The future of Australian property prices

[sptrawler]

Suburb about 7kms North of Geraldton called Glenfield Beach. Stage 1 is underway with titles in January 2016.

Not my development (as in ownership) but is funded by a global hedge fund. I get the job of branding/advertising & marketing for this one. Should do OK but the market is very slow here but in saying that the level of inquiry has been steady

Just had the sod turning ceremony and a bit of press/editorial. Advertising campaign is about to ramp up over the next few weeks.

I used to know an old Dutch guy, called Ben, that lived there.
He had a motorcycle museum, I would buy parts off him, Glenfield motorcycles, just a bit of useless information.

He was a top bloke, his missus hated the bikes, but he had some real classics. Vincent HRD Black Shadow and three Aerial square fours, to name a few.

 

[trainspotter]

I used to know an old Dutch guy, called Ben, that lived there.
He had a motorcycle museum, I would buy parts off him, Glenfield motorcycles, just a bit of useless information.

He was a top bloke, his missus hated the bikes, but he had some real classics. Vincent HRD Black Shadow and three Aerial square fours, to name a few.

Yeah I remember him ... in Okahoma Road I believe ? I was riding a KLX 250 back then and used to ride out to see what he was tinkering with. Mainly British and very old bikes he was interested with but had some beautifully restored bikes that were not for sale.

 

[sptrawler]

Yeah I remember him ... in Okahoma Road I believe ? I was riding a KLX 250 back then and used to ride out to see what he was tinkering with. Mainly British and very old bikes he was interested with but had some beautifully restored bikes that were not for sale.

I used to get parts for my BSA 650 from him, heard an American bought the whole bike collection, and sent them to the U.S.

Anyway a bit off topic, but it does show how much Geraldton has grown, his place was miles out of the township. It now sounds as though suburbia has reached there.

 

[sptrawler]

Well back on thread and the Perth situation.

http://www.perthnow.com.au/realesta...r/news-story/cb8afa0878b705218eca608bfef13948

 

[satanoperca]

The coming year will see what effect all those foreigners who weren't buying established properties has on the Victorian and Sydney markets.

From today, a foreign national that has been found to have purchased an established dwelling without prior Foreign Investment Review Board (FIRB) approval, or has failed to dispose of a property once they have left Australia (in the case of temporary residents), faces increased penalties, including:

Criminal penalty of $135,000 or 3 years imprisonment; or
Civil penalty of the capital gain made on divestment of the property or 25% of the purchase price or market value of the property (whichever is greater).
For the first time, third parties that knowingly assist foreigners to illegally purchase Australian homes will also face penalties of $45,000 individually or $225,000 for a company.

http://http://www.macrobusiness.com.au/2015/12/judgement-day-arrives-for-illegal-foreign-buyers/

 

[notting]

It's all a cometh a downeth.

Tenants market: residential rents are barely budging.

4:31pm: Chinese demand, which helped propel a surge in Sydney homes, has dropped as much as 15 per cent from a year earlier as China's stocks tumbled and the economy slowed, according to real estate agent McGrath.

Buyers from mainland China are turning away from Sydney and Melbourne and looking at southeast Queensland where dwelling values are "compelling," John McGrath, chief executive officer of McGrath, said after the firm debuted on the Australian share market in Sydney on Monday. The shares opened at $1.94 compared with the issue price of A$2.10 in an initial public offering that raised $129.6 million.

Yikes :22_yikes:

Would have loved to have sucked them into the new housing commission flats with lipstick in the big cities for a bit longer. Damnet.

 

[satanoperca]

Thread has been quiet for sometime.

Been wrong in the past, but calling the top for Australian Property prices. Stagnation for the next five years at best.

Good luck to those who are slaves to the overlords - banks.

 

[sptrawler]

An update on the property market, over here in the West.

https://au.news.yahoo.com/thewest/wa/a/30427165/sellers-lose-out-as-home-prices-slump/

Well it's a sad situation, but 'blind Freddy', could see it coming.

 

[trainspotter]

From memory you were pretty spot on, with your prediction a long time back, that property would fall on its ar$e mid 2015.

AHEM ... pure luck my knowledgeable compadre !!

"The housing sector, which plays an important role in shaping the Australian economic cycle, will likely be less stimulatory for growth in 2016 than in 2015," ANZ's co-head of Australian economics Cherelle Murphy said.
"There will not be a significant downturn, but a more muted profile for housing construction and prices this year."

http://www.thebull.com.au/articles/a/57674-sharp-decline-in-housing-sector-confidence.html

Ermmm nope ... watch this space for a rush to the exit door.

After three years of solid price growth, home values in Sydney are now falling, data released on Tuesday shows.

Dwelling prices fell 1.4 per cent in November, resulting in a 1 per cent drop over the past three months, according to the CoreLogic RP Data Home Value Index released on Tuesday.

Houses were hardest hit – falling 1.4 per cent over the quarter, while units bucked the trend increasing 0.6 per cent.

http://www.domain.com.au/news/sydney-house-prices-fall-in-november-report-20151130-glc03x/

ANZ is taking happy pills ...

"Despite the headwinds facing the housing market through the second half of 2015, we see little significant downside risk to the housing market outlook in 2016. That is not to say house prices won't fall. They may," ANZ's senior economist, David Cannington and economist Daniel Gradwell said.

"But strong underlying demand for housing is likely to contain any price falls in the major capital cities to less than 10 per cent in the absence of an economic downturn."

http://www.afr.com/real-estate/hous...-likely-in-2016-20151130-glbbzt#ixzz3xBCAXvmC

Apartments are not risk adverse either ...

The supply of new apartments and a retreating, resource-based economy is starting to weigh on the market, with more units selling at a loss in the June quarter than the previous three months.

The proportion of apartments selling for less than the purchase price rose in Melbourne, Brisbane, Canberra, Perth and Darwin in the second quarter, bringing the capital city average to 8.4 per cent from 8.1 per cent in June, CoreLogic RP Data's latest Pain & Gain report shows. Nationally, loss-making apartment sales ticked up to 12.6 per cent from 12.5 per cent.

The greatest effect of new supply on prices was seen in the Melbourne central business district CBD, where as many as 20 per cent of all sales – where the product is overwhelmingly apartments – were sold at a loss, for a median figure of $28,125 per transaction.

http://www.afr.com/real-estate/melb...-sold-at-a-loss-20150929-gjxdn5#ixzz3xBCdNLqd

 

[shouldaindex]

Nothing that doesn't surprise there.

Basically saying the trend now is that we're in the other side of the cycle, which historically has been up to a 10% correction.

 

[Junior]

Nothing that doesn't surprise there.

Basically saying the trend now is that we're in the other side of the cycle, which historically has been up to a 10% correction.

Whilst many of us will agree, that property in this country is overvalued by much more than 10% on almost all metrics, I think you're right, at this stage up to a 10% correction.

Rates are still super-low and strong job ads/unemployment numbers mean prices are likely supported at these levels, for the time being.

 

[Mrmagoo]

What suggests strong job numbers ?

 

[Ald123]

These losses are actually grossly understated, in reality they are much higher.

To buy a house you pay stamp duty.
When you borrow money you pay interest.

So if you buy a house for $800000 assuming you have $300000 deposit and you bought 5 years ago in Perth in a good suburb. That house is now worth exactly the same amount of money or less. So assuming you wanted to sell today you might get about $750000.

So loss a) is $50000

Stamp duty and settlement costs you paid when you bought the useless piece of ship investment is a loss.

So loss b) is say about $20000

After 5 years of paying it of you would have spent $3500 a month on it.

So loss c) is $210000

Then if you did renovations there is another loss. but let's ignore this for simplicity.

So the total cost of the property is about $1,080,000

Therefore the real loss at selling the property is between $280,000 and $330,000

Let's assume you rented it out and got $130,000 in rent, or you say that you had to live somewhere and therefore by living in it you saved rent, but either way your loss is still between $150,000 and $200,000.
If you rented it you had to deal with the useless stupid children that are rental property managers or tenants. For anybody who has had tenants in Australia you will no what I mean, no respect for your or your property, attitude of entitlement to everything and who all imagine that you are ripping them off and crap a golden dozen eggs every month.

Any idiot can see that Australia is the worst place to invest in Property since 2008 and nobody makes money on it except those who are rich and don't need to loan money from the bank. Such a person who bought the property cash would have made money on the property. That's the only way to do it.

Any idiot can see that in Australia unless you are filthy rich you can't make money on the stock exchange either.

Imagine you are a young person and take a $1000 bucks and are able to pick a stock that over one week rose 10%. Do you know how hard that is?

You thus make $100 dollars profit from your hard earned $1000 which you risked loosing.
But along comes the government slut which risking nothing and contributing nothing takes $30 of your money. What's even more amazing is nobody complains to their minister about this. Paying tax is fine but not that much.
Then the next slut , the bank comes along and they steal $30 from you for facilitating the trade.

You therefore took $1000 dollars and risked it all and earned only $40. Well you would be better of cleaning toilets for a week because you would have earned $500.

Such is life in Australia.

 

[Wysiwyg]

Such is life in Australia.

Well if you look for a solution to anything then you might be good to save up and position yourself for catching distressed sellers in the future. Like when interest rates start to rise then the highly geared and maxed out mortgagees might have to sell. I remember in 2000 when I was looking at taking out a loan to buy a house the interest rates were over 8% and thought that was alot. Eventually bought when interest rates were just over 5% and now pay 4.4% interest. Cycles and supply/demand are worth gathering some information on.

 

[trainspotter]

So if you buy a house for $800000 assuming you have $300000 deposit and you bought 5 years ago in Perth in a good suburb. That house is now worth exactly the same amount of money or less. piece of ship investment is a loss.

Such is life in Australia.

Great post Ald123 ... you Sir belong in the Darwin Awards.

Let's say I bought $800,000 worth of BHP shares on 20th February 2015 @ $32.30.

On the 15th January 2016 the price of BHP shares were around $15.07 mark.

ERGO I lost over $400,000 of my capital input. Same way you create fictitious assumptions about property anybody can pick a losing (NOT LOOSING) stock.

The trick with property is the same with shares. Like Kenny Rogers sung:-

You've got to know when to hold 'em
Know when to fold 'em
Know when to walk away
And know when to run
You never count your money
When you're sittin' at the table
There'll be time enough for counting
When the dealin's done

Now before you get your panties in a bunch and state that you would have sold BHP on the 2nd March 2015 when they were $34.12 and you pat yourself on the back that you made a tidy $45,000 in a 10 day turnaround. WELL DID YOU?? I am guessing not.

So why would you spend $800,000 on a house in a good suburb in Perth unless you are looking for it to be a LONG term investment ie YOU will actually be living in it and raise a family and it's close to your work and it is your dream home and the wife loves it and it has a swimming pool ... ad infinitum.

You could have bought 5 houses in Wagin for the same money and returned 17.2% growth

BLUE CHIP SHARES they said ... buy em they said ... can never go down they said ... should be a part of everybodies portfolio they said ... solid returns they said.

 

[Ald123]

Ok Mr Trainspotter

Let's say that I do deserve the Darwin Awards and by lucky chance I have come across you.

Please let me know how to make some money, you come across as somebody who obviously knows how.

 

[trainspotter]

Define "how to make some money"?

If it is a trading platform you are after then you would be best served reading everything Tech/a and Trembling Hand and skc to name a few who have posted their trading styles and in depth knowledge on the boards.

If it is in Real Estate then my perceptions would be to keep your gun powder dry for another 18 months whilst the regulatory bodies pick over the carcass of what is left of Australian property prices. By the time FIRB and APRA as well as the banks criteria have squeezed the life out of the market by over regulation and when they come to realise that they are in the business of lending money, the regulations will loosen once again to increase lending to the housing sector.

Remember there is a Federal election due before 14th January 2017 and if I was a betting man I would say we are going to the polls around Sept - Oct this year. If Libs get re-elected then you could safely say that Feb - March 2017 you will start to see an uptick in property prices in the 8 capital cities due to consumer and investor confidence. If Labor gets in then it has been an historical fact that vacant land and building is the investment vehicle of choice as they prefer to stimulate the grass roots economy and not the big end of town ie (commercial CBD etc)

But hey ... this is just my opinion and I could be just tapping away at a keyboard with no clue.

Alternatively - Go to casino and put it all on 13 black and take the house down.

 

[Ald123]

Thank you for giving some sage advice.

 

[Ald123]

The problem as I see it is that basically it's been 7 years of downward spiral. This time the liberals have not done much. Things are super expensive in Australia, they will blow money again on election promises. The debt will not be erased before the election. I don't really see anything improving until iron ore goes up in price, along with gas oil and coal. There is nothing much else in Australia. Turnbull would like to create a Silicon Valley but he doesn't understand that there is no culture in Australia of mathematics, engineering, coding and science to speak off. There is a love of footy and footbal stadiums, or cricket stadiums, a love of beer wine and drugs and going for a surf or meeting in a pub. Setting up a business in Australia and employing somebody is a nightmare of bureaucratic paperwork. You won't have people in Australia like you have In The United States, 100's of engineers working together on developing the hyper loop for no money in a shared company, hoping to get paid in stock options once the company takes off. There is no rewards for clever people here, whether you suck at what you do here or are brilliant you get paid the same amount and are taxed to the eyeballs. They can't even get a single national identity card happening here and a single national drivers licence, and motor registry, thus eliminating millions of dollars in wasted bureaucracy.

 

[trainspotter]

Yes these are the parameters you have to work with in Australia. Could be worse ... you could be in Detroit ...

The median home value in Detroit is $37,800. Detroit home values have declined -6.9% over the past year and Zillow predicts they will fall -0.9% within the next year. Mortgage delinquency is the first step in the foreclosure process.

http://www.zillow.com/detroit-mi/home-values/

But bit bit it is turning around ...

http://www.freep.com/story/money/real-estate/2015/07/12/detroit-home-values-rising/29169949/

Home values in Detroit neighborhoods are finally experiencing some upward momentum after years of rock-bottom prices.

Still among the cheapest places in the nation to buy a house, Detroit neighborhoods are seeing prices inch up on most residential blocks with substantial gains in the strongest areas.

A Free Press analysis of land records shows the median sale price of any home in the city was $30,000 last month, more than four times the $7,000 median in 2009, an especially dark year for the economy and real estate.

Not sure where you are basing figures on 7 year downward spiral? Sydney and Melbourne have been doin OK ?? Only 44% over a 5 year period. Peanuts really.

http://www.abs.gov.au/ausstats/abs@.nsf/mf/6416.0