The future of Australian property prices

[explod]

. Clearance rates falling does not necessarily mean the price is falling. It could mean that the greedy Real Estate Agents have coached their vendor to a higher selling position which is unatainable in this current market.

Some 12 months ago when I suggested that high clearance rates do not indicate higher prices I was howled down.

And Real Estate Agents trying to help vendors to achieve higher prices, you have to be joking, high turnover is achieved by getting vendors to reduce prices. And high turnover at 2%, which 2% attracts, brings in much more for the bottom line if the turnover is double for the year, than a few sales at 3%.

Pull the other leg.

 

[satanoperca]

It could mean that the greedy Real Estate Agents have coached their vendor to a higher selling position which is unatainable in this current market.

Ha, real estates are interesting in selling, they work on turnover. The difference to their commission of an extra 5% on selling price is hardly worth their time.

The lower clearance rate is selling not accepting current prices.

While on the discussion of Auction clearance rates, it is hard to determine anything substantial really. Once clearance rates drop to a certain level, most real estate agents will convince sellers to go private.

Auctions gain momentum when prices are rises.
It would seem that is not the case at the moment.

Real estate agents dont want to suggest going to auction if the clearance rate is low.

I think auctions are a bit of a circus and the only way I will bid is after asking the auctionier (often many times) is the property on the market. Until it is declared on the market, why bother. Once on the market, you have a chance, until then it is a fluff and feathers.

Looking forward to Q & A with our local Professor of RE.

Cheers

 

[robots]

hello,

gee i thought Explod would of stuck around, quick break probably

Punter 1: why do you think it is different in Australia Professor Robots?

Professor Robots: its our way of life, many years ago it was identified by our larrikin/ocker/casual lifestyle but it has since evolved into a way of life which is highly valued around the globe, wanted

Punter 2: but surely Professor there must be more?

Professor Robots: yes there is more, the government over many years both local and state have done a remarkable job, superb, offering a democratic society which is envied by many

Punter 1: you often talk about the difference between US & Aus as simple as guns and crack, is it really that simple?

Professor Robots: yes, "yo g after a cap of crack" on every corner, on our corners a cafe, sipping latte's, you walk into Kmart in US and get yourself an uzi, here you get yourself a pushbike

just letting you know the sort of questions i have already been asked, so if we can keep them more orientated to direct property issues

thankyou
professor robots

 

[satanoperca]

Hello Professor Robots,

1. Do you think the govnuts inaction to release land has increased property prices?

2. Do you think that global economic activity including overindebtness can effect Oz property prices?

3. Have you ever been to the USA to make such assumptions that the whole country has crack available on every street corner?

4. Does the availability of credit effect property prices?

5. Where do you see IR's heading in the next 3,6 & 12months?

6. What was the cause of this latest property boom?

7. Do you think that the boom in building that has occurred in the last 12months will ad to supply and have a downward effect on property prices?

8. Do you see the Australian banks as safe?

9. What is an acceptable LVR for your first PPOR in the current environment?

10. How do you see the govnuts propping up RE prices if we enter GFC 11?

11. Is the global debt problem able to be resolved without seeing a slow down in the so called recovery?

12. If I was a FHB who bought last year on 5% IR's and is now at 7.5% (40% increase in mortgage repayments) and getting financial stretch, can only live on bread on water for so long, what should I do? Sell or stick it out.

13. What % increase do you see on Melbourne property this year?

Sure I will have some more questions. But that should get things started.

Cheers

Note : Anything written by myself or the Prof is to be construed as financial advice and acted upon. Risk your own money and decisions at your own peril.

 

[Dowdy]

Take it easy Satanoperca.

You have to talk veeerrrryy sslooowww to the professor.

 

[robots]

Hello Professor Robots,

1. Do you think the govnuts inaction to release land has increased property prices?
Professor: no, plenty across australia for great prices

2. Do you think that global economic activity including overindebtness can effect Oz property prices?
Professor: no, we like our own hobby farm, immune to global issues

3. Have you ever been to the USA to make such assumptions that the whole country has crack available on every street corner?
Professor: no but watch Cops on ch10 all the time

4. Does the availability of credit effect property prices?
Professor: no, we in normal market conditions

5. Where do you see IR's heading in the next 3,6 & 12months?
Professor: down

6. What was the cause of this latest property boom?
Professor: catch up, safety, quality premium asset recognition by investors

7. Do you think that the boom in building that has occurred in the last 12months will ad to supply and have a downward effect on property prices?
Professor: it will take up some supply but will actually maintain or lift prices

8. Do you see the Australian banks as safe?
Professor: yes, thats business and good on them for make a few $

9. What is an acceptable LVR for your first PPOR in the current environment? Professor: i think it is more an issue of employment, 95% is acceptable, take it to 100% if they give it

10. How do you see the govnuts propping up RE prices if we enter GFC 11? Professor: they havent propped up anything so far in properties history so cant see them starting

11. Is the global debt problem able to be resolved without seeing a slow down in the so called recovery?
Professor: maybe a question for another thread

12. If I was a FHB who bought last year on 5% IR's and is now at 7.5% (40% increase in mortgage repayments) and getting financial stretch, can only live on bread on water for so long, what should I do? Sell or stick it out.
Professor: stick it out, get a promotion, cut out the iphone, goof balls, trainers


13. What % increase do you see on Melbourne property this year?
Professor: 2%

Sure I will have some more questions. But that should get things started.

Cheers

Note : Anything written by myself or the Prof is to be construed as financial advice and acted upon. Risk your own money and decisions at your own peril.

hello,

great effort, keep them coming

thankyou
robots

 

[satanoperca]

hello,

great effort, keep them coming

thankyou
robots

Thanks for the response.

Only like to mention your response to Q10. Wouldn't increasing the FHBG by both Fed and State Govnuts be seen as assisting or propping up the property market?

Cheers

 

[Dowdy]

Thanks for the response.

Only like to mention your response to Q10. Wouldn't increasing the FHBG by both Fed and State Govnuts be seen as assisting or propping up the property market?

Cheers

and easing standards on foreign buyers...

 

[Fleeta]

9. What is an acceptable LVR for your first PPOR in the current environment? Professor: i think it is more an issue of employment, 95% is acceptable, take it to 100% if they give it

13. What % increase do you see on Melbourne property this year?
Professor: 2%
thankyou
robots

Robots - I am fast losing respect for your "professor" status. So you suggest first home owners leverage to 100% at an interest rate of 7%+ in order to get a return of 2%! Wow, that's a great way to make money mate...

My question is do you think that house prices can continue to grow above wage growth. If so, why?

And as a secondary question, if so, will Oz have 50-75 year loans in order for the next generation to buy property.

 

[trainspotter]

Some 12 months ago when I suggested that high clearance rates do not indicate higher prices I was howled down.

And Real Estate Agents trying to help vendors to achieve higher prices, you have to be joking, high turnover is achieved by getting vendors to reduce prices. And high turnover at 2%, which 2% attracts, brings in much more for the bottom line if the turnover is double for the year, than a few sales at 3%.

Pull the other leg.

By whom? A clearance rate is not necessarily indicative of a downward pressure on pricing structure? It means the market is not ready to continue paying higher prices in general.

Real Estate Agents are employed by the vendor to get the HIGHEST PRICE for the vendor. If they reckon the value is high then they appeal to the vendor to list with them. ERGO they have "bought" the listing to go to auction. The big day arrives and guess what ...... (insert answer here)

They are after all paid on commission ...... herein lies the problem ..... they reckon they can get a "higher price" then the vendor lists with them to go to auction. The house does not sell at auction and sells under private treaty a few weeks later at a lower price perhaps. The Real Estate Agent gets paid 2% or 3% or whatever. Instead of 770k they settle for 730k or whatever the case may be ?? The RE is losing $800 on the transaction. F*CK ALL in fact BUT they still had the listing to start with? Do you see my point !!

 

[trainspotter]

Ha, real estates are interesting in selling, they work on turnover. The difference to their commission of an extra 5% on selling price is hardly worth their time.

The lower clearance rate is selling not accepting current prices.

While on the discussion of Auction clearance rates, it is hard to determine anything substantial really. Once clearance rates drop to a certain level, most real estate agents will convince sellers to go private.

Auctions gain momentum when prices are rises.
It would seem that is not the case at the moment.

Real estate agents dont want to suggest going to auction if the clearance rate is low.

I think auctions are a bit of a circus and the only way I will bid is after asking the auctionier (often many times) is the property on the market. Until it is declared on the market, why bother. Once on the market, you have a chance, until then it is a fluff and feathers.

Looking forward to Q & A with our local Professor of RE.

Cheers

Agreed with most of your summation. RE's require listings so therefore they will "BUY" the listing with an unrealistic price (auction or otherwise) Therefore the price is inflated and fails at auction only to be sold later under private treaty. It is a catch 22 situation. RE's must list to sell to eat. So they must put a bigger price to get the vendor to go with them. If it does not sell at auction but does sell later is a bonus to them as they got their greedy little mitts all over the property in the first place. HELLO ??????????

AGREE on the Auction tactics as well. I prefer to wait until the fall of the second hammer then up the bid by 10k .......... *QUIET* after that ..... ahahhaahahhahhaaaaaaaaaa ! I win the property in the end.

 

[explod]

I think clearance rates are worth a lot of thinking about. In the stock market for example low volume (sales of shares) usually sees the market plodding along sideways for a change and often signals the arrival of a change of direction or a rest before resuming the previous direction, wether that be up or down.

I am suggesting that the current fall in clearance rates, and I think you indicated that trainspotter, is a dropping of in interest, and in this case it would be the interest in buyers. If a fall in price does get underway, as in shares, we may see a new rise in clearance rates (probably the best would be total sales on a weekly basis) which would indicate that sellers are dropping down to the market price. If others see this drop and then do the sums sellers may well then offer even lower to compete with greater volume of sales. It would be the same but in reverse of what we have just experienced in the last couple of years.

Certainly clearance rates can be a strong indicator of price but they can also be an indicator of many other things and particularly turns in the financial cycle. It has been so good for so long that some may not be adjusting to other possible realities.

The direction of course only the market itself at the time will tell.

And down here on the Mornington Peninsula, the holiday home strip, real estate broking is about volume of sales, holidays, a good time and plenty for the staff xmas party at the end of the year.

 

[satanoperca]

Agreed with most of your summation. RE's require listings so therefore they will "BUY" the listing with an unrealistic price (auction or otherwise) Therefore the price is inflated and fails at auction only to be sold later under private treaty. It is a catch 22 situation. RE's must list to sell to eat. So they must put a bigger price to get the vendor to go with them. If it does not sell at auction but does sell later is a bonus to them as they got their greedy little mitts all over the property in the first place. HELLO ??????????

AGREE on the Auction tactics as well. I prefer to wait until the fall of the second hammer then up the bid by 10k .......... *QUIET* after that ..... ahahhaahahhahhaaaaaaaaaa ! I win the property in the end.

It is funny the tactics of RE agents to get you to sign. Last property I sold I had three RE come and give me their spiel.

1) We list a low price to get people in and then get prospective buyers to bid up the price. The RE agents from the 1st firm came in a group of three tall men, tried pressure tactics and intimidation. Didn't like their tactics and told them so. They got a little upset that I was unwilling to eat what came out of their asses.

2) We list a high price because it gives you room to move. Allows potential buyer to think they are getting a bargain when you drop the price by $50K. I also have a dart board. No go

3) We list at a price that we think is fair and reasonable based on past sales and current RE environment. Their list price was smack on in between the above two.
Went with them after negotiating the commission.

Funny that the other two just didn't give up, even reducing their commission by 50%. Laughed at them, saying, so you were willing to rip me off the first time, what makes me think if I give you the contract that you want try again.

End result, rather happy with the result of the RE agent & firm but for the money they receive they really don't work for it.

Cheers

 

[trainspotter]

It is funny the tactics of RE agents to get you to sign. Last property I sold I had three RE come and give me their spiel.

1) We list a low price to get people in and then get prospective buyers to bid up the price. The RE agents from the 1st firm came in a group of three tall men, tried pressure tactics and intimidation. Didn't like their tactics and told them so. They got a little upset that I was unwilling to eat what came out of their asses.

2) We list a high price because it gives you room to move. Allows potential buyer to think they are getting a bargain when you drop the price by $50K. I also have a dart board. No go

3) We list at a price that we think is fair and reasonable based on past sales and current RE environment. Their list price was smack on in between the above two.
Went with them after negotiating the commission.

Funny that the other two just didn't give up, even reducing their commission by 50%. Laughed at them, saying, so you were willing to rip me off the first time, what makes me think if I give you the contract that you want try again.

End result, rather happy with the result of the RE agent & firm but for the money they receive they really don't work for it.

Cheers

Fortunately for you satanoperca you are a "sophisticated investor" who understands the wily ways of the RE's. Most people do not and greed is the greater good as they think they will get the higher price for their property. FAIL.

At the end of the day they are just order takers and if you had the nous you can do the same for yourself. Bang a for sale sign out the front with a phone number on it and see what happens. Place an advert in the local rag and see what develops? Oooooooooopsies is this too easy a way to make money?

 

[TOBAB]

Real Estate Agents, Used car salesman, Flea circus operators. They are all the same. They sell you an illusion. The illusion being that they care about you. Could not be furtherest from the truth. They care ONLY about turnover and getting your business. BTW I know of a recent story where one encouraged their single mother to buy a 2.5MIO property without having sold. Now unable to sell original home and stuck with a massive debt and stressed out. Incredible.

 

[satanoperca]

I went to an open inspection, told the RE agent I had just inheritted some money and I worked as a storeman. He then proceeded to tell me I could no loose on this property as an investment. I negotiated a small deduction in price, really just a token and said I was willing to buy today. Could he check with the owner if they would accept the offer. He replied yes and off we went to his offices to sign contracts. He was excited and so was his boss.

When it came to signing the contract I asked why they had no included the clause, "I cannot loose on this investment". They looked blankly at me. I said I was unable to sign as this was part of the contract agreed to verbally.

They turned from elated to angry very quickly, trying every trick in the book to get me to sign. I refused to sign unless the original agreement was meet. After 15min of discussion they realised I would not sign.

I walk out of their office with a smile on my face.

Dont promise what you cannot deliver I replied when they said I had wasted their time. My time was well spent. The owner may not have been as happy.

Cheers

 

[Mofra]

I think auctions are a bit of a circus and the only way I will bid is after asking the auctionier (often many times) is the property on the market. Until it is declared on the market, why bother. Once on the market, you have a chance, until then it is a fluff and feathers.

You're not interested in being the highest bidder which gives you rights of negotiation?

Just curious. I've only been in the situation to negotiate with the vendor when I'm making pre-auction offers.

 

[explod]

You're not interested in being the highest bidder which gives you rights of negotiation?

Just curious. I've only been in the situation to negotiate with the vendor when I'm making pre-auction offers.

Untill the property is knocked down to a buyer, negotiation with the vendor is open.

If you really want a property, stay silent till it is stated on the market. I have seen auctions in which no bid was offered and as all were leaving a buyer negotiated an aggreable price; and it will often realise a result within a day or so. The vendor's acceptance of the situation, ie. reality of the market price is the key here. And the market price is only as high as what is offered.

By speaking up early you are showing your hand and in spite of the rules will be ramped up by agents acting for the vendor.

 

[tech/a]

You're not interested in being the highest bidder which gives you rights of negotiation?

Just curious. I've only been in the situation to negotiate with the vendor when I'm making pre-auction offers.

If you really want a property, stay silent till it is stated on the market

Sorry disagree
An important position(Last bid before handing in) one which has gained me more than one property at well below reserve.

As for selling.

I like to place the selling price (I tell my agent the selling price,I only use one and she is brilliant) at slightly below market.
I just sold a cottage at Moana here.
I set price at $300-$320 this was about right and if anything the $300 was attractive to developement (not for me but others).
It went for $317 cash deal.

A good agent is worth their commish--just a matter of finding one.
If South/West of Adelaide then I can recommend 2 terrific agents.Both Female and both very experienced in property sales.

 

[explod]

Sorry disagree
An important position(Last bid before handing in) one which has gained me more than one property at well below reserve.

If there are other bidders, however till it is said to be on the market, and when that is said all players (stated or not) may take part. If you want the property in this situation, on being passed in, yes you need to be the last bidder to further negotiate.