Increasing doomers and gloomers , another indicator to buy ?

[strongy1986]

I think there could be something in this seechange.

The D&G'ers I know became D&G'ers right after they first attempted to buy a property, but then realised that little cute 2 bedder in Elwood they've been renting for $400pw/3% requires a $60k/10% deposit which they have just thought about saving towards for the first time at around age 30 (and they are currently unable to accept the thought of buying a place far out in the suburbs).

So yes, to me, most D&G'ers are people who tried to be first home buyers but failed, so they whinge and post on forums instead, and lots of first home buyers entering is usually what starts booms.

That's the example I use!

Everyone moves to Elwood and st Kilda and then when they are 30 - 35 they wake up to reality and realise they are screwed.
The more realistic people I know live between mordi and frankston
There's always exceptions though

A lot of talk about the peninsula being a good option amongst peers. Not much work down there though

 

[The Fence]

USD is increasing it's value slowly. AUD is under 90 cents now.

Not on my chart, it's 92.18c right now.

Reserve Bank may want to keep the $ somewhere between 90-95 cents. => Rate increase => Break in our boom run

No need for rate increase, they have it between 90-95c now.

Boom on....

 

[Jacque]

Realists buy properties and make money; there is no perfect market or time.

My thoughts exactly. I would like to add, however, that there's another as-yet unmentioned factor that can play a significant role in affecting price growth (besides IR's, sentiment and economic conditions) and that is govt intervention. FHBs are now the thinnest population on the ground they've been since 'no-grant no-concession' days a loonngg time ago now. Since the removal of the $7K grant for established homes and SD concessions on the same in 2012, activity from this group has dwindled to new lows in this sector of the market.

IF the fed or state govts were to consider re-introducing other concession/grants or incentive to FHB's, downgraders or investors all the "signs" in the market mean diddly-squat. Let's not forget what happened back in 1985 with the removal (and reinstatement in 87 by a spurned labour govt)- Sydney rents alone rose by over 50% following the mass sell-off by investors.

Buying "indicators" are useless on their own- buy when you're ready and can afford it. As Intrinsic Value points out, markets are determined by buyers and their wallets. Affordability is absolute key.

 

[impala67]

...IF the fed or state govts were to consider re-introducing other concession/grants or incentive to FHB's...

Being more experienced than I, do you have on opinion of what factors are needed for this to occur again? Does anyone else?

That's the example I use!

Everyone moves to Elwood and st Kilda and then when they are 30 - 35 they wake up to reality and realise they are screwed.
The more realistic people I know live between mordi and frankston
There's always exceptions though

Very true - You can interchange a few more suburbs for the same point. The longer the "sheeple" stay in fantasy land, the better for landlords.

A lot of talk about the peninsula being a good option amongst peers. Not much work down there though

IMO any Government that introduces better transport to the South East and into the Peninsula, e.g., a train or tram on Eastlink or even a non-tolled Eastlink would be a winner amongst voters.

 

[turk]

Realists buy properties and make money; there is no perfect market or time.

Well, that quote brought a wry smile to the dial, one long term property Doomer & Gloomer here has been predicting a 15%-20% drop in property prices since 2008 uses the tag,

Not a bear just a realist

 

[wategos]

Let's not forget what happened back in 1985 with the removal (and reinstatement in 87 by a spurned labour govt)- Sydney rents alone rose by over 50% following the mass sell-off by investors.

On the contrary we should forget myths like this that have no basis in fact.
Investors did not sell off, and even if they did who would they sell off to ? Other investors or former renters .. the demand supply equation remains the same and there is no upward pressure on rents.

There would however be downward pressure on prices, enabling more first home buyers to enter the market without as much competition from speculators dependent on negative gearing. If the government were serious about helping first home buyers they would remove all forms of grants and subsidies, including negative gearing.

 

[impala67]

...myths like this that have no basis in fact..

... remove all forms of grants and subsidies, including negative gearing.

When CPI inflation is subtracted from the nominal rent increases, nominal rents nationally

did rise by over 25% during the two years when Negative Gearing was quarantined.

Nominal rents rose strongly in every Australian capital city, according to the official ABS CPI Data.

 

[wategos]

When CPI inflation is subtracted from the nominal rent increases, nominal rents nationally

did rise by over 25% during the two years when Negative Gearing was quarantined.

Nominal rents rose strongly in every Australian capital city, according to the official ABS CPI Data.

They only rose strongly in Sydney and Perth, for other reasons, since they rose even stronger after negative gearing was reintroduced.

Negative gearing will go, as it should, it's just a matter of time. It's costing the nation too much (not just in monetary terms). This will be particularly evident when interest rates rise significantly.

 

[DavidMc]

Negative gearing will go, as it should, it's just a matter of time. It's costing the nation too much (not just in monetary terms). This will be particularly evident when interest rates rise significantly.

Off topic, but... isn't giving LL's a negative gearing benefit cheaper than providing public housing?

 

[TMNT]

http://www.theage.com.au/business/t...me-ratio-at-record-levels-20140404-362bz.html

im not a doom and gloomer, but whats everyones opinion on rising household debt, and more importantly a record high in income to house prices ratio,

playing devils advocate, there should be a point where property prices stop growing or slow down significantly as incomes dont increase at the same rate as property prices,

at some point the demand should drop significantly when a 3bdr home 40kms from the city costs $1m in todays dollars, which obviously is just about unaffordable for anyone on the average wage

However, then people will stop buying and rent indefinitely, which will increase demand for rentals and thus rent, which in return will increase house prices, but then houses of the future may be seen as a low risk but low growth with high returns investment??

or will prices simply stay low with little growth until wages catch up in 5 years?

 

[wylie]

at some point the demand should drop significantly when a 3bdr home 40kms from the city costs $1m in todays dollars, which obviously is just about unaffordable for anyone on the average wage

Unaffordable for a first home buyer, but not for those on their second or third house who have bought a cheaper first home, and now are on their subsequent homes, and who have some equity built up.

It has always been thus...

 

[TMNT]

Unaffordable for a first home buyer, but not for those on their second or third house who have bought a cheaper first home, and now are on their subsequent homes, and who have some equity built up.

It has always been thus...

agree but in the past first home own buyers could buy 25km from most cities if they stretched themselves, obviously peoples entitlement mentality have changed over the years, and many think newish, 3bdr with media room is the bare minimum poverty line, but as time goes on (amongst all the complaining), but there will come a point when these FHOB will become the older generation, and if they havent got a home and arent interested in buying, then what?

 

[wylie]

agree but in the past first home own buyers could buy 25km from most cities if they stretched themselves, obviously peoples entitlement mentality have changed over the years, and many think newish, 3bdr with media room is the bare minimum poverty line, but as time goes on (amongst all the complaining), but there will come a point when these FHOB will become the older generation, and if they havent got a home and arent interested in buying, then what?

If the FHOB become the older generation and haven't bought anything, that is their own fault. Perhaps lower their expectations. It has always been the same.

 

[Aaron Sice]

HSBC just released a report saying Australian housing was "booming, not bubbling".

 

[see_change]

at some point the demand should drop significantly when a 3bdr home 40kms from the city costs $1m in todays dollars, which obviously is just about unaffordable for anyone on the average wage

It won't reach 1 mill in todays dollars , It will reach 1 mill in tomorrows dollars .

Cliff

 

[see_change]

agree but in the past first home own buyers could buy 25km from most cities if they stretched themselves, obviously peoples entitlement mentality have changed over the years, and many think newish, 3bdr with media room is the bare minimum poverty line, but as time goes on (amongst all the complaining), but there will come a point when these FHOB will become the older generation, and if they havent got a home and arent interested in buying, then what?

They might end up in housing commision places , perpetual renting , maybe in a granny flat behind their kids house . ( the kids saw what happened to mum and dad so they didn't go down that path ... ) or finally realise that they might have to stop living for the moment and plan for the future , or they might be living it rough ( they have to come from somewhere ...) , or they might be living in a commune at the back of byron bay with all the other dropouts and whingers. They've got lots of options .

Cliff

 

[see_change]

HSBC just released a report saying Australian housing was "booming, not bubbling".

Aaron

Do you have a link ? , Seems as though the SMH are recycling a story from October last year.

Cliff

 

[TMNT]

They might end up in housing commision places , perpetual renting , maybe in a granny flat behind their kids house . ( the kids saw what happened to mum and dad so they didn't go down that path ... ) or finally realise that they might have to stop living for the moment and plan for the future , or they might be living it rough ( they have to come from somewhere ...) , or they might be living in a commune at the back of byron bay with all the other dropouts and whingers. They've got lots of options .

Cliff

agree, my point more was once the existing older generation are gone, if the new older generation have no ownership of real estate and their mentality has changed towards ownership completely, we might be looking at an asset class thats a poor performer at that point in time

when I was studying, I could walk to the CBD of my major city and my share house wasnt the best but fairly affordable, now , walking to the city distance for a student flipping burgers is pretty hard,

extrapolate that , and a young couple with young kids on average income in 2014 in vic might only be able to afford a $500k house in Nunawading or $300k in the western suburbs

fast forward 20 years and in todays dollars, the western suburbs might $600k out of reach of the average person, and at this point the only affordable reasonable house (even with the entitled attitude) might now be 70km from the CBD, at some point people will stop buying so far out and rent closer.

 

[DavidMc]

I think if you want to know what the Australian market will look like in the future just look to Europe.

In some countries it's quite normal for medium income families to be life long renters, the housing price has grown so much over the years.
Look at home ownership rates in other countries... it's much less than hours.
Look how big the houses and backyards are.

Of course I'd love it if everybody could afford a nice house but all the money they've been printing will flow around the global economy and quite a lot of it will end up in safe, stable, highly desirable Australia residential property.

 

[DavidMc]

International Comparison(2002)

Austria 56%
Belgium 71%
Denmark 51%
France 55%
Germany 42%
Ireland 77%
Norway 77%
Spain 85%
Portugal 64%
UK 69%
US 68%
Slovenia 82%
Israel 71%
Canada 67%