NAB: Cheaper House Outlook Good, Expensive Houses to Stagnate

[meconium]

According to the NAB, the outlook for cheaper houses is good; the more expensive houses will struggle as far as future capital gains go.

Cheap is good. Clearly, anything that is in the lowest quartile of prices in major cities will outperform some of the overpriced stuff that is on the market these days.

http://au.finance.yahoo.com/news/House-price-outlook-weak-NAB-aap-3266580067.html

 

[Ridin-High]

Yeah their is plently of opinions on this, i sappose time will tell.

Another forum member recently posted something about the more expensive suburbs to out perform due to the higher income earners that reside their having even higher income during good economic times.

I have property in South west sydney and sydneys western suburbs, i'd say over the past 2yrs Inner sydney property has outperformed my ones (i think the numbers being thrown around was 20% growth) where mine have had about 10% CG

 

[tom32]

Another forum member recently posted something about the more expensive suburbs to out perform due to the higher income earners that reside their having even higher income during good economic times.

It was Michael see linnk to it below. It was rather compelling even for someone with a bearish outlook on high end property when you piece it all together.

http://www.somersoft.com/forums/showthread.php?t=65856

 

[Intrinsic_Value]

Another forum member recently posted something about the more expensive suburbs to out perform due to the higher income earners that reside their having even higher income during good economic times.

i think this is spot on, the higher suburbs will consist of upper management, and business owners. Their ability to pay is determiend far more by the health of the economy than by the traditonal salaried 30 year mortgage repayment holder

 

[zed_kid]

Well then wouldn’t the middle bracket also get a bump from the ‘up graders’? they sell cheap house with CG, have to live somewhere, so upgrade to a medium house? No point selling cheap house to buy another cheap house right?

 

[MichaelW]

According to the NAB, the outlook for cheaper houses is good; the more expensive houses will struggle as far as future capital gains go.

Just to be clear, its not the NAB that are making that argument. Read it again and then I'll let you self correct.

Words like "expected prices" and "survey" might give it away...

When I read that I thought that it made sense. Punters are still pesimistic, but the economists can see where the future is taking us already and have a different outlook. The general population always lags reality up and down. They were late jumping off the equities bull ride and will be late jumping back on again. Informed investors are already taking positions in their chosen asset classes or did so 12 months ago.

This explains the difference between the masses saying "zero growth" on the back of all the negative media and informed commentators such as Ross Gittins, BIS, RBA etc all saying the economy is in great shape and that house prices and inflation are on the increase.

Just wait until the punters catch on!

Cheers,
Michael

 

[Nathan]

I have been saying this for a very long time as there becomes ceilings within markets.

 

[Deltaberry]

i think this is spot on, the higher suburbs will consist of upper management, and business owners. Their ability to pay is determiend far more by the health of the economy than by the traditonal salaried 30 year mortgage repayment holder

Me thinks the average bloke just lost his job, at Monash anyway. Hopefully they stay unemployed for the next few years so I can pick their house up for $10k spare change in my trousers.

 

[Aaron Sice]

Me thinks the average bloke just lost his job, at Monash anyway. Hopefully they stay unemployed for the next few years so I can pick their house up for $10k spare change in my trousers.

becoss ze prices are unsustenabull, ya? und ze flow on effekt will be 'orrid, no?

 

[c9806103]

Totally.

People have got to live somewhere. Renting isn't cheap and cheaper houses definitely do exist if one is prepared to drive just 40 mins out of town and that kind of thing. As populations thicken up, newer/faster/efficient bypass roads are built which effectively bring those suburbs closer anyway.

And if interest rates start to creep up further as predicted, then that is only going to push rents up accordingly.

With the way the Australian tax laws (negative gearing) are setup and the way the economy is full steam ahead, I can't see any sudden crash on the horizon whatsoever. Only a periodic stall/lingering of growth while wages and interest rates catch up.

I am definitely on the hunt for 1 or 2 cheapies in 2011, something that won't leave me high and dry when the interest rates kick up a bit more.

"When the tide goes out you suddenly see who's been swimming naked!!!"

Go the cheapies and add value through reno/subdivision.

 

[meconium]

Go for the cheapies and add value through reno/subdivision.

Wise words indeed.