The future of Australian property prices

[trainspotter]

552 posts and Robots is still right, crack me up.

+ 1,000,000, rupiah. Just got back from Batam. Banks are eyeing off profitability margin between RBA and what they can charge customers. Small to begin with (0.06%) but will be a steady increase over next 12 months. Aduh!

 

[DB008]

552 posts and Robots is still right, crack me up.

What did Robots say?

 

[JellySausage]

What did Robots say?

I'm paraphrasing, but it was along the lines of, "If you're a real estate investor everything is and will always be, sunshine and lollipops"

 

[DB008]

I'm paraphrasing, but it was along the lines of, "If you're a real estate investor everything is and will always be, sunshine and lollipops"

But for how long?

Also, timing is key. Entry and exit, unless your in for the long hold....

 

[IFocus]

I'm paraphrasing, but it was along the lines of, "If you're a real estate investor everything is and will always be, sunshine and lollipops"

Yes it was some thing along those lines, I hold property have been amazed it has held up so well.

 

[sydboy007]

Vale the FHB

Yup, never been a better time to buy resi property in Australia.

Rising prices, while vacancies are rising in some of the capital cities (Perth and Melbourne in Particular), rents stagnant, and high inflation in some holding costs eg water and insurance. Throw in more people worried about their jobs, but those house prices are gunna keep on doubling every 7 years.

Current stats make it look like Sydney is a giant game of pass the parcel amongst investors buying and selling properties with each other.

Vacancies in the resource boom towns not looking so hot now:

• Karratha – 8.0%
• Port Hedland – 6.3%
• Gladstone – 11.1%
• Mackay – 6.8%
• Townsville – 8.0%

Will i see the quarantining of NG against asset income in my lifetime? Maybe a broad based land tax to help fund infrastructure for new housing developments? Probablly not. Our current crop of Federal and State pollies love the Property Quango Dance.

 

[matty77]

It might be a mixed bag over the next few years.

Value in the major cities like MEL/BRI/SYD

and other smaller towns connected to Mining, Oil, Gas with retraction.

DAR/TOW/PH/KAR etc

Not much going on in ADL/PER

(cant wait for the ass to fall out of DAR in a few years)

 

[trainspotter]

Australian banks and property resilient?

Fitch says Australian homes expensive but crash unlikely

A major ratings agency says Australian housing is expensive, but not necessarily over-valued, and that price growth should moderate from last year's levels.

Fitch's global Mortgage and Housing Market Outlook looks at 17 nations, and finds Australia ranks inside the worst four countries on three key measures of housing affordability.

"Relative to rents, house prices in a number of countries are significantly above 1997 levels and also above the long-term average ratio. This is especially the case for Belgium, France, the UK, Australia, and Canada, where the ratio is above 170 per cent of 1997 levels," the report observed.

"At the same time, all of these countries also feature high house price to income/GDP ratios. Therefore, it seems reasonable to assume that, in real terms, the upside potential for home prices is limited over the next decade."

Fitch is forecasting price growth of around 4 per cent for Australian housing this year, and similar price rises in 2015, even as interest rates start rising.

Australian home prices appear to have started 2014 with solid gains, with RP Data's daily five-city index showing a rise of around 0.7 per cent so far this year.

The ratings agency says those price gains are likely to remain slightly ahead of wages growth, meaning affordability is expected to worsen further over coming years.

Fitch says recent history has shown that Australia appears able to tolerate relatively high home prices.

"Australian cities appear expensive relative to those in other countries in price-to-income ratio terms. The ratio has, however, been in the same range for a decade," the report noted.

"Fitch expects the affordability metric to slightly deteriorate over the next few years as home prices are likely to grow more than income."

http://www.abc.net.au/news/2014-01-...an-homes-expensive-but-crash-unlikely/5212536

Well DERRRRRRRRRRR .... we all know housing is expensive

Australian banks will continue to benefit from low bad debts and a recovery in credit growth over 2014, Goldman Sachs analysts have predicted.
But after the sector’s blockbuster share price increases of last year, the investment bank says the valuations of most of the big four banks remain ‘‘stretched’’.
With a housing market recovery tipped to drive stronger borrowing in 2014, Goldman analysts led by Andrew Lyons on Friday forecast 6.4 per cent growth in Australian bank cash profits for 2014.

http://www.smh.com.au/business/bank...ldman-sachs-20140120-314hb.html#ixzz2r5GtPx2z

Add a few more billion to the bottom line of the big 4 shall we? Note how the 7 and 10 year terms are the same. Some would suggest this means they are not expecting much to happen over this period of time that would affect their bottom line. Inflation figures should be in the RBA target zone so not expecting Glenn Stevens to hit the panic button just yet. Meanwhile the big 4 will bracket creep on the 1 - 5 year terms introducing a new swathe of fees and charges to keep up profitability.

ANZ RATES FOR RESIDENTIAL HOUSING
Term Interest rate Comparison rate* +
1 year 4.79% p.a. 5.35% p.a.
2 years 4.89% p.a. 5.34% p.a.
3 years 5.19% p.a. 5.41% p.a.
4 years 5.64% p.a. 5.57% p.a.
5 years 5.79% p.a. 5.68% p.a.
7 years 7.54% p.a. 6.79% p.a.
10 years 7.54% p.a. 7.18% p.a.

 

[trainspotter]

HIGHER than expected inflation will stop the Reserve Bank of Australia from cutting interest rates again, an economist says.
The headline measure of inflation, known as the consumer price index (CPI), rose by 0.8 per cent in the December quarter, and by 2.7 per cent in the 2013 calendar year.
Both measures were higher than economists' expectations of 0.5 per cent in the December quarter and an annual rate of 2.5 per cent, as holiday and accommodation and fruit and vegetable prices shot up.
Commonwealth Bank of Australia chief economist Michael Blythe said big increases in fruit and vegetable prices were linked to weather impacts, and the weakening Australian dollar was boosting domestic tourism.
"The inflation measures are now in the upper half of the RBA's target range," Mr Blythe said.
"Not so long ago they were all hovering around the bottom end of the range.
"We have seen a shift which certainly will cement the idea that the interest rate cut cycle is over."
While the numbers were higher than expected, he said they are still comfortably within the RBA's target range of two to three per cent inflation, and are unlikely to trigger a rate rise in the near future.
"But it does add support to those who believe rates will go up by the end of the year," he added.

http://www.news.com.au/finance/business/aust-cpi-rose-08-in-the-dec-qtr/story-e6frfkur-1226807545087

Dead cat bounce due to Christmas spending and price of fruit and vegetables increase.

 

[sydboy007]

with thanxs to CanOz for highlighting one of their other videos

https://www.youtube.com/watch?v=akFWvLGITE8

 

[trainspotter]

Supply and demand as per usual.

 

[medicowallet]

I did some research about property on the net and found this.. what do you think happens to the train next trainspotter?

http://www.youtube.com/watch?v=Yx9xO98kcBU

MW

 

[trainspotter]

I did some research about property on the net and found this.. what do you think happens to the train next trainspotter?

http://www.youtube.com/watch?v=Yx9xO98kcBU

MW

Oooooerrrr .... you need to get out more Doc and lay off the meds !

 

[medicowallet]

Oooooerrrr .... you need to get out more Doc and lay off the meds !

Sorry, a big week, the new interns are starting soon!

MW

 

[trainspotter]

0.8% CPI increase slams the door on a rate cut according to the RBA and the economists? What exactly brought on this magnificent bit of logic? Food, alcohol and tobacco as well as recreation and culture is the culprit !!

http://www.abs.gov.au/ausstats/abs@.nsf/mf/6401.0

In general, percentages of GDP spent on recreation and culture are positively correlated with per capita income - the richer the country, the higher the percentage expenditure on culture and recreation. Sooo the proletariat/bourgeois are spending money on eating, drinking and being merry and this is a reason ?

What does this mean for property prices? Steady as she goes skipper. You have missed the boat.

 

[Mrmagoo]

We're in a lot of economic trouble.

What do you think will happen to the economy when the people who used to be the FHB crowd are unable to purchase anything including consumer goods ?

 

[sptrawler]

Will i see the quarantining of NG against asset income in my lifetime? Maybe a broad based land tax to help fund infrastructure for new housing developments? Probablly not. Our current crop of Federal and State pollies love the Property Quango Dance.

I personally think, you have a better chance of a change to NG under the coalition than labor.

The snouts in the trough would be less.IMO

 

[trainspotter]

We're in a lot of economic trouble.

What do you think will happen to the economy when the people who used to be the FHB crowd are unable to purchase anything including consumer goods ?

Not much Mr. Magoo ... investors will buy them at auction and rent the same house back to the FHB Brigade. The investor takes on the risk and absolves the bank of any responsibility. The lovely young couple have to trade in the SS Commodore and pick up a cheap Camry and pay rent. If what you are leaning towards is total fiscal meltdown then I am sure they will go back and live with their parents. Or start a vege patch in their backyard.

But but but the banks are lending 7.18*\* for 10 years. What catastrophic event is going to happen to force their hand to not be able to afford consumer goods?

 

[satanoperca]

But but but the banks are lending 7.18*\* for 10 years.

The banks couldn't be wrong could they?

Inflation up
Unemployment up
Dollar down down
China slowing
Interest rates who knows
Ageing population

Cheers

 

[Value Collector]

We're in a lot of economic trouble.

What do you think will happen to the economy when the people who used to be the FHB crowd are unable to purchase anything including consumer goods ?

Why would they not be able to purchase consumer goods?