The future of Australian property prices

[MR.]

Glenn Stevens: "I think it is a mistake to assume that a riskless easy guarantee way to prosperity is just to be leverage up into property..."

Look at the past decade of rising property prices.
The problem is the masses think the "way to prosperity is just to be leverage up into property".

It's one thing to say he "thinks it is a mistake" but what exactly is Mr. Stevens going to do about it?

Raise rates by 0.__%?
IMO It's not enough...

 

[So_Cynical]

LOL there's an Australian property bubble wiki

http://en.wikipedia.org/wiki/Australian_property_bubble

The Australian property bubble is an observation that real estate prices in Australia appear to be great inflated (when compared to most other developed economies, when compared to the long-term historical average, when compared to rental yields, and when compared to average income), and that this may constitute a real estate bubble.

Just do a google for "property bubble Australia" and you will find obscure forums with pages and pages of debate just like ASF...its strange.

 

[Fleeta]

OK, time to get back on the thread. 3 Weeks ago I met an old ex navy man in Manly. We got talking about stuff when I asked him where he lived, he told me he lived in Beacon Hill. Beacon Hill is roughly 25 kms from the Sydney CBD, it is not serviced by train and is totally reliant on buses and private motor vehicle for transport.

This man told me than in 1967 he had an agent try to convince him to by the house off the plan in Beacon Hill for $6,000. It took the agent all day to convince him that is was a good idea. He told me he was so scared to do it and that it was just so much money and that he was uncomfortable about it all. He said the only thing that convinced him was that a few Navy mates had already done it and that is was a good idea. In the end he decided he would go for it. He put down the deposit and from that time on his weekly salary paid for the repayments.

The man was not bragging but he said it was the best thing he ever done.

Now this Timber home on brick foundations is worth $800,000..... Will property prices rise in future? Absolutely no doubt in my mind.

What's that disclaimer that fund managers use again...something like 'past performance is not indicative of future returns'...

If I told you that the price of something was $10 in the year 2000 and in the year 2020 it was expected to be $20 and in the year 2010 it was $19, would you assume there was still $10 growth in the second ten years or would you assume it would 'revert back to expected value'. I think I would be in the latter camp, but by the sound of it many here are in the former camp.

 

[So_Cynical]

Anyone see the interview with Glenn Stevens today on Sunrise?

http://au.tv.yahoo.com/sunrise/video/play/-/6994337/em-rba-em-governor-glenn-stevens/

When the man who writes the rules says to not over leverage in real estate then you know there is a bubble. He's of-course not going to admit there is one but you can tell he doesn't like the current situation RE is in.


"I think it is a mistake to assume that a riskless easy guarantee way to prosperity is just to be leverage up into property..." - Glenn Stevens

quoting my link below.

RBA issues warning to homebuyers

The nation's top central banker has taken the unprecedented step of being interviewed on commercial television, warning property buyers not to borrow too much.

http://skynews.com.au/national/article.aspx?id=445631

 

[drsmith]

The nation's top central banker has taken the unprecedented step of being interviewed on commercial television, warning property buyers not to borrow too much.

He wanted to make a point, that's for sure.

He didn't go as far as quoting Alan Greenspan. Perhaps he should have.

 

[TheBigSponge]

He wanted to make a point, that's for sure.

He didn't go as far as quoting Alan Greenspan. Perhaps he should have.

What would he know? I advocate everyone to borrow as much as possible and buy the dream before it is too late. Not long now before the average homw will be worth half a million. Good luck to the suckers who still rent

 

[TheBigSponge]

LOL there's an Australian property bubble wiki

http://en.wikipedia.org/wiki/Australian_property_bubble



Just do a google for "property bubble Australia" and you will find obscure forums with pages and pages of debate just like ASF...its strange.

Yes all rubbbish. BUY BUY BUY

 

[mythos]

From http://en.wikipedia.org/wiki/Australian_property_bubble

The Treasurer (in 2004) who told Australians: "Work for a living and we’ll tax you at close to 50 cents in the dollar; speculate and we’ll only take 25 cents. Not only that but, as a special deal - while stocks last - we’ll pay half your speculating costs."

Interesting Costello back then saw the crazy way we advantage property investment over other forms of investment in this country. I know that you can negatively gear shares too, however the vast majority of the punters out there only leverage property.

Funny how he didn't bother to try to do anything to change things.

 

[kincella]

a couple of points to ponder....
I thought it was the cashed up Asians who were driving up the prices.....in cash, no loans or mortgages with australian banks involved....
so what is the point of raising rates and making all the borrowers pay, when they have no involvment in this scheme....

is stevens just another voice to support the labor mantra,( his boss the treasurer, demanded he go out there and push the lie) that the GFC is over and our economy is still booming, hence the need to raise rates...
compared to all the other countries who have kept their rates on hold at zero %
purely a repeat of the same rubbish a year ago, when swan and mates were glowing about how rosy our economy was, and stevens upped the rates month on month, until finally they woke up, (they would not have woken up, fact and figures were the opposite of their rubbish mantra)...then they dropped the rates by about 3% just as suddenly...
history is repeating itself here, those two are still pushing a lie, to pretend the labor govnuts doing a great job, and should be re-elected...
no more no less no different...
the banks are still not lending to business...and the govnuts are not doing anything about it...
lets see what comes out, with figures due this week...

 

[kincella]

I wonder if all those Asians, who are buying up here in OZ, are doing so...due to their communist govnuts crackdowns....what was the news out last week...was it they banned any sales of RE for a month.....
...................................todays news, an extract....

China bans property loans to 78 state-owned companies
Liu Li From: The Wall Street Journal March 29, 2010 11:58AM


CHINA'S banking regulator banned new property loans to 78 companies owned by the central government in an effort to control risks in property credit and curb asset bubbles, which pose a threat to the country's strong economic recovery.
The measures, together with a recent restriction by the state-owned assets regulator, are aimed at state-owned companies that have helped push up asset prices. The 78 companies were banned Friday from investing in property because property isn't their core business.

http://www.theaustralian.com.au/bus...-owned-companies/story-e6frg90x-1225846843585

 

[satanoperca]

a couple of points to ponder....
I thought it was the cashed up Asians who were driving up the prices.....in cash, no loans or mortgages with australian banks involved....
so what is the point of raising rates and making all the borrowers pay, when they have no involvment in this scheme....

I agree with your sentiment Kincella. Raising rates is not going to affect the overseas buyers but rather normal Aussie mums and dads that just want a roof over their heads for their family.

If anything it is going to prevent more Australians buying a home.

As KRUDD has sold out current and future Australians, an act of treason to support this ever growing ponzi scheme, peoples rage and anger should be directed at him and his party. Shelter is a basic need and should only be available to those that are residents of this country.

My grandfather and great grandfather would be turning in their graves, having given up their lives to defend this great country in years gone past.

They lost their lives and now we have govnuts who support those people who they fort against coming and buying a home next to their families.



Cheers

 

[Captain G]

Another factor for higher prices: Why is there no Captital Gains Tax for foreign property owners ?? This I have read in may articles. If there is no CGT, WILL they pay any form of tax on their profits?? If not, this is crazy & no wonder they're buying in droves.
I know at least 3 couples, who on many occassions who have lost out to oversea's cash buyers, who are making unrealistic offers, especially around Sydney's inner west. How do properties $750k properties go up by $250-300k to over a $1 Mill in 12 months ?? Exactly, 12 months since Oz Govt changed the foreign ownership rules. Sure 10%+ I can understand, but 30-40%, this is mad.

 

[kincella]

I believe the tax laws are there to cover all australian assets, and income derived here....nothing has changed....
however my concern is with the current govnuts...ability to monitor and administer the new laws...

prior to the changes, under the former Firb, foreign residents needed to apply and receive approval to purchase new residential property, and it was mainly 'off the plan' property....to encourage building and investing in more property in OZ..

under the new laws, foreigners are not required to apply and receive approval.....so there is no data base to follow up
or to check on changes in ownership...

I doubt very much these new owners will bother with lodging the Australian tax returns, requird to be lodged by non residents, to account for the income and capital gains on these properties.
An administration nightmare has been allowed to develop...but what else do you expect from a govt that dreams up policy overnight, with no safeguards, checks or balances to match.

 

[kincella]

I note an article out this morning...Swan is standing by his argument that we need to increase immigration....the related topic of providng housing for same is ommitted from the discussion.
I guess all those immigrants must be cramming 12 or more into a house....since we supposedly have a housing shortage in the inner suburbs...
there was a piece on tv last year, about the housing shortage...and they were showing the segment to prove how greedy and nasty landlords were. It was an Indian landlord (which was only acknowledged at the end,of the segment, at the beginning it was portrayed as an obviously white) but the tenant was subletting, he had 20 indians living in the 3 bdr house, they took turns sleeping, when there was not enough beds...etc it was an old one kitchen, one bathroom, ordinary resi..they appeared to be all males in that house...
I saw it as ...the beginning of a slum culture...or how to turn
what we deem as normal living conditions, into a slum hole culture.

 

[Beej]

History has shown that managing a slow decline in real asset values relative to income is indeed difficult.

Really?? Which history is that?? I think you find the opposite is in fact the case......at least for Australia anyway?

Satanoperca - have you been possessed by the soul of Robots until his return???

Cheers,

Beej

 

[MR.]

RBA Glen Stevens :
"I think it is a mistake to assume that a riskless easy guarantee way to prosperity is just to be leverage up into property..."

Look at the past decade of rising property prices.
The problem is the masses think the "way to prosperity is just to be leverage up into property".

What would he know? I advocate everyone to borrow as much as possible and buy the dream before it is too late. Not long now before the average home will be worth half a million. Good luck to the suckers who still rent

Exactly what would he know? .... Seriously! If interest rates aren’t going back near the 2008 highs in the near future for obvious reasons, then it will continue to fuel the property boom. Enough verbal warnings Mr. Stevens!

Interest rates have only returned 1% of the 4% drop. IMO make a punch, hit with 0.5% - 1% rise next meeting before more take the bait.
Rates dropped that quick!

I believe share traders say “breakout” The breakout this time appears to be in property. It appears to be continuing from the recent publicised property price growth from last year when interest rates increased only in the last quarter from historic lows.

One of those programs last night stated that property could double in the next 4 years. My guess is, if interest rates stayed near half the 2008 highs it makes some sense!

Oh, the fear of being left behind!

I thought it was the cashed up Asians who were driving up the prices.....in cash, no loans or mortgages with australian banks involved....
so what is the point of raising rates and making all the borrowers pay, when they have no involvment in this scheme....

I guess you would like to think that but my guess is you know better....

 

[tech/a]

You guys have a warped view of rising interest rates in property.

It WILL slow sales
It WILL increase the prices of property.
It WILL decrease affordability.

You'll still be theorising when the average home is $500K
Just as you were when they were $250K

 

[drsmith]

Really?? Which history is that?? I think you find the opposite is in fact the case......at least for Australia anyway?

History has shown many times that economic bubbles pop rather than slowly deflate.

Australia is not immune to this.

 

[MR.]

You guys have a warped view of rising interest rates in property.

It WILL slow sales
It WILL increase the prices of property.
It WILL decrease affordability.

Higher interest rates will "increase the prices of property"

got it!

 

[tech/a]

Higher interest rates will "increase the prices of property"

got it!

Havent worked it out have you!