The future of Australian property prices

[Miss Hale]

"House prices can't fall a 'dangerous idea':RBA"

The Reserve Bank says housing prices may fall further and believes it is risky to assume they won't.

"It is a very dangerous idea to think that dwelling prices cannot fall," said RBA governor Glenn Stevens said in a speech today. "They can, and they have."

"We should never say a crash couldn't happen here, and the Reserve Bank continues to monitor property markets and the performance of mortgages quite closely," said Mr Stevens.

Home prices in Australia have fallen 5 to 10 per cent from their peak, compared with 15-20 per cent in the UK and 30 per cent in the US, according to the RBA.

http://www.watoday.com.au/business/house-prices-cant-fall-a-dangerous-idea-rba-20120724-22m9v.html

 

[MR.]

Surprised nobody has mentioned this but all day media have been slamming that mining boom will be over in two years, unemployment up, dollar down.... In do recall some indicators being mentiones

What? The mining boom will be over in two years? What’s that got to do with property? Ps: Don’t tell Fortescue…..

How about the “Paradox of Thrift” ……..Google it…... Or how Spain (4th largest Euro Zone) and/or Italy (Third largest Euro zone) may need bailouts! Two year bonds at and below a massive 0% yield is now being lent to Germany. Hey and China’s largest trading partner is with Europe!

“Don’t you worry there Rose we have build you a good ship.” we all saw the final of "The Block" a few weeks ago!

Went to an open house on the weekend... bit like that really.

Was the only one there on a property for the kids which was reduced from $650000 to $540000.

Perhaps the calm before a storm again?

Perhaps not much is happening, because not much is happening!

No no, not even close, it's because nothing's happening.... I've even found time for a visit.... Might sweep the floors again now! .......

Govnut's Need more stimulas! You don't expect us to have to wait for all these loans to be paid back now, do ya?

 

[Glen48]

From Money Morning:

According to SQM research, the record level of 'stock on market' in Melbourne is now sitting at around 41,000 unsold houses (and 14,000 apartments). This level of stock has been increasing steadily, and is now double what it was just two years ago.

Should be ok people are still loosing their jobs, Carbon Tax is in, prices rising, China stopped importing, Germany stop lending.
Wots me worry.

 

[moXJO]

"House prices can't fall a 'dangerous idea':RBA"





http://www.watoday.com.au/business/house-prices-cant-fall-a-dangerous-idea-rba-20120724-22m9v.html

From his speech

It has to be said that the housing market bubble, if that's what it is, seems to be taking quite a long time to pop – if that's what it is going to do. The ingredients we would look for as signalling an imminent crash seem, if anything, less in evidence now than five years ago.
Conclusion

Most Australians I encounter who return from overseas remark how good it is to be living and working here. We are indeed ‘lucky’ in so many ways, relative economic stability being only one of them.

But what matters more is what we do with what we have. Not every good aspect about recent performance is down to luck. By the same token there are things we can do to improve our prospects – or, if you will, to make a bit of our own future luck. Some of the adjustments we have been seeing, as awkward as they might seem, are actually strengthening resilience to possible future shocks. Higher – more normal – rates of household saving, a more sober attitude towards debt, a re-orientation of banks' funding, and a period of dwelling prices not moving much, come into this category.

The years ahead will no doubt challenge us in various ways, including in ways we cannot predict. But what's new about that? Even if the pessimists turn out to be right on one or more counts, it doesn't follow that we would be unable to cope. Acting sensibly, with a long-term focus, has as good a chance as ever of seeing us through whatever comes our way.

edited speech is here
http://www.businessspectator.com.au/bs.nsf/Article/Australian-economy-economic-outlook-RBA-Glenn-Stev-pd20120724-WH7JG?OpenDocument&src=sph&src=rot

 

[Agentm]

classic moments from the master and lord bernanke.. the ultimate bubble denier and whom got it so so wrong on every count every step of the way..

like many here, and i fear, most property owners alike, whom all seem to be bubble deniers, check these classic statements from bernanke prior to the very obvious and well observed and predicted property bubble collapse..

i often hear many of bernankes sentiments replicated here in australia by observers, industry specialists and economists and the rba themselves

if anyone like me has fully read the californian property report posted by the governement in the few months before the collapse, you will see there the same echos of property bubble denial and the same sentiment and bubble denial speak that bernanke and most here echo..

good luck to those bubble denier here in australia, its all about keeping up appearances, listening to the economists who's vetsed interest is in keeping this decades long dream bubble afloat for as long as they can.... as the walls crumble around them..

as we all know its true.. lol ... this bubble is different!!! really,, this aussie property bubble is different.. just listen to bernanke... he knew it too..

 

[Glen48]

I was read were most Pre-divorce men worth 1M ended up worth about $270K post divorce, after the bubble has run out of air a lot of Aussies will be lucky to be worth 270K.

 

[bullet21]

classic moments from the master and lord bernanke.. the ultimate bubble denier and whom got it so so wrong on every count every step of the way..
]

Forget Bernanke for the moment, we've got our own Prince of the RBA talking about rainbows and daffodils. http://smh.domain.com.au/real-estat...ces-of-homes-not-too-high-20120724-22nhe.html

 

[Miss Hale]

Forget Bernanke for the moment, we've got our own Prince of the RBA talking about rainbows and daffodils. http://smh.domain.com.au/real-estat...ces-of-homes-not-too-high-20120724-22nhe.html

I reckon Glenn Stevens is having a bet each way. One minute he's saying don't be surprised if house prices go down (see my post above), the next he is saying the bubble - if there is one - isn't going to pop! Even in the speech I quoted from WA he more or less said both things in the one speech (see post further down from moXJO). What could this mean I wonder? I think it means he has no {insert appropriate adjective} idea

 

[Mrmagoo]

1) it pops and no one can get a loan
2) it continues as is and non-home owners end up as a weird class of new working poor despite high incomes.

Either way, not looking good.

3) Moderate falls over the long term to let wages catch up... to what ? I mean who really WANTS to be able to afford to pay half your lifes earnings on a dog box your folks could have paid off in 10 years on their low wages because they had low status jobs.

I say bring on the crash.... little pain.... for a better future for the entire country.

 

[Mr Z]

This is a democracy, we don't do pain if at all possible. At least not while we can vote other peoples money into our pockets for "the greater good".

Beware of what you wish for, a proper crash would be shared around by our "caring" government.

 

[damien275x]

I am 23 and have been looking around for a house to buy, and god am I sick of real estate agents telling me it's a 'Buyers market' .. I'll tell you when it's a buyers market, k mate? Piss off and let me looka t the home. Also if you see an advertised price, you might as well take off 30% because that's all I hear anyone discussing paying, and even they're holding onto their cash tighly.

I find it hillarious that they're now doing things like giving people cars, and $40,000 cheques for homes. The reason? I think they know the prices are going to tank well north of whatever bribe they give the suckers. Not buying it. Also, I am not sure what happened to this "housing shortage" they were going on about. If housing was in such a shortage, why are prices tanking $50,000+

Also what kind of an idiot buys an investment when it is in short supply? Markets are driven by supply and demand and whenever supply is reduced, it makes it more lucrative to develop, and this drives people in to build and equal it back out. So what the're really saying is. Lose all your money. Right now. It infuriates me that these people are allowed to talk absoulte garbage and con people out of all their money. If someone in the Financial services industry did this with a stock, they'd be screaming bloody murder!!!

 

[bullet21]

I say bring on the crash.... little pain.... for a better future for the entire country.

Sadly you're in the reasonable minority. The majority wants their cake to eat.

I am 23 and have been looking around for a house to buy, and god am I sick of real estate agents telling me it's a 'Buyers market' .. I'll tell you when it's a buyers market, k mate? Piss off and let me looka t the home. Also if you see an advertised price, you might as well take off 30% because that's all I hear anyone discussing paying, and even they're holding onto their cash tighly.

I went to one of those group auctions at a hotel with a mate last week. All the properties were in the Dandenong area, which was supposed to be a boom suburb with one of the fastest growing property prices. Of the six houses five got passed in and most didn't make it past 300k.

 

[Glen48]

Those who wanted to know when the RE boom would return wait no longer it is here:

http://www.ratecity.com.au/home-loans/mortgage-news/investors-surge-back-into-the-property-market

 

[Mr Z]

You mean I miss the bottom? Already?

 

[Glen48]

Afraid so but get in early to catch the next one soon..

 

[white_goodman]

real estate is primarily a function of rents, rents are gonna have to increase a lot more, prices are gonna have to come down a lot more or both for the investment case to make sense... then again people can make (and lose) sums of money playing the 'greater fool' game

 

[sptrawler]

At the end of the day it comes back to basics. Property prices rise and rents rise, eventualy property prices become too expensive and people rent. Then prices sit for an extended period untill buying a house becomes attractive.
Then off we go again.
The problem with the last cycle was, it was pumped by the real estate agents, the banks and the government and it overshot the market affordability by 50%.
Now we have to sit and wait for inflation to sort it out.

 

[Glen48]

Capital gains tax was suppose to bring in revenue once a property was sold now all the properties are starting to tank the feds will miss out on that expected income but have allowed tax deductions for years waiting for the golden egg.

 

[apgb8]

Sadly you're in the reasonable minority. The majority wants their cake to eat.



I went to one of those group auctions at a hotel with a mate last week. All the properties were in the Dandenong area, which was supposed to be a boom suburb with one of the fastest growing property prices. Of the six houses five got passed in and most didn't make it past 300k.

you mean like at most auctions, it's always been like that with auctions, even in the boom times.

looks pretty **** over there in the east, the west is only stagnating, prices won't rise but rent is through the roof, yields are coming back to what they were in the early 00's.
property market over here is going to do a steady rise like it did from the late 80's-90's.

 

[So_Cynical]

you mean like at most auctions, it's always been like that with auctions, even in the boom times.

looks pretty **** over there in the east, the west is only stagnating, prices won't rise but rent is through the roof, yields are coming back to what they were in the early 00's.
property market over here is going to do a steady rise like it did from the late 80's-90's.

stagnating in the west hey?

Not if you paid top dollar in mid 2007 its not...its fallen and its flat.

My mums going back to Busso at Xmas to try and sell her house again..she will need luck to get anywhere near what she wants for it.