Will the world housing boom end in tears?

[wayneL]

Here is an excellent report/lecture from the Bank of Scotland (who owns Bankwest I believe) by John Calverley, Chief Economist & Strategist, American Express Bank Ltd., on the worldwide housing bubble.

http://www.rbs.com/content/media_ce...y/downloads/uk/Calverley_Scottish_Lecture.pdf

A very good report and veeeeerrry interesting.

Cheers

 

[wayneL]

Here's another nice and bearish article:

http://money.cnn.com/2006/08/24/real_estate/pluggedin_tully.fortune/index.htm

Getting real about the real estate bubble
Fortune's Shawn Tully dispels four myths about the future of home prices.
FORTUNE Magazine
By Shawn Tully, Fortune editor-at-large
August 25 2006: 5:42 AM EDT

NEW YORK (Fortune) -- For the past five years, the housing bulls have been trotting out one rational-sounding argument after another to explain why the boom made perfect economic sense..........

 

[tech/a]

Good article Wayne.

As a group we are preparing a study for our Advanced Business Management Degree,as part of our Marketing Study we are looking at the Building Industry in particular SA. As they are our consumers.

Suprisingly data from the Bureau of Stats shows an increase in approvals over the last 2 quaters.I can post the website papers for those interested.

Statistics are of every state with NSW heading the downturn (Now 20% lower than peak)

They are at the office so will post tommorow.
They are free and around 50 pages each.Interesting to analyse if your into that sort of thing.

The paper you have offered up certainly makes sence.

Just noticed a strange coincidence both of us have posted the same number of posts.2595

 

[Milk Man]

Just noticed a strange coincidence both of us have posted the same number of posts.2595

You're both a pair of old post whores! Just kidding, lots of good stuff from you both.

 

[wayneL]

You're both a pair of old post whores! Just kidding, lots of good stuff from you both.

Now it's on!! Who can be the champion waffler

 

[GreatPig]

from the Bank of Scotland (who owns Bankwest I believe)

They do, but that report is from the Royal Bank of Scotland (RBS).

Bank of Scotland is now HBOS, or Halifax Bank of Scotland (the union of Halifax Bank and Bank of Scotland) based in Leeds. RBS is a completely different bank based in Edinburgh.

Cheers,
GP

 

[Tim]

People have been claiming that property is overpriced for decades. I challenge each and every one of you (who think it's overpriced) to stop investing/buying property for the next 10 years (give it time to 'crash') and then jump back in when it's nice and 'cheap'.

Land is one of the few commodities that is completely scarce and finite, and is something that everyone needs.

It's amazing, we've got this thread saying how property prices can't keep going up, and then there's another thread saying the world's population will hit 8 billion in the next 15 years???

But at the end of the day I don't know, and I don't really care. It's just amazing how cheap overpriced property used to be.

 

[wayneL]

People have been claiming that property is overpriced for decades. I challenge each and every one of you (who think it's overpriced) to stop investing/buying property for the next 10 years (give it time to 'crash') and then jump back in when it's nice and 'cheap'.

Land is one of the few commodities that is completely scarce and finite, and is something that everyone needs.

It's amazing, we've got this thread saying how property prices can't keep going up, and then there's another thread saying the world's population will hit 8 billion in the next 15 years???

But at the end of the day I don't know, and I don't really care. It's just amazing how cheap overpriced property used to be.

Dude,

You are ignoring relativity. Property was Cheap 5 years ago, particularly in the UK where my props are.

Yields of 8-13% were common... 25% in the north. Currently 3.5 -5% yields are the norm.

It will cycle back either by:

1/ Price crash

2/ Wage inflation + price stagnation

It will be relatively cheap again

Cheers

 

[audispex]

Haven't been following this thread but out of interest attached some interesting reading

 

[tech/a]

Tim.

I have a rye smile evertime I see and become involved in the property debate myself.

Property has been the single most profitable venture I am involved with and has been for many years.
Like most things people tend to think in a shoe box never venturing outside the square to find ways of turning percieved negatives into positives.

Sure dont buy at a percieved market top if thats what you believe but dont sit back and watch!!

Current demand is for high density cheaper apartments(Community Title) for purchase or sale.
I'm selling houses and building apartments Finished and sold 10 12 mths ago,plans in for another developement of 8

I remember my 82 yr old father (He still sayis it) "If only I knew then what I know now."

And most here will be saying the same---if they dont already.

 

[Happy]

Have a look at it from different angle, INFLATION.

If house fetches 500,000 or 50,000,000 means nothing, just numbers, look at the other numbers.

Drop of petrol costs more than 4 times more today than it was 20 years ago.

Ever increasing numbers make us feel good, in several decades if there will be no currency devaluation, bricklayer will earn $ million a year.

 

[Rafa]

well said happy...

I have another take on this issue too:

people keep saying house prices are too high, but essentially its all relative...
you also have to look at quality of life and the type of accomodation...

so what if the avg dwelling in other parts of the world is less expensive, its also a 2 bedroom unit in a multi storey building!.... In Oz its a house on a 700+ sqm block of LAND!

in the end, land is land... and its land that is of value, not the actual house/ apartment on the 100th floor, etc, that is of value.... (or is it?)

when the world runs out of oil, those with land can grow stuff, those in an apartment are stuffed!

Be interested to hear comments on this angle, as to why LAND in Oz is still relatively cheap...

 

[dr00]

its not just land, its supply and demand (im a poet and didnt know it). you cant write off apartments because they have no land. if demand for apartments is high then there will be capital growth in it. the government has an interest in promoting higher density rather than urban sprawl because it is cheaper to provide infrastructure. aussies have this affinity for the 500+sqm block but i think that will fade as the options become a) very expensive, b) very far away or c) an apartment.

theres more to it than just the amount of dirt

 

[tech/a]

Be interested to hear comments on this angle, as to why LAND in Oz is still relatively cheap...

There is more of it relatively close to CBD's.
Close a school and turn it into residential.
Subdivisions constantly being opened up.

Aust is a big place with only 20 million people.

So dont go telling anyone and have our lifestyle stuffed up!!!

 

[krisbarry]

Aust is a big place with only 20 million people.

But 2/3rds of Australia is a desert, surely we cannot expect that 20 million people could live in towns/cities like Alice Springs.

Its just not possible, both from a infrastructral/economial point of view.

Australia is very similar to Canada, massive amount of land and small populations, the only difference is that one is a desert and the other a frozen land mass.

 

[TimmyC]

i was under the impression that housing prices in Melbourne and Sydeny were dropping.

 

[krisbarry]

aussies have this affinity for the 500+sqm block but i think that will fade as the options become a) very expensive, b) very far away or c) an apartment.

Yes...it must be all those women out there strapped with massive HECS debts, instead of babies. No need to have that 500+sqm block of land for the kiddies to run around in, as kiddies are not being produced, not unless your un-educated and looking at the baby bonus

 

[professor_frink]

Yes...it must be all those women out there strapped with massive HECS debts, instead of babies. No need to have that 500+sqm block of land for the kiddies to run around in, as kiddies are not being produced, not unless your un-educated and looking at the baby bonus

so only uneducated people have babies

Another brilliant statement Stop. Well said once again :horse:

 

[krisbarry]

so only uneducated people have babies

Another brilliant statement Stop. Well said once again :horse:

Its was a joke, notice the sarcastic smile!

....I was just running with the ferral un-educated breeders you see on A Current Affair, taking advantage of the baby bonus and popping out babies.

 

[wayneL]

http://www.in2perspective.com/nr/2006/09/australia-slides-into-negative-equity.jsp

SNIP:

In Australia, negative equity has spread to Brisbane as the country's property downturn continues to slug investors at the lower end of the housing market.

Australia's largest mortgage broker, Australian Finance Group (AFG), has reported that falling property values in parts of Brisbane have led to an increase in the number of owners with mortgages bigger than the value of their homes.

"In some of the outer Brisbane suburbs we are seeing valuations for house-and-land packages purchased mainly for investment purposes falling short of purchase prices," AFG executive director Malcolm Watkins told The Australian newspaper.

AFG said some new construction projects in that state were being independently valued at 20% below asking prices.