Is the Aus housing market crashing & is this a decent forum?

I'm an established Aussie landlord in London. I'm active on a good UK forum. Is this a decent forum for Aus? I've searched and seen a few, but they seem to have threads with barely any replies on them.

The UK's been through some major changes to their landlord/tenant laws since 1988 which I reckon has changed their market completely, to be much more like Aus, but negative gearing isn't allowed, so it isn't all the way there yet.

The forum I'm active on is filled with property bears, many of whom claim the 'current' crash in Australia is about to hit the UK and stagnation is impossible in property, I believe an opinion tainted by their last crash between 89-94 which was deep and painful. If memory serves me right, property stagnated in Aus between 90-92?

But as far as I can tell, Aus is taking a breather for a while and stagnation is the word of the day. I've tried to convince my UK oponents that they now have a mature IP market (they call it Buy-To-Let, or BTL) and that is what will help any bear market to be moderate compared to their last one.

Am I right, is Aus relatively stable?

As a footnote, you wouldn't believe the spelling of some of the UK posters.

Hi TTRTR,

This is an active forum & in my opinion more than simply decent

The other one you may wish to look at is www.propertyinvesting.com.

I've seen some of the press in the UK about the Aussie market, and as you'd expect it's the same sort of alarmist rubbish we get about the UK market.

There's rarely a balanced view - it's usually either extremely bullish or extremely bearish.

I remember the reporting of the Sydney bushfires a few years back in the UK press - it was basically that all of Sydney was burning down Anything for a story!

Australia is largely past our last property boom & in a stagnant phase at present. Interest rates are weighted to the upside (more chance of rising than falling) - BUT realistically haven't moved very far or fast. We still have good employment growth, a booming economy & a positive economic outlook, so there are few areas indicating an imminent crash & burn.

It's even at the stage where the majority of new investors have realised that it's too late to enter the market for quick capital gains & the scammers have begun turning to share scams rather than the property ones they've used for the last five years or so.

Some areas have gone backwards, some remain quite active with decent capital growth. Rentals are stable or growing slightly & the home renovation market is booming - which you might expect after a price boom.

We have our own doomsayers predicting various degrees of collapse - to the extent of a complete collapse of the Aussie economy. However in the last few months as property has refused to oblige them they've turned a lot of their attention to rising oil prices to justify such a collapse.

IMHO It's definitely not a good property market for foreigners to enter at this point - there will be better opportunities at the upswing of the next boom considering that non-Australians are generally limited to buying new-built properties, so I wouldn't recommend that your UK colleagues put big bucks into the Aussie market at this time.

Equally it's a tough market for new investors here - they won't see the fast returns and generally will be significantly out of pocket negatively gearing good stock.

However for experienced investors there are opportunities to either grow their portfolios selectively by buy into markets with continued or lagged growth (such as areas of Queensland & Perth), or to sell the dogs in their portfolio and cash up for the years ahead.

What forum are you active in? A few good spellers from Somersoft could perhaps give a local Aussie view on the Aussie market.

Cheers,

Aceyducey

Do your own research

Somersoft is the best internet forum I have found. Not the most active, most members or posts, just the best. However a bit of reading will allow you to make up your own mind. I'm curious as to what sort of a negative response you would get from a post such as this? Perhaps a ... "No!! This forum is hopeless, run - save yourself before it's too late".

There are still problems of course including the occasional post and run attacks, occasional viral marketing and spam, though the forum is excellently moderated.

I have a few UK real estate sites bookmarked as I had a quick look at the Real Estate market there a few months ago, some impressive yields compared to Australia on the residential side currently. I found it interesting that a lot of the London properties appeared to be purchasable only on long term leasehold, not sure of the implications of this.

Regarding the Aussie market there is a general consensus that the peak of activity was late 2003, there has been some fall off in areas of prices being reached since then, though plenty of areas are still moving forwards. The economy is strong and interest rates are staying put for the time being, so the pressure on sellers still isn't intense.

My personal view is that we are in a similar position to 1991-1993 in my area (SE QLD) where property had modest gains for several years after the previous boom. So I think it's an excellent time to be on the lookout though not in a rush to buy quality residential property, don't know much about commercial. There are some very knowledgable people on here that have witnessed a few boom/bust cycles before who might comment.

How is stagnation in residential property quantified? In my street prices did very little from 94-01 before doubling in 2 years.

Not sure what the poor spelling would indicate, there seem to be plenty of spelling challenged people on Australian forums as well. Perhaps there are a higher % on non English speaking posters in the UK?

My UK links for those looking to do some surfing:

http://www.proviser.com/
http://www.propertysecrets.net/index.php
http://www.nationwide.co.uk/hpi/
http://www.hbosplc.com/economy/HousingResearch.asp
http://www.teamprop.co.uk/
http://www.your-move.co.uk/html/default.htm
http://www.taxcafe.co.uk/
http://www.rightmove.co.uk/rm/
http://www.upmystreet.com/
http://www.thepropertyassociation.co.uk/
http://fish4.co.uk/homes/index.jsp
http://www.propertyhotspots.net/index.php

WaySolid

BTW,

Here's an article I just read which illustrates the confidence of Australians in the local property market.

Now this is as accurate as any poll is accurate...but it's correct about our sentiments about Superannuation

SMH: http://www.smh.com.au/articles/2004/08/21/1092972819595.html

We distrust superannuation so much we're just as likely to put any spare cash on the sharemarket instead, an exclusive poll for The Sun-Herald by Taverner Research Company has shown.

But our trust in property was absolute - almost nobody polled said the price of their home would drop in 12 months, three years or five years.

.......

One in four Australians had no savings, while an almost equal number would put any savings they had in a bank or building society product, the poll found.

The next favoured form of savings was buying an investment property, preferred by 17 per cent of the 600 surveyed in the phone poll.

Putting more in super was favoured by only 14 per cent, just ahead of buying shares.

In another disturbing sign of Australia's addiction to debt, only 3 per cent would use savings to make extra mortgage repayments.

....

When asked if they thought the value of their home would be higher 12 months from now, almost two thirds said yes.

Click to expand...

So we continue to like property & regard it as a secure....to the extent where very few people even feel the need to top up their mortgage payments in case of problems with the property market

Superannuation is a HUGE balls-up here in Australia & continues to get more complex, higher taxed & simply a way to get money from the pockets of the broader community into those of financial planners & super fund managers.

Cheers,

Aceyducey

I'm one of the main posters on www.housepricecrash.co.uk - wonderful sounding forum (known on the site as HPC). My normal title is Time to raise the rents, but it wouldn't fit on this forum. The site just started a registration policy, so by number of posts per user etc it looks like a new forum, but it's about 1 year old now.

BTW I rent 8 places out in London and actually live in Sweden, in case you read that at HPC & wonder.

The thing that keeps me coming back to HPC is the home page linking to a lot of press articles, plus historical links going back months now (you need click on th news archive to see the old links). You may find some of the articles interesting.

It's definitely a very hot forum now though, as it's been in the press itself a few times and attracted quite a following (10,000 hits a day they say).

I'm from Sydney & plan to return home in 4-5 years. I was out there last year looking at houses thinking it would be better to buy now & move in later, having profited in the meantime. But to be honest, I was shocked by the void periods, the land tax, the low yield, all the stuff that a landlord has to pay for in Aus (like when renting a house with a pool and garden - paying for the gardener & pool cleaner). The negative cashflow was going to put a real drag on my plan, so I decided to shelve it for a while. Right now it seems I made the right choice, but prices take off on short notice & I'm trying to watch the market via the internet while I'm here.

The UK is a lot simpler, the landlord insures and maintains the house and the tenants pay the rest. Because a lot of London property is terraced, the gardening and outside maintenance is minimal (your tenants don't have much that they can let overgrow).

And it is still reasonably easy to find positive cashflow properties in the UK. Although I'm not in a rush to pick up more at the moment, more of a wait and see as it's no good getting £500pcm cash off a place going down £2000pcm in price. Again, biding my time just now.

A few Sydney & Melbourne headlines on newly built units (particularly Southbank units in Melb) being sold at a loss have convinced some of the other HPC posters that Aus is in rapid decline. But whenever I look at desirable Sydney suburbs on Domain, things look either steady or upward.

Waysolid,

"I have a few UK real estate sites bookmarked as I had a quick look at the Real Estate market there a few months ago, some impressive yields compared to Australia on the residential side currently. I found it interesting that a lot of the London properties appeared to be purchasable only on long term leasehold, not sure of the implications of this."

The yields are great compared to Aus. Every place I rent out is CF+ and has been since purchase.

I've stayed well away from Leasehold places & only bought freehold (a permanent title ). In Sydney a few older places are on a similar system which they call Company Title. For other readers, bascially the purchaser, rather than becoming and owner, becomes a leasholder for say 99 years. In that period the leaseholder can act as the owner, but pays a service charge to the freeholder & has to ask permission to rent the place & do any modifications. Something to stay away from if you want to make any money out of it. The real problem is that the lease diminishes in value as the years expire.

Hi TT

Your observation about different reactions in different markets is in my opinion spot on.

There is no crash in the median house price in capital cities and regional centres.

Some unit markets have taken a battering, but even there it appears its segmented and localised.

If you are waiting for a significant drop in the median house price in places like Mosman, Elisabeth/Rose Bay I feel you wont see much of that unless the cost of borrowing money goes up by anther 25 % or so.

ta

rolf

We have our own doomsayers predicting various degrees of collapse - to the extent of a complete collapse of the Aussie economy. However in the last few months as property has refused to oblige them they've turned a lot of their attention to rising oil prices to justify such a collapse.

Click to expand...

But you're too polite to mention me by name LOL May just be work in progress but.

Also;

Superannuation is a HUGE balls-up here in Australia & continues to get more complex, higher taxed & simply a way to get money from the pockets of the broader community into those of financial planners & super fund managers.

Click to expand...

This is a point I have made too, in the context that I would not like to see the Super Guarantee Levy raised.

Thommo

Rolf Latham said:

If you are waiting for a significant drop in the median house price in places like Mosman, Elisabeth/Rose Bay I feel you wont see much of that unless the cost of borrowing money goes up by anther 25 % or so.

Click to expand...

I'm looking between Chatswood & Wahroonga. I fancy a large garden etc. But it seems like the areas are dominated by owner-occupiers, so yields are even lower than other areas and voids are long, I guess because there aren't too many tenants looking for large houses when they can find something more affordable locally.

But land tax was the real killer to my plans.

Thommo,

At the risk of sounding dumb, are you one of the bears on the forum?

TTRTR said:

Thommo,

At the risk of sounding dumb, are you one of the bears on the forum?

Click to expand...

Yea! Thats me. I don't even believe everything I post but I feel the eternal optimists on the forum should consider external forces more than they do. The Devil's Advocate really.

Like it or not we are greatly effected by the other big world economies, wars, oil shocks, depressions etc.

Thommo

Here's on of HPC's resident bears mad website:

www.powroznik.freeserve.co.uk

This guy is an absolute nutter & seems to repeat the same message over & over. There's entertainment value in it anyway....

Please don't think I'm putting you in his class by the way Thommo. By saying you don't believe everything you post, you're showing yourself to be moderate.

oh my, he's a nutter.

Signs of a Housing Crash...
A large number of property programmes on television
Newspapers containing property supplements
People constantly talking about house prices...

Click to expand...

Oh dear. Then the crash happened in Australia about four years ago?

He's got some great comments!

Some people may be deceived into thinking that a boom is a sign of economic success but in reality it is a sign of impending economic doom

Click to expand...

So booms are really, really bad things....therefore busts must be GOOD things...therefore by definition this guy, by predicting a total bust, is an absolute optimist!

Cheers,

Aceyducey

Let me ask about rents.

Have any of you been able to raise rents since the rate rises last year?

In London I've raised 3 of 8 rents this past 6 months. Not a wisper of objection from my tenants as they know and accept that my costs are higher (rates in the UK have moved up 1.25% since Nov).

The other 5 rents are high anyway, so I'll wait until next year on those ones.

TTRTR said:

Here's on of HPC's resident bears mad website:

www.powroznik.freeserve.co.uk

This guy is an absolute nutter & seems to repeat the same message over & over. There's entertainment value in it anyway....
.

Click to expand...

hehe.
This guy needs help.

TTRTR said:

Let me ask about rents.

Have any of you been able to raise rents since the rate rises last year?

In London I've raised 3 of 8 rents this past 6 months. Not a wisper of objection from my tenants as they know and accept that my costs are higher (rates in the UK have moved up 1.25% since Nov).

The other 5 rents are high anyway, so I'll wait until next year on those ones.

Click to expand...

I actually did raise the rent by 9% and the tenant is still there.
A coat of paint does help

TTRTR said:

Have any of you been able to raise rents since the rate rises last year?

Click to expand...

My rents go up 3-5% every Jan. Some tenants want long term leases, so they get 2yr+ leases with a $10-$20 rise each Jan - they know it's going to happen so they can budget accordingly.

Well if the email I recieved on the weekend is right, then I'd say we will be in big trouble.

THE TOTAL DESTRUCTION OF THE U.S. HOUSING MARKET

This shocking financial scenario is not only completely unavoidable...it's already well under way!

Find out why the burst of this bubble will have DOUBLE the impact of a stock market collapse ...and what you can do TODAY to protect yourself and your family...

Dear Reader,

Hold on to your wallets. Like it or not, your life - and the lives of over 72 million Americans - is about to change dramatically over the course of the next three weeks.

After nearly 10 years of unprecedented growth, the bottom is about to fall out of the U.S. housing market. The dominoes in this horrific game have already begun to fall...

A total of $2.5 trillion - or more - will be wiped away. But - as awful as that sounds - that's not the worst of it. Because of the enormous house of cards created by the U.S. government over the past 10 years, the entire U.S. financial system is in jeopardy.

Click to expand...

The email is far to long to post it all here, but it does go on to say that for $159 they can tell me how to avoid the danger

Details can be found here http://www.investmentu.com/

Cheers

Phil