RPData - House prices falling (nation wide) - Q2 2010

[MIDProperty]

Well it was one whole suburb. I can do an LGA, but the chart looks pretty much the same.

And even if you accept the fact that something completely different will occur (and I don't), but accepting that, what impact will it have on my long term goals? (Personally, I can tolerate an occassional dip on a chart or a long flat period - that is just the nature of the underlying asset.)

While bluestorm, you were busy de-leveraging to 28% LVR, others were leveraging up to 95% LVR, and in the case of this particular suburb, picked up 20-25% CG in the space of about 18 months. So for example, people who bought at $420K are now sitting on a val of $520K and $100K of equity.

Would agree with Property Unity in that whatever your view is of the market just make sure that you understand the full impact of your decision. Run some scenarios and sensitivities of your assumptions to give you an idea on a range of values that could potentially happen.

Only time will tell.

My Investment Decision
Become a smart investor - myinvestmentdecision.com.au

 

[bluestorm]

While bluestorm, you were busy de-leveraging to 28% LVR, others were leveraging up to 95% LVR, and in the case of this particular suburb, picked up 20-25% CG in the space of about 18 months. So for example, people who bought at $420K are now sitting on a val of $520K and $100K of equity.

$100K less the costs. While they were making only $100K, I was busy using the slush fund to build up more cash reserves in a rising share market from the low of Mar 2009, and have 28% LVR, and a nicer, bigger slush fund now to purchase more in 2013.

Their gains are still paper gains, and might all disappear in the next 1-2yrs. My gains a crystalised.

 

[turk]

$100K less the costs. While they were making only $100K, I was busy using the slush fund to build up more cash reserves in a rising share market from the low of Mar 2009, and have 28% LVR, and a nicer, bigger slush fund now to purchase more in 2013.

Their gains are still paper gains, and might all disappear in the next 1-2yrs. My gains a crystalised.

Hi bluestorm

Do you think that the share market is overpriced or just going nowhere at the moment and what would be a trigger for you to reenter?

CHEERS

Pete

 

[bluestorm]

Hi bluestorm

Do you think that the share market is overpriced or just going nowhere at the moment and what would be a trigger for you to reenter?

I day trade more now, so don't really care if the overall market is overpriced (but yes, I think it is now, with many companies coming out with poor results). I did say 4700 by the end of April at least 2 weeks ago.
I've also moved my super to conservative, and think an even bigger market correction will happen by Nov.

In terms of reentering the property market, and getting more properties, I'm waiting until 2013.

But that's just my crystal ball. Your's may be better.

 

[Kingbrown]

I am neither bullish nor bearish on this issue - very undecided.

However, ABS statistics show for the last few months, consecutively, the value of dwelling commitments, and the total number of dwelling commitments, have increased every month (after previous declines),

Also, the percentage of FHB's has increased each month as well.

After 2 or 3 months, I wouldn't mention it.

Now it's about 6 months straight, it would appear to be a trend.

Looking for someone to explain this in a bearish light, because, against all odds, this seems to be the start of a bullish trend to me. Am I wrong in interpreting this as leading to higher prices if the trend continues?

 

[hobo-jo]

Latest figures show slight positive growth nationwide for Feb, but there are some scary numbers in some cities: [edit: PDF has now been removed from the site]

Darwin Units down 10.2% over the quarter
Hobart Units down 19.8% over the quarter

...wasn't there supposedly a housing shortage in Darwin?

Change in dwelling values Feb 2010 - Feb 2011
Hobart -5.6%
Brisbane -5.3%
Darwin -5.2%
Perth -4.1%

Some of the volume charts are shockers, Melbourne has seen volume almost halve over the last 12 months!

 

[Propertunity]

Change in dwelling values Feb 2010 - Feb 2011
Hobart -5.6%
Brisbane -5.3%
Darwin -5.2%
Perth -4.1%

I take it that the absence of SYD & MEL in the list, don't fit in with your D&G property predictions?

 

[hobo-jo]

I take it that the absence of SYD & MEL in the list, don't fit in with your D&G property predictions?

For 12 months to Feb Sydney was + 3.3% and Melbourne +2.5%. For 3 months to Feb Melbourne was -1%, Sydney +.7%. For 3 months to Feb Sydney was the only city that showed growth. Volume of transactions in Melbourne have almost halved from 12 months ago.

But don't worry, falling medians just means that people are buying cheaper houses, right Propertunity?

 

[Propertunity]

But don't worry, falling medians just means that people are buying cheaper houses, right Propertunity?

It can mean that - sure. And the rising medians in Syd & Mel can mean that people are buying more expensive houses too.

Alternatively, they can mean that prices are actually rising or falling. Either way, I would not be getting too excited about a 5% increase or decrease over the course of a whole 12 months in a reasonably low-volatility asset like property. That's just the nature of the asset.

If it was a BHP or RIO share we were talking about - it would not rate a mention. Move on.......

 

[Deltaberry]

Haha how funny you guys who've been around so long arguing over a few percentage points.

Makes you wonder if people like Forrest lose sleep at night when his share price moves more than 5% in a day.

 

[hobo-jo]

I'm not arguing, simply reporting.

 

[Bigtone]

Latest figures show slight positive growth nationwide for Feb, but there are some scary numbers in some cities: [edit: PDF has now been removed from the site]

Darwin Units down 10.2% over the quarter
Hobart Units down 19.8% over the quarter

...wasn't there supposedly a housing shortage in Darwin?

Change in dwelling values Feb 2010 - Feb 2011
Hobart -5.6%
Brisbane -5.3%
Darwin -5.2%
Perth -4.1%

Some of the volume charts are shockers, Melbourne has seen volume almost halve over the last 12 months!

darwin has to have a slow down in growth (drop a little) for a while without a doubt

i have units there that have gone up 400% in 7 years, that is not sustainable long term, it needs to catch it's breath for a couple of years at least

 

[hobo-jo]

darwin has to have a slow down in growth (drop a little) for a while without a doubt

i have units there that have gone up 400% in 7 years, that is not sustainable long term, it needs to catch it's breath for a couple of years at least

It's certainly seen some incredible growth, what I find amazing is that only a month ago RPData was claiming Darwin's growth may continue to outpace other capitals:

The big question is whether Darwin can sustain such high prices and keep attracting the high level of investment recorded over the last decade.

Our view is that with yields remaining high compared with other capitals and the Darwin economy continuing to perform strongly the Darwin market may continue to surprise with capital gains continuing to outpace the broader combined capital city average.

http://blog.rpdata.com/2011/02/whats-in-store-for-darwin/

So this correction has been fast and unexpected by leading analysts. What else have they got wrong?

The REI up there seems to be in denial:

The Territory branch of the Real Estate Institute says new figures suggesting Darwin's housing market is falling are a guideline only, and not hard evidence.

http://www.abc.net.au/news/stories/2011/03/31/3178822.htm

Will be interesting to see how things go over the next few months for Darwin!

 

[evand]

This is called "railing at the failing light".

At some point prop, you have to admit the market is falling. Your denial is getting silly. You are running out of reasons for a rising market.

Also, the gains in Syd & Meld are lower than inflation so a loss still. The rest of the nation is falling fast. An obvious strong downward trend is developing.

It can mean that - sure. And the rising medians in Syd & Mel can mean that people are buying more expensive houses too.

Alternatively, they can mean that prices are actually rising or falling. Either way, I would not be getting too excited about a 5% increase or decrease over the course of a whole 12 months in a reasonably low-volatility asset like property. That's just the nature of the asset.

If it was a BHP or RIO share we were talking about - it would not rate a mention. Move on.......

 

[Propertunity]

At some point prop, you have to admit the market is falling. Your denial is getting silly. You are running out of reasons for a rising market.

I am not denying that markets in some part of the country are falling. I am also declaring that markets in some parts of the country (most noteably some parts of Sydney, Central Coast and Newcastle) are still rising.

I have never seen a sharemarket ASX board, even in a sea of red, not have a few greens here and there, and I have never seen the whole Australian RE market behave in unison. For every place with falling prices I am sure someone can point to another one with rising prices. In times like this you need to do your DD more than ever and be very selective.

I am not saying stick your head in the sand and press on, neither am I saying stand on the sidelines and do nothing, I am just calling for balance. Especially so, when RE is a long term investment and very forgiving even if you get it a bit wrong.

 

[Reality Cheque]

I am also declaring that markets in some parts of the country (most noteably some parts of Sydney, Central Coast and Newcastle) are still rising.

Thats only because you're so good at talking the market up in the areas where you operate.


RC

 

[Propertunity]

Thats only because you're so good at talking the market up in the areas where you operate. RC

I'll pay that

But I'm sure that there are some (and I emphasise the word 'some') parts of many places that are doing well really.

 

[Aaron Sice]

oh man a drop in RE values here in Perth would be PERFECT timing - PERFECT.

how to make money from a falling market 101...

 

[Ocean Architect]

Latest figures show slight positive growth nationwide for Feb, but there are some scary numbers in some cities: [edit: PDF has now been removed from the site]

Darwin Units down 10.2% over the quarter
Hobart Units down 19.8% over the quarter

...wasn't there supposedly a housing shortage in Darwin?

Change in dwelling values Feb 2010 - Feb 2011
Hobart -5.6%
Brisbane -5.3%
Darwin -5.2%
Perth -4.1%

Some of the volume charts are shockers, Melbourne has seen volume almost halve over the last 12 months!

Darwin is a funny one. I know this because Im here.

The darwin market is dominated by a handful of builders (I can name them, but wont of course) and they pulled back recently because they werent sure, hence the decrease. Most of the decision making is emotional. They arent sure, have lots of $ in the bank, and are waiting to see. I know this based on personal conversations.

You need to understand something about Darwin. Its a capital city, sure, but has a population of 100 000. Its tiny. Theyre playing with a coming gas deal with Inpex, to the tune of 3 to 5 billion. 100 000 people, 3-5 billion dollar investment for gas. The upward curve is huge.

Darwin is a very unusual place. Big money to be made up here, imo.

 

[DEC]

You need to understand something about Darwin. Its a capital city, sure, but has a population of 100 000. Its tiny. Theyre playing with a coming gas deal with Inpex, to the tune of 3 to 5 billion. 100 000 people, 3-5 billion dollar investment for gas. The upward curve is huge.

Darwin is a very unusual place. Big money to be made up here, imo.

And if that one deal doesn't pan out, what else has Darwin got?