The Australian housing bubble furphy

[tcocaro]

No that leads to an increase in DEMAND due to more people now being able to afford. If SUPPLY was able to keep up then prices wouldnt change, if SUPPLY actually could be introduced faster prices would actually fall however the situation we are in now is that SUPPLY is NOT keeping up and hence prices are rising.

Your still wrong, read up Demand & Supply and understand this concept your comments are simply discuissions reserved to people standing around and chattering over a beer and not reflective of what is actually happening.

Its not the limited supply that causes house prices to be above average. Its easy credit, govt stimulus, low int rates, etc etc...... there are many factors driving demand, much more relevant than 'under supply'

 

[tcocaro]

Umm yes by writting out new loans... lol your comment proves my point. More credit is available, is it as easy as a 5 or so years ago? NO is it easier than a year or two ago? Yes.

Maybe they were one of the tighest Banks during and after the GFC, lost some market share and now are trying to get some back?

 

[Beebop]

Hi Bayview,

Would it be possible to hold off on the sale until the market improves? Is it true that a FHB incentive/grant kicks in, in Victoria in July? An agent in my local area told me this - but I am not sure? He thinks that there will be increased pressure on prices in the lower end of the market when this occurs.

All the best with it.


Regards Jason.

What incentives ?

 

[Beebop]

No one wants to drop prices because they're scared it will cause bigger falls. Problem is the longer you leave it the further the fall will be as it will influence sentiment. You can roll your stones down the hill slowly and everything will be fine. If you let that negative pressure pile up at the top of the hill the force will be a lot bigger and the stone will crush the village underneath.

 

[BayView]

Hi Bayview,

Would it be possible to hold off on the sale until the market improves? Is it true that a FHB incentive/grant kicks in, in Victoria in July? An agent in my local area told me this - but I am not sure? He thinks that there will be increased pressure on prices in the lower end of the market when this occurs.

All the best with it.


Regards Jason.

Thanks Jason.

We could probably hold off until then (but when is then?), and it looks as though one of the others we want to sell has sold, so less pressure.

The new incentive if it eventuates will no doubt kick sart the bottom end again, but it will depend on how they structure it - the new home developers will no doubt be putting enormous pressure on the Gubbmint to make the incentive for new homes very good.

 

[Intrinsic_Value]

The new incentive if it eventuates will no doubt kick sart the bottom end again, but it will depend on how they structure it - the new home developers will no doubt be putting enormous pressure on the Gubbmint to make the incentive for new homes very good.

This is a good point has the disclosed how the incentives will work post July?
BTW congratulations on offloading one of your properties. Holding assets is great, but one always needs to balance assets with liquidity in changing circumstances. The stress tendons must be significantly reduced now.

 

[BayView]

This is a good point has the disclosed how the incentives will work post July?
BTW congratulations on offloading one of your properties. Holding assets is great, but one always needs to balance assets with liquidity in changing circumstances. The stress tendons must be significantly reduced now.

Not a totally done deal yet, but so far so good..

I'll get excited when I see the money in the bank.

Funny how life goes; we might still see this sale fall over, spew heaps about it, and then find things turn around and we needen't have worried about selling at all.

It's happened before.

For example; the new incentive might spike the lower end properties, of which we have most in our portfolio, and all of a sudden our nett worth jumps even more. Gotta luv that.

Won't help the cashflow issue of course; just another period for us of being "asset rich and cashflow poor". Can't seem to escape this.

I'm thinking that once the PPoR is done we will offload all the IP's and put all the funds into more cashflow positive business, then reinvest some of that into more (commercial) property later.

 

[Sunfish]

We have a 2x1 bedroom unit with SLOG, courtyard, separate toilet, in a quiet court in Central Frankston, near Myers and the train station, near the Monash Freeway entrance, near the hospital and the TAFE.

We need to sell it, and have been told by the agents it is worth $270k.

In 6 weeks of selling campaign; not one offer - not even a low one.

The agent even said DON'T DROP THE PRICE!! because there is no point doing so - the market is pretty flat. He hasn't been able to make a sale this month. In a place like Frankston; this is unheard of.

We would take $250k if the settlement was short.

Now, if this is unaffordable in today's world, I'll go he.

aah! but it's not a brand new 3x2 house with DLUG, within 5km's of the CBD. Damn; that'd be the problem .

WOW, Bayview has come out! He is a SELLER.

If you can, take your "property bull" hat off and reread your post. What is there which would inspire confidence in property, which seems to be your mission in life? In six weeks you have not had an offer on a cheap property. You have no control over the buyers so don't blame them. Price and presentation are all you can control.

 

[Intrinsic_Value]

We have a 2x1 bedroom unit with SLOG, courtyard, separate toilet, in a quiet court in Central Frankston, near Myers and the train station, near the Monash Freeway entrance, near the hospital and the TAFE.

We need to sell it, and have been told by the agents it is worth $270k.

In 6 weeks of selling campaign; not one offer - not even a low one.

The agent even said DON'T DROP THE PRICE!! because there is no point doing so - the market is pretty flat. He hasn't been able to make a sale this month. In a place like Frankston; this is unheard of.

We would take $250k if the settlement was short.

Now, if this is unaffordable in today's world, I'll go he.

aah! but it's not a brand new 3x2 house with DLUG, within 5km's of the CBD. Damn; that'd be the problem .

i think this is what Even was referring to when he said prices are set at the margin.
All that is required at this stage is for some other property owner to panick and sell into a time of low demand and bingo, the market has 'dropped' for that area.

 

[evand]

No sorry. This will only increase supply in the particular area the land release is situated.

This is my whole pint. That under supply only occurs in few specific areas.

This is the flaw in the thinking that to ease supply constraints we'll release more land on the outskirts of Sydney. The problem is not everyone wants to live there, so not everyone buys there. So it achieves SFA in the overall scheme because under supply is a small local issue.

Btw: I was pretty much in the middle of the gentrification of the Balmain peninsula.

What should be occuring is a slow ramp up in stock via, land release, higher density living and infrastructure improvements. This will increase "SUPPLY!" and lower price until a new more efficient equilibrium price is found but one at a point where more people are living in accomodation.

Anyways I am off to my HIA\UIDA conspiracy meeting.. ciao.

 

[evand]

Read my other post re under supply being a small local issue (eg: Balmain) and not a cure for property prices overall.

And its pedantic to say increase in demand is not the same as under supply.

No that leads to an increase in DEMAND due to more people now being able to afford. If SUPPLY was able to keep up then prices wouldnt change, if SUPPLY actually could be introduced faster prices would actually fall however the situation we are in now is that SUPPLY is NOT keeping up and hence prices are rising.

Your still wrong, read up Demand & Supply and understand this concept your comments are simply discuissions reserved to people standing around and chattering over a beer and not reflective of what is actually happening.

 

[evand]

I think people sell 'now' because they think prices will be lower in the future. They are often encouraged by RE agents to list now for just this reason.

This is major factor in a consistent and orderly falling of prices over time.

No one wants to drop prices because they're scared it will cause bigger falls. Problem is the longer you leave it the further the fall will be as it will influence sentiment. You can roll your stones down the hill slowly and everything will be fine. If you let that negative pressure pile up at the top of the hill the force will be a lot bigger and the stone will crush the village underneath.

 

[tcocaro]

supply a small local issue?

lol, seriously that one made me laugh...

anyways lets agree to "totally" disagree..

ps: balmain prices have fallen so has leichardt recently...

Read my other post re under supply being a small local issue (eg: Balmain) and not a cure for property prices overall.

And its pedantic to say increase in demand is not the same as under supply.

 

[BayView]

WOW, Bayview has come out! He is a SELLER.

If you can, take your "property bull" hat off and reread your post. What is there which would inspire confidence in property, which seems to be your mission in life? In six weeks you have not had an offer on a cheap property. You have no control over the buyers so don't blame them. Price and presentation are all you can control.

I am always confident about property - over the long term, and I have always said that.

Yeah; right now is not a good window, and I have always said there are cycles - especially when the perma-bears and Trolls keep whining about how expensive it all is.

Sunfish,

show me where there has been any mention of "blame" apportioned to buyers.

I was merely stating the present climate; as stated to me my by the agent.

And, if you re-read it, he also said not to bother lowering the price because there has been no inquiry - and that is across the board for the area.

 

[zed_kid]

I am always confident about property - over the long term, and I have always said that.

Yeah; right now is not a good window, and I have always said there are cycles - especially when the perma-bears and Trolls keep whining about how expensive it all is.

When was the last bust cycle (pre GFC)? Like 2003-2005?

 

[Sunfish]

Sunfish,

show me where there has been any mention of "blame" apportioned to buyers.

Now, if this is unaffordable in today's world, I'll go he.

aah! but it's not a brand new 3x2 house with DLUG, within 5km's of the CBD. Damn; that'd be the problem

Sorry, It just seemed to me that you were saying the buyers are too fussy and don't know a deal when they see one. just for the record, what were you saying?

I was merely stating the present climate; as stated to me my by the agent.

And, if you re-read it, he also said not to bother lowering the price because there has been no inquiry - and that is across the board for the area.

When I was selling last year my agent said to meet the market because things would get worse. That's what I did, but I'm a realist.

 

[Sunfish]

When was the last bust cycle (pre GFC)? Like 2003-2005?

There hasn't been a "bust" in my lifetime. Read my sig.

 

[Aaron Sice]

Don't know about this one right now.

From what I'm seeing and hearing, obtaining finance is not easy ATM unless you are in a strong financial position - always a criteria, but moreso than two years ago.

.....and is one of the reasons prices have softened. the article says unless all these trends are reversed then there will be no "pop", but one of them has reversed already which explains the slowdown.

so by cause and effect, we can say that article appears to be true.

 

[Beebop]

Gonna be funny when the market crashes. It is already starting. Just like the stock market, everyone said it couldn't happen.

Question is, will the government put money into housing to prop it up ?

 

[MichaelW]

We're not in a strong financial position. We're hocked to the eyeballs with our development in Sydney. There will be $2.2M of debt being serviced against that with no income until fully let out at completion. But I just rang my banker and asked for pre-approval for another $400K odd to go chasing a rent buster cheapie in Brisbane for us to move into short term then convert to an IP when we're finished the build in Sydney and want to upgrade to a flash IP in Toowong. He says it looks alright and they lend to 85% again now without LMI. Financing is getting loose again.

I'm filling in the forms tonight and will scan/email them back to him tomorrow for pre-approval. Then off to the auction on Saturday. Might have another property in my portfolio this time next week. All good if you're a buyer!!

Cheers,
Michael