House prices in freefall

[Sunfish]

Bill; You need to ask that Q of someone smarter than I.

Most US commentators prefer the 12-18mths of muddle through. But what do they know.

If you really want to be scared, on financialsense.com they speak of The Perfect Storm, a take off from the movie and of the Greater Depression. But you can proove a case for anything.

Thommo

 

[Peter 14.7]

Suppose they rise theirs by 50 points to 1.50%, the impact of such a rise is of 50%,

Hi All

Re Sparks Comment

"Suppose they rise theirs by 50 points to 1.50%, the impact of such a rise is of 50%, much more than 50 points here for example (which would be only 10% rise). This is the reason why I do not believe that the US RB will close the gap so quickly... Thus, IMHO, it will take a very long time for rates here to get to 6%, at max... "

I agree with Acey post

"True, but it may take bigger rises to influence the US economy than it is taking to affect Australia's."

Purely on the logical reason that (assuming the parameters have not changed) Fed Reserve had to drop thier rates a lot more to start the US economy......... so they should have to raise them a lot more than Oz to control a booming economy.

The question is....Is the USA economy back on track or booming?

Peter 147

 

[Sunfish]

"The question is....Is the USA economy back on track or booming?"

No.

T

 

[Bill.L]

Hi all,

Greenspan in the US stated today that the economy was in an expansionary phase and that the fed could accomodate it without raising rates.
This sounds inflationary to me.

The $US tanked($A at new highs), rates here probably on hold for a few more months, is this a green light for property investors, despite the gloom and doom in the media??

The suburb of Freefall may become just a fleeting thought and memory

bye

 

[suggo]

Well I am not seeing any freefall in houseing prices thus far. When is all this happening LB? Suppose to be happening now isn't it?

And rental market seems healthy enough too. We just rented out one of ours for more than we were getting and had something like 30 calls, 7 inspections (on an open for inspection day) and had five applications in on that same day. This was from two ads in the Courier Mail (Wed and Sat). The old tennents moved out on Thursday and the new moved in on Monday. Damn I hate it when there is such long vacancies!!! I mean with all these supposed vacancy signs around I can see why it takes soooo long. BTW I live in Brisbane as well folks and I haven't seen too many of those vacancy signs around. Anyway just thought I'd ask where the cheap houses are, I'd like another couple please!

 

[L Bernham]

Maybe you havent noticed but many of the places that were vacant are now "for sale". The stock of houses for sale is going up and up. If you dont believe me pick a few random suburbs and see how many are available for sale on realestate.com.au, then look a week later and you'll see there are more than there were the last week.

I don't know about the freefall in house prices. I never said there was one. Didn't I just post an article asking for comments?
Prices will fall, there is no doubt about that. 1,2 and 3 years from now they will be lower than what they are now, and thats on the record. Keep note of this date.
Too many people are trying to turn their paper profits into money and too many are finding its not so easy. My parents were lucky enough to sell at the top just recently but it took a while to sell and they were starting to get nervous.

LB

Well I am not seeing any freefall in houseing prices thus far. When is all this happening LB? Suppose to be happening now isn't it?

And rental market seems healthy enough too. We just rented out one of ours for more than we were getting and had something like 30 calls, 7 inspections (on an open for inspection day) and had five applications in on that same day. This was from two ads in the Courier Mail (Wed and Sat). The old tennents moved out on Thursday and the new moved in on Monday. Damn I hate it when there is such long vacancies!!! I mean with all these supposed vacancy signs around I can see why it takes soooo long. BTW I live in Brisbane as well folks and I haven't seen too many of those vacancy signs around. Anyway just thought I'd ask where the cheap houses are, I'd like another couple please!

 

[suggo]

Maybe you havent noticed but many of the places that were vacant are now "for sale". The stock of houses for sale is going up and up. If you dont believe me pick a few random suburbs and see how many are available for sale on realestate.com.au, then look a week later and you'll see there are more than there were the last week.

I don't know about the freefall in house prices. I never said there was one. Didn't I just post an article asking for comments?
Prices will fall, there is no doubt about that. 1,2 and 3 years from now they will be lower than what they are now, and thats on the record. Keep note of this date.
Too many people are trying to turn their paper profits into money and too many are finding its not so easy. My parents were lucky enough to sell at the top just recently but it took a while to sell and they were starting to get nervous.

LB

Post #68 27-01-04 by LB
"It is quite basic economics really. I know these boring old supply demand rules get thrown out the window during a boom but eventually sanity and reason return. It happens in all markets.

AS a result I can finally see this occuring, and you will start seeing reports of this coming in the next few months"

lol, keep dancing LB, keep dancing!

 

[ToGetProperty]

All house projections only have little value. I am holding two copies of APM Sydney Property Guilde of 2003 and 2004 published by Sunheral. Take a example:

Blacktown (2148) house
In 2003 copy:
predicted by APM: (+)5-9%
Actual growth: (+)21.5%
Predicted by Economics: (-)20%
In 2004:
Predicted by APM: (+)7-11%
Predicted by a member of this forum: (-)40%
What is the actually growth? Increase or decrease? We will know it by the end of this year.

The whole western Sydney have similar results as above.

I listen to all of those projections as well as their arguments. However, I will take actions according to my own research. And most importantly, no matter who is correct, I am still survive and properous. That is all.

TGP

 

[L Bernham]

Post #68 27-01-04 by LB
"It is quite basic economics really. I know these boring old supply demand rules get thrown out the window during a boom but eventually sanity and reason return. It happens in all markets.

AS a result I can finally see this occuring, and you will start seeing reports of this coming in the next few months"

lol, keep dancing LB, keep dancing!

And I say it again, you will continue to see reports such as this - (from last weeks SMH)-
Bondi heart breaker in wave of prices going down the tube
By Jonathan Chancellor, Property Editor

A Bondi unit was bought in 2001 for $470,000, and was covered by a $400,000 mortgage. But when it sold this week the bank accepted $1000 less than that, in a market that is starting to look friendlier to buyers.

The $399,000 taken for the two-bedroom unit in Penkivil Street was at least close to a break-even deal for the bank.

More troublesome was a Balmoral mortgagee apartment passed in at $2.16 million last weekend, bought two years ago for $3.05 million by recently bankrupted property developer Robert Orehek. There were seven lenders with caveats registered on its title and a State Government claim for unpaid land tax.

Last year it was residential auction clearance rates that toppled, slipping to 42 per cent in December, but now, with record March volumes, it is prices that are under pressure, particularly for properties with drawbacks.
****
How many more properties are going to have to be sold for 50% less than they were bought for before people are going to realise that this is going to be general trend for the next few years. When there are more sellers than there are buyers, prices will fall. Just as the opposite is true when demand outweighs supply.
Quite obvious really.

LB

 

[BV]

LB
there will always be properties that
previously sold for record high prices and in the current climate
they will only sell for what they are actually worth.
That doesn't mean that prices are falling everywhere.
It simply means that vendors should expect their properties to sell
for what they are worth.


ToGetProperty,

Doing your own research is better.
If you drive through an area will give you an idea on how it rates
compared to the areas around it.
The figure that APM release does not take into account
improvements in infrastructure shops, schools
hospitals etc.

If you take Blacktown as an example, Their westfield shopping centre
is currently being rebuilt. Land around it has run out,
Motorways and other roads are under construction.
The council boundary covers a large area so they have lots of rate payers
and lots of money to spend (parks, playgrounds and roads will improve as a result)

Even if you didn't take into account the improvements in the area,
and you only compared their property prices with those of other areas,
then Blacktown prices would seem undervalued
(hence the +10% prediction).

At the same time, property prices in the area are near entry level for the
Sydney Market so to me it doesn't seem that they are going to suffer
any price drops. Pity I can't borrow any more money...

 

[L Bernham]

LB
there will always be properties that
previously sold for record high prices and in the current climate
they will only sell for what they are actually worth.
That doesn't mean that prices are falling everywhere.
It simply means that vendors should expect their properties to sell
for what they are worth.

A sample of one, does not a population maketh.
No joke.
What I was saying is that there will be more and more reports like these. When the commercial current affiar shows finally pick up on this I think it would be a good time to buy again.

 

[nic]

Maybe you havent noticed but many of the places that were vacant are now "for sale". The stock of houses for sale is going up and up. If you dont believe me pick a few random suburbs and see how many are available for sale on realestate.com.au, then look a week later and you'll see there are more than there were the last week.

L Bernham

I can't say for other places, but I have been closely watching the suburb of Doonside in Western Sydney. At the beginning of the year there were 33 properties for sale in Doonside listed on realestate.com.au. By February the number has risen to 40. I didn't have access to the Internet in the last week or so. Has just logged in tonight and found the number of properties is down to 29. Obviously, no panic selling there.

Cheers
Nic

 

[Aceyducey]

Is the broken record still playing?

Prices dropping 35%....number of properties on market increasing (gee my .com shares are doing well!).....economy tanking...interest rates going through the roof...all contrary examples from others are singular cases and WON'T occur across the board but my singular cases are examples of what WILL happen across the board.

Any new information or insights worth me taking L Bernham off my ignore list yet?

Cheers,
Aceyducey

 

[L Bernham]

FACT: there have been more properties coming onto the market each week in Australia than there have been that are actually selling = more sellers than buyers. This has been observed since the start of this year.

If I'm wrong please tell me, but my research shows differently.

 

[suggo]

LB, was that the two-step or the rumba?
lol, please stop, I am feeling embarrassed for you.

Actually I could use some help painting and wondered if you wanted to come round and paint yourself into a corner at my place as well.

 

[JumJones]

My view ..

Because we are all educated investors, or on the road to becoming one, I like to think that we should be able to stay emotionally detached from predictions, snake oil vendors and market sentiments.

Q: Who is concerned about predictions? Who cares if property prices drop a bit?

A: Uneducated, misinformed, easily led property investors OR property investors knowingly exposing themselves to this risk.

I shouldnt care less if property prices fall. Why? Properties generally fall into one of two categories.. Cashflow, or Capital gainers. Each has a purpose to my long term strategy.

Why dont I care if property prices fall? Because I structure my wealth creation machine in a way that it will never be affected.

Cashflow properties are setup in a way that the underlying value of the asset does not affect its contribution/purpose to your investment goals. They are purely used on the basis that you get more money out of it, in cash, than you have to put in. It is a vehicle for delivering cashflow to maintain your other assets, your lifestyle, whatever. If the underlying value of these over the long term NEVER move up, you are still achieving what you require. Cashflow.

I dont care about falling prices on the Capital gain properties either. Huh? Why? Because of prudent selection criteria. No speculation, no forecasting, no predictions involved in the decision when aquiring the workhorse, the mainstay of what is going to make me rich. How? Pay the right price for the property in the first place, and purchase in above average locations. Simple. No emotions, no complicated strategizing. Sure the value might dip a bit, but because i'm never hocked up to the hilt, and I have several ways to service debt I will never have to worry. Ever. I will never be in a position where I am forced to sell. NO trying to predict which suburbs will boom. I KNOW which suburbs will deliver consistent, above average capital growth. We all do .. we all know what makes a great suburb, what attracts people to a particular place.

The machine will grind on. No predictions required. Hell, hardly even any effort involved either.

 

[L Bernham]

suggo
when you're through with your clever dancing themes, do you want to give us something that disputes the facts as I've stated? Or is this not possible.

 

[np2003]

I just received the real estate buyers guide for March and I can tell you one thing. IT IS THE BIGGEST I have ever seen. There are soooo many properties listed for sale, its not funny.

 

[see_change]

suggo
when you're through with your clever dancing themes, do you want to give us something that disputes the facts as I've stated? Or is this not possible.

Had a look at your post LB. First for a while. I see nothings changed.

In scientific terms you need to provide the evidence before your Theory , or assumption ( that the market is going to the crapper ) can be taken to be a fact.

I see no evidence on your post to this effect . So for you to state that your assumption is fact is actually, um , incorrect.....

Is that simple enough for you to understand ?

Maybe it is ( going to the crapper ) . Time will tell , but while we're all waiting, try and put a bit more substance in your posts , rather than mere spin.

If you do that , then people around here might take you a bit more seriously.

See Change

 

[ToGetProperty]

Keep posting LB please

LB:

Without your input, this forum seems going to one way - too positive.

I have bought 4 houses around Blacktown areas in less than 12 months and the last contact was signed at July 2003. All of them have 10 to 60% capital growth.

However, I have only experienced this booming cycle of property market. And no idea about the period of 18% interest. When the insterest rate was 18%, nobody would believe it will be down to 6%. Today, it is 6.5%, not many people could believe it may go up to 11% in the future either.

I help others to buy few cheap houses in Blacktown as well. And still suggest new comers to buy now although I have stopped buying. I do drive through Doonsite, Blacktown, Seven Hills areas every week and go shopping in the West Point shopping Center, Blacktown, since last year.

However, I would like to hear some negative opinons about the market as well as their arguments.

Keep posting LB, please.

TGP