What stage of the property cycle are we at now?

[Mindmaster]

Assuming that you look at a property cycle having the following four stages
1-boom
2-slump
3-stabilization
4-upturn

which phase do you think the property market is in now

My uneducated opinion (see my post count) is we are in stabilization stage. All the unusual economic variables such as low interest rates and increasing unemployment make my opinion too much guess work.

 

[Player]

Difficult to answer this with one selection. If you are referring to residential property, there are many sub-markets within that and they are at different stages of the cycle.

My spin on things and I've posted elsewhere also, is that top shelf properties are likely to come off perhaps 10-15 % depending on suburbs and how exposed the owner occupiers (OO's) still are to equities and business uncertainty.

The middle shelf and this for simplicity's sake would include suburbs where most properties are around the median price range (or slightly above) for the capital city in question, may soften slightly (I'll commit to 5 % or so) or track sideways.

I feel the lower end may continue rally due to affordability issues with FHOG as one component but also due to reducing interest rates, making that sector more affordable to its intended purchasers. I feel investors may also push the bottom end up with falling interest rates.

That lower end may, however fall off as job losses hit OO's who over-committed a couple of years ago and perhaps even locked in at nine's. This is the sector I find the most frustrating to prognosticate on. Perhaps some pull-back of the low shelf rally due to unemployment (in family OO's) or no effect. I also missed another (smaller) and more unique group. The unique and and elite properties where there are very few biuyers. That's where the fire sales are at present.

We will know better where we are on the clock in another 6-12 months time with the benefit of hindsight.

If I had to pick one (after all that rant ) I would average it out and I have seletced # 2 slump. Although we may be between 2-3 slump and stabilisation, I gone more conservative and picked slump.

For those looking through opportunity eyes and who have done their research and DD and are prepared, this is where some astute buying will occur to provide cap growth for the future. Positive (or near positive) cashflow is not impossible today in metro city markets. Interest rates are at recent 45-50 year historical lows, whilst I'm not rushing, I'm looking, looking, looking and preparing to pounce on opportunitie$ that come my way.

 

[topcropper]

With the news coming from overseas just getting worse and worse, I can't see much hope for probably the last remaining assets in the world that haven't dropped yet to go up. That's Aussie resi property.

I believe that globalisation makes it impossible for Australia to somehow miraculously miss the bust. Every country is now tied to the wealth and productivity of every other. Globalisation increased the living standard of all the participants, but this will be the down side. We all go down together.

Australia will be entering a period of massive current account deficites in the years ahead, way bigger than any before, just as no one wants to lend anyone money anymore. One only needs some commonsense and a calculator that does 12 didgets to see this next crisis coming

I'm not predicting the massive falls that the mega bears are, just years of flat markets or small falls until this mess gets sorted out. The world is deleveraging. Australia is deleveraging. Everything is deleveraging because the bubble in everything was caused by excess debt. As all the liquid assets have been sold, the illiquid ones start to get looked at.

There is obviously some strength in some resi markets now, especially Sydney. Plus the FHOG and the drunken sailors and 'Little Gough'. Supporting business rather than trying to prop up home prices would be more sensible, but typical socialist government thinking I guess. My simple view is this is just a dead cat bounce, caused by those who don't understand whats happening right now.

See ya's.

 

[Rixter]

Assuming that you look at a property cycle having the following four stages
1-boom
2-slump
3-stabilization
4-upturn

which phase do you think the property market is in now

Where and which is the property market cycle you are asking on? Australia's a big place.

 

[nonrecourse]

With the news coming from overseas just getting worse and worse, I can't see much hope for probably the last remaining assets in the world that haven't dropped yet to go up. That's Aussie resi property.

I believe that globalisation makes it impossible for Australia to somehow miraculously miss the bust. Every country is now tied to the wealth and productivity of every other. Globalisation increased the living standard of all the participants, but this will be the down side. We all go down together.

Australia will be entering a period of massive current account deficites in the years ahead, way bigger than any before, just as no one wants to lend anyone money anymore. One only needs some commonsense and a calculator that does 12 didgets to see this next crisis coming

I'm not predicting the massive falls that the mega bears are, just years of flat markets or small falls until this mess gets sorted out. The world is deleveraging. Australia is deleveraging. Everything is deleveraging because the bubble in everything was caused by excess debt. As all the liquid assets have been sold, the illiquid ones start to get looked at.

There is obviously some strength in some resi markets now, especially Sydney. Plus the FHOG and the drunken sailors and 'Little Gough'. Supporting business rather than trying to prop up home prices would be more sensible, but typical socialist government thinking I guess. My simple view is this is just a dead cat bounce, caused by those who don't understand whats happening right now.

See ya's.

Toppie your synopsis is spot on kudos to you mate

 

[topcropper]

Where and which is the property market cycle you are asking on?

You asking me..??

I voted slump. However I've never said 50% drops. Small drops or a stagnent market for many years is still a slump with an asset that costs money to hold. I'm not falling for the 'cash flow positive everywhere' garbage.

The property market is 18 to 24 months behind the share market. Australia's economy is 18 to 24 months behind the US and Euro economies due to the commodities boom giving us an extended bubble.

See ya's.

 

[peastman]

I voted upturn because in the last couple of months, asking prices for properties similar to my portfolio
2 suburbs jumped by 10%
2 suburbs stayed about the same
1 dropped marginally.

Overall its an upward trend for me.
I know asking prices are not selling prices, but it is a guide.

 

[see_change]

I voted stabilisation , but I wanted to vote for slump / stabilisation / uncertain.

Cliff

 

[Big Rog]

topcropper,
great posts; I reckon you are right on the money with your analysis.
I like your idea about markets being flat for a long time effectively equating to a slump.
My own view is that we are in a mild slump by world standards (ie; in view of what has occurred in Japan, Euro, USA and the UK and also Ireland).
I also believe we will enter a long term (3 to 5 years) period of flat benign conditions, particularly when we now hear that Japan is once again picking up the threads of their 1990's depression, and China has got the wobbles, and our markets depend so heavily on these 2 doing the right thing. I seem to remember that after the bubble burst we had in 1991 that we didn't seem to come good until around 1997/98 (not sure about the dates but it sure was a long time of flat conditions). I reckon this means that until such time as the employment situation looks rosier, interest rates come down a bit more and confidence returns to the investment markets that property prices will take at least 2 to 3 years to come good and surging upwards again.
I might be a bit cynical but my own view about the odd economist, politicians or even the RBA continuing to talk up the market, all they are doing is trying not to talk it down unless it kicks off a larger recession, more fear and less investment.
This thinking leads me to just hold onto the current very attractive variable rates rather than jumping at fixed 3 year or even 5 year rates.
Cheers, Big Rog

 

[andrew_de_a]

good post big Rob, i agree also with your views

 

[willair]

Assuming that you look at a property cycle having the following four stages
1-boom
2-slump
3-stabilization
4-upturn

which phase do you think the property market is in now

My uneducated opinion (see my post count) is we are in stabilization stage. All the unusual economic variables such as low interest rates and increasing unemployment make my opinion too much guess work.

I voted stabilization , but i don't think it is important what we think we know how the next five years will pan out,2 years ago very few people saw what was going on, it's now happening world wide,and all these polls show is everyone has a different understanding of knowledge and there own evaluation of their own knowledge, the question to ask yourself is
if property does go into a long but slow slow downward spiral are you prepared??, i hope i am just went out yesterday and bought into a small but large Qld Bank, with a yeild at above 12%..
imho..willair..

 

[Rixter]

To everyone who is voting....which and where's the market are you referring to?

Australia's a big place with lots of markets.

 

[want2bewealthy]

I voted upturn and am voting on Darwin,

But in saying that it is the cheaper end of the market that is holding up well and the more expensive properties that arent showing much growth.

 

[sproket]

I voted upturn and am voting on Darwin

That wasn't the question. You didn't answer the question. Why didn't you answer the question?

 

[boomtown]

Brisbane: slump.

 

[Gee Cee]

What Boom ?

Speaking as a Investor / developer I have posted my longer term market opinions previously.

And even owing to short term stimulus packages I am still bearish.
I go pretty well along with Topcropper and Sea Change. (Must be our ages)


Thats for ALL of Aus. Small areas may rise .
With mining dropping I cannot see any boom in any mining towns.
With world slowing and job losses accross the board I still cannot see why any of Aus would suddenly boom.

Exports are dropping. Jobs are going right across the board

Like who is going to push the prices up. All those on the Dole

I hope I am wrong

But I am careful


Gee Cee

Old fart

 

[Shadow]

So many different markets in Australia.

My observation of Sydney is that the lower end is rising, mid market is stable and top end is falling.

I expect Sydney median prices to grow moderately over the next year or two leading to a strong surge in prices around 2010-2011, with a boom beginning around 2013.

I expect those cities that saw 20%+ growth in 2007 will experience falls of 10-15% in real terms over a few years (similar to what happened in Sydney after the last boom ended in 2003/2004).

I also expect Perth prices to drop a bit more.

This is pretty much what I've been saying for the past year. Despite the fact that the gloomers think I'm sort sort of 'permabull' I have actually been predicting moderate falls in many parts of Australia for a long time. No 'crash' though.

Sydney will lead the next property boom beginning around 2013 with the other cities following a year or two later.

Top-end Sydney property presents some great buying opportunities right now - that's where I'm in the process of buying. 20-30% reductions are certainly achievable in the top 5-10% of properties (if you can get the credit that is).

Aside from the falls in top-end property, Sydney is doing pretty well.

Cheers,

Shadow.

 

[Shadow]

Mindmaster
Join Date: Feb 2009
Location: China
Posts: 2

Hi Mindmaster, just curious, why the interest in Australian property if you are located in China?

Cheers,

Shadow.

 

[spark]

Despite the sliding prices, both yields & interest rates are at boom conditions.

 

[evand]

Are you talking North Shore & Eastern Suburbs $5m+ and/or $10m+ properties. Can you define 'top end' and 'top 5% - 10%'?

Thanks

S

Top-end Sydney property presents some great buying opportunities right now - that's where I'm in the process of buying. 20-30% reductions are certainly achievable in the top 5-10% of properties (if you can get the credit that is).