The future of Australian property prices

kincella · 29 May 2010

Morning Robots....
I note these poor suckers did nothing at all, just bought their houses, lived in them whilst working and raising their families....and presto..the houses are worth a million bucks or more.....
in the print edition it stated one family paid 16,000 many years ago...they will never move...cause they love the street, the area, their neighbours...they just love Essendon....no amount of money will entice them to move away....(hints to those who believe most are hocked to the hilt, and will have to sell out)
on the other hand,,, the renters would have coughed up about half a million in rent over the same period.....with nothing to show for it....still renting...

the owners on the other hand, can elect to sell up, buy something cheaper, and have half a million sitting in the bank.....that is a prime example of the real difference....everyone has the choice on the road trip in life....

extract only follows....
One in seven live on millionaire's row in Melbourne By Terry Brown From: Herald Sun May 29, 2010 8:31AM Increase Text SizeDecrease Text SizePrintEmail Share
Add to DiggAdd to del.icio.usAdd to FacebookAdd to KwoffAdd to MyspaceAdd to NewsvineWhat are these?IF you think your home looks a million bucks, there's a one in seven chance you're right if you live in Melbourne.
About 148,000 Melbourne houses are $1 million-plus now, out of just over a million in the whole of Melbourne.

And the surge in property prices has created thousands of new Millionaire Rows in the space of a year.

As of April, Melbourne had 4222 streets with a $1 million median house price, from just 1734 last year.

To be sitting on a cool million, you don't need neighbours called Smorgon or Lew.

Melbourne got its first million-dollar street early in 1990.

Now one-time battler suburbs such as Port Melbourne have cracked the mark, and far-flung parts including Wonga Park and Dandenong figure in the list.

But Toorak has bragging rights, with the three dearest streets, 10 of the top 20 and 31 in the elite 50.
http://www.heraldsun.com.au/money/o...row-in-melbourne/story-e6frfh5f-1225872803957

UBIQUITOUS · 29 May 2010

robots said:
hello,

anyway, whats the problem with negative gearing? you dont run a campaign on NG which is used on any income producing asset (businesses, shares etc,etc)

thankyou

With RE, people are allowed to offset the losses against a totally DIFFERENT income stream. This is not allowed with losses on other asset classes such as shares and nor should it be allowed with RE. Any investment decision just to save tax should be punished, not rewarded. The pain will come though. It always does, except that this time it is going to be a lot worse.

Bubbles pop. Balloons deflate. This is a bubble of gigantic proportions.

robots · 29 May 2010

UBIQUITOUS said:
With RE, people are allowed to offset the losses against a totally DIFFERENT income stream. This is not allowed with losses on other asset classes such as shares and nor should it be allowed with RE. Any investment decision just to save tax should be punished, not rewarded. The pain will come though. It always does, except that this time it is going to be a lot worse.

Bubbles pop. Balloons deflate. This is a bubble of gigantic proportions.

hello,

really? sure about that? maybe comeback with the correct information

oh yeah, we are finished (this is the 5th yr i have been going to be finished) amazing

morning Kincella, yes and as they head into retirement they can sell (capital gains free), buy a place in a town like Ballarat, have a 1mil in change, catch the train to the city, sip lattes, goto theatre, chill out

thankyou
S.Keen

medicowallet · 29 May 2010

UBIQUITOUS said:
Bubbles pop. Balloons deflate. This is a bubble of gigantic proportions.

According to LaPlace's law, bubbles in fact implode.

There is a bubble, and it will most likely implode.

Anyone who cannot see people offloading their investment properties, holiday homes and their personal home (if highly geared) are living in a false reality.

The overconfidence will turn into fear, and the fear will drive people to run away. There will be huge "paper losses" for people who hang around, but as always people look at paper losses from the bubble peak, and not return on investment since their purchase. I agree, with this in mind, that people who purchased well will not go backwards, they will just not be as far forwards as they thought they would be.

The problem is that a lot of consumption in Australia is driven by "capital growth", and hence people fund their retail committments assuming that their house will keep going up in value. If this falters, then consumption drops, and unemployment will surely rise, putting more pressure on houses. This coupled with businesses such as banks, cutting staff in the attempt to maintain profit in an environment of falling loan approvals and increasing bad debts, will help fuel the effect.

The thing which saved us from this kind of scenario was the mining sector. Now our prophetic (or is that pathetic) PM wants to sabotage the ability of the industry to expand and invest, all to pay for his inefficient and ineffective, poorly targetted and thought out wasteful politically motivated sweeteners. When the miners stop employing and investing, and start moving their capital offshore, then it will also put pressure on Australia.

medicowallet · 29 May 2010

robots said:
hello,

really? sure about that? maybe comeback with the correct information

oh yeah, we are finished (this is the 5th yr i have been going to be finished) amazing

thankyou
S.Keen

One must be careful not to gloat too much, especially after advertising that they just purchased a property (and if I recall correctly on 100% finance). For it may well be you who has egg on your face, especially if you are not diversified into other asset classes, which may well outperform residential property over the medium term.

I hope that I am wrong, as I am also invested in property, but it would be sad to see such a bull be neutered.

robots · 29 May 2010

hello,

my post was regarding how many like Ubiquitous didnt know that interest can be claimed against income if you have purchased shares and run at a loss to interest cost

now many go on about productivity regarding property investment, show me the productivity created when an individual buys shares, negative gears its, claims interest against income

SAME THING

the whole issue is about the rich vs. the poor

thankyou
S.Keen

medicowallet · 29 May 2010

robots said:
now many go on about productivity regarding property investment, show me the productivity created when an individual buys shares, negative gears its, claims interest against income

SAME THING

the whole issue is about the rich vs. the poor

thankyou
S.Keen

Well that is a different discussion.

If someone uses their equity in their house to purchase a TV or a car, then that does not really create as many jobs in Australia as opposed to BHP using its equity to fund expansion of a mining project.

It is absolutely not the same thing, and hence why we need to make sure that neither housing or business enter bubbles. One of these bubbles has been dealt with, the other is actually supported by the government, in their misunderstanding of how to make money.

MACCA350 · 29 May 2010

robots said:
hello,
yes and as they head into retirement they can sell (capital gains free), buy a place in a town like Ballarat, have a 1mil in change

And what happens when the many baby boomers start doing just that en masse?

We all know the baby boomers are hoarding many IP's which will start to hit the market as they begin offloading to fund the later years of their retirement, or get sold through their estate. Do you think there is enough demand to absorb all those properties without putting downward pressure on prices? Maybe there is, maybe that's why KRudd changed the international investment rules.........to cope with that upcoming supply.

Just random thoughts

cheers

medicowallet · 29 May 2010

MACCA350 said:
And what happens when the many baby boomers start doing just that en masse?

We all know the baby boomers are hoarding many IP's which will start to hit the market as they begin offloading to fund the later years of their retirement, or get sold through their estate. Do you think there is enough demand to absorb all those properties without putting downward pressure on prices? Maybe there is, maybe that's why KRudd changed the international investment rules.........to cope with that upcoming supply.

Just random thoughts

cheers

The same can be said of shares. I honestly think that the BB generation will leave the economy in a much worse state then they enjoyed for the majority of their working lives.

I think in the current climate, more will be willing to sell down their super to fund their lifestyle before investment properties.

However it will probably depend on the amount in each investment and the taxation implications of having an investment property vs annuity etc. A bit complicated.

MACCA350 · 29 May 2010

medicowallet said:
The same can be said of shares. I honestly think that the BB generation will leave the economy in a much worse state then they enjoyed for the majority of their working lives.

I think in the current climate, more will be willing to sell down their super to fund their lifestyle before investment properties.

However it will probably depend on the amount in each investment and the taxation implications of having an investment property vs annuity etc. A bit complicated.

Especially given many baby boomers seem to subscribe to the SKI(Spend the Kids Inheritance) club, I'd say the BB's as a generation will be more likely to sell out and spend up compared to earlier generations.

It does make one wonder what the effects on our economy will be with all those funds being freed from IP's and super and spent on other more self indulgent areas in the economy.

cheers

explod · 29 May 2010

MACCA350 said:
Especially given many baby boomers seem to subscribe to the SKI(Spend the Kids Inheritance) club, I'd say the BB's as a generation will be more likely to sell out and spend up compared to earlier generations.

It does make one wonder what the effects on our economy will be with all those funds being freed from IP's and super and spent on other more self indulgent areas in the economy.

cheers

Yeh, the coffee and cafe strips but the big one is poker machines. Just do a walk through Crown, even any afternoon during the week and it is horrifying to see the money going down the drain from the BB group. Not sure its going to help economy any.

Know a bloke who had a home and two investment properties, thought he had a foolproof gambling system and lost the lot in just five years trying to prove it. About my age 64

Dowdy · 29 May 2010

Here's an interesting story i came across. People have been faking prices in order to prop up the real estate market.

AN elaborate scheme ratcheted up the prices of some of Australia's most coveted beachfront properties, misleading valuers and duping banks, finance companies and the buyers who parted with millions of dollars

http://www.theaustralian.com.au/news/nation/options-scheme-duped-banks-and-buyers-in-queensland/story-e6frg6nf-1225872730218

Macquack · 29 May 2010

Dowdy said:
Here's an interesting story i came across. People have been faking prices in order to prop up the real estate market.

http://www.theaustralian.com.au/news/nation/options-scheme-duped-banks-and-buyers-in-queensland/story-e6frg6nf-1225872730218

Ironic that it was a real estate agent that fell for a real estate scam. I think that is call "karma".

robots · 29 May 2010

medicowallet said:
Well that is a different discussion.

If someone uses their equity in their house to purchase a TV or a car, then that does not really create as many jobs in Australia as opposed to BHP using its equity to fund expansion of a mining project.

It is absolutely not the same thing, and hence why we need to make sure that neither housing or business enter bubbles. One of these bubbles has been dealt with, the other is actually supported by the government, in their misunderstanding of how to make money.

hello,

what are you going on about,

how does a share investor who can negative gear and thus claim losses against gross income (yes that happens Ubiquitous) help productivity?

bhp doesnt get the cash, people just dont like the fact that others make money in property and its all through hardwork

thankyou
professor robots

medicowallet · 29 May 2010

robots said:
hello,

what are you going on about,

how does a share investor who can negative gear and thus claim losses against gross income (yes that happens Ubiquitous) help productivity?

bhp doesnt get the cash, people just dont like the fact that others make money in property and its all through hardwork

thankyou
professor robots

I think I made my point quite clearly. I think you are choosing to ignore the fact that a strong shareprice helps drive business investment, where a strong home price helps drive consumption.

UBIQUITOUS · 29 May 2010

Hello Mr Hello, What do we have here? How come you didn't post it this week?

http://reiv.com.au/home/inside.asp?ID=162&nav1=1226&nav2=162

There has been a shift in the residential property market in Melbourne over the past month, with six successive interest rates and unseasonably high auction numbers having an impact.

The number of homes on offer at auction is at the same level we normally see in the spring selling season and, in that context, clearance rates remain very healthy, this does provide buyers with a better opportunity than was the case earlier this year.

The clearance rate from the 869 auctions reported today was 73% per cent.

Of the 869 auctions there was a total of 631 sold and 238 passed in, 156 of those on a vendors bid.

On this weekend last year there were 667 auctions and a clearance rate of 82 per cent

There will be around 900 more auctions next weekend and then a record 1000 :couchthe weekend after the Queens Birthday long weekend.

The second paragraph is hilarious. What a schmuck of a ramper this Enzo is!!!

Oh, by the way Enzo, the clearance rate is actually 72.612197928653624856156501726122%, and falling!!!!

robots · 29 May 2010

hello,

so how does a ng share investor help productivity and business investment, they dont, zip

But yet wont find 1 blog on the internet about it vs 5mil on ng propert investment

Business provide anything for consumptiom

medicowallet · 29 May 2010

robots said:
hello,

so how does a ng share investor help productivity and business investment, they dont, zip

I think I will leave it where it is. As I said, it is clearly laid out in my previous posts.

UBIQUITOUS · 29 May 2010

So 775 auctions on the first weekend of this month, 900 next weekend, and 1000 the weekend after. Can somebody plot this on a graph for me please?

These seem to be awfully high numbers.

Perhaps the cash rate is causing it. Can somebody please tell me what the cash rate is please...10%..12%...15%?

If the clearance rate doesn't plummet faster with this sudden jacking up in the number of auctioned houses, it can only mean one of two things.

1. Vendors are lowering their reserves/expectations
2. The numbers are being fudged.

Higher numbers of properties being available for sale does not lead to more buyers.

explod · 29 May 2010

UBIQUITOUS said:
Higher numbers of properties being available for sale does not lead to more buyers.

It may indicate that more want to sell as they can not afford to hold on anymore with the recent interests rates and cost of living increases. If this is so then some vendors will reduce prices to get out which will then lead to more people seeing values drop and want to get out too. Then we may have a panic by spring and the bubble will have popped.

The next few weeks will tell the tale.

The future of Australian property prices

hello

hello

explod

hello

hello

explod

Similar threads

Privacy & Transparency

Privacy & Transparency