Where's the crash

[pieman]

I haven't see the crash in the burbs Im keen to buy in. I was led to believe that Middle Park, Albert park etc would be less expensive than Werribee/Frankston Nth etc as the expensive suburbs copped a 50% reduction in price.
Well i want my money back as now things havent gone down and ill have to look at the outer burbs. Tell me when will the crash happen, like keen and **** people still crap on about.


the house below i thought may be worth 300k now but i see that they want a little more.
http://www.realestate.com.au/cgi-bi...t=&header=&cc=&c=82548959&s=vic&tm=1238835228

pieman

 

[sparky23]

Sadly I think a lot of people will start realising a lot of things very shortly!

 

[Propertunity]

Tell me when will the crash happen, like keen and **** people still crap on about.

pieman, it is not going to happen

 

[twobobsworth]

Went to a property today that has been on the market for over 12 months. They were asking mid 900s and dropped to high 800s. Still no bites so are going to auction. Neighbours on either side sold for 1.1m and 900 in the last 3years. I think they will be lucky to get anything starting with an 8.

I'm pretty sure they feel like they're in a crash.

 

[Propertunity]

I accept what you are saying 2BW. I have been saying for a while now that there are 3 markets in one atm. Sub-$400K FHB market is experiencing 5-10% increases and stock is running low.
$600-$800K fairly flat but no falls or rises.
& the $1M+ stuff taking a big hit if vendors need to sell.

I was in Newcastle today at a number of OFI's and nearly got trampled in the stampeed of FHBs making their last dash before June 30. There were literally dozens of couples lined up to go thru places. A number of older couples said to me that they were just about to give up trying to buy around $350K because of the competiton from FHBs.

REAs that I spoke to are selling at list price and $10K above in some cases.

 

[Pushka]

I think unemployment will hit 10% this year. If the FHB bonus is scrapped then those entry level prices will fall. I dont think the market will fall the 30-40% of doomsayers but it will fall around 15%. Just my gut feel.

 

[GIDDO]

I think unemployment will hit 10% this year. If the FHB bonus is scrapped then those entry level prices will fall. I dont think the market will fall the 30-40% of doomsayers but it will fall around 15%. Just my gut feel.

I am with you Pushka we are only just at the beginning of the pain.

We are mot at the beginning of a RE boom IMO.

 

[topcropper]

What about the latest news,......



Mortgage relief for jobs,....

http://www.theage.com.au/national/mortgage-relief-for-jobless-20090404-9sjg.html


......"PEOPLE who lose their job will be eligible for mortgage relief for up to a year and could get concessions on car loans and other debts under an unprecedented deal struck between the Federal Government and major banks.

Under the plan, to be announced by Prime Minister Kevin Rudd in Melbourne today, CBA, Westpac, ANZ and NAB have agreed to work with unemployed borrowers to postpone loan repayments for up to 12 months, with accrued interest rolled back into the loan.

The move is seen as a way of staving off a rise in mortgage defaults and forced sales that would normally accompany rising unemployment".......




This will all work great if the GFC is short lived. If the GFC goes for years, this plan could be a nightmare for all involved, especially the banks.

Looks like every single possible thing will be done to hold house prices at current levels.

See ya's.

 

[evand]

Be patient mate. The 2nd half of this year or the first half of next year and you'll see what your looking for. And then some.

I haven't see the crash in the burbs Im keen to buy in. I was led to believe that Middle Park, Albert park etc would be less expensive than Werribee/Frankston Nth etc as the expensive suburbs copped a 50% reduction in price.
Well i want my money back as now things havent gone down and ill have to look at the outer burbs. Tell me when will the crash happen, like keen and **** people still crap on about.


the house below i thought may be worth 300k now but i see that they want a little more.
http://www.realestate.com.au/cgi-bi...t=&header=&cc=&c=82548959&s=vic&tm=1238835228

pieman

 

[BoatBoy]

Be patient mate. The 2nd half of this year or the first half of next year and you'll see what your looking for. And then some.

I don't know evand, even your mates are getting shakey,

I was reading comments somewhere else this morning and the comments on the above story from topcropper were.......................

Incredible. The Government really is trying to keep property prices propped up................

I just read that. I think it is time to give up, resistance is futile..............

Ok, remember how we laughed at ____, saying "I have also mentioned before that if people are worried about their jobs then they definetly need to get on the property ladder now" Well, you have to admit that she was right. She was F____ right........

I really don't care anymore. I've pretty much given up on buying in the foreseeable future (at 40% off?)

I was even reading in Saturday's. Courier Mail about houses at the top end getting shifted in the Ray White Property Spectacular, so Maybe Shadow was right, property on the up now and crash in 2014 or similar?

Add:: LOL, Michael Pascoe just commentated on Sunrise (shudder) That average joe housing prices in previous recessions went up in value and that this relief during job loss was a good move as it will prevent mass fire sales and loss of value.

The Pigmen appear to be winning?

Dave

 

[keithj]

Looks like every single possible thing will be done to hold house prices at current levels.

Agreed... the govt can see what falling house prices has done to US & UK confidence.... it wants to prevent lack of confidence here. It prevented the bottom end falling with FHOG (which appears v. unlikely to be pulled in July now), it prevented mortgage stress by halving IRs, it's now preventing forced sales by forcing the banks to capitalise interest.

These 3 temporary props are likely to prevent falls, and they won't be removed until confidence & consumer led demand returns.

Is the US they say Don't fight the Fed......

This will all work great if the GFC is short lived. If the GFC goes for years, this plan could be a nightmare for all involved, especially the banks.

The govt is (was) debt free, it can probably continue to FHOG for several years, without much impact on the bottom line.

The big 4 banks average LVR is currently ~57%. There's a lot of slack before they hit negative equity like the US banks.

There will be a small percentage of high LVR loans taken up by those who do lose their jobs AND fail to find another AND don't have family to support them AND don't have any buffer AND don't sell their PPOR AND go into negative equity. If the banks do have negative equity when they foreclose on this minority then I'd expect them to do some sort of deal with the govt which has forced them to capitalise the interest in the first place. Many high LVR loans will have had at least some principle paid off, so there's a least a year (assuming <5% IRs) before any loans hit negative equity (assuming prices stay flat).

And if the GFC goes on for longer than a few years then (as you've mentioned before) house prices are one of the last things we'll be worrying about.

 

[chilliaa]

Guys you really need to differentiate between the GFC and the real economy.
I tried to draw some circles on a free graphics program but i am so pathetic at this type of stuff that i couldnt work out how to save it. Anyway imagine two circles the left one being the GFC the right one being the real economy.

We start off with a smaller left circle being the GFC it barely touches the right circle (This would be the period around June-Dec2007). Most people at this point havent even heard of the GFC its irrelevant to their personal lives and has minimal impact on the real economy.

Now as the GFC intensifies the left circle gets bigger at its peak (around Sept-Nov2008) it significantly over laps the real economy. Hence everyone is feeling its effects and its impact on the real economy (banks wont even lend to each other for short periods of time, trade companies cant even get letters of credit to ship their goods etc).

We are now entering stage 3: the left circle is starting to shrink as banks and governments come to grips with the GFC. Over time i expect the left circle to continue to shrink which will continuously reduce its effect on the real economy.

Therefore going foward we need to be focussed on issues that are going to effect the real economy (and easy credit wont be one of them!!!!!). This is the next challange the world has to face, but it wont have anything to do with the then recently passed GFC.

 

[GIDDO]

We are now entering stage 3: the left circle is starting to shrink as banks and governments come to grips with the GFC. Over time i expect the left circle to continue to shrink which will continuously reduce its effect on the real economy.

Therefore going foward we need to be focussed on issues that are going to effect the real economy (and easy credit wont be one of them!!!!!). This is the next challange the world has to face, but it wont have anything to do with the then recently passed GFC.

I think your view seems very plausible Chill.

So you think from this time forward; we should be thinking more about how tight credit will effect us?
Lower volumes of RE sales but values holding?
Higher savings levels for Joe Public?
More conservative LVRs for IP investors?
Most people taking on less risky investments? Bricks and mortar anyone?

 

[Pushka]

I think your view seems very plausible Chill.

So you think from this time forward; we should be thinking more about how tight credit will effect us?

Ah, yeah, that would be right. Not just for housing loans but for business. Most businesses need credit just to work. If they dont get credit, then they dont operate. Then people will be laid off.

 

[BV]

I haven't see the crash in the burbs Im keen to buy in. I was led to believe that Middle Park, Albert park etc would be less expensive than Werribee/Frankston Nth etc as the expensive suburbs copped a 50% reduction in price.
Well i want my money back as now things havent gone down and ill have to look at the outer burbs. Tell me when will the crash happen, like keen and **** people still crap on about.
pieman

it depends where you look.
In FHB areas properties now sell for the asking price or more
I don't know about other cities but in Sydney entry level property in most areas sells very quickly and the next property agents list will be at a higher price.

 

[sash]

Hmmmm....50% reduction....maybe on stuff which is $3m plus....but can't see that in the under $1m on a regualr basis.

I know in Sydney Mosman houses selling for $1.6m sell now for 1.25m but still only a 21% fall!

I think a 10-20% fall in the 350k - 900K stuff is more realistic. Particularly once unemployment hits 7-8%. So the jury is not ot yet.....the lagging economic indicators have not come through yet!

I haven't see the crash in the burbs Im keen to buy in. I was led to believe that Middle Park, Albert park etc would be less expensive than Werribee/Frankston Nth etc as the expensive suburbs copped a 50% reduction in price.
Well i want my money back as now things havent gone down and ill have to look at the outer burbs. Tell me when will the crash happen, like keen and **** people still crap on about.


the house below i thought may be worth 300k now but i see that they want a little more.
http://www.realestate.com.au/cgi-bi...t=&header=&cc=&c=82548959&s=vic&tm=1238835228

pieman

 

[sparky23]

Incredible. The Government really is trying to keep property prices propped up................

I just read that. I think it is time to give up, resistance is futile..............

Ok, remember how we laughed at ____, saying "I have also mentioned before that if people are worried about their jobs then they definetly need to get on the property ladder now" Well, you have to admit that she was right. She was F____ right........

I really don't care anymore. I've pretty much given up on buying in the foreseeable future (at 40% off?)

Ha Ha thats hysterical, however please note that I am still a very dangerous numbskull and should be treated with caution!

It seems several of them have now gone off and blown all their dosh on expensive cars, funny how we are always telling the newbies how irresponsible that is early in the game!

 

[chilliaa]

I think your view seems very plausible Chill.

So you think from this time forward; we should be thinking more about how tight credit will effect us?
Lower volumes of RE sales but values holding?
Higher savings levels for Joe Public?
More conservative LVRs for IP investors?
Most people taking on less risky investments? Bricks and mortar anyone?

It depends what you mean by tight credit. If you mean a return to 100%+LVR ratios, explossion in financial institutions jumping over each others feet to offer loans to sub prime borrowers on narrow interest rate margins etc, i think those times are over for the next 10years+ (even if the financial institutuions are happy to do it, will the mortgage insurers be happy to take the risk? NO, will the securitised market be prepared to buy the underlying securities? NO, will local councils be prepared to buy the securities on the advice of a merchant banker who says they are safe because the securitised product contains a blend of subprime borrowers from different parts of the country? NO

There is definately going to be a trend towards higher savings levels for Joe Public.

More conservative LRV's for investors? i dont know. Personally i think the banks have moved on from decades past when LRV ratios for investment properties had to be lower. I think it banks will be paying alot closer attention to the cash flow position of investors, and it will be cash flow that determine the ability to take on extra loans and extra investment properties, not the LVR ratio itself.

I dont buy into the logic that residential property is cheap because affordability is now back to early 2000's level. Residential property is cheap on an affordability level because interest rates are the lowest in 50 odd years.
As soon as economic conditions show signs of growth, and as the GFC fades from view expect the RBA to revert interest rates back to a normal setting of around 5%. Unfortunately just as having the majority of loans financed on variable rates helped Australia avoid the debth of the global recession, future increases in variable rates from a low base will have a magnified effect

 

[lostis]

With the (possible) tightening of credit would we then be seeing a further reduction in RE prices?

Due to. Less of the average Joe purchasing for either PPoR or Invest because they do not have the history/savings to be able to service loans (as requirements for credit become more stringent) --> less people in the market --> RE staying on the market for longer --> reduced prices?

Please tell me if I'm missing something, this is what i've gotten from this thread...

 

[turk]

With the (possible) tightening of credit would we then be seeing a further reduction in RE prices?

Due to. Less of the average Joe purchasing for either PPoR or Invest because they do not have the history/savings to be able to service loans (as requirements for credit become more stringent) --> less people in the market --> RE staying on the market for longer --> reduced prices?

Please tell me if I'm missing something, this is what i've gotten from this thread...

Hi Lostis

You are looking at the demand side only, at the moment in Melbourne the supply side has also contracted, seems to be the same interstate.

Cheers

Pete