According to the 100yr chart, we will drop !

So what do you guys make of the 100yr chart then and where does this Aussie house prices never drop stuff come from.

Every spike for 100 yrs has been followed by a drop and 7 to 15 yrs stagnation afterward before regaining the origional level , and then it's off again.
Or is there some fan dangle numbers missing that make the that red line not what it appears.
It's all there so it seems in red and white but the major difference this time is that our spike is triple any of any others .
06 -10 aren't on it but we've spiked even further since then.

I think the writings on the wall ladies and gents whatever they tell us unless we have a tinkered chart, the red line is the red line and that's pretty well that.

Cheers
 
Can you please post your 100 year chart and the underlying data. It's very difficult to get historical data this far back, so please share what you have.
 
Sorry about that Paul , it was just on the home page member pics at top this morning but when I went back to get it they'd changed.
Somebody must have it . But when it turns up again , that is the nastiest red line I've ever seen.
Another interesting thing is, I was just listening to Ross Greenwood on housing before , I'd consider him one of the most conservative we have. So to my surprise he actually went through our extreme price increases by the numbers and admitted himself, there is no ifs or buts our prices aren't sustainable .
He reckons no matter what the reasoning behind our spikes , at the end of the day people just don't earn enough to pay this sort of money continuously and the market will have no choice .
A pretty big statement coming from him I'd reckon.
 
Sorry about that Paul , it was just on the home page member pics at top this morning but when I went back to get it they'd changed.
Somebody must have it . But when it turns up again , that is the nastiest red line I've ever seen.
Another interesting thing is, I was just listening to Ross Greenwood on housing before , I'd consider him one of the most conservative we have. So to my surprise he actually went through our extreme price increases by the numbers and admitted himself, there is no ifs or buts our prices aren't sustainable .
He reckons no matter what the reasoning behind our spikes , at the end of the day people just don't earn enough to pay this sort of money continuously and the market will have no choice .
A pretty big statement coming from him I'd reckon.

You've probably hit the nail on the head.

As you've probably seen, you can get into all sorts of discussions about
supply, demand, population growth, shortages, empty houses, mining booms, affordability, interest rates, immigration, growth suburbs, negative gearing, lo doc loans,etc.
You'll never reach a conclusion because each person puts a different weighting on each influence or interprets them differently and it branches out into detailed sub arguments with each person quoting their little investment catchphrase, and it goes into even finer detail until everyone just gets bored and decides to move onto the next discussion.

Ultimately though the golden rule is that when house prices have risen too high relative to inflation, they will fall back to the long term trend. There is no amount of government interference that can stop this in the long run .

You may not be able to predict when (although sometimes the warning signs are stronger), but anyone purchasing an IP with a plan of holding for 10 years or more, needs to understand that it's far more likely that they will lose than win. The ones who have the ability to look outside of what the herd is doing will save themselve a lot of time, money and worry.

Disclaimer: professional experienced investors, buying cash flow positive with low LVRs and the ability to add value cheaply should continue to do well, although usual risks apply.
 
Yep that's him , cheers . It's even scarier on second look , wonder if anyone has the tip - 05 to now , must look like a pin tip.

At anyrate , I came across this exact chart 2 yrs ago somewhere , showed it to my sister , she was deciding about selling at the time , and said I'd sell right now if I was you .
Well she didn't , kept the flat till just 2 mths ago and made and extra 55 grand on it, so much for my advice ! Stimulus came in and off it all went again.

Cheers
 
Sorry, but that chart just doesn't add up to me.

I've been watching the markets in several states for several decades and cant say I can relate that chart to any of the prices and the times. Would also love to see what happens on that chart after 2005, as I know many places have had dips and plateaus in that time, while other areas have boomed ahead.

A place I bought 10 years ago has now trippled in price/value, could be subdivided and worth even more. Even if property value dropped by 50% I would still be 50% up on my initial investment (still with the option to subdivide for more $$).

Anyone and everyone in property who watches the market will see/feel when things are turning, if they follow and keep up to date. They could easily maximise their$$. Or just sit on it and ride it out until the next tidal wave/increase.
 
I have one house that I'm not going to make any capital gain on in 7 years.

Another that (with subdivision) has more than quadrupled in 2 years. New house will be worth more than double what I will be paying for it 5 minutes after it is finished.

Both old houses have had work done on them and I can't see either going down much in the future unless something REALLY catastrophic happens, but I can see plenty of other places that are massively overpriced. Like my new house ... can't believe what people pay for new houses here ... :eek:
 
A few things on the chart , I have seen plenty of other shorter term charts that don't seem to show the spike to the same degree myself , we might need a longer term b/4 it can show the degree of the spike.
But on the other hand the result in a way is the same b/c as you said your place has tripled in 10 yrs , it should have only doubled, most stuff around the country has atleast tripled x 10 , a lot much more in many cases , so it does match this spike .
On your front yeah your as safe as it gets even without your subdivide , anyone that bought 10 yrs ago have all made these sort of gains but buying market price now might be a different story. Spose time will tell.

PS , I know your obviously easily safe no matter what but I read Melton was high risk from here on and had slowed right off , how's it looking to you ?

Cheers








Sorry, but that chart just doesn't add up to me.

I've been watching the markets in several states for several decades and cant say I can relate that chart to any of the prices and the times. Would also love to see what happens on that chart after 2005, as I know many places have had dips and plateaus in that time, while other areas have boomed ahead.

A place I bought 10 years ago has now trippled in price/value, could be subdivided and worth even more. Even if property value dropped by 50% I would still be 50% up on my initial investment (still with the option to subdivide for more $$).

Anyone and everyone in property who watches the market will see/feel when things are turning, if they follow and keep up to date. They could easily maximise their$$. Or just sit on it and ride it out until the next tidal wave/increase.
 
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Sorry, but that chart just doesn't add up to me.



A place I bought 10 years ago has now trippled in price/value, could be subdivided and worth even more. Even if property value dropped by 50% I would still be 50% up on my initial investment (still with the option to subdivide for more $$).

Anyone and everyone in property who watches the market will see/feel when things are turning, if they follow and keep up to date. They could easily maximise their$$. Or just sit on it and ride it out until the next tidal wave/increase.

I would be very supprised if you were not well ahead in nominal terms on any investment after ten years, 50% over ten years ain't that great after all.

When, or rather, IF, the market turns, if it goes anything like the UK in 90, there wont be much chance to jump out, unfortunately the property market is not the most liquid, as many found out to their cost, and chasing a market down is not fun. All of a sudden the buyers stood back in the expectation of further drops and better bargains, accellerating the drops, as they accellerated, people just plain got scared, and didn't want anything to do with property. Amazingly what had been everyones favourite thing was suddenly a hot potato.

I do find it interesting however that the tenure of the debate seems to have changed somewhat recently, from

'Don't be ridiculous, Aussie prices are fine!'

to (in the face of overwhelming evidence)

'Well, prices may be extraordinarly high, but there are good reasons, and anyway, the Banks/Government wont let them drop!'

This may be quite true, but as a warning, I would point to Norman Lamont (UK chancellor of exchequer), and what happened when the Government used all its might to stand in the way of the markets.

That said, with the mining reserves, Australia is more akin to a Saudi oil economy, and may have the clout for further Keynesian support.
 
There was a long period of declining prices until that mini spike in the early 50's. Doesn't look too bad, does it? I'll put a little flesh on it.

My Grandfather was doing quite well around the turn of the century and bought what would nearly have been the best house in the best street in Townsville. A nice big house on the strand. I don't know the details but from what my mother tells me it wasn't cheap. After he died and the house was sold I think they may have got $54k for it in the late sixties. It is no consolation that the block would be worth $3 mil today but they got market price at the time, I believe.

Absolutely NO WAY was that a good investment and the time scale was around 60 years.

The steep curve since the 70's coincides with the two income families becoming the norm, globalization and industrialization causing a massive drop in the cost of household goods and the freeing up of credit. There are no gains left to be made in any of those factors so where will the "new" money needed to drive prices further come from?

Supply/demand is meaningless if those on the "demand" side can't meet the market. Only the miners and the public servants are getting meaningful pay rises and one of them is being chopped off at the knees. They can wish, whinge and b**** as much as they like but they still won't meet the market.
 
You can't just read raw data without more context.

US price index is completely different to Australia. There are hundreds of cities included. Australian prices are driven mainly by 2 and at most 5.

Next the price rise in Australia is partly driven by inner-city land prices booming because the dodgy inner-city areas are mostly being gentrified. That is happening a bit in the US, but many inner-city areas middle-class people won't live because of crime and the perception of crime.

Prices boom in coastal areas due to land shortage with water views. Every capital in Australia is coastal.

Australian prices are driven by scarcity of land in desirable locations and even high land prices on the outskirts of the cities. Previously land was a much much smaller component of the price.
 
Linear charts cause people to see things going "parabolic" when in fact there may only be a constant annual percentage increase.

Of course spruikers know this and deliberately use it to their advantage.
 
You can't just read raw data without more context.

US price index is completely different to Australia. There are hundreds of cities included. Australian prices are driven mainly by 2 and at most 5.
.

It is also worth remembering that there is a big difference between long establised dwelling areas, and places such as Byron which would have offered enormous potential 25 yrs ago.

With much of Australia so young, of course it is easy to point to fantastic gains, but I do wonder if this has entered the mind set as some sort of recieved wisdom, that could distort perception.
 



I dunno.

Houses in 1880? The average house would have been a slab hut. With an outdoor dunny over a hole. Probably on half an acre with a vege patch, but it would be hard to believe that much land in 1880 would have much land content value as there'd have been land everywhere back then and not many people. Who'd care about an ocean view? You would rather be close to a creek with water and a paddock to park the horse. Considering all this I'm surprised real house prices today are only 3 or 4 times as much. A house today is 50 times better than one in 1880.

There was a big dump in 1929 with the depression. That figures.

Another dump to 1950, then a boom. Just a guess, but there was a massive inflation spike in 1950 to 1952, and inflation went to 30% annual for a very brief time. Might be something to do with that.

A peak in 1973 with the oil crisis and then a decade of high inflation and falling real prices. We must remember that houses really went up a lot in this time, but if they were going up at 12% a year, and if inflation was 14%, then real house price growth was negative.

Then the 1987 to 1990 price boom with the Oct 87 stock market crash. Real prices then dropped till 97. Everyone was worn out from 2 decades of high inflation and high interest rates. I suspect houses everywhere were super duper cheap in 1997. That's when the real smart money got in, 1997.



House prices might come back a bit if our economy goes to crap. If China blows up, put the crash hat on. If our economy stays strong, I can't see it happening. Houses in my parts are based purely on replacement value. If it's a brand new 4 bed brick home it's going to be worth 350k, and every other house is valued accordingly. This would be the same around the edges of the big cities. Then when you move into the big cities you add on the land value.

So it's hard to see how houses are going to halve in price, as then they will be half of their replacement value.


See ya's.
 
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