The future of Australian property prices

[sptrawler]

It will be interesting to see how the property market deflates, everyone acknowledges it is overpriced.

http://www.smh.com.au/money/borrowi...ave-they-missed-something-20140128-31jaz.html

That is an interesting article, the reporter thinks negative gearing and primary residence exemption from assett test, is cast in stone.
Nothing is forever.IMO

 

[CanOz]

It will be interesting to see how the property market deflates, everyone acknowledges it is overpriced.

http://www.smh.com.au/money/borrowi...ave-they-missed-something-20140128-31jaz.html

That is an interesting article, the reporter thinks negative gearing and primary residence exemption from assett test, is cast in stone.
Nothing is forever.IMO

That's the book Tech/A read i think...

 

[tech/a]

That's the book Tech/A read i think...

I've read quite a few on Macro economics
Well the state of it according to some.

Thats not one of them.
There are conflicting long term views
At 180 Degrees with one another.

My PERSONAL view is govts will balance budgets with quantitative easing
This will be wound down with the hope that economies will be saved and growth will
decrease the debts.

If past history has anything to do with the future ---this wont happen---ever!
The end is not pretty but must eventually come---it will only be fixed once its broken
and although that's the case now they need the plane to hit the ground first before recognizing that it wont pull out of the dive.

A long long time off I think.
These things have a way of drawing out.

 

[CanOz]

I've read quite a few on Macro economics
Well the state of it according to some.

Thats not one of them.
There are conflicting long term views
At 180 Degrees with one another.

ahh you mean Dent's books?

 

[tech/a]

ahh you mean Dent's books?

Dent on The negative side with Pento on the coming Bond Collapse.
For a bit of Balance Plunkett on the Next Boom.

Oh and I forgot the most important in my view.

"The Crisis of Crowding"
Chincarini

Nothing to do with population
Everything to do with Crowding in the financial markets.

Domino effect!
Must read in my view.
Still the case to this day.

 

[sptrawler]

I've read quite a few on Macro economics
Well the state of it according to some.

Thats not one of them.
There are conflicting long term views
At 180 Degrees with one another.

My PERSONAL view is govts will balance budgets with quantitative easing
This will be wound down with the hope that economies will be saved and growth will
decrease the debts.

If past history has anything to do with the future ---this wont happen---ever!
The end is not pretty but must eventually come---it will only be fixed once its broken
and although that's the case now they need the plane to hit the ground first before recognizing that it wont pull out of the dive.

A long long time off I think.
These things have a way of drawing out.

I agree that quantative easing can and is working in large economies, eg the U.S.

The devaluing of the $U.S has made their manufactured goods much more affordable, as can be seen by the resurgence of Jeep. The Grand Cherokee is outselling both the Toyota Landcruiser and the Prado.

It isn't going to have the same effect on our economy, we have very little manufacturing export focused anyway.
Therefore the only major beneficiary will be the mining sector, which already is geared up for increased production.
This really doesn't help 'Joe average' though as the transition from construction to production, means less jobs.

So we end up with higher unemployment, low wages growth and high personal debt.
Like you said though, these things have a way of drawing.

 

[satanoperca]

I agree that quantative easing can and is working in large economies, eg the U.S.

Sure it works until it stops, like giving drugs to an addict, no problem until they cannot get any more juice. Then the party really starts.

Quantitative only prolongs the period until reality must be faced.

QE will reduce debts if it brings inflation, but this doesn't seem to be the case in the US. Without QE the US would be in heavy deflation.

I do agree the lower dollar will help with manufacturing, but as both a manufacturer and an importer it all equalizes out as all my raw materials are imported anyway. My manufacturing is not based anymore on labor but technology.

To me everything points to China and there is baking the biggest of the bubbles the world has seen.

 

[tech/a]

India
Africa
Indonesia.

It's going to take a while.
These emerging economies will take up the slack
I doubt I'll see the real melt down in my lifetime
30 yrs max.

 

[McLovin]

ahh you mean Dent's books?

Harry "even a broken clock is right twice a day" Dent.

The funny thing is that the guy is so often, so ridiculously wrong, and yet people still believe his BS.

 

[CanOz]

Harry "even a broken clock is right twice a day" Dent.

The funny thing is that the guy is so often, so ridiculously wrong, and yet people still believe his BS.

Yeah, i think that's mentioned in the story or the video...lol, i recall you mentioned it to me before.

Plunkett is demographer as well...

 

[trainspotter]

What only 3% ?? The more things change the more they stay the same just with different rules.

 

[Tyler Durden]

Where on earth are the Chinese getting all this money from???

“Anecdotally, Chinese buying has been a material driver of new-apartment purchasing activity in the last 12 to 18 months,” Scott Ryall, head of Australia research at CLSA Asia-Pacific Markets in Sydney, wrote in a report in September. “This is a significant potential tailwind for Australian property prices.”

By law, non-resident foreigners can only buy new homes, with exceptions to buy existing properties granted on a case-by-case basis.

While many Chinese immigrants buying in Australia pay cash, they take out mortgages for second or third properties to take advantage of tax rules, said Ray Chan, managing director of Sydney-based real estate broker Henson Properties, 95 per cent of whose clients are from China. Owners can claim tax deductions if expenses, including mortgage payments, are greater than their investments’ rental income.

http://www.smh.com.au/business/prop...y-property-hotspot-demand-20140129-31m1b.html

 

[sptrawler]

Where on earth are the Chinese getting all this money from???



http://www.smh.com.au/business/prop...y-property-hotspot-demand-20140129-31m1b.html

Obviously they have decided, they want a part of the $13billion negative gearing tax refund.

I know an asian renting a house for $500/week in Perth and subletting the rooms for a return of $700/week.
There are no flies on the Chinese when it comes to making money.

 

[sydboy007]

http://www.macrobusiness.com.au/2014/01/high-density-bias-is-putting-homes-out-of-reach-2/

Bob Day the SA Senator for Family First is able to make some headway into reforming the dysfunctional housing market in Australia.

Since its inception in 1973, the South Australian State Government’s land agency has seen land prices rise from $15,000 per block (in current dollars) to $160,000 per block, more than a tenfold increase. By comparison, the cost of building a 135 square metre house increased from $97,000 in current dollars to just $102,000 over the same period, virtually no increase at all. Think about that for a moment – a ten-fold increase for a commodity (land) controlled by government (with a so- called “price containment” policy), compared with virtually no increase at all for a commodity (the house) controlled by the private sector (with no price containment policy). One can only conclude that had the private sector been allowed to manage land supply, like it has managed housing supply, we’d be enjoying land prices significantly lower than they are today.

I doubt the private sector would have been much better on land supply, except if we take Robert Gottliebsens' at face vaule that Harry Triguboff is a kind hearted soul who started selling his apartments now that the price had gotten too high so as to help contain the runaway growth in apartment prices.

 

[Bill M]

In December 2013 I was looking at brand new off the plan apartments for sale in the city of Gosford NSW at one particular site. Yesterday I searched these apartments again, all of them have got "under contract" under their ads. I thought I'd go and have a look at the site, very good position in the middle of town, walking distance to everywhere and an old building sits on the site. Off the plan and the whole lot has gone, with demand like this prices are only going to keep going up. My wife and I would like to buy a brand new apartment in a good location, finding one is near impossible, just not enough supply.

 

[FxTrader]

http://www.macrobusiness.com.au/2014/01/high-density-bias-is-putting-homes-out-of-reach-2/

Bob Day the SA Senator for Family First is able to make some headway into reforming the dysfunctional housing market in Australia.

Political affiliation aside, Day makes some excellent points.

It is important to remember that the “scarcity” that drove up land prices is wholly contrived – it is a matter of political choice, not geographic reality. It is the product of restrictions imposed through planning regulation and zoning.

While state governments embraced the opportunity to garner windfall profits by stifling the release of land, they were also responding to a wider ideological agenda driven by a powerful planning community that sought to curb the size of our cities. “Urban consolidation” became the new mantra…

This combined with councils forcing developers to cover infrastructure costs with the resulting "assets" then transferred to council ownership combine to drive up land prices. To a significant degree, the house price fiasco in Aus is attributable to market distorting government (local and federal) policy and regulation. Not only is land scarcity contrived, the real estate market in general is a totally contrived marketplace manipulated, sustained and overinflated by government policy.

While many a real estate investor and developer have profited from this ("living the dream" as TS likes to say), Day notes the inevitable consequences for society as a whole and the many living with the nightmare of unaffordability and mortgage stress...

In creating the conditions for home ownership to become the privilege of the few rather the rightful expectation of the many, state governments have produced intergenerational inequity and breached the moral contract between generations…

One of the more pernicious aspects of high land prices ie high mortgages, is the forced misallocation of capital and family income into mortgage payments instead of higher standards of living, assets, goods, travel, children’s education, appliances or even foregone income to spend more time at home…

IMHO, only a major economic crash will correct house prices now. The market distorting policies that have artificially inflated property prices here are simply too entrenched and politically untouchable.

 

[trainspotter]

Cyclone Dylan to hit FNQ will increase inflation due to the banana crop about to be devastated. Larry in 2006 and Yasi in 2011 were blamed ... now it is Dylans turn. "Beware the Ides of March" ... when the RBA meets it will have to "look through" this blip ... I am not so sure the banks will and will use this as an excuse to increase margins.

https://theconversation.com/inflation-stokes-rate-rise-speculation-but-dont-blame-the-bananas-2562 - 2006 Larry

http://www.theaustralian.com.au/nat...-towards-the-sky/story-fn59niix-1226103020238 - 2011 Yasi

But it did not stop Westpac from increasing their retail rates ... anyone remember the cute video they produced?

http://www.youtube.com/watch?v=IN9B-rh3bM4 .. for a basic explanation of how economists think.

Westpac coup de grâce video http://www.youtube.com/watch?v=dbRo98A1zZQ

Sooooooooooo Perth has hit a new median high of $535,000 and expected to peak at $570,000 before a softening in the market late in 2014. Sydney is trending the same way and the rest of the capital cities remaining stagnant to slight increases would mean that there is still a little bit of puff left in this cycle. JMHO

 

[sptrawler]

Sooooooooooo Perth has hit a new median high of $535,000 and expected to peak at $570,000 before a softening in the market late in 2014. Sydney is trending the same way and the rest of the capital cities remaining stagnant to slight increases would mean that there is still a little bit of puff left in this cycle. JMHO

It is pretty amazing trainspotter, prices are certainly defying gravity.
That is unless Australia is entering a new 'norm', where $100,000pa is going to become the average wage sooner rather than later. That will require our $aus to go to about $ 0.50c U.S to be competitive, then we will have a real poverty problem.
Or trailer parks/cardboard boxes, will be the destiny for many Australians.

 

[beachlife]

Sooooooooooo Perth has hit a new median high of $535,000 and expected to peak at $570,000 before a softening in the market late in 2014. Sydney is trending the same way and the rest of the capital cities remaining stagnant to slight increases would mean that there is still a little bit of puff left in this cycle. JMHO

But look at the volume
http://reiwa.com.au/Research/Pages/Perth-quarterly-market-charts.aspx

and look at the number of listings
http://reiwa.com.au/Research/Pages/Perth-listings-and-rental-trends.aspx

The lowest turn over for at least 6 years. Hardly the frenzy of the good old days.

 

[trainspotter]

But look at the volume
http://reiwa.com.au/Research/Pages/Perth-quarterly-market-charts.aspx

and look at the number of listings
http://reiwa.com.au/Research/Pages/Perth-listings-and-rental-trends.aspx

The lowest turn over for at least 6 years. Hardly the frenzy of the good old days.

Very true as the velocity of money has slowed down due to the banks stricter lending criteria. Also could mean that the uber rich are flogging off their McMansions and downsizing thusly increasing the mean average.