Are Australian property prices going to crash?

[WinstonWolfe]

Also worth noting is that Fair Work Australia (what a name... ) just raised the minimum wage by 4.8%.

So they're going to raise the minimum wage greater than cpi or gdp how many years in a row?

And people on the minimum wage effect house price growth how?

The more I hear out of Rudd's mouth, the more I see annual rent increases being capped.....now that'd be a black swan........but then, that'd adversely effect tax revenue...cos IPs would stay negatively geared longer

 

[truong]

Truong, back of the envelope calcs have their blind spots.
Every IP has in costs.
1% hold costs are very optimistic.

1% average is what I’m achieving... Mind you, depreciation is not yet counted in there...

Doubling every 12 years is 6%pa growth....for 20 years!!! Maybe achievable, maybe not. There's heaps of regions that are still under pre-GFC prices.

Is 5.9% CG achievable in future? Don’t know. I’m no economist and doubt even economists would know. But assuming inflation around 3%, wages around 4%, household disposable income around 5%... CG of 5.9% doesn’t appear completely out of place.

This will strengthen the case for timing the market. Putting cash into a passive investment that can't beat cash for 5-8 years, makes timing all the more attractive.
The other option is to be an active investor, and intelligently pre-empt zoning changes.

Yes, “time in the market” may not be enough any more.

 

[Deltaberry]

Fortunately HE, I'd had a few sav blancs when I read your post so it made sense.

I agree with your insight that you are more likely familiar with wage rises in a specific sector, unrepresentative of the services sector that comprises 65-70% of gdp.

You have prompted an interesting question in my mind.....the correlation between cpi and wage price/index growth

I'll have to do a long term chart of the relationship.

Yea please do. I'm hoping to get a good payrise, but somehow think it's just as likely I'll get fired hahaha...

 

[Roachy]

There was a great segment on the 730 report last night about this topic. The journalist (forget the reporters name) believe that the general supply and demand method will count true for house prices, and they will continue on the up. He sourced a number of facts one being that there wa 360000 properties (May figures) still needed to rectify the current housing shortage and that the government can only make approximately 20000 by 2015. Also, an interesting town planning fact about that the release of new land will not happen until 2020 because they want to discourage urban sprawl etc etc.

Im sure all of you have heard it before, but it was a very interesting report.

 

[Deltaberry]

There're always numerous arguments to support both sides of the coin.

Also no matter what numerical analysis we do, I can twig the assumptions until my point is proven. Do you want me to prove BHP is overvalued or undervalued?

I guess my point is, it's all voodoo at the end and no one knows. As the shoeless investor says, tread your own path. Fundamental value? Intrinsic value? Hah! Try a day in an investment banking office and see what you think of it afterwards.

 

[Ausprop]

Fundamental value? Intrinsic value? Hah! Try a day in an investment banking office and see what you think of it afterwards.

unlikely to happen for me - so care to share?

 

[WinstonWolfe]

Yea please do. I'm hoping to get a good payrise, but somehow think it's just as likely I'll get fired hahaha...

Hmmmm....as I suspected. Wages are increasing faster than cpi.....which to my mind confirms what BS cpi methodology is.

Isn't it just dandy to see public servants value their man hours greater than the private sector, that they draw a wage from. It seems the govt's view on economic stimulus is to ramp up the pay rates for public servants....while the private sector is cutting theirs.....what ever happened to tax cuts as a fairer form of economic stimulus?

 

[Ausprop]

what ever happened to tax cuts as a fairer form of economic stimulus?

the govt is confused tho as it is stimulating and de-stimulating (respect tax, IRs etc)

 

[BayView]

hi, not to be facetious, which property did you buy that lost 40%, Sunfish?

KY

It'd be the same type of one that everyone else bought at the top of the frenzy and sold at the bottom of the panic.

 

[BayView]

Yea please do. I'm hoping to get a good payrise, but somehow think it's just as likely I'll get fired hahaha...

A person on a 45% tax bracket doesn't really need a payrise.

But, I hope you get it.

 

[BayView]

Cut the crap, I can read. And since when is being old a sin? Ageism is rife here but we can't TOU it.

I think I'm older than you.

What does TOU mean?

 

[Sunfish]

What does TOU mean?

"Terms of use". You agree to them everytime you log in. If you believe a post to be out of order there is a red triangle in the top right of every post to click on so you can report it. Just don't bother TOUing a moderator. LOL