The future of Australian property prices

[Uncle Festivus]

hello,

does anybody actually have any NEW research as to why property prices will fall?

anyone?

thankyou


robots

• consumer debt at 174% of GDP
• outstanding balances on credit cards up from $44.7 billion to $45.2 billion
• government guarantee of banks borrowing has supplied cheap funds for property

It's still all about debt, but never about how to pay it back and have an acceptable quality of life - working for the banks more like it ....

One in five (19%) Australians with debt finding it difficult to make repayments, or unsure how they will make their next repayment.
The study, conducted by Galaxy research, found four in five (82%) Australians worry about the ability to repay debt over the next 12 months - up from 76% of Australians in September 2009.

This is the highest level of debt stress in the past two-and-a-half years of this study.

Also of concern is the finding that one in seven (14%) Australians have missed a minimum bill repayment in the past three months - up from 12% in September 2009. Of those who had missed a repayment, one in ten (11%) are looking to take on more debt in the next six months.

Unaffordable for the locals ie Australians - sell it to foreigners.....

The most recent first-home buyer affordability index plummeted 18.4 per cent in the final quarter of 2009 to a reading of 120.1 from 147.1 in the September quarter, on HIA and Commonwealth Bank numbers, as more Australians found themselves priced out of the housing market.

China stimulis credit, though Chinese investors, flows into our prices too, as it will 'unflow' when stimulis is reduced

Property prices in China rose at the fastest pace in almost two years in February, spurring warnings of asset bubbles. Hedge fund manager James Chanos said last week that China is “on a treadmill to hell” and that the land market is a bubble that may burst as early as this year. Pan Shiyi, chairman of Soho China Ltd., said April 10 excess capital has driven rapid gains in auction prices paid for land and fueled a bubble.

http://www.businessweek.com/news/20...is-overheated-nomura-asset-says-update1-.html

Rising local interest rates - seeing the stragglers arive to the party.....who just happen to be - <investors> - who supplant first home buyers, who are now priced out of the market. And so we move further up the unaffordability ladder.

April 12 (Bloomberg) -- Australian home-loan approvals fell in February for a fifth straight month after central bank Governor Glenn Stevens boosted borrowing costs and the government cut grants to first-time buyers.
Waning demand for approvals adds to evidence that Governor Stevens’ decision to boost the benchmark interest rate five times in six meetings is cooling domestic demand.

http://www.businessweek.com/news/20...home-loan-approvals-decline-1-8-update1-.html

Australian banks have had their fill of 'easy' loan growth with easy, cheap funding? To the point of overexposure and at the expense of business?

 

[UBIQUITOUS]

hello,

what bubble though

the legend Shadow continually provides evidence that aus does not have the highest price/income ratio in the world, many more countries have way higher prices and far less to offer

just appears to be all normal to me, non issue, got some $ buy a place, no $ then do something else

plenty of joints around to rent or buy

thankyou
robots

Hey Robots,

Here's one for you from today, which is especially worrying as the person it comes from is no Stevo Keen.

http://www.smh.com.au/business/the-china-bubble-20100412-s34b.html

The horror stories are now coming thick and fast. Even your buddy Enzo seems to be affected.

 

[robots]

hello,

oh yeah, ramp it down so you get a few more buying into your funds, CFD's, futures, forex

usual vested interest article, most bloggers fall into this

hidden deals in companies

thankyou
robots

 

[Uncle Festivus]

Tempted to sell yet Myra?

 

[kincella]

Hi Robots,
the funny thing is that China is trying to curb its own property growth, by clamping down....
but the Chinese are over here, buying up OZ property.....,with their cheap money...they are not using the OZ bank's high rates...
see the article liniked over in the interest rate thread today....could not see many asians in that photo though....and really high prices

they all forget, they are all trying to climb into the honeypot together, resticted to the honey in the inner suburbs....
but there are bargains galore out side that pot...

I put a lot of the problems today down to the 'dumbing down of society' thats been going on for the past 30 years....

 

[trainspotter]

Not sure about a bubble but possible a slow down due to increased interest rates. I do not forsee a freefall similar to USA or Hong Kong etc. basically due to the regulatory policies in place with the banks servicing criteria, as well as Lenders Mortgage Insurers who insist on independent valuations to cover the price point and they must be accredited panel valuers who have Professional Indemnity. SO therefore if the market does hit the wall then the Insurance companies covering the valuers will be hit in the nads. UNLIKELY !

http://www.thebull.com.au/articles_detail.php?id=1372

We do not have sub prime lenders in Australia nor do we have No recourse loans here. If you sign up for debt then the banks can follow you to the ends of the earth to get their money. Both personally or by way of Guarantees over the directors of companies or the companies themselves with a fixed and floating charge.

Stick to your guns robots. Like you say ..... it's about personal choice. If you have the $$$$ put it into property. If not ... put it where you think it would will make you money. Funny how in here it is OK for everyone to naysay in regards to property but you are not allowed to ramp down stocks?? HA hah ah ahha ha ha aaaaaaaaaaa ???

 

[awg]

Probably should have a thread of its own

checked your electricity bill lately?

my last one was $700+ with forecasts of 62% rise over next 3 years.

With thermally inneficient housing in Western Sydney (and many other places)
I can guarantee many will be unable to cope with the massive double whammy of increased bills plus UNDOUBTED interest rate increases.

And their yards are too small to grow enough grass to eat:

I predict a large surge in defaults in certain areas, and that could be contagious.

Of course the high end will not be affected as much by increased costs, because, like me (just), they can afford to pay.

I am not sure exactly how bad the increase will be in other states, as the driving forces behind the NSW increases are the politics and economics of the portended sale of Elec assets, and the inept and disgraceful mismanagement of power infrastrucure maintenance

 

[MR.]

hello,

does anybody actually have any NEW research as to why property prices will fall?

anyone?

ABS Housing Finance Feb 2010 released today.
http://www.abs.gov.au/AUSSTATS/abs@...05DBCE56402EC566CA25723D000F2999?opendocument

Property sales volumes are still falling.

June 2009 56,265 existing homes sold (recent peak cash rate 3%)
Feb 2010 42,156 existing homes sold

Sept 2009 2,723 new homes sold (recent peak cash rate 3%)
Feb 2010 2,193 new homes sold

Updated the chart below with current and more accurate data.
http://www.abs.gov.au/AUSSTATS/abs@...sues&prodno=5609.0&issue=Feb 2010&num=&view=&
http://www.rba.gov.au/statistics/cash-rate.html

Housing volumes still seem to be governed by interest rates!
Still expect prices to follow volumes. Will be interesting!

 

[satanoperca]

hello,

oh yeah, ramp it down so you get a few more buying into your funds, CFD's, futures, forex

usual vested interest article, most bloggers fall into this

hidden deals in companies

thankyou
robots

Think you are being a little off the mark there.

Uncle Festivus simply tried to answer your question, didn't see any mention of CFD, futures, forex.

You may have just provided a contrarian indicator for the property market, a bull not liking the facts.

Cheers

 

[robots]

hello,

that reply was to Ubiquit who posted an article form the chancelor who runs a fund business

so yes, negative comments to property equal $ heading into the fund

good info MR, i hope sales decrease even more

thankyou
robots

 

[Uncle Festivus]

Not sure about a bubble but possible a slow down due to increased interest rates. I do not forsee a freefall similar to USA or Hong Kong etc. basically due to the regulatory policies in place with the banks servicing criteria, as well as Lenders Mortgage Insurers who insist on independent valuations to cover the price point and they must be accredited panel valuers who have Professional Indemnity. SO therefore if the market does hit the wall then the Insurance companies covering the valuers will be hit in the nads. UNLIKELY !

Are you sure? I don't think Professional Indemnity works that way? In any event, are you saying prices can't go down (below what a valuer has priced them at) because the insurers will get all upset and such???

We do not have sub prime lenders in Australia nor do we have No recourse loans here. If you sign up for debt then the banks can follow you to the ends of the earth to get their money. Both personally or by way of Guarantees over the directors of companies or the companies themselves with a fixed and floating charge.

That must be why the banks have put aside $35 BILLION for non performing loans? Ever heard of Bankruptcy or Mortgagee In Possession sales??

Stick to your guns robots. Like you say ..... it's about personal choice. If you have the $$$$ put it into property. If not ... put it where you think it would will make you money. Funny how in here it is OK for everyone to naysay in regards to property but you are not allowed to ramp down stocks?? HA hah ah ahha ha ha aaaaaaaaaaa ???

Not naysay, just balancing up the Botmeisters perpetual ramp ups

 

[satanoperca]

Interest rates heading for 10 per cent, experts warn

http://www.news.com.au/money/interest-rates-heading-for10-per-cent/story-e6frfmci-1225852259386

economists at Macquarie Bank and Commsec, the Commonwealth Bank's investment arm, have both forecast the cash rate will hit "pre-crisis highs" of 7.25 per cent by 2012 if the economy continues to perform so strongly.

Since banks have expanded their profit margins during the financial crisis, that translates to variable mortgage rates of 10.1 per cent - the highest since 1996.

Good to here that some people believe the economy is going great guns and will continue to do so.

Fantastic news. We live in a great country.

Cheers

 

[trainspotter]

Are you sure? I don't think Professional Indemnity works that way? In any event, are you saying prices can't go down (below what a valuer has priced them at) because the insurers will get all upset and such??

That must be why the banks have put aside $35 BILLION for non performing loans? Ever heard of Bankruptcy or Mortgagee In Possession sales??

Not naysay, just balancing up the Botmeisters perpetual ramp ups

1) I am saying that if a valuer places a value on a certain property and if there is LMI involvement and a bank forecloses then the Valuer is liable for the LOSS made by the LMI (in certain mitigating circumstances) The insurers will pursue the Valuer involved if he has placed a value on the property and the financier/LMI suffers a loss.

2)Yes I have but there is a recourse in place ... that's why they are called bankruptcy and Mortgaee in Possession sales. A non- recourse loan means you can walk in to the bank, borrow money, not pay it back, default then hand back the keys and NO REPURCUSSIONS. NO BANKRUPTCY, NO BAD DEBT, NO CRAA.

3) robots is of an idealogy that has it's place in here and he believes in property. Balance is required for sure but if you read between the lines the blogger has not been wrong yet. No bubble, no reversing of prices, auction rates still clearing at high %. What more do you want?

 

[MR.]

i hope sales decrease even more

Decrease in sales volumes = More demand for the limited supply?

Could be,.... but I doubt it! More like:

Decrease in sales volumes = More not buying overpriced property!


So, what's driving the recent auction results?
Publicity from the end of year property price increases and investors are flocking in?

 

[robots]

hello,

those with the $ are in and always around

big thing i believe is the way the government is changing "Super" (rules)

all minor issues which add up to a major issue when one wants to kick back prior to being 65 (or is that 67?)

upsize the family home (no tax at end of game), buy a little joint in the city, treechange or seachange

sell something, hold something, get some income and capitol growth, plod along, pay tax on 50% of capital gain and put in wife's name or when you decide to take year off

most of all YOU in control and the miniscule amount of tax you pay for this is irrelevant

the auction activity is just people getting it

thankyou
robots

 

[ands]

Decrease in sales volumes = More demand for the limited supply?

Could be,.... but I doubt it! More like:

Decrease in sales volumes = More not buying overpriced property!


So, what's driving the recent auction results?
Publicity from the end of year property price increases and investors are flocking in?

People have to live somewhere.

 

[MR.]

the auction activity is just people getting it

In addition to your reasons, wonder if the media hype over last year's gains, have encouraged a few more side liners to jump in "all of a sudden"?

People have to live somewhere.

Yes, but did they sleep outside or did they have a roof over their heads last night?

 

[robots]

hello,

maybe so, the media is still pumping up the negatives more than anything i believe

would be 5 negative to 1 positive article, been that way for a long time because of the vested interests the media outlets have (ie. fund businesses/interests)

thankyou
robots

 

[Scalper23]

A property investor said that investment property loans are similar to margin loans on shares. If the value of the property falls under the loan value by x amount, the bank wants the difference. If the investor cant pay, this property and other assets may be liquidated to cover the shortfall, could include their primary residence.
With home loan rates forecast to rise upwards of 10% and investment loans higher are investors locking themselves into a dangerous situation?

If rates go too high as in late 80s early 90s the average home price in melbourne may drop dramatically causing a domino effect in forced sales.

your thoughts appreciated.

 

[CamKawa]

Got to laugh at Fairfax media. A few weeks ago they were saying

Red-hot Melbourne market starts to glow white
"MELBOURNE'S property market is shaping up to record its strongest pre-Easter results due to insatiable demand."

now they are saying

Housing market to weaken as buyers retreat
"BUYERS are retreating from the Melbourne property market at the rate of 600 a month, causing real estate professionals to predict an ''exhausted market'...'

lol