So which camp was right the doomsayers or the property faithfull?

[hobo-jo]

with the world coming out of recession in 2010 I very much doubt it.

The only reason most countries are coming out of recession is due to huge stimulus spend, do you really consider this a recovery? Do you believe the underlying issues that caused the GFC have been resolved? 2009 was the eye of the storm, IMO there are several ways things could play out, but no scenario I can imagine sees Australian property becoming even more unaffordable.

For every country that is "recovering" there is a Greece, Dubai, Ireland, Mexico, etc who are still facing debt issues and sovereign debt rating decreases.

If I had to chose and bet between a 50% boom and a 15% crash I'd put my money on the boom , not because I expect prices to boom that much, not because I'm a property bull but simply because it would be the safer bet.

At least we are partially in agreeance here, investment in housing at these prices really is a bet/gamble.

 

[devo76]

1st quarter 2010 now is it

To me the gloomist are wrong. We may be in for modest drops or a long period of stagnation but it wasnt that long ago we thought the world was going to end and a 20% drop was the best outcome we could hope for. The world didnt end so that seals it for me.

 

[hobo-jo]

1st quarter 2010 now is it
To me the gloomist are wrong. We may be in for modest drops or a long period of stagnation but it wasnt that long ago we thought the world was going to end and a 20% drop was the best outcome we could hope for. The world didnt end so that seals it for me.

Who's the 'we' you refer to? If you are insinuating that I've said nominal property prices will drop more than 20% then feel free to link everyone, because I haven't said that. You are simply trying to lump all those that think we will see house prices fall into 1 group with 1 opinion. Petty.

As far back as early 2008 I was saying I expected only a 15-20% drop in nominal prices (and no I don't think it's going to happen overnight ) and my opinion hasn't changed, but given the circumstances of last year I've put a timeframe on when I believe the stagnation/drops will begin.

I could be wrong with timing, but I think drops are more likely this year than rising prices (in most capital city markets).

 

[devo76]

Who's the 'we' you refer to? If you are insinuating that I've said nominal property prices will drop more than 20% then feel free to link everyone, because I haven't said that. You are simply trying to lump all those that think we will see house prices fall into 1 group with 1 opinion. Petty.

As far back as early 2008 I was saying I expected only a 15-20% drop in nominal prices (and no I don't think it's going to happen overnight ) and my opinion hasn't changed, but given the circumstances of last year I've put a timeframe on when I believe the stagnation/drops will begin.

I could be wrong with timing, but I think drops are more likely this year than rising prices (in most capital city markets).

I was stating that your 1st qtr 2010 remark reminded me of the ENDLESS gloomist bombing runs stating that big falls were comming. I was not saying you were the source of all these references. Im not going to split hairs over the who,we,if blah blah. Im just saying that many thought the sky would fall and it didnt. Now we are talking the possibilities of smaller drops. The attitude has already changed with many it would seem.

 

[hobo-jo]

I was stating that your 1st qtr 2010 remark reminded me of the ENDLESS gloomist bombing runs stating that big falls were comming. I was not saying you were the source of all these references. Im not going to split hairs over the who,we,if blah blah. Im just saying that many thought the sky would fall and it didnt. Now we are talking the possibilities of smaller drops. The attitude has already changed with many it would seem.

Well clearly those "many" were wrong. I guess we will have a pretty good idea in around 12 months whether I was as well.

 

[devo76]

Well clearly those "many" were wrong. I guess we will have a pretty good idea in around 12 months whether I was as well.

Yes yes. In 12 months we will see. This is a familiar call also. ( but not from you)

I will just add. What I say isnt intended to be rude. It's just that a lot of post follow a similar templet. #### fall in prices by #####.

They are a bit thinner on the ground these days but they still pop up. I have not been around long but still long enough to see a theme . Who knows what is ahead. Stats and graphs tell us some of the story but the human element also plays a big part.and this element can go against many facts/graphs and apparent certainties.

 

[Sailesh Channan]

I feel that the market has at least another two years of growth before it will plateau again. Also remember if there is a correction then it is usually in areas that have overheated and it is usual to see a correction back to normal levels as all markets have buyers at the fair value price.

As for predictions,any one making the same prediction year after year is bound to get it right eventually. Then they turn around and say "I told you so!!"

 

[yorke]

The only reason most countries are coming out of recession is due to huge stimulus spend, do you really consider this a recovery?

What does it matter the reason ? Never look a gift horse in the mouth.

IMO there are several ways things could play out, but no scenario I can imagine sees Australian property becoming even more unaffordable.

The median prices can remain at the same average income to price ratio if inflation hits both house prices and wages, also your median prices moves further away from the CBD. With Adelaide falling behind for the past two years there is the real chance of playing catch up in 2010. You only need a couple of mines to start up , a large desal project and you have a SA economic boom and prices taking off.

For every country that is "recovering" there is a Greece, Dubai, Ireland, Mexico, etc who are still facing debt issues and sovereign debt rating decreases.

True but most of our exports or the products manufactured from our exports do not go there.

At least we are partially in agreeance here, investment in housing at these prices really is a bet/gamble.

Only you didn't gamble with the investment home, didn't you say that was your PPoR and you intended to subdivide it ?
Sure , investing in housing at any price is a gamble. But what you did , for lack of a better description, was to slay the golden goose.

 

[Token Funder]

*snip*
True but most of our exports or the products manufactured from our exports do not go there.
*snip*

And how would you summarise the prospects of our single largest export market at the present?

 

[yorke]

And how would you summarise the prospects of our single largest export market at the present?

Our largest export market may soon become our second largest. Just as well its not our only export market hey ?

Looks like I'm not the only one with confidence in our economy,

''Australia's proximity to China, its ability to turn around the housing market very quickly with stimulus, the demographic situation, and pretty strong economy are likely to generate inflation faster than in the US and Europe,'' said Weinstein, who oversees $US18.6 billion of linkers. ''The market is liquid again. That's why we got involved.''


http://www.theage.com.au/business/markets/blackrock-bets-on-inflation-pickup-20100120-mjsz.html

 

[Token Funder]

Our largest export market may soon become our second largest. Just as well its not our only export market hey ?

Looks like I'm not the only one with confidence in our economy,

Did you even read the Age piece?

 

[yorke]

Did you even read the Age piece?

No, what did it say ? House prices and rents to go up by 25% in 2010 ?

Isn't it sad when people start cheering stories about the Chinese trying to restrict lending to keep a lid on the economy and stop it from growing at more then 10%, you'd think it was bad news for us or something.
Oh well, I guess we'll have to be satisfied with only a 20% rise in iron ore prices this year.

 

[willair]

No, what did it say ? House prices and rents to go up by 25% in 2010 ?

Isn't it sad when people start cheering stories about the Chinese trying to restrict lending to keep a lid on the economy and stop it from growing at more then 10%, you'd think it was bad news for us or something.
Oh well, I guess we'll have to be satisfied with only a 20% rise in iron ore prices this year.

If you have the time,watch this no different from today only the numbers..willair..
http://www.pbs.org/wgbh/americanexperience/crash/

 

[hobo-jo]

Well clearly those "many" were wrong. I guess we will have a pretty good idea in around 12 months whether I was as well.

Yes yes. In 12 months we will see. This is a familiar call also. ( but not from you)

Well what do ya know, here we are 12 months on

My prediction is the tipping point is Qtr 1 2010 (that may just mean relatively flat growth to begin with).

Not a bad effort if you ask me although I didn't get the -5% I was expecting nationwide, but we did see YOY drops in two capital cities.

http://www.rpdata.com/images/storie...es/rpdata_rismark_home_value_index_jan_31.pdf

There is more to come in my opinion and with higher rates, less stimulus, more properties on the market, less volume & prices already dropping it's looking likely that 2011 will see negative YOY growth for the weighted national index. Likely most, if not all capital cities over 2011 will see negative growth. How much will likely depend on whether we have further rate rises over the year...

Instead the large number of faceless and more importantly campless business minded people who were quietly adjusting their investment strategy based on the prevailing information were right. They understood simple economic principals such as cycles start and end and therefore taking advantage of the downside by picking up undervalued assets and now re-adujsting again for the prevailing up cycle.

tcocaro, when does this 'up' cycle start?

Sorry to hear the bears got to you dude. You waited until the market has started to pick up to jump ship ?

Well, you were right, the Adelaide median rose for around 3 months after I sold, but then fell and stagnated. 12 months on I doubt I would have sold the house for anymore (suburb = St Marys), so given we have saved a bundle by renting I am still pleased with the decision.

Next thing you'll say that now its the time to move into gold.

Well I'd already started moving capital into Gold back in late 2008, however yes I was still buying Gold equities in 2010 and some proceeds from the sale went into these. I doubled my net worth in 2010 with Gold/Silver based investments using very little leverage. I'm sure that comment was funny to you at the time

Now you sold the house you'll have to pay increasingly higher rents.

My rent increased the equivalent of around $10 per week mid last year with renewal again in June... how much have interest rates increased over the same period?

I think you are about 2 years too late with your predictions of flat growth for SA and we'll see 10-15% growth this year and almost similar growth next year.

Well we saw +3.6% for the year in Adelaide according to RPData. I suspect that gain will be wiped out (and maybe then some) in 2011. Hope you weren't counting on that growth!

 

[devo76]

Yes yes well played.
My last ip bought 18 months ago is still worth well above the purchase price so my real world scenario tells me im ok.
I still say property faithfull will prevail given more time. picking smaller wondows in a cycle will always have different teams winning.
The question from here is are we

Stabilising
Dropping
Rising
I think a modest drop from here does not claim a win to the doomers because most would understand the market takes a breather.

People know my stance.
Flat growth to maybe small neg losses for the short to medium term then upwards from there. Longer term its still a property win.

But yes Hobo-jo. you win appear to have one that fight.But not the war

 

[VYBerlinaV8]

If this is what a dropping market looks like, then I'm glad I invested in property!

 

[Propertunity]

Well what do ya know, here we are 12 months on Not a bad effort if you ask me although I didn't get the -5% I was expecting nationwide, but we did see YOY drops in two capital cities.

Oh please.....
For year ended 2010, according to Residex:
ACT +8.93%
Adelaide +3.13%
SA Country +2.57%
Brisbane -2.90%
Qld Country -1.43%
Darwin +2.15%
NT +4.15%
Hobart +4.99%
TAS Country +2.9%
Melbourne +9.21%
VIC Country +9.26%
Perth +0.41%
WA Country -7.84%
Sydney +6.51%
NSW Country +4.78%
Australia overall +5.51%.

......and you were predicting -5% nationwide. Gimme a break

 

[Deltaberry]

If this is what a dropping market looks like, then I'm glad I invested in property!

No this is what a flat market looks like. A dropping market looks like the US and you better pray our commodities don't bust any time soon, otherwise you'll face a bigger dropping market since this is what we call in the finance world, a one trick pony economy.

 

[evand]

Don't be so smug dude. You wont be later, its just the beginning of the trend.

http://www.perthnow.com.au/business...ling-home-values/story-e6frg2ru-1225997345057

If this is what a dropping market looks like, then I'm glad I invested in property!

 

[Propertunity]

...... its just the beginning of the trend.

http://www.perthnow.com.au/business...ling-home-values/story-e6frg2ru-1225997345057

Look, in my opinion, Perth is is a different part of the RE cycle. A few years back its median price exceeded that of Sydney for the very first time. That was clearly unsustainable (to me at least) & a good indication that the Perth market had overshot. Now it is just correcting over there.