Australia prices falling faster than US at same stage of cycle

[tubs]

The US and Australian markets are VERY different beasts.

The US market has had the subprime problem.

Aus doesnt even HAVE a subprime market.

How do you know Australia and the US are even in the same cycle? A slight decline from the peak is hardly an indication of the next movement. I think it will be sideways and then back up for Aus.

I read somewhere that house prices in the last 5 years rose FASTER than the price of VCRs! And look at how cheap VCRs are nowadays!!! Based on that, I think property has to be doomed.

 

[sphinx]

How is this for a fact.

In my area the median price in Nov 08 was $475k. In Dec 08 the median price was $910k.
Its awesome what light volume can do for statistics.

Interesting. My data is ABS data in all major cities. Your data is "your own area"?

 

[boomtown]

Data is obtained from a "suburb report" generated electronically by PDSlive for the inner Brisbane suburb where I (and my family) hold all our IPs.

Yes all of our IPs are in the same postcode... but this is because we believe that area is undervalued / overlooked.

During the relevant period the lowest sale was under $100k and the highest sale was over $5 million.

The only lesson to be drawn from this is that statistical measures become increasingly unreliable as the sample size decreases. Across inner Brisbane volume is currently so light that any measure of median house prices is just garbage data. Maybe this will change as we get new fresh data following the what is apparently a FHOG boom (although I predict this will show median prices dropping sharply as lower end properties are transacted rapidly while high end properties simply dont move). This doesnt mean house prices have dropped - it just means that there are lots of FHOGs and few luxo manors being sold.

I can see this myself with new luxury apartments going straight onto the rental market - the developers arent dropping the price they are just renting them out and waiting for the market to recover. In one unfortunate luxury development almost the entire tower is up for rent...

Of course our good mate Keen will be hopping up and down yelling "I told you so - there has been a 40% collapse!" when in fact house prices havent changed but the type of house forming the bulk of sales has changed dramatically.

 

[turk]

Interesting. My data is ABS data in all major cities. Your data is "your own area"?

Hi Spinx

My data is also ABS data, do you consider dropping by less than 2% after an extended bull market to be (in your words) dropping like a stone?

Cheers

Pete

P.S. How are you going finding the US Gov. data

 

[Dazz]

Interesting. My data is ABS data in all major cities. Your data is "your own area"?

That's not interesting. That's normal human behaviour for an investor to monitor the small local market where that investor has invested. It's highly relevant for them.

What's interesting is knowing what you are going to do with your data. What does the ABS data for all major cities indicate about your investments that you currently hold ??

 

[boomtown]

Hey Boomtown, Isn't the median price the middle amount of number of sales?
eg. $4 $9 $2.. the median price would be $9? If that's the case than it could change by quite a bit every month? It would still be an indication of prices increasing but not as good as the average sale price?

Thanks
Andrew

A median is less volatile than a mean (commonly referred to as an average). The "normal" median in my area is $475k and the "normal" average is $800k. This is a function of a large volume of sales around the $400k price point with a smaller number of sales in the $1 million + bracket. The median effectively disregards the small number of high value sales, the average takes them into consideration.

 

[yorke]

yet another personal attack.
It would be much more convincing if one single poster on this forum can look at the factual data and say it is wrong. A fact is a fact no matter who says it.

Ok, I'll bite.
It wasn't a personal attack, the guy needs attention and from the looks of it he needs to be quarantined.
What are the facts you speak off ? The paper was released before the interest rates and FHOG started to have an impact on the market. In fact some may say that he had to release it before the two kicked in and his fictional work became obsolete.
We all know the property prices in most suburbs were down in the first 3 quarters of the year, it was in all the newspapers for the last half of 2008 so not exactly a revelation despite his insinuation of a media conspiracy to hide the truth.

And if the world went crazy and interest rates dropped by almost 4% overnight - down to 5% -somebody buying a roughly median priced home would still need a massive deposit of almost $200,000 to enjoy the same standard of living as they do renting that home!
Now, I don’t think anybody is predicting mortgage rates of 5% in the very near future. And even if that were to occur, because our house prices are so ridiculously high, renting would still be the better financial option.

The world must be getting crazy, Brett and his buddies are the only sane people around.

Yes, that’s right. Miami did not peak until well after the other US cities peaked, but it caught up in a hurry! I would suggest that this should serve as a word of caution to anybody feeling optimistic about Darwin house prices.

Wow, Darwin residents must be happy to be compared to Miami.

This is exactly why decreasing interest rates will not bring back first home buyers.
There is no way to escape that house prices must fall significantly before young Australians will buy homes again.

That's what I call confidence. I guess we will see soon enough, although I noticed that even the mods on the other site have started buying recently so it looks like old Brett got it wrong once again.
Brett, maybe its time to give up blogging and get a real job. Then go and see your bank manager for a mortgage to buy that house you've been waiting to buy all these years.

 

[essence]

Interesting. My data is ABS data in all major cities. Your data is "your own area"?

Ok Brett (aka sphinx) - you obviously were kicked out of news.com site, so now you are preaching here?

Do not pretend that it was not explained to you many times, that at the beginning of the boom people snap up cheap properties first. At the same time luxury suburbs suffer from sharemarket crash. This is why when boom begins, median prices go down. Always.

When ABS data will show increase in median price it means that you missed the moment to enter property market. This is when stampede begins.

And this is how to tell real investor from the rest - real investor goes ahead of the herd and gets the greeniest (did I spell it right?) grass.

 

[devo76]

yet another personal attack.
It would be much more convincing if one single poster on this forum can look at the factual data and say it is wrong. A fact is a fact no matter who says it.

You guys make me laugh. You sit in your little G.H.P.C cyber world slinging s#@t in any direction and then openly comment on how you are going to go and rev up the people at somersoft. You then drop in with your usual cut and past crap showing one bit of information that conforms to your ideas. This usually being a direct attempt at baiting. And when us fishies take the bait you get all defensive. At that point you normally scurry back to your hole to tell all your live at home sour with the world buddies how you stirred up some more crap. Blah blah blah

 

[fald1]

my prediction:
there's no way prices are going to fall nationally by more then 5% for 09.
the government and demand won't let it. I think it will be about 2%.

some areas will drop more though!
residex has calculated perth fell 7% in the dec quarter:
http://www.theaustralian.news.com.au/story/0,,24914426-25658,00.htm

according to residex they are now worth 480k, so they fell 7% from 513k (480x1.07) = $2750 capital loss each week on average.

and residex are saying that more falls are expected there.

so yeah, perth is going to drag the nation's real estate figure into the negatives, but there will be plenty of lower end pockets in oz for good investment, I intend to find them out.

(but first i'm waiting for ABS stats and RBA meeting, both in feb)

 

[BayView]

Bumped into a paper on this website: "Prices falling faster than US at same stage of cycle" http://www.geocities.com/homes4aussies/h4a081104.pdf (homepage: http://www.geocities.com/homes4aussies/)


* If the peak was March 2008, in the first 6 months till Sept.(ABS's Dec. data won't be out till Feb02), Australia prices are falling faster than US at same stage of cycle. (US house prices didn't drop like a stone.. and there were plenty denials in the 1/2-1 year)

* some discussion on how media/housing price data companies have been trying to switch to long term data (1 year) rather than short term (6 month) to cover the fact of dramatic falling.

Interesting read.

One of our local agents who I know pretty well reckons that there are very few buyers, and basically only the desperate sellers are actually selling. As a volume of sales this is small.

Everyone else is either taking their houses off the market or holding on until someone comes along with a suitable offer - which isn't many.

In other words; the majority of prices are reasonably stable in our area at the moment. They may continue to drop a bit, but unless there is mass desperate selling, and there is no indication of this occuring in Aus, then this won't happen I supect.

Does this mean a full-scale collapse? I'd doubt it.

More likely a period of no growth or very slow growth.

 

[evand]

This is exactly what the blind optimists (aks rose colored glasses) do in reverse.

This is the funniest thread i've seen on here in ages and displays to me the limited investing knowledge and experience of the majority of members on the forum.

You guys make me laugh. You sit in your little G.H.P.C cyber world slinging s#@t in any direction and then openly comment on how you are going to go and rev up the people at somersoft. You then drop in with your usual cut and past crap showing one bit of information that conforms to your ideas. This usually being a direct attempt at baiting. And when us fishies take the bait you get all defensive. At that point you normally scurry back to your hole to tell all your live at home sour with the world buddies how you stirred up some more crap. Blah blah blah

 

[essence]

This is the funniest thread i've seen on here in ages and displays to me the limited investing knowledge and experience of the majority of members on the forum.

If everybody around seems dodgy to you, it is time to take a long, hard look at yourself.

As to investment knowledge and experience there is simple measure to it. It is called "net worth". What is yours (excluding any inheritance that you received)?

 

[lizzie]

"-somebody buying a roughly median priced home would still need a massive deposit of almost $200,000 to enjoy the same standard of living as they do renting that home!"

since when is the average rental or purchase home around $1mil in australia? get real.

"Miami ... this should serve as a word of caution to anybody feeling optimistic about Darwin house prices."

haven't seen a majority population, overabundance of grey haired, liver-spotted retirees living in thier condo's in darwin lately. lots of industry workers tho.

"This is exactly why decreasing interest rates will not bring back first home buyers. There is no way to escape that house prices must fall significantly before young Australians will buy homes again."

but they have returned already. the dropping interest rates, increasing rents, slightly dropped values and fhog have all combined to pursuade the fhb'er to enter the market in droves.

i'm sorry but i can't take this brett guy seriously. okay, so i don't pour over general abs stats, but instead look at what is actually happening on the ground today. i know what is more up to date and gives a clearer indication of the movement of the market.

 

[evand]

who said anything about dodgy and more than yours.

If everybody around seems dodgy to you, it is time to take a long, hard look at yourself.

As to investment knowledge and experience there is simple measure to it. It is called "net worth". What is yours (excluding any inheritance that you received)?

 

[joeExpat]

One of our local agents who I know pretty well reckons that there are very few buyers, and basically only the desperate sellers are actually selling. As a volume of sales this is small.

Everyone else is either taking their houses off the market or holding on until someone comes along with a suitable offer - which isn't many.

Todays desperate sales and bargains are tomorrows market prices.

I found the article interesting and well researched (he could have structured it better with sections, contents, etc though). He's correct with his assertion that negative gearing has created a speculative premium in the Australian boom and that the removal of taxpayer subsidies for real estate investors would go a long way to helping first home buyers. Doesn't seem likely though from the response from the treasurer, though full CGT reinstatement does.

 

[lizzie]

If everybody around seems dodgy to you, it is time to take a long, hard look at yourself.

As to investment knowledge and experience there is simple measure to it. It is called "net worth". What is yours (excluding any inheritance that you received)?

now now - don't get slanging and posturing again you two.

evand could very well have been talking about the "other" forum ... he knows there is a lot of experience around here.

 

[essence]

who said anything about dodgy and more than yours.

Thanks,

Now I see you really ran a business.

 

[lizzie]

He's correct with his assertion that negative gearing has created a speculative premium in the Australian boom and that the removal of taxpayer subsidies for real estate investors would go a long way to helping first home buyers. Doesn't seem likely though from the response from the treasurer, though full CGT reinstatement does.

and how would we look if instead they gave us the american ability to claim interest payments for the ppor against the income?

if the government did that, they'd be welcome to my negative gearing any day ...

 

[devo76]

This is exactly what the blind optimists (aks rose colored glasses) do in reverse.

This is the funniest thread i've seen on here in ages and displays to me the limited investing knowledge and experience of the majority of members on the forum.

Are you saying i am a blind optimist because i dont follow the gloomers.
*I believe values have/will drop.
*I dont believe that values only go up.The people that do i believe also have issues and run the risk of investing biting them in the a##.

I do however believe that when it comes to investing it is best to listen to INVESTORS. Preforably ones with expieriance and wealth.
I dont listen to people with sour grapes or hidden agendas or limited to no investing expieriance.

And i sure as hell dont waste my time by going over to that other site to post positive stories just to stir the pot. If they want to live in a hole more power too them.

What i believe.

Listen to people that do,not the people that find reasons not too.
Values will continue to go up LONG TERM.
This crisis will pass.
Have a buffer.
Select your properties well.
Notice that nowhere do i say "head for the hills ,we are all doomed"