Anyone read this article yet????

[blaster]

I believe our so called housing shortage was just a flood of gurus, home- hot property and reno shows, low interest rates and doubling home grants, causing a boom and 1000's of new found investors suddenly buying 2 and 3 houses instead of the usual one and first home buyers suddenly having a deposit.
The FHOG this year alone caused a 2o% or 30 increase , after 6 yrs of boom and a world recession, add new found investors all over the place = squeeze.
If things were left to run their natural course , there'd be extra houses again this year.

We could actually end up with a flood of unwanted blocks if nothing else that's for sure. From what I've seen as all over Vic they're rushing through new sub approvals all over the place because of our , um land shortage. Suddenly towns of 1000 people have 300 new blocks , or 30,000 x 2 and 3000 new blocks.

Just my theory.
Cheers

 

[WinstonWolfe]

This Australian Treasury chart by David Gruen, shows there was oversupply until 2006, and undersupply since is heavily influenced by change in persons per household.

One has to question more insightfully why more households are getting smaller, and keep in mind the logical outcome that single income households will have higher rates of affordability issues.

 

[evand]

After the property boom in the late 80s the market was pretty flat for most of the 90s. As investors had left the market it reduced the amount of properties for rent and yields rose steadily throughout the 90s.

I remember reading an article in the Sydney Morning Herald in 1998 about 10%+ yields in Mt Druitt and it wasn't hard to find the same around Brisbane at the time. Which eventually led to the next property boom of around 1998-2003 as investors entered the market in large numbers chasing high yields.

Now my point is wouldn't rents be rising, rising, rising (as in the 90s) if there was truly a housing shortage. If people cant buy they rent.

Why isnt this happening? Or is it not relevant?

Also, there is the problem of where people want to live. The reason a 2br shoebox size semi in Balmain is $800k and a large 4br brick veneer home with big yard in outer Sydney is $350k - $400k is because more people want to live in Balmain.

So there is no overall housing shortage. There is an obvious shortage in Balmain (and areas like it) but not in outer Sydney (and areas like it).

I think the shortage is isolated, not general.

I think its a beat up myself. And pretty much all commentary supporting the shortage has self interest first and reality second.

 

[JIT]

I remember reading an article in the Sydney Morning Herald in 1998 about 10%+ yields in Mt Druitt and it wasn't hard to find the same around Brisbane at the time.

Evan do you know what were variable interest rates at the time?

 

[The_Bludger]

Now my point is wouldn't rents be rising, rising, rising (as in the 90s) if there was truly a housing shortage. If people cant buy they rent.

Why would rents be rising when it's cheaper to buy than rent with low IR's ATM? When IR's go up, rents will follow, because these same people won't be able to afford a house and demand for rental prop increases pushing prices up.

 

[evand]

Its only cheaper to buy than rent in a select few dodgy suburbs with house prices about $200-$300k. As detailed in a newspaper article a few weeks ago (there is a thread here about it somewhere)

But my point is if there is a general housing shortage, wouldn't it affect the rental AND the purchase market (house prices) with rents AND house prices constantly rising?

Why would rents be rising when it's cheaper to buy than rent with low IR's ATM? When IR's go up, rents will follow, because these same people won't be able to afford a house and demand for rental prop increases.

 

[evand]

Not sure but they were definitely higher than they are now. By quite a bit i think.

But still, yields were good enough to bring investors to the market in large enough numbers to create a boom.

My god, i remember a few incidences of busses full of investors pulling up in regional towns and swarming all over houses for sale, arguments, exchanging contracts on the front lawn....LOL....it was madness for a while there.

Evan do you know what were variable interest rates at the time?

 

[Minxdamanx]

Evan do you know what were variable interest rates at the time?

http://www.loansense.com.au/historical-rates.html

This link lists variable interest rates. You just need to scroll down for a graph and list.

 

[evand]

Thanks. Looks like varying between 6% - 8% in the period i am talking about.

http://www.loansense.com.au/historical-rates.html

This link lists variable interest rates. You just need to scroll down for a graph and list.

 

[JIT]

Not sure but they were definitely higher than they are now. By quite a bit i think.

But still, yields were good enough to bring investors to the market in large enough numbers to create a boom.

My god, i remember a few incidences of busses full of investors pulling up in regional towns and swarming all over houses for sale, arguments, exchanging contracts on the front lawn....LOL....it was madness for a while there.

(Thanks for the link Minx...)

6.70% pa was the SVR at the time (1998)... not sure if there were discounts on the SVR then though...
Not sure what point I'm trying to make, but I need to ponder what you just said.

 

[JIT]

But my point is if there is a general housing shortage, wouldn't it affect the rental AND the purchase market (house prices) with rents AND house prices constantly rising?

This is precisely what happened in inner city Melbourne from 2005-2007 (the so called ''mini-boom"), with a plateau/correction in prices in 2008 and generally stable rents in 2008 (dropping in some pockets), and in 2009 another surge in prices to new record highs, but with rents not moving up so much.

 

[willair]

Have a look at this site,with cash up people like these,and the prices for businesses that are on their books makes one think what's on offer..
imho willair..
http://www.australia.inbib.com/businesses/property_for_sale_search.aspx

 

[Hulkster]

Have a look at this site,with cash up people like these,and the prices for businesses that are on their books makes one think what's on offer..
imho willair..
http://www.australia.inbib.com/businesses/property_for_sale_search.aspx

That's an interesting site. It looks like they trawl realcommercial and copy listings of businesses for sale. I wonder if they then go to the business owner or the agent with leads?

 

[Ausprop]

Have a look at this site,with cash up people like these,and the prices for businesses that are on their books makes one think what's on offer..
imho willair..
http://www.australia.inbib.com/businesses/property_for_sale_search.aspx

Hi Willair I had a look at the site and was struggling to see what conclusions you were drawing from it - just looked like a bunch of stuff for sale. what was the opinion you were expressing?

 

[boz]

Now my point is wouldn't rents be rising, rising, rising (as in the 90s) if there was truly a housing shortage. If people cant buy they rent.

Why isnt this happening? Or is it not relevant?

.

good post evand,
rent are somewhat capped because demand (and weather there is shortage or not) is very much dependent of rent costs or mortgage costs or home costs.
also the chart WW is showing is outdated as made probably at end of 2006 early 2007 and rent rised very significantly since then (and for sure above David Gruen expectations at that time). rent costs will have big effect on house hold size and occupancy rate.
It is like the usual point of underlying demand of Ferrari car that is always high but somewhat its purchasing cost put a cap the demand (specially between teenagers).
Also in my case if rents would be cheaper I'll end up with a bigger home with an extra spare room and the occupancy rate in australia will be lower as a consequence (i wouldn't upgrade the suburb as i am happy where i am now).

 

[HandyAndy888]

Look boys and girls, the number of empty houses sitting idle around Australia is ONE OF THE FACTORS that dictate supply/demand, but by no means is it the only one....end of story.

 

[Aaron Sice]

no it's not ...

 

[chilliaa]

I'm not sure how to post this so i will just type as i think.
When some people might have expressed concern over equity markets prior to the end of 2007, do you think people would have listened????

I'm very confident given the carnage that subsequently happened that most people would have said NO!!! (you can only have carnage when people are investing based on perpetual blue sky and preferably with borrowing to boot).

Now before people jump down my throat my position on residential property over the last 12 months has been and is still: Neutral

If you dont believe me, use the search function, especially for any postings made mid 2008 to end 2008, i'm no doom and gloomer, and when the s**t was really hitting the fan, i was very proactive in giving opinions not to listen to the dire predictions of some posters (namely Non-recourse)

This forum is very dear to me, there are not many places where one can truely be oneself.

So let me emphasise again:
Dont misconsrue short term prices in the market for validity of ones opinions and thesis's. This especially applies to stock markets, but it also applies to the residential property market.

As Sunfish once said (to paraphrase), many 'loosers' just dispear into the sunset, ie you dont hear from them anymore.

This is just a forum, you dont get to really check on the financial health of posters over the long term. There is no accountability.

Again to verify this look at the number of posters in this forum at this point in time who are from NSW. The proportion is relatively low. Why? because the Sydney residential market has been underperforming over a 5yr basis.

I am not a property bear, i just want to emphasise, prior performance is no guarantee of future performance. Please conduct yourselves with your eyes open.

 

[boz]

Again to verify this look at the number of posters in this forum at this point in time who are from NSW. The proportion is relatively low. Why? because the Sydney residential market has been underperforming over a 5yr basis.

I am with you on this one chilliaa,
more interesting is to check about property investment forum in country like germany, japan or other (excluding uk and us), in the particular case of the other bear forum it is at nearly zero posts for many major country (none care much about weather home prices crash or goes down or up, this even in country where home ownership is higher then australia)

 

[WinstonWolfe]

I am with you on this one chilliaa,
more interesting is to check about property investment forum in country like germany, japan or other (excluding uk and us), in the particular case of the other bear forum it is at nearly zero posts for many major country (none care much about weather home prices crash or goes down or up, this even in country where home ownership is higher then australia)

Interesting point Boz, on why Australia has arguably more active forums about property.

It probably has something to do with

1. change in the cost of property over the last 10 years.
Australia had an unprecedented boom that has shocked many.
Germany and Japan have been negative in real terms for years.

2. population growth rate.
Australia 1.90%
Germany -0.12%
Japan -0.19%