The future of Australian property prices

[sptrawler]

Well the boom keeps rolling on, trainspotter has been right, house prices continue to defy gravity as household debt goes to 1.8 times household income.

http://www.abc.net.au/news/2014-05-07/household-debt-the-big-threat-to-australian-economy/5435844

 

[trainspotter]

Wrote this on the 27th November 2013

Meanwhile back in reality:-

http://www.abc.net.au/news/2013-11-27/apra-working-with-banks-on-lending/5119022

Number 4 ladeeez and generalmen ....

4) Lending standards (is the answer)

With economists predicting a rate REDUCTION in 2014 then the market is CERTAINLY showing signs of heading South. WHY ? Because the more banks lend at low rates and 95% LVR the more likely a default or mortgage in possession will result. What happens to prices then? A FIRE SALE results which then sends confidence tumbling as well as resulting in the banks tightening their lending ..... blah blah blah .... bored yet?

View attachment 55547

"We're only six years from when poor lending practices dropped us into the global financial crisis and now these loans seem to have found their way back into the mix," Mr Godfrey said.
"Whether it's a low deposit loan, 40-year loan or family guarantee, they're very high risk products and they can leave consumers in a great deal of financial distress.

http://www.thebull.com.au/articles/a/45857-risky-loans-'could-leave-people-homeless'.html

Choice Magazine is all over this now eh ??

I am a bit surprised the banks did not adjust their loan margins in March/April as I predicted ... 3 year rate moved a bit but I was sure they would have moved on the 10 year yield as well ?? 10 years = 7.33% p.a. at ANZ. 7 year rate is equivalent .

http://www.anz.com/promo/ANZ-home-l...gages&ef_id=U2ncVQAAARmk6EE4:20140507071013:s

 

[Uncle Festivus]

We bought in Brisbane, within 10km of the CBD. Love the weather here! It's raining in Sydney today....off to see the swans play the lions tonight at the gabba!

I could have sold you mine...in the CBD, just sold.

Just sold a unit in Sydney for suburb record price.......this is just scary now! Race to exchange unconditional type sale....bubble...

Melbourne CBD already signs of past peak.....just a glut of units now.....anybody want to buy one....cheap?

 

[Bill M]

I could have sold you mine...in the CBD, just sold.

Just sold a unit in Sydney for suburb record price.......this is just scary now! Race to exchange unconditional type sale....bubble...

Melbourne CBD already signs of past peak.....just a glut of units now.....anybody want to buy one....cheap?

Things are certainly booming in Sydney. In my block a unit went to market at "From 495K", then a week later it was advertised at "From 500K". This week it has been confirmed sold for 515K.

I am in the process of doing contracts for my unit, up for sale later in the year. Even the agent said he thinks it will keep going for a while but also said nothing is guaranteed. Well done on your sale.

 

[CanOz]

I could have sold you mine...in the CBD, just sold.

Just sold a unit in Sydney for suburb record price.......this is just scary now! Race to exchange unconditional type sale....bubble...

Melbourne CBD already signs of past peak.....just a glut of units now.....anybody want to buy one....cheap?

Was this an apartment UF.?

Also looking at a house now around the Albany creek area.

 

[sydboy007]

http://www.demographia.com/dhi.pdf

http://www.newgeography.com/content/004261-urban-containment-land-price-up-5-times-income-smaller

These graphs sum up quite nicely the ponziness of Australian property

 

[trainspotter]

Rachel de Graaf represents a generation of Sydneysiders giving up on the Aussie dream. The 26-year-old marketing manager has been renting in the inner city for eight years and can’t buy.
“I would like to own a property but I don’t think I’ll ever be able to afford anything in Sydney,” she said.
“I’ve drawn that conclusion from looking at the cost of buying in comparison to my salary and it doesn’t really equate.”
Ms de Graaf said renting in the inner city made saving for a deposit even more difficult.
“I’d rather live conveniently in inner Sydney area than move further out and save because I don’t drive so I need to live in an area that is public transport-friendly.”

http://www.news.com.au/finance/real...y-or-rent-a-home/story-fncq3era-1226907065854

Me me me me me I I I I me me me ... it's all about ME "I don't drive" and "It's convenient for me"

Owning property is not a right of this country .. it is a privilege. You actually have to get off your @rse and do something about it instead of whinging and whining. I bet she doesn't give up her $300 shoes and $500 dresses she would buy to look glitzy on a Saturday night out with the gurls !!

 

[Vixs]

http://www.news.com.au/finance/real...y-or-rent-a-home/story-fncq3era-1226907065854

Me me me me me I I I I me me me ... it's all about ME "I don't drive" and "It's convenient for me"

Owning property is not a right of this country .. it is a privilege. You actually have to get off your @rse and do something about it instead of whinging and whining. I bet she doesn't give up her $300 shoes and $500 dresses she would buy to look glitzy on a Saturday night out with the gurls !!

Yeah I picked up on that too TS - the way that's written sounds like she's not prepared to sacrifice a damn thing!

 

[medicowallet]

http://www.news.com.au/finance/real...y-or-rent-a-home/story-fncq3era-1226907065854

Me me me me me I I I I me me me ... it's all about ME "I don't drive" and "It's convenient for me"

Owning property is not a right of this country .. it is a privilege. You actually have to get off your @rse and do something about it instead of whinging and whining. I bet she doesn't give up her $300 shoes and $500 dresses she would buy to look glitzy on a Saturday night out with the gurls !!

In my generation, we could do so on a single income.

Now it takes dual incomes and a long time, and whilst I understand my fist car was not new, and my first TV was tiny etc,

I am still old and mature enough to recognise that my generation had vastly greater opportunity to buy affordable, quality housing that the GENYers do not.

Though she is probably whining, I think your post disrespects the problem that my generation has contributed to.

I am sad about how things have gone, and hope that Hockey rips out middle class welfare, and property plummets. I await a housing bust/recession we have to have, to reset our stupidly unrealistic lifestyles and expectations.

MW

 

[CanOz]

In my generation, we could do so on a single income.

Now it takes dual incomes and a long time, and whilst I understand my fist car was not new, and my first TV was tiny etc,

I am still old and mature enough to recognise that my generation had vastly greater opportunity to buy affordable, quality housing that the GENYers do not.

Though she is probably whining, I think your post disrespects the problem that my generation has contributed to.

I am sad about how things have gone, and hope that Hockey rips out middle class welfare, and property plummets. I await a housing bust/recession we have to have, to reset our stupidly unrealistic lifestyles and expectations.

MW

This sort of ignores the 'Asia' effect MC?

 

[againsthegrain]

This whinging girl and her generation are going to be the ones looking after you in aged care so be prepared for more of that attitude, well thats unless in 20-30 we will all be speaking mandarin, working 14 hour 7 week days for our Chinese business friends/overlords.

Either way the greed of the baby boomer generation will contribute to either situation. The ones that will be fortunate enough to die of age or disease while splurging their investments will be the only winners.

 

[CanOz]

This whinging girl and her generation are going to be the ones looking after you in aged care so be prepared for more of that attitude, well thats unless in 20-30 we will all be speaking mandarin, working 14 hour 7 week days for our Chinese business friends/overlords.

Either way the greed of the baby boomer generation will contribute to either situation. The ones that will be fortunate enough to die of age or disease while splurging their investments will be the only winners.

What laugh, most of Australia only works five hours a day, four and half days a week for ten months a year!!!

Then y'all wonder why it's so bloody expensive here!!...lol!!

 

[medicowallet]

This sort of ignores the 'Asia' effect MC?

Yes and no.

I don't think it is a good idea to allow foreigners to own australian real estate or farming land.

But booms from overseas have happened before, they stopped eventually, but we obviously learned nothing from that.


I still believe that the major problem is "us" and not "them", and though I have earned some $$ in my time, it was / is mostly in businesses so I actually helped employ many people etc.

Unlike the obscene amounts of "money" sitting in residential real estate which could have been effectively invested in money producing / employment generating assets such as ports / rail / education etc. Then again, that would require the individual to consider what is best for the group (and hence for themselves too) but then again, people probably don't understand the scene from a beautiful mind.

MW

 

[SuperGlue]

I don't think it is a good idea to allow foreigners to own australian real estate or farming land.

But booms from overseas have happened before, they stopped eventually, but we obviously learned nothing from that.

MW

Property bust will be coming soon, just round the corner. Which corner, we don't know.

Some of you will recall when the Japanese were buying up big down the Gold Coast, Cairns, Yeppoon, Queensland in the 80s.
Then the bust came, they had to sell.

Now you don't hear of the Japanese buying any properties over here anymore.

In the 1993 movie "Rising Sun", where Sean Connery utters the line:
Quote:
"The Japanese have a saying: if you sit by a river long enough, you'll see the body of your enemy float by."

It's just a cycle, it will happen.
Prime example, look at the US.

Both the above, are caused by financial crisis in their very own country.


Interesting reading.
China heading toward a debt crisis with global ramifications: Banking vet

Last year Suntech Power, a Chinese solar energy company, defaulted on a $541 million bond followed by Shanghai Chaori Solar failing to make a $14.7 million interest payment on March 7. On March 18, Zhejiang Xingrun Real Estate Company defaulted on a $400 million loan. China is also taking large (and potentially unsustainable) debts in emerging markets prompting investor concern. China’s hard currency debt exposure was $223 billion at the end of 2013, according to Nomura Securities."

Link:
http://finance.yahoo.com/blogs/dail...ith-global-impact--banking-vet-121832857.html


Please DYOR, the above are just my own personal opinion and me think aloud.

 

[ROE]

though I don't subscribe to doom and gloom theory on any asset and I do own houses

my observation lead me to believe a lot of people are maxing out on housing and mortgage and we
reach a stage where there is a high chance of correction or at least housing asset is now just too expensive based on fundamental...this may be the last hooray anyone buying in these time face higher probability of a correction though no one know when or how..

just like the stock market, when down turn hits there will be a lot of people making money out of this and there will be many more will cry and regret that they over leverage..

human tend to believe in trend when it has non interrupted run, just like people in the US believe in Las Vegas run
while housing through out the US has cycle ...Las Vegas has 25 years of grow and people believe it doesn't apply to Las Vegas, then GFC change everything it dropped sharply ...the old saying the higher it goes the bigger the drop.

There are many reasons to believe Housing never go down in Australia but history has been written what ever human believe in, the opposite happen.

 

[rryall]

I went to an auction in Brunswick, VIC yesterday and a 2 bedroom house that was been leased for $400 a week sold for $725,000 which was about 100k over reserve. A first home buyer had an opening bid of $550,000 and the eventual winner came over the top with a $660,000 bid and the property was immediately on the market. Apparently the winning bidder hadn't even seen the property and he was bidding strongly in 10k increments. Unbelievable.

Really does destroy the confidence for my generation. The budget that will conveniently leave the baby boomer generation out of assisting in reducing government deficits just adds salt to the wounds.

 

[Julia]

That seems a lot for a two brm house. I don't know Melbourne at all. What sort of suburb is Brunswick?
ie does the location constitute substantial relevance to the price?

When you feel miserable about house prices, have you considered living somewhere other than such an expensive capital city? Lots of much more affordable areas if your work situation can accommodate a move.

 

[McLovin]

That seems a lot for a two brm house. I don't know Melbourne at all. What sort of suburb is Brunswick?
ie does the location constitute substantial relevance to the price?

That's cheap for inner city in the southern capitals. Actually, having a quick look at my own suburb, in the last few months the cheapest two bedder was $1.145m, most were around $1.3m. You'd be lucky to get a 2 bed apartment for $725k. I'm amazed that in places like Alexandria, a suburb you wouldn't have wanted to park your car on the street at night ten years ago, small 2 bed cottages are going for over $1.1m.

 

[luutzu]

since 2000, i think there's around 4 housing cycles in NSW/Australia.
I know because i've seen people boasting how they own 3 properties and won't even sell 1 to make an easy $100k profit... then the same people running around borrowing family $50 for fuel because the tenant didn't pay on time... then soon forced to sell an aprtment in QLD at massive loss

Same thing happen to different people i know every couple of years.

Thank god for the Chinese though. They're here investing into new properties and soon it will collapse and maybe a couple more young aussie family could afford a house then.

 

[Wysiwyg]

Property bust will be coming soon, just round the corner. Which corner, we don't know.

Some of you will recall when the Japanese were buying up big down the Gold Coast, Cairns, Yeppoon, Queensland in the 80s.
Then the bust came, they had to sell.

A few of you on this thread need to read this book. I will try to remember from this day 12/05/2014 for a future check on whether the predictions are true or not.
Australia: Boom to Bust: The Great Australian Credit and Property Bubble [Kindle Edition]