The future of Australian property prices

im sparticus · 10 June 2012

How do property investors drive rents up i always thaught they were the supply side of the equasion?

I seriously doubt property is being cornered btw

Mr Z · 10 June 2012

They don't, the market drives it all and the market gets distorted by government intervention, directly via grants and indirectly via monetary policy. What we have is the result of government attempting to control what the shouldn't touch.

im sparticus · 10 June 2012

For what its worth houses these days bear a closer resemblence to peoples wants than there needs. Enough with the moral high ground. not directed at you mr z neither was my last post but thanks for explaining

Mr Z · 10 June 2012

im sparticus said:
For what its worth houses these days bear a closer resemblence to peoples wants than there needs.

This is another factor in the downward pressure, when push comes to shove people can downsize. Years ago we had three generations under one roof, these days we have one generation under two roofs. When it gets tougher families tend to pool resources more and expectations are kept more realistic. One of my long standing predictions is that many Mc Mansions of 40 squares will be divided into four flats, there is an up coming opportunity for the smart property investor... that is when these things tank!

im sparticus · 10 June 2012

Mr Z said:
This is another factor in the downward pressure, when push comes to shove people can downsize. Years ago we had three generations under one roof, these days we have one generation under two roofs. When it gets tougher families tend to pool resources more and expectations are kept more realistic. One of my long standing predictions is that many Mc Mansions of 40 squares will be divided into four flats, there is an up coming opportunity for the smart property investor... that is when these things tank!

years ago 3 generations under 1 roof = property 3x average wage.

today one generation under 2 roofs = property 7x average wage.

whatever it takes to get property back to the fair and equitable 3x average wage i guess.

Mr Z · 10 June 2012

It is likely property will move from over to under valued, markets rarely stop at fair for long. I expect outright cheap, better than early 90's pricing, there is good opportunity coming for the patience IMO.

wayneL · 10 June 2012

im sparticus said:
years ago 3 generations under 1 roof = property 3x average wage.

How many years are we talking?

>100?

I can't ever remember 3 generations being the norm and I'm starting to get long in the tooth myself.

Glen48 · 10 June 2012

http://www.chrismartenson.com/blog/...mail_newsletter&utm_content=node_title_76297&
latest from Steve Keen

Mr Z · 10 June 2012

wayneL said:
How many years are we talking?

>100?

I can't ever remember 3 generations being the norm and I'm starting to get long in the tooth myself.

No not that long

It was far more common in the 50's and 60's than it is now. Mind you granny flats are coming back in vogue with the stalling boomers! We have three under one roof as it happens. I'm just making the point that the maths on dwellings required is done in a static accounting fashion, the reality is that when there is financial pressure things change, gran lives with the kids and their kids, divorces that might otherwise happen don't happen simply because of tight resources. Lots of people find flexible solutions that the statistics guys don't consider, hard times breeds innovation. I live in a suburb where 15% of the houses are full time dwellings, the rest are holiday places... we are not that far from Melbourne! Plenty of flexibility in the housing stock around here!

Julia · 10 June 2012

Glen48 said:
So true but don't worry the Feds are on to it:
The longer this bail out lurk goes on the worse it will get and longer to settle.

Spain has become the fourth and largest country to ask Europe to rescue its failing banks, a bailout of up to 100 billion euros ($A127.76 billion) that leaders hope will stabilise a financial crisis that threatens to break apart the 17-country eurozone...................

Glen, could you put passages that you are quoting within the QUOTE tags in order to differentiate properly between this and your own comments.

wayneL said:
How many years are we talking?

>100?

I can't ever remember 3 generations being the norm and I'm starting to get long in the tooth myself.

Me neither. I've never seen even two generations living in the one house, with the occasional brief exception of a single elderly parent for about a year before dying.

numbercruncher · 10 June 2012

Mr Z said:
It is likely property will move from over to under valued, markets rarely stop at fair for long. I expect outright cheap, better than early 90's pricing, there is good opportunity coming for the patience IMO.

I think youll be correct on that !

I put an offer in on a block of land mortgagee in possession early this year that ended up selling less than half price of the peak. So that wasnt the norm where I nearly bought but it will start hapening more.

Mr Z · 10 June 2012

Julia said:
Me neither. I've never seen even two generations living in the one house, with the occasional brief exception of a single elderly parent for about a year before dying.

What? You don't know anyone with kids? That is two for a start.

The last place I worked most of the people under 30 where still at home due to the cost of housing, add a granny flat and you have three... come on folks, it is not exactly unheard of & IMO you will see more and more of it.

numbercruncher · 10 June 2012

Theres Probaly 10s of thousands of three generation households in Oz and I bet itll get more common in the future .... Gran , mum dad and the kids - quite common - thats how we got Granny Flats !

MR. · 11 June 2012

Posted by drsmith
And the Howard Government.

they changed CGT to favour shorter term speculation and disadvantage longer term investment.

Mr Z said:
I think you have that backwards.

Howard encouraged speculating by rewarding businesses to a 50% capital gains deduction. Before that businesses were taxed fully, less perhaps CPI index. Howards reforms (about yr 2000) encouraged speculation not real investment.

Interest rates were too low for too long, yes, but there is always more a story.

MR. · 11 June 2012

tech/a said:
Prices are 20% down from peak here.

I'm in the process of selling all longterm holdings. Keeping all industrial stock.

Development is where the opportunity is currently.
Holding property even if it's positively geared is. In my opinion not the best use of opportunities (in property) at this time. ( in the domestic market ).

If Tech unloads, we might see the market at that 50% price reduction!

Adding more fuel to the fire with everyone else......

MR. · 11 June 2012

2010 "The Peak":

tech/a said:
The best time to buy property is NOW.

It was in 2003,2004,2005,2006,2007,2008,2009, and NOW.

Maybe you should be more specific in ya riddles, someone might start to think that you're saying 2012 is the time to buy!.......

Mr Z · 11 June 2012

MR. said:
Howard encouraged speculating by rewarding businesses to a 50% capital gains deduction. Before that businesses were taxed fully, less perhaps CPI index. Howards reforms (about yr 2000) encouraged speculation not real investment.

Interest rates were too low for too long, yes, but there is always more a story.

Huh? You get a 50% deduction for long term holdings not short term, you pay full freight short term (< 1yr). The only concession small businesses get make sense and are designed to encourage small business, the rules prior penalized the largest job creating sector of our economy, Howard simply recognized that and reduced the penalty. They don't speculate... in fact I can't see how they can really under the rules, anymore than you or I can under the long term holding rules.

As far as I can see none of it engenders short term speculation! Be happy have the specifics pointed out if that is wrong as I could certainly use that loop hole, the cost of setting up a company would be easily covered by the benefits.

Mr Z · 11 June 2012

I guess you could argue that the ultra long term holders would be better off under an indexation scheme but as to this engendering short term speculation... unless you are talking 1 to 5 years say as short term, which I guess it is in property terms.

The thing that I think is wrong is that people are taxed at their top marginal rate in the year that the gain is realized. In reality if the gain took tens year to materialize then the gain should be broken down and apportioned across the ten years and an average top margin rate calculated. That way a low income earner that managed to buy say a block of land and held it for ten years but couldn't manage to put a house on it is not unduly taxed. The reality is that the capital gain occurred over time, therefore tax should be calculate over the same time.

Tyler Durden · 11 June 2012

Glen48 said:
http://www.chrismartenson.com/blog/...mail_newsletter&utm_content=node_title_76297&
latest from Steve Keen

Thanks Glen, I read that from a link from Zero Hedge.
Interesting read, though one wonders, when will the ugly end?

im sparticus · 11 June 2012

Tyler Durden said:
Thanks Glen, I read that from a link from Zero Hedge.
Interesting read, though one wonders, when will the ugly end?

Never people have realised property is not an investment but a neccessity property is reverting back to its fairly valued 100 year mean from there it will be impossible for property to ever print a positive return in real terms again, it is a depreciating asset after all. it is well documented in this thread property prices are depressed in both inflationary and deflationary times due to being leveraged you cant win best to buy gold it goes up in both win win! Everone knows the true way to increase your worth is through precious metals sure its miles of its highs and dont yeild a thing but precious metals have great fundamentals just wait till the world ends youll see!

The future of Australian property prices

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