RPData - House prices falling (nation wide) - Q2 2010
- Thread starter hobo-jo
- Start date
Very much a mixed bag here right now, anything could happen yet.
On one hand reports come out daily on improving business confidence , better and better unemployment and all sorts of goodies but on the other, quite a few things across the board are approaching second and third mths in atleast flattening.
Lending has tightened a lot but gov' projects/money are still working through the system providing a lot of work. Retail is definitely slow , there's been huge deals and sales going on non stop all yr so far.
New car sales have been up but then there's the end of the financial yr and Gov' incentives still playing through that area to so. Housing's definitely flattening but it is also winter , plus home grants have also now mostly worked through so.
Imo the predicted mining boom could also go either way yet and will have a lot of say in how things shape up.
But at the same time once again, general consensus seems to be almost taking it for granted we've escaped the worst and will hold up ok.
Imo where our property goes come spring and late 10 is going to hold the key from here !
Cheers
PS , the stock market's definitely nervous .
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It might be, but I doubt it. As far as influencing factors goes we have many of the same as 2008:
- Falling volume
- Falling auction clearance rates
- Rising interest rates
- Rising stock levels
- Same over priced housing (if not more-so)
In 2008 starting in the same quarter (June), using ABS statistics, we saw 4 consecutive quarters of negative growth. Arguably the only thing that avoided a long period of negative growth/stagnation was the slashing of interest rates to a historical low, the introduction of a boost for FHBs (which saw them make up the largest percentage of the market in ABS record keeping history) and a relaxing of foreign ownership laws (recently reversed). What will turn around the negative growth this time?
Future wage rises, a period of stable interest rates and anything else that gives the general public confidence, including better news from overseas would help put a floor under Australian house prices.
On the other hand Australia is at risk of returning to an overheated economy over the longer term. We can again look forward to a cycle of higher interest rates, higher inflation and wage demands. Possibly that is why many Australians are focused on paying down debt and saving at the moment, rather than taking on new debt.
Propertunity, check the June month figures for All Dwellings. They fell nation wide for the month of June.
DEC, but I thought property was best leveraged? Assuming a 95% lend a .7% drop would be a 14% erosion of equity
But in that case, the recent 20-30% capital gains would also have been multiplied by 20, so a 0.7% fall is still insignificant.
Besides, Residex are showing a large rise in prices for the June quarter and month of June...
http://www.residex.com.au/newsletter/source2010_07aMC.html
And of course, the ABS data released yesterday shows huge rises continuing nationwide through the June quarter...
http://www.abs.gov.au/AUSSTATS/[email protected]/Lookup/6416.0Main+Features1Jun 2010?OpenDocument
But, if you want to get excited about one index provider showing a 0.7% fall, and you don't think a 15% crash in the gold price is significant... be my guest.
Incidentally, how much do house prices actually need to fall from here, in order to vindicate your decision to sell (including buying/selling/moving costs, stamp duty to buy back in, cost of rent etc.)?
Did you notice the wink?
You missed APM, they also showed a rise. It isn't like you to be not thorough Shadow, lift your game please
How much has Gold risen year to date even after the correction?But, if you want to get excited about one index provider showing a 0.7% fall, and you don't think a 15% crash in the gold price is significant... be my guest.
The decision to sell although heavily influenced by my thoughts that property will correct/stagnate was not based solely on that factor. For example even if we hadn't sold we would have still moved. Why would I factor in cost of rent? It's less than half our mortgage was.
Yep, definately end of the world stuff. Couldn't be clearer. If you haven't sold already then SELL NOW!!! Buy gold and guns and run for the hills. Find some like-minded people and setup a permaculture community with razor wire fences and prepare for the Chinese hoards...
http://www.businessspectator.com.au...730-7U35M?OpenDocument&src=is&cat=property-al
Cheers,
Michael
http://www.businessspectator.com.au...730-7U35M?OpenDocument&src=is&cat=property-al
Chris Joye said:
Cheers,
Michael
sign - haven't this been done to death before ... what are property prices in comparison to "household" income now that most mortgaged families have at least two adults working?
as for market slowing ... opinion from the coalface - not in my area. although i do notice the number of renovations are going thru the roof.
The funny thing about this post is that you make fun of buying Gold yet I guarantee that your 1kg would put you far ahead of 99% of users on this forum.
As usual when there is discussion of falling house prices MichaelW is claiming we are talking "end of the world stuff"...
And we have already been over this before:
http://www.somersoft.com/forums/showpost.php?p=691187&postcount=123
House prices as a multiple of household income have risen around the same (in percentage terms) as they have agaisnt a single income (see below).
I have seen no evidence to suggest that "now" there are more dual income households than in times past.
Feel free to backup your posts with facts and figures.
Even if things do drop a bit or stagnate. So what. Is this not expected after a run up in values. It wasnt that long ago many where convinced of Australian wide housing crash of such a magnitude that recovery would take decades.40% plus.Blood in the streets.Collapse of the dollar etc etc.Shouldnt we be lining up in the streets begging for a loaf of bread by now.
This gloom attitude has tapered down to possible value drops or stagnation. How quick we forget.
This gloom attitude has tapered down to possible value drops or stagnation. How quick we forget.
Well, just got the AFG index and somewhat relieved (you hate to think it's only your business seeing an unexpectedly high easing of activity) to note:
Their volumes down 9.1% July to June and 15% July to July.
Interestingly, when you account for refinance rates compared to last year, purchase dollars YOY down 20%.
Of course, notwithstanding they are a significant chunk of the market, it aint the whole market but is pretty consistent with what i had been seeing and hearing in July.
Their volumes down 9.1% July to June and 15% July to July.
Interestingly, when you account for refinance rates compared to last year, purchase dollars YOY down 20%.
Of course, notwithstanding they are a significant chunk of the market, it aint the whole market but is pretty consistent with what i had been seeing and hearing in July.
Hi - any chance you could expand on this a bit? Thanks.
I think he's arguing that my gains from buying my kilo bar of AU a year or two ago have made me more money than a lot of property investors here. I doubt it though. Its gone up from $25K to about $40K I think, woohoo! But I can't retire on $15K of profits. In the same time my measley property portfolio on the Northern Beaches of Sydney has probably gone up $200K. That's a bit more material.
I also bought about $50K worth of AVO gold shares at $1.64 that traded to $2.99 recently before settling back to around $2.70 today. That's made me more than my hard bullion but still not as much as my resi property.
And my resi property is set to make me a squillion (technical term) over the next 12 months. I'll post a new thread up on it soon, but I just got my million dollar phone call from the banks. Once the vals come back Monday and I'm ready to sign finance contracts I'll post it up. Don't think my kilo of bullion stands to make me that sort of money any time soon.
And, Hobo, not poking fun at gold mate. I love the stuff. Just poking fun at the doom and gloom merchants that think there's a story in a less than 1% flattening in house prices after 17 consecutive monthly gains of aggregate 20%. I'm constantly reminded of that character in the beginning of Ice Age 2 and his over the top "Its the end of the world!".
Off topic a bit, but I reckon the upper middle medians will continue to perform strongly over the next 12 months. They're not as interest rate sensitive and the aussie economy is in stellar conditions. Give it 6 months and the current terms of trade will translate into higher incomes, then retail and construction will kick back in and we'll see the next leg up in property prices. Of course, the RBA will move to dampen it with rates, but they'll struggle.
Cheers,
Michael
I also bought about $50K worth of AVO gold shares at $1.64 that traded to $2.99 recently before settling back to around $2.70 today. That's made me more than my hard bullion but still not as much as my resi property.
And my resi property is set to make me a squillion (technical term) over the next 12 months. I'll post a new thread up on it soon, but I just got my million dollar phone call from the banks. Once the vals come back Monday and I'm ready to sign finance contracts I'll post it up. Don't think my kilo of bullion stands to make me that sort of money any time soon.
And, Hobo, not poking fun at gold mate. I love the stuff. Just poking fun at the doom and gloom merchants that think there's a story in a less than 1% flattening in house prices after 17 consecutive monthly gains of aggregate 20%. I'm constantly reminded of that character in the beginning of Ice Age 2 and his over the top "Its the end of the world!".
Off topic a bit, but I reckon the upper middle medians will continue to perform strongly over the next 12 months. They're not as interest rate sensitive and the aussie economy is in stellar conditions. Give it 6 months and the current terms of trade will translate into higher incomes, then retail and construction will kick back in and we'll see the next leg up in property prices. Of course, the RBA will move to dampen it with rates, but they'll struggle.
Cheers,
Michael
the data is all wrong.
every last bit of it.
house prices ALWAYS go up.
every last bit of it.
house prices ALWAYS go up.
Was referring not so much to the gains in price, but that you would own MORE than 99% of users here. So if anyone around these parts is the guns & gold type it's possibly yourself
Affordability only determines demand at various prices, not new supply at various prices.
If we had double the workforce / participation rate this should not effect the price of a product.
Land is limited, sure but the price of development land is only what it is due to a shortage due to short term speculative factors causing people to buy and hold development land even with up to 2.1% land taxes in some states. It has nothing to do with higher participation rates.
If you had 1000 people, 500 of which worked and another population of 1000 people where they all worked population 2 should build / develop their houses and have a bigger surplus of excess goods. It does not mean population 2 just has higher house prices with the same output.
That it costs so much to develop a house and land package on the fringe of our cities now with a ridiculous government component is the reason houses are not affordable.
Give the likes of a Trigaboff 2000hectares at Sackville, currently zoned at large acres and allow him to buy it first at current prices reflective of its limited zoning potential then allow him to turn it into residential lots 600sq.m a piece remove government taxes and he, or indeed anyone could be turning them out at $100,000.00 per housing lot while this land is worth very little due to its zoning about a million for 20acres. This is affordability "crisis" solved.
Then go to one of our deemed fit for development areas like Kellyville, 6million for 35block potential in raw undeveloped but zoned resi land! Pay your 100k odd in tax / council levies per lot add the 170k for the land itself plus 60k for the development works and you can see why they want more the 350k for the blocks there?
This ridiculous premium on resi zoned land versus other zonings is a clear indication that the government is not zoning enough residential land. If I was a property investor however I would not know who to vote for now, as both parties are talking of releasing more. In WA the Liberal state government is bringing more land on at a time when I cannot see the market taking it at current prices.
Ultimately our house prices will go south due to one of two things:
a) an oversupply; Australia has avoided this in large part due to the ridiculous costs developers have to pay to create housing blocks between procuring land and in government taxes. It is however a possibility in the more progressive state capitals; Brisbane, Melbourne and Perth. Melbourne moreso due to recent policy directing the punters into new homes with boosted grants on new homes only etc rather than low production costs for development.
When the above occurs a housing slump is the leading indicator for a recession.
b) Affordability Crisis; I think this is where it will come from in Australia. When you get a recession or higher interest rates people have a tendancy to utilise housing more efficiently. Without any additional housing stock being built you can find you have an oversupply where you did not before. The reasons for this higher utility rate can be, high interest rates or unemployment.
When this occurs the housing slump happens as a result of a recession or credit restriction / rationing.
We have had both in Australia's history and never have we had house price to income levels of 8 before. That a house and a developed block is the product of 8 years of work for a citizen in an advanced economy with limitless land is a failing of government first. Unfortunately however it is unlikely that it is sustainable into the future short of the government adding to taxes in the new build area decimating building activity. It would seem to me they are intent now on doing the opposite.
Fair call, I do like both...Was referring not so much to the gains in price, but that you would own MORE than 99% of users here. So if anyone around these parts is the guns & gold type it's possibly yourself
Cheers,
Michael
From reader Dave
"If the share market had risen for 17 consecutive months, people would be screaming BUBBLE. Somehow this logic seems to defy Chris Joye ... Oh dear.”
Yes, that's because the sharemarket is a lot more volatile. If IT rose for 17 months straight people would be screaming bubble. The resi property market is much less volatile, minor incremental increases over a 17 month period is steady as she goes. Somehow this logic seems to defy reader Dave...
Michael
Michael
