The future of Australian property prices

[medicowallet]

As this elasticity in property plays out seems to me its gonna place more demand on smaller places whilst lowering median (as the median gets redefined) and bigger properties loose value seems like appartments and such could have an nice increase in real terms... actually this has already been playing out for the last few years appartment overall have been outperforming house (im talking capital cities).

I don't mind reading your posts.


I just wish you would lose an o.

So frustrating when adults can not even spell lose.

I am sorry if that is narky, but I have mentioned it before, and it seriously is something that the young ones of today struggle with.. In fact, I would be surprised if you are over 25.

MW

 

[MR.]

No not selling the industrials as I own them and the return on investment is excellent.

Your industrials are owned outright while the residential is only marginally positively geared. So your residential understandably is being liquidated.

Anyway, I brought up your industrials because in your neck of the woods, it sounded like industrial hadn’t taken much of a hit. If your tenants are tradies on residential developments they’d be asking their selves how much they really need that shed!

Industrials definitely have their advantages over residential with the outgoings and a tenant can’t do too much damage when there is 4 concrete walls and a roof. However, a tenant is going to pay their house rent or repayments before the rent of their business.

Medi, but that's how is sounds Loooooooooooooooooooose. I'm giving it another year..... What do you think?

 

[tech/a]

Your industrials are owned outright while the residential is only marginally positively geared. So your residential understandably is being liquidated.

Anyway, I brought up your industrials because in your neck of the woods, it sounded like industrial hadn’t taken much of a hit. If your tenants are tradies on residential developments they’d be asking their selves how much they really need that shed!

Industrials definitely have their advantages over residential with the outgoings and a tenant can’t do too much damage when there is 4 concrete walls and a roof. However, a tenant is going to pay their house rent or repayments before the rent of their business.

Medi, but that's how is sounds Loooooooooooooooooooose. I'm giving it another year..... What do you think?

Not that clear cut.

They are owned by my SMSF
My company rents one so I pay myself rent and various other SMSF benefits.
The other is rented by one of my suppliers which I have an interest in as well.

Both of us are in the building industry and both are experiencing strong down turns.
Both accept it's part of business. You learn more in business in these times than you
Ever can in boom times.

 

[young-gun]

Not that clear cut.

They are owned by my SMSF
My company rents one so I pay myself rent and various other SMSF benefits.
The other is rented by one of my suppliers which I have an interest in as well.

Both of us are in the building industry and both are experiencing strong down turns.
Both accept it's part of business. You learn more in business in these times than you
Ever can in boom times.

Tech, can I ask just how far you are expecting property to fall? As it has become quite clear it is on it's way down and you have acknowledged your industry is experiencing a 'downturn', have you got a certain percentage fall in mind that you believe will be the bottom? perhaps a point which you think would be safe to re-enter residential RE.

 

[young-gun]

Your industrials are owned outright while the residential is only marginally positively geared. So your residential understandably is being liquidated.

Anyway, I brought up your industrials because in your neck of the woods, it sounded like industrial hadn’t taken much of a hit. If your tenants are tradies on residential developments they’d be asking their selves how much they really need that shed!

Industrials definitely have their advantages over residential with the outgoings and a tenant can’t do too much damage when there is 4 concrete walls and a roof. However, a tenant is going to pay their house rent or repayments before the rent of their business.

Medi, but that's how is sounds Loooooooooooooooooooose. I'm giving it another year..... What do you think?

at least 1 then reassess, and who knows, maybe even another few years on that. Once it bottoms it will take a looonng(apologies for the o's MW)time before prices start increasing. With majority of speculators burnt and out of cash a house will simply become a place to live.

 

[numbercruncher]

interesting to see the afforability that our American Brothers are enjoying now that their bubble has completely popped. So much healthier for their economy when Households have all that cash to spend elsewhere.

Rates are almost half what they were at the peak of the housing bubble in mid-2006. At the time, the median price of a U.S. home was about $250,000, according to the National Association of Home Builders, and the average interest rate was about 6.75% for a 30-year loan.

A person who bought a home in 2006 with 20% down would have made payments of $1,300 a month. Today, a person who buys a median price home of about $162,000, would pay less than half that amount, about $600 a month. *

http://money.cnn.com/2012/05/24/real_estate/mortgage-rates/index.htm?iid=obnetwork

 

[Mr Z]

Some people I know of in the US have been buying HUD houses. They are defaults and so numerous that it has been described as a watermelon in a snake. HUD simply want to push them out and it seems at nearly any cost. I have heard of people buying job lots for 10K a piece. It would seem that if you look in the right places or know the right people there is reasonable real estate (I'm sure it is not top draw!) available for give away rates. Most banks are holding stuff off the market because supply is too high and I have heard of people living in places that they are trying to default on but the bank will not process them. When tax time comes the owner says to the state... it is not mine, I defaulted and the bank says it ain't ours yet we haven't foreclosed! Apparently there is a lot of this limbo stuff, not to mention some of the stuff caught up on shoddy CDO paper work where no one is sure who holds the mortgage and no one can prove anything. The whole mess is kinda amusing in a sad way.

That said, apparently some big money is starting to soak up housing stock... or so the rumor goes.

You probably know all this stuff, but every so often I just have to remind myself just how big a train wreck they had in their housing market.

"Only in America" ---> Hopefully!

 

[young-gun]

Some people I know of in the US have been buying HUD houses. They are defaults and so numerous that it has been described as a watermelon in a snake. HUD simply want to push them out and it seems at nearly any cost. I have heard of people buying job lots for 10K a piece. It would seem that if you look in the right places or know the right people there is reasonable real estate (I'm sure it is not top draw!) available for give away rates. Most banks are holding stuff off the market because supply is too high and I have heard of people living in places that they are trying to default on but the bank will not process them. When tax time comes the owner says to the state... it is not mine, I defaulted and the bank says it ain't ours yet we haven't foreclosed! Apparently there is a lot of this limbo stuff, not to mention some of the stuff caught up on shoddy CDO paper work where no one is sure who holds the mortgage and no one can prove anything. The whole mess is kinda amusing in a sad way.

That said, apparently some big money is starting to soak up housing stock... or so the rumor goes.

You probably know all this stuff, but every so often I just have to remind myself just how big a train wreck they had in their housing market.

"Only in America" ---> Hopefully!

I've heard the banks still have countless amounts RE on their books, that as you say they don't want to go to market with as it will completely destroy them. I wonder just how long they can hold onto it all for, it could very well be the un-doing of the US banks.

Haha... I know you don't believe that.

 

[young-gun]

interesting to see the afforability that our American Brothers are enjoying now that their bubble has completely popped. So much healthier for their economy when Households have all that cash to spend elsewhere.




http://money.cnn.com/2012/05/24/real_estate/mortgage-rates/index.htm?iid=obnetwork

It will take a long time for that cash to filter through the economy, I imagine alot of families are still in huge amounts of debt they are trying to pay down, which as you say at least is made easier if they walked away from their home and bought now.

 

[McLovin]

I've heard the banks still have countless amounts RE on their books, that as you say they don't want to go to market with as it will completely destroy them. I wonder just how long they can hold onto it all for, it could very well be the un-doing of the US banks.

Haha... I know you don't believe that.

Everyone knows this, it's like an open secret. The banks have been letting mortgage holders live in their houses for 2-3 years without making a single payment because a) they have so many mortgages in default it takes time to get around to new ones b) they don't want to have to make the impairment charge on their books, so instead they just keep calling past due but collectible.

It's unlikely US banks will go broke from this, at least systemically important ones. There was a risk for a while that smaller banks could drag down larger banks (in the US smaller banks almost exclusively lend their deposits to larger banks) but that seems to have passed.

The biggest issue for the US banking system is that because it is still trying to digest the fallout from the boom it will become like the Japanese banking system, which has kept Japan unable to grow for decades. IMO.

 

[Glen48]

At least some one living in house which they have stopped making payments on will keep maintaining the place and keep the smash and grab merchants away the banks should be paying the householder a fee for guarding the place, I assume the owner or ex- owner would also be paying the land tax etc.

 

[Mr Z]

At least some one living in house which they have stopped making payments on will keep maintaining the place and keep the smash and grab merchants away

Yes

the banks should be paying the householder a fee for guarding the place,

LOL... it would be cheaper in many ways.

I assume the owner or ex- owner would also be paying the land tax etc.

No, this is a problem for the state... they have no one to chase, no one who gives a damn. Eventually they can sell it for the back tax, I guess that the bank will make decision at that time.

 

[JellySausage]

Hey, some more incentives on the way.

http://www.news.com.au/money/proper...t-doubled-in-nsw/story-e6frfmd0-1226392861922

Under his Building the State package, which Mr Baird said was at the heart of today's Budget, the grant would increase from $7000 to $15,000 on October 1, then drop to $10,000 from 2014.

The Budget will also introduce the New Home Grant of $5000 to all others buying a new property up to $650,000, while existing first home buyer stamp duty concessions will apply on new properties up to that amount - an increase of $50,000.

 

[numbercruncher]

Hey, some more incentives on the way.

http://www.news.com.au/money/proper...t-doubled-in-nsw/story-e6frfmd0-1226392861922

Under his Building the State package, which Mr Baird said was at the heart of today's Budget, the grant would increase from $7000 to $15,000 on October 1, then drop to $10,000 from 2014.

The Budget will also introduce the New Home Grant of $5000 to all others buying a new property up to $650,000, while existing first home buyer stamp duty concessions will apply on new properties up to that amount - an increase of $50,000.

Not very encouraging numbers - Prices are falling by more that the amount of this grant, guess it encourages a new home build rather than one of the energy hogs littering the landscape

 

[Aussiejeff]

Hey, some more incentives on the way.

http://www.news.com.au/money/proper...ubled-in-nsw[/B]/story-e6frfmd0-1226392861922

Under his Building the State package, which Mr Baird said was at the heart of today's Budget, the grant would increase from $7000 to $15,000 on October 1, then drop to $10,000 from 2014.

The Budget will also introduce the New Home Grant of $5000 to all others buying a new property up to $650,000, while existing first home buyer stamp duty concessions will apply on new properties up to that amount - an increase of $50,000.

Hoorah.

More fat for the flaming pyre.

Will. They. Never. Learn?

 

[Mr Z]

Not very encouraging numbers - Prices are falling by more that the amount of this grant, guess it encourages a new home build rather than one of the energy hogs littering the landscape

Might do if the energy rating system actually worked. Talk about a co-opted measuring system that is poorly implemented.

http://www.theaustralian.com.au/new...ings-in-disarray/story-fn6tcs23-1225899270215

There is a designer in Canberra designing virtually zero energy designs, they use one small fan to circulate air. He has trouble getting them to rate 6 star! They should rate 10! The model assume that you use heating and cooling regardless of requirement to do so!

 

[Mr Z]

Hoorah.

More fat for the flaming pyre.

Will. They. Never. Learn?

Here, have some free money and shutup... it is all good... RIGHT?

 

[young-gun]

Hoorah.

More fat for the flaming pyre.

Will. They. Never. Learn?

I would assume any more stimulus thrown at the Aussie housing market will have achieve less than desired effects with each batch. As is with most forms of stimulus, regardless of how they are delivered, when you're trying to make something do what it doesn't wish to do, it will inevitably get to where it wants to be.

 

[tech/a]

Tech, can I ask just how far you are expecting property to fall? As it has become quite clear it is on it's way down and you have acknowledged your industry is experiencing a 'downturn', have you got a certain percentage fall in mind that you believe will be the bottom? perhaps a point which you think would be safe to re-enter residential RE.

I personally think it's close to where it will rest now.
It will rest at these levels for sometime many years.
Unless there is a massive dump in Europe and Asia.

Interest rates are really low.
They will turn so bear this in mind.

 

[McLovin]

No, this is a problem for the state... they have no one to chase, no one who gives a damn. Eventually they can sell it for the back tax, I guess that the bank will make decision at that time.

The unpaid tax in many states attaches to the property, not the owner. So whoever buys the property will have to pay the unpaid tax.