The future of Australian property prices

[young-gun]

problem is under that scenario what would the lending standards be.. need to be heavy in cash

Not necesarily. Well to buy 3 in 12 months yeah. Im unsure of the loan requirements, prob a 20% deposit on IP's. Once I meet with him and crunch the numbers and make sure he is achieving what he claims I'll go speak to my mortgage broker and see what the story is. I'm still bearish on property, but if you can pick something up at 20-30% off then if things do crash it won't fall as hard as everything else. I also wouldn't have over-payed.

If prices slide enough the rental market should start to heat up. That's what's happening in the states atm.

 

[white_goodman]

Not necesarily. Well to buy 3 in 12 months yeah. Im unsure of the loan requirements, prob a 20% deposit on IP's. Once I meet with him and crunch the numbers and make sure he is achieving what he claims I'll go speak to my mortgage broker and see what the story is. I'm still bearish on property, but if you can pick something up at 20-30% off then if things do crash it won't fall as hard as everything else. I also wouldn't have over-payed.

If prices slide enough the rental market should start to heat up. That's what's happening in the states atm.

what do you think that state of bank balance sheets under a scenario wear property falls 30%, what do you think happens to the bank ratios in that situation with new basel lll coming in? if your talking a one off property at discount where lending levels are essentially the same as present then yes id agree. (which i think is what ur saying)

The bear scenario of prices crashing and people being able to buy up at firesale with unlimited bank finance is foolish at best.

There were plenty of people that could have bought US property at the crash prices under the pre-crash lending criteria, the willingness and ability to lend by banks was not there.

imo we could be at a new elevated new normal when it comes to median income/median prices... cash flow will be the new meme in resi going forward.. however the bear case is still strong relative to other assets.

 

[young-gun]

what do you think that state of bank balance sheets under a scenario wear property falls 30%, what do you think happens to the bank ratios in that situation with new basel lll coming in? if your talking a one off property at discount where lending levels are essentially the same as present then yes id agree. (which i think is what ur saying)

Yes, I am referring to buying a heavily discounted property in todays market. As you say, trying to buy in a crash with a bunch of banks who have toxic balance sheets would no doubt be much harder to gather finance.

The bear scenario of prices crashing and people being able to buy up at firesale with unlimited bank finance is foolish at best.

For investors perhaps, but for first home owners I don't believe it to be foolish. Prices are over-cooked, there's no doubt about it. Saving a deposit and waiting for things to calm down(after a sharp slide), and waiting for normality to return in lending practises(ie when they get bailed out) would be a good time to get in. If the scenario were to paly out like that.

imo we could be at a new elevated new normal when it comes to median income/median prices... cash flow will be the new meme in resi going forward.. however the bear case is still strong relative to other assets.

That's just the problem. So many people have jumped on the RE bandwagon that they don't even realise they are losing out. The amount of investors in negative cash-flow, and that have bought property without truly understanding the figures imo is astronomical. Hence the bubble. When mum and dads can just buy a house somewhere and do well out of it without thinking too much, I guess that's a sign of trouble. Not that that is happening now.

What happened to number-cruncher, he was always a big fan of negative gearing

 

[white_goodman]

yeh i agree on all that you say there, fhb's/investors might inevitably get the bottom of the market as lending would only come in once it had sufficiently bottomed out, not catching a knife.. ie 1-5 years post crash

 

[trainspotter]

Yes explod, whatever happened to Robots, Trainspotter, and the others that used to pop in here...
Market Snapshot
http://apm.domain.com.au/Research/AuctionResults/

Well, Spring is here, the time of year when buyers are out and about...
As I have said, I know a few that have bought.
Footscray, North Melbourne, Kensington etc have all taken off the last few years.
Its not my side of town, but bargains were to be found

My opinion.

Got tired of all the naysayers squawking on about how the sky is falling. Residential home market has taken a hit. (In CERTAIN areas) TICK. Prediction was between 5 - 7 per cent NATIONALLY on 8 capital city average and NOT the 40% Keen followers were drivelling on about. TICK. I think I also mentioned the suburbs and cities with pie charts and demographics etc ad infinitum. TICK. Bank lending criteria tightening. TICK. Time to move into commercial property. TICK. Secure leases on BIG tin sheds with low overheads. TICK. Explained how banks would move the goal posts on developers. TICK. Went into great detail as to WHY the builders were raping the boom cycle. TICK. Enucleated to the masses when TV productions start bringing back shows like HOT PROPERTY and THE BLOCK the market is in need of a push. TICK. Gave ACTUAL examples of how much capital is required to play the real estate game and how BIG your nads need to be. TICK. It's a long term game at the moment and not a FLIPPING market. TICK. Blah yadda blah.

I have left a WHOLE bunch of stuff out that was wasted on the great unwashed masses.

Keep smiling everybody

P.S. This post was not intended nor needs to be taken as an irruption on you Tink.

 

[white_goodman]

Got tired of all the naysayers squawking on about how the sky is falling. Residential home market has taken a hit. (In CERTAIN areas) TICK. Prediction was between 5 - 7 per cent NATIONALLY on 8 capital city average and NOT the 40% Keen followers were drivelling on about. TICK. I think I also mentioned the suburbs and cities with pie charts and demographics etc ad infinitum. TICK. Bank lending criteria tightening. TICK. Time to move into commercial property. TICK. Secure leases on BIG tin sheds with low overheads. TICK. Explained how banks would move the goal posts on developers. TICK. Went into great detail as to WHY the builders were raping the boom cycle. TICK. Enucleated to the masses when TV productions start bringing back shows like HOT PROPERTY and THE BLOCK the market is in need of a push. TICK. Gave ACTUAL examples of how much capital is required to play the real estate game and how BIG your nads need to be. TICK. It's a long term game at the moment and not a FLIPPING market. TICK. Blah yadda blah.

I have left a WHOLE bunch of stuff out that was wasted on the great unwashed masses.

Keep smiling everybody

P.S. This post was not intended nor needs to be taken as an irruption on you Tink.

in fairness to Keen he gave a timeline of a decade for that to pan out, and also his own arrogance doesnt allow him to see scenarios where he is incorrect... ie hes an economist.

 

[trainspotter]

I don't think SCM would take too kindly to that assumption/comparison Canoz Magoo just rattles off troll-like non-sense and outlandish/weird ideas that would never work or be implemented(not necessarily referring to the above).

At least scm was an educated troll.

An engineer in fact or so he told us, the best in the land bar none.

 

[KurwaJegoMac]

Welcome back Trainspotter

Hopefully you've recharged the batteries for the next round. Looks like you've kicked off with a ripper.

 

[trainspotter]

in fairness to Keen he gave a timeline of a decade for that to pan out, and also his own arrogance doesnt allow him to see scenarios where he is incorrect... ie hes an economist.

Ummm NOPE .... He bet Rory Robertson and no mention of a decade as the time line. Based his figures on the Japan slump I believe? 15 years of data and Japanese economics at the time is nothing like what we have now. He even sold his own house for fear of losing 40% etc. He wore a T shirt emblazoned with "I was hopelessly wrong on house prices! Ask me how." Agree on the economist barb. 2 part bet with the latter to be formed. How long has it been now? A mere 3 years? Could be possible but it would have to be something catastrophic to get there.

 

[McLovin]

Ummm NOPE .... He bet Rory Robertson and no mention of a decade as the time line.

There was.

Rory: I think some people here probably came today to hear about why house prices are going to fall 40 percent, so that’s what you’re most famous for at this stage. So what I was going to do, in the spirit of competition or whatever, Steve’s a betting man, he sold his house.. so what I would say is if, I think it was 40 percent on average across Australia, is that what it was?

Steve: Yeah, but over a ten to fifteen year period mate, so…

Rory: so, all right, it’s a long term thing…

Steve: but over the long term I’m willing to stick to it.

 

[trainspotter]

There was.

OK OK OK ... It has only been 3 years and Keen based his prediction on Japans data over a 15 year period which is why I posted this

" 2 part bet. How long has it been now? A mere 3 years? Could be possible but it would have to be something catastrophic to get there. ."

If he was so keen (pardon the pun) WHY OH WHY did he sell his house?

 

[Tink]

Good to see you back, trainspotter

 

[Uncle Festivus]

Got tired of all the naysayers squawking on about how the sky is falling. Residential home market has taken a hit. (In CERTAIN areas) TICK. Prediction was between 5 - 7 per cent NATIONALLY on 8 capital city average and NOT the 40% Keen followers were drivelling on about. TICK. I think I also mentioned the suburbs and cities with pie charts and demographics etc ad infinitum. TICK. Bank lending criteria tightening. TICK. Time to move into commercial property. TICK. Secure leases on BIG tin sheds with low overheads. TICK. Explained how banks would move the goal posts on developers. TICK. Went into great detail as to WHY the builders were raping the boom cycle. TICK. Enucleated to the masses when TV productions start bringing back shows like HOT PROPERTY and THE BLOCK the market is in need of a push. TICK. Gave ACTUAL examples of how much capital is required to play the real estate game and how BIG your nads need to be. TICK. It's a long term game at the moment and not a FLIPPING market. TICK. Blah yadda blah.

I have left a WHOLE bunch of stuff out that was wasted on the great unwashed masses.

Keep smiling everybody

P.S. This post was not intended nor needs to be taken as an irruption on you Tink.

Seems like you have an uncontrollable TICK?

Don't you have trouble just walking?

"Gave ACTUAL examples of how much capital is required to play the real estate game and how BIG your nads need to be."

 

[moXJO]

If that's true they are only shooting themselves in the foot.

My wife works for in the recruitment industry, never before has she seen so many unemployed people coming through the office doors. Not that it seems to be reflected in the unemployment numbers, then again that may just be due to ABS admittedly not calculating very accurately. The construction industry appears to be slowing rapidly from what I can see here in brisbane. Our whole company has a strict over-time ban in place.

Perhaps unemployment is just the flavour of the month for media outlets. At the end of the day a rate cut signals a struggling economy. The perfect storm is still brewing, mining boom slowdown, sluggish global economy, unemployment although not evident in the figures appears to be on the rise just by talking to a lot of people. The end of problems is endless.

However I am meeting with a guy soon who claims he has bought 3 positively geared properties in the past 12 months, so very interested in speaking to him. There may still be some opportunities if you can buy at substantially reduced prices.

Business is dying out there. Self-employed are doing it very tough and the whole:
"Australians have never had it better"
line I keep hearing being trotted out is a load of bull.
Unless the problem is addressed we will grind to a nasty halt no matter how much they fudge the figures imo.

As for property round my way, I have seen a massive increase in stock hit the market. Good houses/commercial as well, not the usual dumps I normally see. No doubt we do get more on the market during spring till the end of the year. But I will be doing some figures because some are in great positions to value add.
Had a tenant move out of one property recently was $210, put the rent up $250 and had tenants a week later. It's a bit of a shthole too so I was surprised how quick it rented.
Very mixed signals out there.

 

[trainspotter]

Good to see you back, trainspotter

Thanks Tink. Has the sky fallen in yet? Certainly has been a slow leaking of air out of the balloon. Notice how our banks are still recording MEGA profits. Wonder why that is? Could it be that Mums and Dads are still paying their mortgages? Default rate is very low in Australalia. Have I mentioned this before?

 

[KurwaJegoMac]

Thanks Tink. Has the sky fallen in yet? Certainly has been a slow leaking of air out of the balloon. Notice how our banks are still recording MEGA profits. Wonder why that is? Could it be that Mums and Dads are still paying their mortgages? Default rate is very low in Australalia. Have I mentioned this before?

But but but the RE market crashed 40% in the US so it HAS to happen here! My friend's uncle's nephew's best friend was talking to some guy at the bus stop who said they saw a house go for 30% less than a year ago. Proves we're in a bubble and everything is crashing.

P.S. don't mention Canada nor make reference to auction results - especially the recent "Super Saturday" where 2400 properties went up for sale and clearance rates were 60%+. Never mind that it was the highest number of properties on auction in two years and still had a very healthy clearance rate. Guess it must be a whole bunch of naive people buying in an enviornment with low interest rates, low unemployment rates, low default rates and prices off peaks. You'd be mad to buy now!!


Please note: Post may, or may not be filled with rampant sarcasm

 

[Uncle Festivus]

Unfortunatly, time is not on the property permabulls side.

Do you really think that Oz property will even match just cash in the bank these days?

By any measure, the data is not conducive to even a lukewarm market, despite the usual banter of vested interests to talk it up.



Even the RBA is trying to keep the bubble alive with their own version of ZIRP. With interest rates this low, various government grants/loans/bribes and a highly accomodative tax structure trying to keep the bubble inflated, you wil have to, at some stage very soon, have to admit that the property game, as an investment, is over.

To make it interesting, any of you care to nominate any city/suburb to buy into and we'll see how it fairs over the next 12 months?

 

[moXJO]

This thread almost three years old

 

[Aussiejeff]

This thread almost three years old

"The future" is infinite.....

 

[Modest]

How's the next 12 - 24 months looking for the first home buyer? There is a lot of talk about property from an investors perspective I was wondering what you all think the future for someone like me who will be a first time home buyer within the next 24 months?

From what I can see/read if things continue to go as they are prices should continue to drop...