The future of Australian property prices

[sptrawler]

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.

Also if we try and inflate away our housing debt, it just manifests itself as a reduction in pensioners savings buying power.
Which in turn results in a lower standard of living for them, which results in higher taxes to support higher pensions.
Isn't it great, smoke and mirrors, untill someone say's " hang on a minute".

 

[Quincy]

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

An article in today's Business Spectator by Florence Chong may give you some answers to your question - extract below.

http://www.businessspectator.com.au...se-buyers-dont-want-your-house-they-want-land

Chinese buyers don't want your house, they want the land

Juwai’s Taylor says China's economic ascendancy has unleashed unprecedented purchasing power for its citizens, and is now washing up on the shores of Australia, the United States, Europe, South America, and Southeast Asia.

"The true power of the Chinese buyer is represented by more than 63 million people whose wealth and incomes provide them with the ability to purchase international property," says Taylor, who points out that 90 million Chinese search for property online every month. More than 60 per cent pay in cash.

Globally, Taylor says Chinese purchases of residential properties totalled at least $38 billion and possibly as much as $50 billion last year.

And just as they are moving out of tier one cities in China, overseas Chinese investors are now moving out of capital cities, like London, to Manchester and Birmingham.

In Australia, Taylor says, the Chinese are also buying in tier two cities - Gold Coast, Perth and Adelaide. And surprisingly, juwai.com is getting enquiries for properties in Wagga Wagga, in the south west of NSW.

"We didn't really understand why, until we found out that a Chinese company has made a big investment in Wagga." (The state-owned Wuai Group has partnered with Sydney-based company ACA Capital Investment to build a $400m trade centre in Wagga.)

The mainland Chinese passion for real estate remained unfulfilled in their home market until about 15 years ago, when private ownership was first permitted, according to Taylor. "They are going through their first property cycle. Property is like gold to them."

 

[trainspotter]

Also if we try and inflate away our housing debt, it just manifests itself as a reduction in pensioners savings buying power.
Which in turn results in a lower standard of living for them, which results in higher taxes to support higher pensions.
Isn't it great, smoke and mirrors, untill someone say's " hang on a minute".

Is this a statement based on facts or just an opinion?

If the housing debt is controlled by the banks and the banks are greedy then inflation will eventually rear it's head which means interest rates are rising which means pensioners savings will earn more interest? (very loose terms here) Vicious cycle really

 

[pavilion103]

So will there be:

1) a catalyst/s for a crash at some point?

2) a long long period of zero growth (and a decrease in real terms)?

 

[lusk]

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

An article in today's Business Spectator by Florence Chong may give you some answers to your question - extract below.

http://www.businessspectator.com.au...se-buyers-dont-want-your-house-they-want-land

They have dropped the gates and handing out money like no tomorrow. Credit increasing by 14 trillion since 2008 would have something to do with it. When opportunities are exhausted in China they are going to look elsewhere it has to go somewhere.

"Overall credit has jumped from $9 trillion to $23 trillion since the Lehman crisis. "They have replicated the entire US commercial banking system in five years," she said."

http://www.telegraph.co.uk/finance/...le-unprecedented-in-modern-world-history.html

 

[trainspotter]

So will there be:

1) a catalyst/s for a crash at some point?

2) a long long period of zero growth (and a decrease in real terms)?

I will take door number 2 thanks. Cant see what would be on the horizon that would qualify as an ELE.

 

[satanoperca]

"Overall credit has jumped from $9 trillion to $23 trillion since the Lehman crisis. "They have replicated the entire US commercial banking system in five years," she said."

Their grand master plan to take over the world maybe.

Hate the think what would happen if goes the same way as the USA but would be interesting seeing a whole suburb like Glen Waverly, Vic up for sale in one go as they sell assets to get cash.

All fun and games, or as it seems a wise old man said "sunshine and lollipops".

 

[trainspotter]

Their grand master plan to take over the world maybe.

Hate the think what would happen if goes the same way as the USA but would be interesting seeing a whole suburb like Glen Waverly, Vic up for sale in one go as they sell assets to get cash.

All fun and games, or as it seems a wise old man said "sunshine and lollipops".

But the banks in Oz do not practice usury lending now do they? Can't imagine a whole suburb up for sale .. no wait .. that would be Ipswich a couple of years ago !

 

[satanoperca]

But the banks in Oz do not practice usury lending now do they? Can't imagine a whole suburb up for sale .. no wait .. that would be Ipswich a couple of years ago !

Our banks might be, however, the scale of the Chinese banks system could cause systematic world financial collapse if it defaulted.

A suburb that is majority owned by Chinese, both Chinese Australians and Chinese nationals could go up in a fire sale. I am thankful the it wouldn't be a Jewish fire sale.

Cheers

Off fishing with son in kayak.

 

[sptrawler]

Is this a statement based on facts or just an opinion?

If the housing debt is controlled by the banks and the banks are greedy then inflation will eventually rear it's head which means interest rates are rising which means pensioners savings will earn more interest? (very loose terms here) Vicious cycle really

Just an opinion, also interest rates rising only help pensioners who have savings.
The rest are at the mercy of the rental market, therefore as house prices increase, so do rents. Those on a Government pension will already be feeling the pinch, if they are renters.
As you said inflation follows which not only puts up rents but also the cost of everything else.
Therefore one would expect at some stage pensions would have to be increased.

 

[sydboy007]

Only in NSW

As Chinese investors are blamed for driving up Sydney house prices and accused of keeping first home buyers out of the property market, it has emerged that the government is giving them a helping hand.

…under the New Home Owner Scheme introduced in the 2012 state budget, buyers can own multiple homes in their country of origin and still apply for the grant for the purchase of Australian properties.

They don’t have to live in it. All they have to do is apply through the foreign investment review board to buy.

In fact, if an overseas buyer were to buy 20 off-the-plan apartments, they could apply for 20 $5000 grants, Treasurer Mike Baird’s office confirmed yesterday…

 

[ftw129]

Original

Only in NSW

As Chinese investors are blamed for driving up Sydney house prices and accused of keeping first home buyers out of the property market, it has emerged that the government is giving them a helping hand.

…under the New Home Owner Scheme introduced in the 2012 state budget, buyers can own multiple homes in their country of origin and still apply for the grant for the purchase of Australian properties.

They don’t have to live in it. All they have to do is apply through the foreign investment review board to buy.

In fact, if an overseas buyer were to buy 20 off-the-plan apartments, they could apply for 20 $5000 grants, Treasurer Mike Baird’s office confirmed yesterday…

Updated

Only in NSW

As foreign investors are blamed for driving up Sydney house prices and accused of keeping first home buyers out of the property market, it has emerged that the government is giving them a helping hand.

…under the New Home Owner Scheme introduced in the 2012 state budget, buyers can own multiple homes in their country of origin and still apply for the grant for the purchase of Australian properties.

They don’t have to live in it. All they have to do is apply through the foreign investment review board to buy.

In fact, if an overseas buyer were to buy 20 off-the-plan apartments, they could apply for 20 $5000 grants, Treasurer Mike Baird’s office confirmed yesterday…

I changed one single word in that article.

One word is all it takes to change the angle of the story and be more respectful of our fellow brothers and sisters.

Peace.

 

[DB008]

Original



Updated



I changed one single word in that article.

One word is all it takes to change the angle of the story and be more respectful of our fellow brothers and sisters.

Peace.

If the Chinese are the majority of 'foreigners' purchasing property, I don't see a problem naming them. There is nothing offensive in it at all and l'm sure that sydboy007 never had a racist twist on it.

Please don't make this a PC issue, when it isn't.

 

[sptrawler]

Only in NSW

As Chinese investors are blamed for driving up Sydney house prices and accused of keeping first home buyers out of the property market, it has emerged that the government is giving them a helping hand.

…under the New Home Owner Scheme introduced in the 2012 state budget, buyers can own multiple homes in their country of origin and still apply for the grant for the purchase of Australian properties.

They don’t have to live in it. All they have to do is apply through the foreign investment review board to buy.

In fact, if an overseas buyer were to buy 20 off-the-plan apartments, they could apply for 20 $5000 grants, Treasurer Mike Baird’s office confirmed yesterday…

It appears all and sundry are pouring stimulus into the housing sector, to try and prevent a huge jump in unemployment.
It also has the side benefit of stimulating brickworks, cement works, earth moving, surveying, most trades also local council services, elect,water,sewage etc.
However it is a very short term hit, once the house is built it produces nothing, but carries a lot of debt.

Sooner or later wages have to go up to service the debt, which in turn makes our export position more uncompetitive.
This will lead to more unemloyment a worsening balance of trade and a further fall in the $Aus.
That results in higher prices( for imported goods), higher inflation, higher interest rates, less disposable income to pay the mortgage.
The other options are a correction, a slow squeeze with interest rates or a change to the taxation rules on property and a tightening of foriegn ownership rules.

Jeez I wish I knew which way they are going to play it. lol

 

[Julia]

Just an opinion, also interest rates rising only help pensioners who have savings.

Only a small point, I guess, but hundreds of thousands of people with savings accounts are not pensioners.
Self funded retirees just as one example. Many others who are, for example, saving for home deposit.

There are many more people with savings accounts than those with mortgages.

 

[sptrawler]

Only a small point, I guess, but hundreds of thousands of people with savings accounts are not pensioners.
Self funded retirees just as one example. Many others who are, for example, saving for home deposit.

There are many more people with savings accounts than those with mortgages.

Very true, also people with no 'recovery time' are reluctant to invest in shares. Therefore they are in the unenviable position of feeling corralled into savings accounts.
Yet as I inferred in my last post, savings can be erroded as quickly as shares.
Our $Aus is down about 20% in 12 months, this has to flow on to prices of imported goods eventually.
I think Australia is at the make or break point, we either work together to get our 'house' in order, or we are destined to become a third world nation.
Might be a bit over the top, but I don't think so.
These are only my opinions, just a chat.

 

[Smurf1976]

It appears all and sundry are pouring stimulus into the housing sector, to try and prevent a huge jump in unemployment.
It also has the side benefit of stimulating brickworks, cement works, earth moving, surveying, most trades also local council services, elect,water,sewage etc.
However it is a very short term hit, once the house is built it produces nothing, but carries a lot of debt.

Much the same with any sort of physical construction stimulus.

There's some very impressive roads around Burnie Tas, and it's no secret that they were built largely to provide employment as the acid plant, Tioxide and the paper mill all slowly went broke and collectively laid off thousands of workers. So we massively upgraded the transport infrastructure but only after the productive industry was already in decline. It has some ongoing use for the port, but there's a limit to how many freight trucks actually need to get in and out of a port in a place the size of Tasmania. The road itself isn't really doing much at all in terms of ongoing benefits, although eventually it's going to need maintenance and no doubt maintaining 4 lanes will cost more than maintaining 2 lanes would have cost. It's a nice road though.

If we're going to pour money in to what is essentially a make work scheme then I'd rather we put it into something of ongoing use. Going back a very long way, to 1934 actually, two such projects were commenced here in Tas. One was the road up Mt Wellington, still in use today and whilst it was built solely to create employment amidst the Great Depression it subsequently enabled the TV transmission towers and tourism use of the Mountain so it has been of ongoing benefit. The other was Tarraleah power station, and 80 years later (76 years after it started production) it is still providing the light, heat and power it was intended to provide - indeed those exact words are embedded into the floor of the entrance foyer and still there today. It also indirectly provides much of Hobart's water supply, although that use didn't commence until the 1960's. Both of those have been of lasting value and create ongoing employment via tourism, industry using power and practical benefits to the general community.

It we're going to stimulate the economy, then propping up house prices seems like a very silly way to do it. More useful things which come to mind are (listed in random order):

1. Passenger transport (rail, bus, ferry) in the major cities (Melbourne and especially Sydney seem to have significant problems at present).

2. Freight rail to replace interstate trucking as a more fuel efficient means of transport.

3. High speed passenger rail between Melbourne and Sydney with a possible extension to Brisbane. In addition to saving significant amounts of aviation fuel, it may also remove or at least delay the need for another airport in Sydney with all the costs that entails. Rail is inherently more sustainable than air transport from an environmental perspective too.

4. For all its' faults, the NBN is at least better than simply making existing houses more expensive.

5. Large scale renewable energy - wind, solar, hydro, geothermal etc. It may well cost more than coal, but it at least has some ongoing benefits economically as well as environmentally.

6. Water infrastructure - we've got plenty in some parts of the country but not enough in others. Dams, canals, pipelines etc to move it from A to B.

7. Tourism facilities. At least it will provide some ongoing employment once its' built and to the extent that international tourists use it, or that it encourages Australians to holiday at home rather than overseas, it has broader economic benefits.

8. Environmental protection and restoration works. It won't make money, but it creates work and has a significant non-economic value. It's better than just inflating house prices.

9. Extend the gas network to towns that don't currently have a gas system but which are reasonably close to a bulk gas pipeline. Launceston, where air pollution from the use of firewood is a problem, comes immediately to mind.

10. Community recreational facilities. We've got a problem with obesity so anything that gets people out and about can't be too bad an idea. Walking and cycling paths that go to places where people will actually use them etc.

Propping up house prices just seems like a very poor use of financial and physical resources in my opinion when there are so many better things we could be doing with the money instead.

 

[sptrawler]

Absolutely Smurph, this is the issue I have, we are spending money on stimulating non productive debt(housing) and long long long term infrastructure NBN.
Yet when I catch a train to Kalgoorlie, it takes forever because you are sitting in sidings waiting for goods trains or ore trains to pass. If you aren't stopped in a siding the ore train or goods train is.lol
600k's from Perth to Kal, 300k's to Merredin half way.
The Indian Pacific took 3 hours to Merredin then 6 hours to Kal.
What a laugh, that can't be an efficient way to move export product.
Double the track from Perth to Kalgoorlie, one would think Kal is going to be a hub for some years to come.

 

[Uncle Festivus]

As Bill Gross recently said 'The days of getting rich quick by leverage are over'

And it's all about the appetite of Chinese investors for Oz property with leveraged yuan?

A similar thing happened 30 years ago with the Japanese buying up all and sundry on freshly printed yen, and we all know how that turned out.....and so too will the Chineses succomb from within as their economic model is terminally flawed.

I'm out then, putting a Melbourne unit on the market for now, see how we go........Brisbane & then Sydney to go....

 

[trainspotter]

The total amount of Chinese investment in property, including residential, increased just $93 million from the 2010-11 financial year to the $4.187 billion reported for 2011-12 by the FIRE.

http://www.news.com.au/national/que...chinese-new-year/story-fnii5v6w-1226818350666

Year of the horse eh? More like year of the glue factory. 4 billion a year for the last coupla years and it only makes headlines now? I think UF is selling a bit premature for mine. I would keep the gunpowder dry for a few more months yet if it was me. Only my opinion of course.