The Coming Property Crash

[sheryl_anne]

Dearest Sanchez,

Is that the same infamous Rene Rivkin that I am currently watching on TV trying to worm his way out of insider trading????

regards
Sheryl-anne

 

[Crystal]

For your information...

TREVOR SYKES, 'AUSTRALIAN FINANCIAL REVIEW': It's the smallest criminal conviction I've ever seen in the financial world, in dollar terms.
I mean, I don't think I've ever been to a lunch with Rene that cost less than he's alleged to have taken here, which amounted to the grand sum of $340.00

ANDREW GEOGHEGAN: Rene Rivkin looks to have made a serious error of judgment when he decided to trade Qantas shares for a personal profit of just $346.

MARK WESTFIELD: What, I suppose, disturbs me about this policy of chasing high profile miscreants, is that a huge number of people are walking around after having inside traded and earnt and made many, many times more than Rivkin, and ASIC won't touch them.


I think it's criminal for ASIC to spend huge sums of money to put Rene in jail for making $346!!!!

Regards,
Crystal

 

[brains]

Ross, I love how you cover all your bases (most - some - plateau -fall - rise) You cant lose there mate

Is not inner city apartments a significant part of real estate? You say you didnt mention them but you didnt discount them either.

In my opinion the only way this property boom wont end in a crash is with government intervention to provide a soft landing.
They have already taken steps to implement this, what does that tell you?

Originally posted by Ross Sneddon
Hi Brains

Your thinking has galloped away with you again. I made no reference to inner city, CBD apartments in Melbourne or Sydney, none at all. Nor have I suggested that apartments were a good investment. Indeed I have stated many times in the last few years that I don’t recommend CBD apartments but I acknowledge others may have a different viewpoint. Where you get the idea I have suggested something else is only in your mind.

My comment is that the property market has overheated. In most areas it has reached a plateau and in some areas it may fall a little or rise a little further but essentially it has reached a point where it will now commence to stabilise and rents will catch up over time. Natural inflation will also have an effect.

I don’t see a crash occurring but a steady stabilising of the market back to a state of normalcy, whatever interpretation you wish to use to apply to the term normalcy.

I have reread my comments and don’t intend to suggest any changes to what I have already stated.

Regards

Ross

 

[Mikhaila]

Originally posted by yee3890
Hi all,

Please have a look for the following link for the prediction for the future popert market of Australia.


http://www.economist.com/surveys/di...tory_id=1794873

Here is The Age article Just to balance the Economist essay.
http://www.theage.com.au/articles/2003/06/02/1054406130670.html

 

[Bill.L]

Hi all,

I love the doomsayers, they're usually soooo wrong.
To take one area of investing and say it is going to crash, shows a total lack of understanding of the investment class, and history.
If property was all the same then perhaps it could crash, but the different types ranging from CBD apartments, to suburban townhouses, to 3bdr BV on 1/4 acre, to beachfront mansions, to, to ,to.. means that the cycle of boom to bust just happens in different areas at different times.

If Jenman was a little more specific in what was going to crash then perhaps he would have more creditability, especially after the event, if he was correct.

I'll make my prediction, but remember it's worth the paper it's written on, that inner city apartments will crash ala the townhouses and units that were built in Logan around the late 80's early 90's. Median priced freestanding houses that are located close to schools, transport, shopping centres will continue to rise in price.
No prizes for guessing where our money is.

Looking at reasons why some experts think prices will crash has to come back to supply and demand. Inner city apartments have been hyped as where people wish to live, but I just don't see the demand. Whereas suburban housing with a larger percentage of owner occupiers is where the demand is at. Yields in terms of cashflow on investment were never as good in the 80's as they are today and any further lowering of interest rates could see an acceleration of price increases.

The trend for house prices has been up for years, the trend for interest rates has been down for years. Those who would stand in front of the trend and say your going the wrong way, usually get run over.

bye

 

[Aceyducey]

Mikhaila,

Good article - balanced & looks at the big picture. Well worth reading.

Cheers,

Aceyducey

 

[Gotham]

Everybody should read the May 31st - June 6th "The Economist". It has a very informative 14 page survey on the property market.

I agree with most, prudent purchasing should yield excellent returns. You have to keep reminding yourself RE is a business and you should carefully examine your investment and returns. If we are all running out buying property purely on the speculation that it will go up in value we are gamblers not investors.

Lastly we should all be happy with the doom and gloom talk as the market needs to calm down a little for everybodies sake.

 

[brains]

Bill

I suppose its the definition of a "crash". What do you call what happened after the 88-89 boom when ALL property decreased in price in a matter of a year or two.

Didnt stay flat, didnt increase slightly but decreased.

I know the economic situation was different then (i was extended owning a Leichhardt terrace at 18% interest rates) but its all relative.

And for those who stand in front of a trend and usually get run over by it, im sure those people are still standing in Hong Kong, Japan and Canada where the property market is or has crashed, burnt and busted big time and is beginning to happen in Britian anecdotally.

 

[Bill.L]

Brains,

"ALL property decreased in price in a matter of a year or two". There is an ignorant statement.

I purchased a rural block of land in 1988 for $15,000 and the one next door sold for $25,000 in 1992 then $45,000 in 1998. Both blocks were esentially the same. I think this constitutes part of "ALL property"

In Japan the trend in property prices has been DOWN for years, standing in front of that trend you would have been buying for years and losing money. Speaking of losing money, how are your AMP shares going that you bought, by going against the trend??

I don't say that trends don't change, they do. But predicting when it will change is a losing strategy as trends often go much further than people count on, ie the dotcom bubble.

bye

 

[brains]

Bill

Love that insecure dig re the AMP shares. They are a spec of my total asetts and as i have said previously i will make money on them, if you dont think i will id love to have a wager with you.


2 blocks of land in WOOP WOOP do not constitute zip, but if memory serves me the bottom of the price correction was in 91 -92 and property has been risng since.

Originally posted by Bill.L
Brains,

"ALL property decreased in price in a matter of a year or two". There is an ignorant statement.

I purchased a rural block of land in 1988 for $15,000 and the one next door sold for $25,000 in 1992 then $45,000 in 1998. Both blocks were esentially the same. I think this constitutes part of "ALL property"

In Japan the trend in property prices has been DOWN for years, standing in front of that trend you would have been buying for years and losing money. Speaking of losing money, how are your AMP shares going that you bought, by going against the trend??

I don't say that trends don't change, they do. But predicting when it will change is a losing strategy as trends often go much further than people count on, ie the dotcom bubble.

bye

 

[astroboy]

C'mon play nice now boys.
astroboy

 

[brains]

Im always nice Astro but slightly less so when provoked

btw: heres the link for the article on the plans the government are implementing for when people are doing it tough due to the upcoming property/interest rate crunch. This might sound tacky but there will be less foreclosures for those hoping to pick up a bargain.


http://smh.com.au/articles/2003/05/31/1054177765823.html

 

[Bill.L]

OK Brains,

Sorry about the dig on AMP shares, I was just highlighting it to point out the fallacy of predicting against the trend. If something is a great buy because it has gone down in price then when it goes to an even lower price it must be a better buy. Well according to your logic.

Back to property.
If someone else makes a profit that doesn't fit your statement then the obvious thing to do is say it doesn't count. You couldn't entertain the possibility that you were wrong and that different sectors of the market were doing different things at different times???

We sold a house in Melbourne in 1990 that we could have bought back for about the same price at any time up to 1996. So for that period obviously prices hadn't gone up. Had it been purchased by an investor they would have lost because of the negative gearing required. Yields were around a third of the interest payments in 1990 whereas now yields are a much higher percentage of interest payments. But remember in the longer time frame the trend was up, and if you had bought in the mid 80's then the short term correction due to the recession we had to have, was that, only a correction in the TREND of higher prices.

bye

 

[Michael Croft]

Hi,

To quote the age; "The Economist said that Australian house prices rose 83 per cent on average between 1995 and 2002, with an 18.4 per cent increase last year alone. It said prices were at least 30 per cent too high, and forecast a 20 per cent fall over the next four years." Don't you just love rubbery figures as put out by the sensationalist press (including The Economist)!

A twenty percent fall over four years, hmmm........ did they mean a fall in relative or real terms? If you pay the same price in four to five years time that will equal a 20% fall in value won't it? Will inflation cease to exist or go into reverse?

A purchase price in four to five years time of 20% less than today will be a 40% fall in value, true or false?

Fools and their money are soon parted and the authors know two/fifths of three/eights of stuff/all about property and values; except in a less than well thought out, generalised, semi literate, diratribe designed to sell papers/magazines

Yes their ignorance pees me off because they profess to be otherwise.

regards, MC

 

[brains]

This will go some way to answering your question:


" This time, however, with inflation so low, house prices will fall more sharply in money terms than they did in the past. In Britain as a whole, for example, average nominal house prices are likely to drop by 20-25%, and in London by much more. Significant numbers of owners may be left with homes worth less than their mortgages—especially as the proportion of owner-occupiers with mortgages exceeding 80% of the value of their homes is higher now than it was in the previous bust in the early 1990s. "

 

[multi]

Im always nice Astro but slightly less so when provoked

You are from Central Coast, aren't you?

Why don't you stop sniffing mass media bulldust for a while, get outside and try to find 3bed house around Gosford for less than $300K (even rundown fibro will do - but no structural faults please).

Just 2 weeks ago you could snap one (if you are quick) for as "low" as $270K, but now - He-he-he.

Property market crash and Iraq's Weapons of Mass Deception are things of the same kind.

 

[brains]

and your point is??

Originally posted by multi
You are from Central Coast, aren't you?

Why don't you stop sniffing mass media bulldust for a while, get outside and try to find 3bed house around Gosford for less than $300K (even rundown fibro will do - but no structural faults please).

Just 2 weeks ago you could snap one (if you are quick) for as "low" as $270K, but now - He-he-he.

Property market crash and Iraq's Weapons of Mass Deception are things of the same kind.

 

[astroboy]

Currently banks are getting edgy about property developement and are starting to change the rules. They are more comfortable with developments of 3 or less units or borrowings of less than $1,000,000. For these they do not usually ask for outside valuations or a QS.

And ppl are looking for signs ? Micheal Yardneys post from the development recipe thread. Just reading the signs....
astro

 

[XBenX]

well banks tightening lending policies on developments must mean and end to the market !!!!

its not like they have been doing this (tightening lending policies in certain areas) for 12+ months

funnily enough the boom has continued.

now Im not saying a correction is not coming... infact I think it is... but lets not get carried away at the indicators

 

[astroboy]

C'mon I thought I'd get a better bite than that !
astroboy