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Hi guys,
So long as we're taking bets, my money is still on 2012. There's a lot of good reasons why this will be the case:
* The current massive under-supply of houses.
* The lag before new property can come online.
* The impact of low rates.
* The economic recovery and the construction led property boom.
etc.
The guys at the economics company that we use to inform our strategic decisions have the following take as per the attachment. As can be seen, they reckon dwelling investment is going to peak in 2012. If investment equals prices, then the boom should peak at about the same time.
Cheers,
Michael
the undersupply if it really exists in Australia wont prevent house price falls as this clearly did not prevent them in the UK
* The impact of low rates.
This is temporary and is artifically low so its hard to include this as having any significant longer or even medium term effect because interest rates will simply go back up soon and quickly in the event of ANY sign of a property boom
Nice post Michael, I was almost considering requesting a thread delete given some of the cynical replies thus far!
Y33,Michael,
Even if the RBA tows the line will the banks do the same and not raise rates in the near future?
Sorry if i sounded a bit cynical in my above post, but i think polls on this sought of topic are dangerous.
Just look at some of the earlier polls done on interest rate predictions.
Some very good points on here, although I can't help but wonder when an actual correction wil take place. I've said here before that I suspect our correction will come in the form of several years worth of stagnation (and frankly I hope I'm right).
Any ideas as to when that might start? There is, ultimately, a level above which most people simply cannot front the necessary funds to purchase a property, and I suspect we are getting close-ish to that point now.
Thoughts?
I'd argue that there isn't a level where people can't afford a property. 70% of the population already have a property & with time they'll have significant equity in it. That equity will enable them to put down a large deposit on the upgraded PPOR. Their servicability of the loan will be good. Approx half of that 70% own their PPOR outright - they are in a v. strong position to upgrade.There is, ultimately, a level above which most people simply cannot front the necessary funds to purchase a property, and I suspect we are getting close-ish to that point now.
Thoughts?
I'd argue that there isn't a level where people can't afford a property. 70% of the population already have a property & with time they'll have significant equity in it. That equity will enable them to put down a large deposit on the upgraded PPOR. Their servicability of the loan will be good. Approx half of that 70% own their PPOR outright - they are in a v. strong position to upgrade.
If property doubles every 10 yrs then they'll be able to put down a 50+% deposit on the next place & keep their repayments at a reasonable level.
It's the FHBs that need to build up equity to get into that position... and a good way to do that is to buy something they can afford to service in the outer ring... and wait.
The RBA has stated that housing is currently more affordable than at any time in the last 10 years, it's cheaper to own than rent in several suburbs.
God bless the battlers who will go ACA when rates rise 0.25% and squeal "but me new Holden needs a wash and now I cannot afford it and will have to sell meee house, Wezz doomed" for they are the one who vote in marginal seats accross our Country and influence all the Pollies. God bless em
Much too sarcastic, time to go home, Peter
No, and yes. Genworth recently did a survey - they found that only 25% of FHB were significantly influenced the the FHOG, the rest were going to buy a house anyway or thought it was a nice bonus. Investors will replace that 25% of FHB, if they can find c/f neutral IP.The FHOG is very important however to keep prices moving up, because there always needs to be new buyers entering the market.
The housing market has stagnated for the last 6 yrs, while wages have risen by 4%pa, and discretionary income by 6-7%pa. The RBA tells us that housing is more affordable (for the 25-35 age group ie FHB) than at any time in the last 10 yrs.If they need to wait too long to get into the market, then the market itself can stagnate while wages catch up with prices.