Property prices due to credit or demand?

interesting. it doesn't mater what you perceive something to be worth, if you can't pull enough cash together to buy it then you simply can't buy it
 
Prof Keen walks tomorrow

Interesting article from Alan Kohler,
http://www.businessspectator.com.au...le-myth-pd20100414-4GS4U?OpenDocument&src=kgb

So Prof Keen is walking tomorrow :D.
And Kohler does not believe the growth we are seeing is due to a credit bubble at all.

...Meanwhile the housing loan approvals data shows that demand is not being boosted by easy credit, but rather by population growth and overseas buying. That means the 12 per cent growth in national house prices last year was not evidence of a credit bubble.

That’s why everyone keeps getting the property market wrong (even the bulls have been surprised at its strength).
 
the 12% national growth occurred everywhere except where I owned properties. I did get 5% on my PPOR however it is still down about 20% on 2 years ago.

- credit is tight
- prices IMO are restrained other than melbourne which seems to be smoking something
- IRs tightening rapidly

they keep talkign about this boom and I am sure it will come but it's liek a lot of my devys, you think you will be out of there and smoking a cigar in 6 months, then a year comes and goes and you are still chasing down banks and arguing with council about the colour of the fence
 
Recently (4 weeks ago) sold a two bedroom apartment in melbourne city for $500k. Today i organised a private inspection for a chinese couple for another two bedroom apartment that i own in the same building (same specs).

Now that i have sold one, i am feeling less pressure because debt is being repaid, so my sales price increases appropriately.

Asking price (non-negotiable) on this one is $575k, they said they were interested but need to ask their parents (who are providing the finance).:eek:

God if this one goes through, then the next one will be on the market for $650k
 
perhaps i just need to snap out of my bearishness. I just saw the data out of singapore so maybe I am reacting too much to noise around me
 
Hi Ausprop,

Are all your properties in WA?

If so that is why you are probably bearish as you have not had firsthand benefit of the booms in other areas so it is understandable.

Perth boom started after Melb and Syd ran out of steam last time so could be same cycle, maybe next WA boom get the equity out and buy elsewhere.

Just a suggestion I have no idea of what your portfolio looks like so please don't take offense.

Cheers

BT
 
yeh definitely too concentrated in WA. I have some in Qld too and i dont see them as having done anything much.

I would have difficulty tho in buying in vic/nsw atm tho due to fundamentals. if i found a decent comm property tho i would pick it up. well actually i wouldnt buy a resi IP anywhere regardless
 
Perth boom started after Melb and Syd ran out of steam last time so could be same cycle


Nah mate, you don't seem to understand how cycles work.


Perth led the cycle back in 99 and 00. Melbourne and Sydney followed in 02 and 03.....then died.


You then had to wait until Perth had their next big run in 05, 06 and 07, then ran out of steam. You guys over East are now just riding on our coat-tails from this period. That time lag is how long it takes for you east coasters to wake up and find out what is happening.


I expect Melbourne to run out of steam, following in Perth's footsteps in the next cuppla months.


You'll have to wait for Perth to boom again, before it ripples out to Sydney and Melbourne again.
 
There's been a world boom in housing prices that was broadly synchronised (starting in the mid to late nineties), and a similarly synchronised bust.

There have been a few exceptions: Germany and Japan didn't boom, whilst Australia hasn't busted and the UK is doing something weird.

What strikes me as happening (and I'm not an economist) is that banks were slicing up and repackaging loans into mortgage backed securities. These could be sold off to investors looking for a decent return, and by this reduced banks' net lending, enabling them to write more loans. Hence the Wall of Money that was reported chasing assets towards the end of the last decade.

This led to a boom (or bubble) in credit availability, and countries keeping interest rates low after the Dot.com bubble burst and 9/11 encouraged more buyers.

The securitisation markets aren't currently functioning, banks worldwide are cautious about supplying credit, and new capital rules mean that financial institutions are going to have to hold more assets to back loans in the future. This will take some time to resolve, so I'd expect the money supply to remain relatively low for the next few years.

So if credit remains tight then demand backed up by cold, hard cash is going to be subdued.
 
interesting article - thoughts/comments?

Interesting how he says .... "It is the availability of credit that has the largest bearing on asset price bubbles"

Totally agree, and have said the same many times on the forum.

Indeed, Gail Kelly basically admitted it today when she said

"We don't want to have asset bubbles. The housing market is very solid, but buyers are remaining cautious. We are making sure growth is managed in this area."

So here's Gail stating Westpac 'manage' property growth.
i.e. control the rate of property appreciation.

I wonder if she also thinks she is managing new supply.
 
Nah mate, you don't seem to understand how cycles work.


Perth led the cycle back in 99 and 00. Melbourne and Sydney followed in 02 and 03.....then died.


You then had to wait until Perth had their next big run in 05, 06 and 07, then ran out of steam. You guys over East are now just riding on our coat-tails from this period. That time lag is how long it takes for you east coasters to wake up and find out what is happening.


I expect Melbourne to run out of steam, following in Perth's footsteps in the next cuppla months.


You'll have to wait for Perth to boom again, before it ripples out to Sydney and Melbourne again.


Sorry Dazz I thought the booms were like the sun, rising in the east and settling in the west! my mistake:p thanks for sending this boom over it has been extremely helpful!!
 
Sorry Dazz I thought the booms were like the sun, rising in the east and settling in the west!


Nah mate....it's more like the weather. Rolls in from the west and slowly dies away as she crosses the paddock eastwards. You get your occassional big blows, but she's normally just a steady flow.


That big blow you had last year, where Brissy and Sydney got covered in dust, that was just one of the Haulpaks in Newman tipping over round a tight bend. The boys managed to get it back on it's wheels and most of the load back, but a bit escaped over east. No doubt the media portrayed it as some big event over in NSW.


Anyways, there you have it. Sure as bro. :cool:
 
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