Apparently we're now at the start of a gradual recovery
http://money.ninemsn.com.au/article.aspx?id=808110
Although Adelaide looks cheap
http://money.ninemsn.com.au/article.aspx?id=808110
Although Adelaide looks cheap
Prices on the rise
- Thread starter ILoveProperty
- Start date
Agreed.
The only bear in the room is the spectre of rising unemployment. At the end of the day prices are set by the demand/supply balance. Here's MichaelW's quick and dirty synopsis on the current state of these:
Demand
FHB demand is up due to the FHOG. Will taper or collapse post 1/July.
Investor demand is soft as they sit it out waiting for a sign of price direction. They're scared about the possible impact on price of rising unemployment.
Second, third, upsizer demand is steady but still subdued from previous levels.
Interest rates have fallen dramatically which has increased affordability dramatically and created a platform for significant increased demand for property at current prices. This has yet to gain significant traction beyond the FHB market.
Credit rationing is limiting the availability of loans to those with poor servicability or insufficient deposit. This is working to partially offset the reduced interest rates in stimulating sales in the residential property market.
Supply
As most would be aware Supply of residential housing stock in Australia is severely constrained. The market is currently under-supplied and with immigration and natural population growth still in place, the under-supply is set to worsen over the coming years.
Impact
You put that lot together and you get a tension between all the positives (low rates, FHB grants, improved servicability, limited supply, increasing population) and all the negatives (credit rationing, fear of increased unemployment). At present the positives are winning the tug-of-war with the negatives but its a close battle. If unemployment spikes as many suspect it will then this might turn the tide of battle for a while. But I'm a simple man and I look at it this way: even if unemployment doubles from 5% to 10% then that's still only a 5% reduction in those able to service loans. Of that 5%, 2% are renters and 2% own their homes outright. So, a doubling of unemployment rates sees a 1-2% reduction in net household loan demand. If unemployment does double then the RBA will lower rates even further. Eventually the 30% of the market which is investors will en masse awaken to the opportunity, realising that their jobs are secure, and re-enter the market.
An increase in demand by 30% of the market will more than offset the decrease in demand by 1-2% of the market.
Its a tug-of-war, but the odds are stacked in favour of more price appreciation in the medium term once the fear of recession and high unemployment abates. Watch for investors re-entering the market as a strong signal for the next solid leg up in prices.
Just MHO.
Cheers,
Michael
It is a dangerous mix when investors drive up a market. You Need the owner occupiers to push up the market, they are the demand. The investors are the speculators.
Gradual recovery? I can't feel it...
Oh well in that case its definately off...
Sorry, that's a bit harsh, but the point I'm trying to make is that a lot of people are trying to "feel" it at the moment. i.e. They are buying or not based on some sort of intuitive emotional sense of the market and not based on any objective understanding of the market dynamics and the likely impact on prices and servicability.
So long as gut feel rules buying decisions then today's prevailing mood of "fear" will limit any gains. But the fundamental demand and supply imbalance suggests that as soon as consumer confidence returns in 6-12 months time then the switch to "greed" will ensure some solid gains over a relatively short period.
If its flat to marginally up in THIS emotional environment, imagine what it would be doing in the absence of fear!?..
Cheers,
Michael
yes indeed, house prices are rising! ...not.
http://www.news.com.au/business/money/story/0,28323,25425279-5013951,00.html
http://www.news.com.au/business/money/story/0,28323,25425279-5013951,00.html
Oh Yes they are!
Residential housing market holds up despite economic gloom
http://www.news.com.au/business/money/story/0,28323,25412757-5013951,00.html
and BOTH articles published by the same media outlet.
+1
Rising unemployment will almost certainly prevent rising house prices at the very minimum.
Sheesh! Why, or why would you even consider listening to what the media says.
FWIW, prices are going UP where I am, but I know that is not true in all parts of the country. Do your own research & don't listen to the media because 9 times out of 10, they are just looking for a juicy headline to sell papers.
I think Micheal W is on the money.
FWIW, prices are going UP where I am, but I know that is not true in all parts of the country. Do your own research & don't listen to the media because 9 times out of 10, they are just looking for a juicy headline to sell papers.
I think Micheal W is on the money.
To add some real market facts, I just called my agent for 2IPs I have in Melton VIC.
FYI Melton is FHO central and one of the suburbs to boom or booming with the FHOG or crashing with the recession being struggling young families/workers.
His advice: Yes prices have risen. We bought in late 2007 for $230k and now we could get $260k. So 10% per annum. FHO are heavy in the market but are still looking hard. Most selling is new builds and builders are "rubbing hands togehter" but still prices are not crazy despite some reports in paper of $300k plus.
So it would a rise of 10% due to FHOG but no boom yet. What I do see is many young buyers getting in trouble when rates rise in 2010/2011.
FYI, Peter
FYI Melton is FHO central and one of the suburbs to boom or booming with the FHOG or crashing with the recession being struggling young families/workers.
His advice: Yes prices have risen. We bought in late 2007 for $230k and now we could get $260k. So 10% per annum. FHO are heavy in the market but are still looking hard. Most selling is new builds and builders are "rubbing hands togehter" but still prices are not crazy despite some reports in paper of $300k plus.
So it would a rise of 10% due to FHOG but no boom yet. What I do see is many young buyers getting in trouble when rates rise in 2010/2011.
FYI, Peter
no, just skewed.
houw about this - instead of relying on being spoonfed information by media releases, how about you got to RE.com and write down all the houses in your desired area.
then next month, go back and compare.
because ANYONE looking for a house over the past 3 months will tell you NOTHING has gotten cheaper.
houw about this - instead of relying on being spoonfed information by media releases, how about you got to RE.com and write down all the houses in your desired area.
then next month, go back and compare.
because ANYONE looking for a house over the past 3 months will tell you NOTHING has gotten cheaper.
There is a distinct difference in trusting any Agent, to trusting one that has developed a relationship with you over time.
Well, from the markets point only the ABS index is reported and has medium impact on currency (same as the monthly new home sold reported from housing industry), no news is the APM index or the RP data index.
Even bloomberg doesn't bother mentioning those 2 index with ABS index
Even bloomberg doesn't bother mentioning those 2 index with ABS index
The news didn't have any impact on the AU$. It might had impact on the australia 10 year treasury bond that is at 6 month high at over 4.7% (but higher are also the one from other major countries)
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You know the author is actually involved with one of the "other" indices, don't you?
