Housing Price Crash in Oz?

[Tim]

I am aware the share markets are super rocky at the moment and that doom and gloom is pervasive, US could go into recession etc, but putting all of that aside, even though Oz has great fundamental in relation to supply and demand to help property prices up, considering that US, UK, parts of Europe, NZ have all had property price drops does anyone think Oz will be different.

I seriously wonder if we might have a significant price correction in Oz in the next year or so. I am not saying I think we WILL, but I guess I wouldn't put it past impossible, and in fact it could be probably.

Any thoughts on this? I mean median property is now 10 times AWOTE not 7 as it was a decade ago.

Cheers,

Tim

 

[Ausprop]

who knows. comforting is the fact that underlying demand is very strong and govts are hopeless at approving and releasing housing

 

[VYBerlinaV8]

Average house size is significantly larger than it used to be, and houses now have better/more features than they used to. People have bigger dreams and better access to credit.

Property out in the mortgage belt will always ebb and flow, depending on the market. Well located, desirable property will increase in value over time regardless.

My opinion is that we will see average house prices stagnate for a while (like the 1990's), until other factors catch up. This could take several years, which for those of us in acquisition phase could be a good thing. I predict the next boom starting about 6-9 years from now. Of course, I could be wrong!

 

[Ausprop]

I predict the next boom starting about 6-9 years from now. Of course, I could be wrong!

this could be depressingly true... I am off to go trading for a few years, buy and die can wait.

 

[casper007]

As far back as I can remember ... people have lived in houses.
With affordability making it tough for many to "Own the Aussie Dream" then rental demand will continue ... making investing in property desirable.

As for capital gains ... well that depends on how well you buy, where you buy, when you buy and how long you intend holding.

It amazes me that so many on this forum espouse the "Buy & Hold" phylosophy ... and yet seem to be chasing the next quick fix...

The fundamentals have not changed ... remind yourself why you decided to get involved in property in the first place ... and go for it.

Definition of luck ... "When preparation meets opportunity".
From what I've read ... there are many "Lucky Property Investors" on this forum.

 

[Harris]

this could be depressingly true... I am off to go trading for a few years, buy and die can wait.

"not buy and cry" sounds more appropriate

significant majority of us here at SS have done very well, even in short term with property... with the intention of buying and holding for the long term

 

[Ausprop]

Am sure they have, including myself, however different times call for different tactics. buy'n'die is appropriate only if you believe the market is rising... else why on earth would you carry a loss making property? If the market will be flat for an extended time then I think it is a trading environment, then prepare for your bnd's at the end of it. you wouldn't want to trade anything that has significant inbuilt cap gains, hence the reason why I have accumulated some IPs along the way (whilst admitting that they do test my patience)

 

[gooram]

Doesn't a bear sharemarket usually correspond with rising property prices as people look for something else to invest in?

Is it different this time? Have there been times when both markets have crashed or flatlined together?

Where are poeple going to put their money when the share and property markets are flat or in decline? Gold? Emus?

 

[Harris]

else why on earth would you carry a loss making property?

we all have carried loss making properties for a while (except ofcourse regional and commercial) in stagnant market (non-rising market) and have done well either due to yield, future potential inc development or simply because the DD tells us that a certain area/ property is under valued. No one knows when a rising market becomes a stagnant market since jumping on the band wagon of rising market is more dangerous in expectation of quick CG than buying in a relatively depressed market, thereby assured of catching the next wave.

If the market will be flat for an extended time then I think it is a trading environment, then prepare for your bnd's at the end of it.

who knows how long the market will be flat for..? When inner mebourne started its historical rise, no one knew that it was increasing except those who sold in that earlier time. No one could predict if its a slight aberration or if the market would keep going up. I thought the prop values in inner melb were at un-sustaining level in mid 2007 and that it might crash soon.. The market went up over 30% since then..in most inner suburbs, so I think no-one can predict those trends.

you wouldn't want to trade anything that has significant inbuilt cap gains, hence the reason why I have accumulated some IPs along the way (whilst admitting that they do test my patience)

those cap gains were there when I bought in inner melb at the peak of last cycle in 2002 and didnt get any growth for the following 4 years followed by over 50% gain within 18 months and still going...

After the last boom, the doom and gloomers were adamant of a big drop or at best, stagnation for the next 10 years.. however that stagnation was there for 4 years for melb. Some of us bought after the peak of last boom, however in regional areas or Perth/ Darwin/ Cairns and have done extremely well.

There are markets and then there are micro markets. Within micro markets, there are streets and individual prop with the X-factor. When you buy with the intention of long term hold and combine those buying decisions with some market intelligence/ DD, it normally pays off sooner than one had hoped for. I certainly have and wouldnt change that strategy.

I would rather buy in a depressed market and buy well than trying to predict the state of the market.

Harris

 

[Belu]

I am in a pre-acquisition phase, starting work on monday and hoping to save enough in year 1 for my first property. So i would definitely like to see a nice quiet market for the next 2-3 years at least whilst i build up. I am not looking to refinance for 5ish years so if i can fit in 2-5 properties before the next move i will be a very happy man

 

[tubs]

I am in a pre-acquisition phase, starting work on monday and hoping to save enough in year 1 for my first property. So i would definitely like to see a nice quiet market for the next 2-3 years at least whilst i build up. I am not looking to refinance for 5ish years so if i can fit in 2-5 properties before the next move i will be a very happy man

I think you'll see different markets at different phases, so when you're ready, somewhere will be booming, somewhere recovering, somewhere flat.

 

[steveadl]

I seriously wonder if we might have a significant price correction in Oz in the next year or so. I am not saying I think we WILL, but I guess I wouldn't put it past impossible, and in fact it could be probably.

No, I doubt every market in Australia will have a price correction at the same time. Individual states, cities and suburbs - you bet! All of them - no way!

 

[Sunfish]

Doesn't a bear sharemarket usually correspond with rising property prices as people look for something else to invest in? Is it different this time?

It's difr'nt this time. But really, it always is. At these depressed levels the sharemarket returns are quite good. I, the sheep investor, would be unlikely to take money out of a market where returns are now quite good and the feeling is "surely it can't fall further" into a much less liquid investment, giving worse return, which is at bubble heights and which could suffer the same falls as shares. That left/right combo might be a knockout. (Maybe that's a little too sophisticated for a "sheep")

Where are poeple going to put their money when the share and property markets are flat or in decline? Gold? Emus?

Gold: Yes. Emus: No. Art and collectibles: Yes. (There is a swing to "tangibles") Resources: Yes (and them what dig 'em) Banks, Financials: No.

All this just my opinion.

 

[sailor]

Just because the US looks like it might have a recession with lower housing prices, doesn't nec mean that Oz will. When we gave up the Gold Standard to have a fiat currency, that put our dollar in relationship to others around the world. So we are not tied to the $US as a standard. The $US is deflating, and by comparison ours is inflating...like a seesaw...but we are also operating in relationship to other countries who are also inflating against the $US. I think Oz will be sufficiently bouyant to ride our the tide.

 

[BV]

A US recession means that they will be buying less chinese goods
less cars, less of everything so it will slow down production in china.

China will have reduced appetite for our raw materials, our resource companies/states will be hit, recession will spread here too starting from WA and QLD and the cycle repeats again....IMHO

Will this have an impact on housing?
I believe it will because people on unemployment cannot support loans.
They can't sell their PPOR (they have to live somewhere)
so they will have to control expenditure starting with the sale of some of their IP's. IMHO

cheers

 

[BV]

btw, I wouldn't be surprised if some IP selling starts soon because of the problems in the share markets and forced margin calls by the banks.

I am talking about property investors who used IP equity to get into the share market.

cheers

 

[Ausprop]

the resources that drive WA and Qld are predominately energy, something for which I don't see demand ever dropping for. too bad if it does seeing as it is contracted!

 

[devo76]

A US recession means that they will be buying less chinese goods
less cars, less of everything so it will slow down production in china.

China will have reduced appetite for our raw materials, our resource companies/states will be hit, recession will spread here too starting from WA and QLD and the cycle repeats again....IMHO

Will this have an impact on housing?
I believe it will because people on unemployment cannot support loans.
They can't sell their PPOR (they have to live somewhere)
so they will have to control expenditure starting with the sale of some of their IP's. IMHO

cheers

Would this mean that since the property boom in WA and QLD is largely supported by the resources boom, they have much more to lose as far as house values go if things slow down. And since NSW and sydney is still a flat market with minimal positive effects from the current resource boom.Then NSW and Sydney will be less effected by a recession starting from a slow down in resources???

 

[BV]

Would this mean that since the property boom in WA and QLD is largely supported by the resources boom, they have much more to lose as far as house values go if things slow down. And since NSW and sydney is still a flat market with minimal positive effects from the current resource boom.Then NSW and Sydney will be less effected by a recession starting from a slow down in resources???

Yes without a doubt.

Also, Sydney siders have a love affair with shares and IP's and many of us
thinking of our retirement near the water tend to buy IP's interstate.

The current state of our share market is not looking good and could get even worse.
If we get in a difficult financial situation we could be forced to sell.

I am ok as I've sold most of my shares early but I know a few
who could be in that difficult situation very soon.
Cheers

 

[Mofra]

I seriously wonder if we might have a significant price correction in Oz in the next year or so. I am not saying I think we WILL, but I guess I wouldn't put it past impossible, and in fact it could be probably.

The US & UK have already taken a mighty hit, however we are shielded largely by incompetant local government who somehow manage to justify year on year a building approvals rate of less than half of the required rate when measured to population growth. Domestic credit standards are higher so we only feel the secondary funding effects of the sub-prime crisis.

Quality areas still have some demand, areas with a lack of infrastructure are widely tipped for a period of flat growth (therefore a decline in real terms).