The next 10 years: Prediction of the market

T

TMNT

We all know that each city has its different markets and submarkets, but its safe to assume as a whole the country is doing pretty good now

D&Gers will always say that we are in a bubble, and that a property crash is around the corner

we saw a major crash in the early 90s
and a drop in 03ish
and a signficant drop in 09 ish

as human beings we never seem to learn or do we?

a few people have commented (which I agree with) that until prices start to double in a few years, we arent in a bubble at all, and that we are in a growth part of the cycle

So what do people think will happen in the next 10 years. Some experts have said that the days of property doubling in 7-10 years is a thing of the past. Have we learnt our lesson or will the past repeat itself. The reason why I ask is, there are some factors that make me think its another business as usual real estate cycle, whilst I also think we are facing very unique circumstances, eg higher then historical income to price ratios, and I think the priority for home ownership will start to diminish, which may lead to a cap in real estate growth

(Ive only included a few realistic scenarios to keep the poll small)

Oops, I accidentally clicked no poll,

well here are my options

1. Average Growth for the next 0-3 years, then and plateau for a few years, followed by the start of a typical property growth cycle

2. Above average growth for the 0-3 years, followed by noticeable drop with a shabby market for a few years, ie the typical real estate cycle

3. Property Bust: signficant growth for the next 0-3 years followed by a correction/bust with a drop of up to 20%, followed by who knows?

4. A new type of cycle where the growth will be fairly small but consistent over the next 10 -15 years with no real drop or plateau

5. Something else
 
It's impossible to predict, depends if China can avoid crashing down with it incredible property bubble

I am following Warren Buffet style concentrate buying whenever price cheaper than intrinsic value. Enough cash to handle emergencies and taking advantage of any opportunity in a down market. Then shut out news and enjoy life now
 
I was leaning towards point four with some of point one regarding the four biggest capitals. Opinion based on supply & demand & ABS predictions.

The rest of the capitals and larger regionals, a little further back, and I would find it too difficult to make any specific comment on. Throw in a few surprise improved markets, which are always obvious in hindsight.
 
Don't ask me. When I bought my last IP over 2 years ago I was sure it was at the top of the market for the area. I only bought it because it was a good deal at the time. That particular sub-sub-sub market peaked this year and is currently undergoing a minor price correction. So while some sub-markets are going ahead, mine is going down.

For what it's worth, I can see price corrections in some sub-markets in around 18 months to 2 years. Other will continue to increase modestly over this time.

Of course last time I was completely wrong.
 
It's impossible to predict what will happen with any certainty over a longer term frame how ever it is possible to get a good idea what is going to happen in the short term. Look at how good the experts are . They're crap

My only prediction is that , short of some black swan event ( why by definition is unpredictable ) I expect the market to move up in the next 6 mth-2 years . 1 year is the time I'm working on at the moment , though I'm keeping my ear to the ground to see if circumstances change. If things look really good then I'll review our plans

I think the last properties we bought in the last cycle were in 2003 - We spent around 3 years doing a development after that . We cashed up in around 2006 and at that stage we sat on the sidelines watching. I'm sure there were opportunities we missed , but i'm not concerned about that.

When the GFC hit we saw a opportunity to pick up good properties in good areas and then waited . In 2011 I felt we were closer to the market moving so we picked up a couple more good properties in good areas . On both these occasions we didn't extend ourselves. Mid last year it became obvious the market was starting to move strongly so we bought fairly aggressively up to our comfort zone and now we wait and watch the market as it moves up.
We're around 50 % up on the 2009 buys and around 25 % on the 2011 ones.
Around 10 % on last year.

Chats with real estate agents in sydney in the areas I watch show no sign of the market slowing down. The RBA have indicated they don't see the property market being a concern in the short to medium term though they have fired a couple of warning shots across the bows of the banks telling them to be careful and at least the big banks have long enough corperate memories to remember what happened when they got careless. I'm not concerned about the " noise " about a bubble . Comparing income to prices is irrelevant as far as I'm concerned . For those who are students of history or have been around long enough , it's around 20 years since rates were around 18 % . Yes 18 % .

I was lucky I was locked in at 14 % .....

So in the last cycle when rates were around 8 - 9 % the D & G's were taking about them going back to 18 %. The reality is , certainly for the foreseeable future there has been a change in the interest rate picture and I don't see that jumping any time soon .

The worlds financial market is a different places . For as long as I've been investing there has always been something lurking in the back ground as a disaster . Only one came true . If the GFC had come a year earlier or a year later , there would be a different set of experts around trading of the fact that they had predicted the GFC .

We have people predicting a turn down in the market . I'll add my voice to that chorus .

At some stage there will be a turn down . It will occur somewhere in between 2-10 years time , and it will consist of a turn down of around 2 - 20 % from the preceding peak . In reality I don't think it will occur for at least five years. I don't think anyone can be more accurate than that

Why because there always are down turns.

That's my prediction.;); :rolleyes:

What I don't see is a turn down in the shorter term and that's as far as I look in terms of decision making with buying and selling property.

For me this cycle looks remarkable similar to the last one . Prices are going up and property is AFFORDABLE.

Cliff
 
In the short term, prices will go up.

In the medium term, prices will fall.

In the longer-term, prices will go up.

In the very long term, prices will boom like you've never seen before.
 
Personally I think property price is now at historical high (a house in Seven Hills these days are around half million dollar now) so the price will plateau for the next couple of years at best, and may dip 5 - 10%, depends on the job market and interest rate.
 
The Economist - House-price indicators

Deltaberry said:
...In the longer-term, prices will go up.

In the very long term, prices will boom like you've never seen before.
Click to expand...

Hong Kong and Australia the standouts on this list , I found a graph

from Colliers International months ago (that I should have saved), that shows

predictions of Australian property undervalued by about 40 %, therefore

showing a lot of room to move. Something to think about.
 
Last edited:
TMNT said:
Ummmm how did you get that

It says Australia is 61% overpriced
Click to expand...

Sorry I should have found both graphs . :D Economist 61% overpriced; Colliers 40-42% underpriced

What I was trying to say, all reputable sources show 2 totally separate things.
 
impala67 said:


Hong Kong and Australia the standouts on this list , I found a graph

from Colliers International months ago (that I should have saved), that shows

predictions of Australian property undervalued by about 40 %, therefore

showing a lot of room to move. Something to think about.
Click to expand...

mind you, Colliers International is actually just a big time real estate agency...
 
Changing demographics over the next 10-20 years will put pressure on governments as the aging population starts to show its true cost. Governments will be forced to reduce spending on the aged pension and health care. They will also be pressured to increase consumption taxes as well.

As baby boomers retire many of them will start to shed investment properties and downsize larger family homes in order fund their retirement.

This will put downwards price pressure on your more Blue chip suburbs (mainly inhabited by baby boomers) as there will be a glut of high end properties on the market.

The lower end of the market will remain flat, the middle will do ok as people looking to downsize will compete for modest/small homes in good areas.

So high value homes in the good suburbs will suffer, but everything else should do ok.
 
I'm not game enough to go against histories property cycles. I think my grand parents who paid $1000 for a property would have never imagined a 3 bedroom house in the suburbs would hit HALF A MILLION dollars.
I predict UP UP AND AWAY.
 
Is anyone else a bit concerned about how the future generation will be able to afford housing at the rate that house prices are going up? It's gotten to the point where the next IPs I purchase, I actually think of keeping/gifting for my future children as I just can't see how they'll be able to afford anything reasonable. I don't know if I'm just worrying needlessly though.
 
tess85 said:
Is anyone else a bit concerned about how the future generation will be able to afford housing at the rate that house prices are going up? It's gotten to the point where the next IPs I purchase, I actually think of keeping/gifting for my future children as I just can't see how they'll be able to afford anything reasonable. I don't know if I'm just worrying needlessly though.
Click to expand...

Are you a communist or something?
 
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