the market?

http://www.smh.com.au/business/redhot-melbourne-market-starts-to-glow-white-20100321-qo82.html

''It is staggering that for a house that hasn't been touched in the 42 years since it was built, people are paying upwards of $800,000.

Reminds me of the dot-com boom

Dunger · 22 March 2010

Dowdy said:
Anyone sense any irrational madness in the market?

http://www.smh.com.au/business/redhot-melbourne-market-starts-to-glow-white-20100321-qo82.html

Reminds me of the dot-com boom

I wonder if the purchaser was a cashed up, foreign investor where the AUD makes the $800k a $600k hit combined with really low interest rates?

demiser · 22 March 2010

SM Junkie said:
What do our younger members here think? Is moving to the country on your plan if you could not afford a house within transit distance to the city?

I'm just about to move to cairns in about a week, sure cairns isnt exactly a country town, but it's not exactly big either.

The main reason for the move is a better job, but as for moving somewhere even more remote, yes I would, but as others have mentioned, it comes back to work, and with both myself and my parter working in fairly specialised fields, it rather limits our options.

MR. · 22 March 2010

Tysonboss1 said:
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,

I see where you are going and I agree with Beej's knowing the system in which we live.

Since this is the property thread how is buying property at inflated prices, due to debt, productive?

Buying manufacturing machinery is productive, but there is the problem of industrial property valuations to work from. Due to the high costs associated with industrial properties it is unproductive for those businesses to compete. Importing cheap components makes paying the bills easier but where does our money end up? Productive?

Investor82 · 22 March 2010

SM Junkie said:
What do our younger members here think? Is moving to the country on your plan if you could not afford a house within transit distance to the city?

I am not sure if I still fit into the "younger" category (27) but when I was 18 I moved out of the city. From what I have seen the the general belief that there is no work in country area's is a myth. Most companies in rural areas are screaming for new talent, who are willing to comitt to the town/area.
I moved all around WA in various roles, from trades to office work. It was always a challenge to find good staff.
I ended up in a brilliant city about 4 hours north of Perth. Renting a 3bed house with ocean views for $200/wk (probably about $300/wk nowadays). I could get to work (on the other side of the town) in 13 minutes. Town centre in 7mins, walk to the beach etc. By the time I left I had figured out that I could actually ride my bike most places quicker than I could drive there.
I bought a block of dirt there, which I will build on sometime in the near future. I have designed my 'retirement' home and hope to move back there sometime in the next 5-10years.
In the last 10 years I have only spent 2 years in the city, and have no intentions of returning.

10 years ago, if you had of asked if I would want to live outside the city, the answer would have been "no way" but now, I think if you are under 25, you are nuts if you live in the city!

nunthewiser · 22 March 2010

Investor82 said:
I ended up in a brilliant city about 4 hours north of Perth. Renting a 3bed house with ocean views for $200/wk (probably about $300/wk nowadays). I could get to work (on the other side of the town) in 13 minutes. Town centre in 7mins, walk to the beach etc. By the time I left I had figured out that I could actually ride my bike most places quicker than I could drive there.
I bought a block of dirt there, which I will build on sometime in the near future. I have designed my 'retirement' home and hope to move back there sometime in the next 5-10years.
!

More like around 400 now

Good place Geraldton....... has its negatives but the positives far outweigh them......and yes plenty of opportunities up here for those that are willing to give it a go!

Same with any other regional city anywhere in oz i spose ........ good and bad in all.

Tysonboss1 · 22 March 2010

I 28 and currently live in sydney and will leave when I sell my business. Who Knows where I will end up. Probally some where within 2 hrs of brisbane.

Investor82 · 22 March 2010

nunthewiser said:
More like around 400 now

Ok, I have been out for a couple of years now

If that is the case I better get building!

Tysonboss1 · 22 March 2010

Dowdy said:
Our money system doesn't work like that

Yes it does, If you watched the series of 5 videos that you gave me the link to and then sequel called "money as debt promises unleashed" you would see it describes the system in exactly the way i explained it.

Every time a bank writes a loan it is putting fresh "debt money" into the system and increasing the money supply by the size of that loan. every time a loan is paid off it reduces the money supply by the size of that loan.

Here is video four of "money as debt Promises unleashed" (the sequel to the vid to showed me).

http://www.youtube.com/watch?v=0-O_yGEI_0U

I would recommend you what the sequel if you enjoyed the first viedeo series.

Tysonboss1 · 22 March 2010

MR. said:
I see where you are going and I agree with Beej's knowing the system in which we live.

Since this is the property thread how is buying property at inflated prices, due to debt, productive?

Whether property prices are over inflated is not something you can say in a broad brush type statement, It's only really something that time will uncover.

However property investment in general benefits the economy in many ways.

Firstly as I said earlier it provides the basic needs of housing to renters, as well as housing other businesses that rent their premises, without property investors willing to commit funds to buy a house to rent to other families there would be alot of people living in shanty towns.

It is the source high paying jobs for those employed in building and construction, and this flows onto everyone else in every other sector from mechanics, car dealers, hardware stores, transport industry, hookers, breweries, dentists, clothing stores and pretty much every single industry.

The loans generated by property investment also keep our debt based money supply going and also causes many people to commit to the work force and work productively so as to repay their debt and interest commitments.

There are so many benefits I could possibly go on to list them all.

Tysonboss1 · 22 March 2010

SM Junkie said:
Agree we do have a lot of great towns and I in particular am one that could not return to city living, but for most people country living is not where the work is (except for mining of course). So although some will complain about the affordability of housing, they are unlikely to move to locations where although they can afford a house, they may not get employment.
.

Thats where you just have to way up the benefits of continuing to live in a large city vs the cons.

Tysonboss1 · 22 March 2010

Dowdy said:
Our money system doesn't work like that

watch this vid from the 5min 10 sec mark.

http://www.youtube.com/watch?v=6MwHgpFSQMo&feature=related

MR. · 22 March 2010

Tysonboss1 said:
Whether property prices are over inflated is not something you can say in a broad brush type statement, It's only really something that time will uncover.

However property investment in general benefits the economy in many ways.

Firstly as I said earlier it provides the basic needs of housing to renters, as well as housing other businesses that rent their premises, without property investors willing to commit funds to buy a house to rent to other families there would be alot of people living in shanty towns.

It is the source high paying jobs for those employed in building and construction, and this flows onto everyone else in every other sector from mechanics, car dealers, hardware stores, transport industry, hookers, breweries, dentists, clothing stores and pretty much every single industry.

The loans generated by property investment also keep our debt based money supply going and also causes many people to commit to the work force and work productively so as to repay their debt and interest commitments.

It appears to be productive to everyone else but the purchaser.
Which is my point. As long as you arn't the purchaser you're doing OK!

Can't factor in speculative property gains because that's also something that time can only uncover. However I bet that's not what the purchases are led to believe. Just pick up a paper from the weekend.

kincella · 23 March 2010

some snippets to ponder... (for the higher interest rates brigade)
extracts only...you really should read the whole article
ps...the asterisks are mine

Interest rates rose three times in the year before, yet prices in three cities -- Brisbane, Adelaide and Melbourne -- rose more than 20 per cent.
So, despite the fear and rhetoric, evidence that property prices automatically fall when interest rates move up is hard to find. In fact, there has only been one instance in the past 30 years of high interest rates and falling real house price arriving together: the dark days of the early 1990s, which brought crushing interest rates of 17 per cent and more.

A more profound reason for the resilience of house prices is that when rates rise they usually go up in small increments and property demand merely switches over to a different type of buyer.

** Cashed-up investors and equity-rich buyers often emerge even as rates rise, taking a larger share of the market from ****equity-poor, interest-rate-sensitive first homebuyers. We have seen this quite clearly over the past six months when, despite three consecutive interest rate rises, upgraders and investors returned to the market in droves.

****Higher rates tend to separate the wheat from the chaff, as financially resourced buyers are nothing if not discerning, favouring well-serviced inner-urban locations. That is why it would be no surprise to me to see inner-urban property prices remain firm as rates rise, even if this leads to the overall market moderating or prices on our far-flung urban frontiers falling
http://www.theaustralian.com.au/bus...rates-not-so-bad/story-e6frg9gx-1225842032129

kincella · 23 March 2010

I have found the answer.....
pack 10 people into a 3brd house.....example recently with the Indian community
so of course those 10 people can afford more than you....
what if it becomes a trend....10 people in a single story house, 20 in a 2 story....etc
sounds like fun....
but not the way australians are used to....maybe the govts have this is mind....
how does it work with parking cars....
how do the neighbours feel about this type of accommodation style in OZ

and this post over on the 'asx general thread' from trendtrading today
extract..............................
As a further example it is common in Pakistan to add another floor to a building as the extended family grows. So you have an 8 storey house with maybe 60-70 people in it. That is an enormous source of money to finance one person to establish in another country. So the house price rises are not all coming from Jack and Jill setting up house together.

kincella · 23 March 2010

some of you have some really funny ideas about housing......

all the jobs that would be lost if we simply lived in a hut or a cave....
the companies who make the building materials, who employ hundreds of thousands of workers....all those jobs gone

the builders employ similar numbers

the manufacturers of all the things that furnish a house...there goes China

the maintenance people....who keep the house in good order, or refurbishment, including the gardeners,cleaners, landscapers etc

you would probably lose half the workforce....if we lived in a cave
I have not mentioned all the other related industries....ie; financial including the banks, the estate agents etc

and all those jobs that rely on the housing industry to support them....if they were not there, you would not have a thriving metropolis...actually life as you know here in OZ....

it would be like the poor in India, China ,Africa and all those other god forsaken countries..

UBIQUITOUS · 23 March 2010

The party is over. The music has stopped. Looking at clearance rates though it would appear that some fools are still dancing.

http://www.ibtimes.com.au/services/pop_print.htm?id=119945&tb=bh

Westpac announces the end of low interest rates

Posted 23 March 2010 @ 09:00 pm AEST

The chairman of Westpac, Ted Evans, has admitted that interest rates would continue to rise independent of official RBA rate hikes for at least the next five years.

In an interview with The Australian Financial Review, published today, Evans warned that the RBA cash rate was no longer the primary guide for bank interest rate movements.

“Other influences are simply that much more important at the moment, because of what’s happening globally,” he said. “That will remain the case for many years to come, may even remain the case forever.”

On the 2008 St George merger, Evans said business was going “extraordinarily well”. He added that part of the reason Westpac customers were slugged with a supercharged rate rise in December was that the bank was attracting too many mortgages.

Evans also told AFR that Westpac was no longer opposed to the government’s Four Pillars policy.

drsmith · 23 March 2010

The chairman of Westpac, Ted Evans, has admitted that interest rates would continue to rise independent of official RBA rate hikes for at least the next five years.

In an interview with The Australian Financial Review, published today, Evans warned that the RBA cash rate was no longer the primary guide for bank interest rate movements.

“Other influences are simply that much more important at the moment, because of what’s happening globally,” he said. “That will remain the case for many years to come, may even remain the case forever.”

The market rate for cash is well above 5% which is itself well above the RBA cash target of 4%.

The future of Australian property prices

SM Junkie

wayneL

VIVA LA LIBERTAD, CARAJO!

Dowdy

Dunger

demiser

Trading_Trainee

MR.

Investor82

nunthewiser

Tysonboss1

Investor82

Tysonboss1

Tysonboss1

Tysonboss1

Tysonboss1

MR.

kincella

kincella

kincella

UBIQUITOUS

drsmith

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