Peter,
By the supply side, do you mean that because of tightened credit, there will be less development thus keeping prices stable?
I know this kind of contradicts what I previously wrote, but again thats my understanding...
Where's the crash
- Thread starter pieman
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Peter,
By the supply side, do you mean that because of tightened credit, there will be less development thus keeping prices stable?
I know this kind of contradicts what I previously wrote, but again thats my understanding...
Its not as simple as a+b=c. There are numerous variables that come into play.
Imagine the property market is like a tug of war game.
On one side of the rope are the postive factors:
1) positive immigration
2) rising rental market
3) fundamental shortage of houses
4) low interest rate environment where the low interest rates can be received by the majority of the population
5) government first home incentives.
6) increases in future average wages
6) others i havent listed.
On the other hand we have the negative factors:
1) tough economic climate
2) potential rising future unemployment
3) future interest rate rises
4) potential future increases in required LVR ratio's.
5) others i havent listed
So who will win this tug of war. Remember the tug of war can swing backwards and forwards.
Over the next 5-10 years i still see alot of uncertainty, on a 10 year+ investment horizon i think property will do just fine.
Hi Lotis
Various factors may limit the supply side
Less development is only 1 part of the supply side.
Less of the existing stock of houses on the market
-due to people not being able to get increased loans to upgrade.
-fear of unemployment, not wanting to take on increased obligations.
In times of uncertainty people become more conservative and tend to stay
put, thus you have less people buying but less selling.
Cheers
Pete
Where's the crash?
how long does a crash take?
RESI
Meanwhile, try Perth from Dec07 to 08,
65% of its burbs had negative nominal house price growth
6 burbs >20% (Piesse Brook, Champion Lakes, Crawley, Harrisdale, Cardup, Byford)
20 > 15%
41 > 10%
Perth's median house price dropped 12.2% in the same period.
Got to be some negative equity amongst all that.
Queen's Park land is down 26%...
You might also check any regional town in Australia and the Gold Coast.
COMMERCIAL
HTW April 09 commercial market overview says
Sydney has dropped 15-40% depending on the area.
Similar for Wollongong.
Bisbane 20% down.
Gold Coast 50%.
There's enough evidence many areas are down signficantly, if you are prepared to read the data impartially.
how long does a crash take?
RESI
Meanwhile, try Perth from Dec07 to 08,
65% of its burbs had negative nominal house price growth
6 burbs >20% (Piesse Brook, Champion Lakes, Crawley, Harrisdale, Cardup, Byford)
20 > 15%
41 > 10%
Perth's median house price dropped 12.2% in the same period.
Got to be some negative equity amongst all that.
Queen's Park land is down 26%...
You might also check any regional town in Australia and the Gold Coast.
COMMERCIAL
HTW April 09 commercial market overview says
Sydney has dropped 15-40% depending on the area.
Similar for Wollongong.
Bisbane 20% down.
Gold Coast 50%.
There's enough evidence many areas are down signficantly, if you are prepared to read the data impartially.
ANY regional and ALL GC ?
Are you sure on that?
Or cherry pick your sources, like those HTW commercial examples
Dave
is it any urpirse the median has dropped with the amount of lower priced FHB transactiosn being processed?
but yes there have been some big drops in some motivated seller top end property.
Or cherry pick your sources, like those HTW commercial examples
Dave
fair crack of the sav Dave.
the question was 'where's the crash?'
I gave some examples cos a lot of people don't believe anywhere has dropped more than the 'median', which if was true, the median wouldn't be the median....
how does unemployment increasing by 150,000 between feb 08 and 09 fit in?
pieman, it is not going to happen
Don't you just love it?
It's always 'next year'. A blind monkey will get that right 1 in 7.
Pieman thanks for starting this thread and posting this beauty that you expected to SNAP up for $300K.
http://www.realestate.com.au/cgi-bi...t=&header=&cc=&c=82548959&s=vic&tm=1238835228
It is on Beaconsfield parade, only the most prestigious address (In my little head anyway) in albert/middle park.
Anyway, keep dreaming, just like I think that I can buy my neighbour's townhouse for $45K, how dare he ask for 10 times that. I cannot stop laughing now.
http://www.realestate.com.au/cgi-bi...t=&header=&cc=&c=82548959&s=vic&tm=1238835228
It is on Beaconsfield parade, only the most prestigious address (In my little head anyway) in albert/middle park.
Anyway, keep dreaming, just like I think that I can buy my neighbour's townhouse for $45K, how dare he ask for 10 times that. I cannot stop laughing now.
Remember that nothing is as unpredictable as the future.
But a few things to keep in mind. Some people are pedicting prices to materially drop, some people are not. I haven't yet seen anyone predicting a boom in the next year or two - the most bullish of prediction appear to be for moderate growth
In other words, there is a downside risk (the key word being risk, not certainty). But there is an assymetry here, because the chance of an upside doesn't appear to be anywhere near as high. But who knows....
Something else to think about: immigration. Traditionally, immigration lags but strongly follows the economic cycle. In other words, once the economy turns down migration levels take a while to drop, but once they start dropping they do so markedly.Very markedly. Governments love immigration, and only reduce migration levels once unemployment starts being a major problem and the people start shouting "stop them from stealing our jobs" (we won't go into whether I agrees with this view of the people).
That lower migration follows a downturn in the economy in a lagging manner is not just an Australian phenomenon, it has been the case internationally during previous downturns.
Lower immigration levels will mean all other things being constant, real estate prices that will be lower had there been higher levels of migration.
On the other hand, this government is so popular, it might be able to get away with keep migration levels high during the downturn. For all sorts of reasons I won't go into here, governments love love love immigration.
But a few things to keep in mind. Some people are pedicting prices to materially drop, some people are not. I haven't yet seen anyone predicting a boom in the next year or two - the most bullish of prediction appear to be for moderate growth
In other words, there is a downside risk (the key word being risk, not certainty). But there is an assymetry here, because the chance of an upside doesn't appear to be anywhere near as high. But who knows....
Something else to think about: immigration. Traditionally, immigration lags but strongly follows the economic cycle. In other words, once the economy turns down migration levels take a while to drop, but once they start dropping they do so markedly.Very markedly. Governments love immigration, and only reduce migration levels once unemployment starts being a major problem and the people start shouting "stop them from stealing our jobs" (we won't go into whether I agrees with this view of the people).
That lower migration follows a downturn in the economy in a lagging manner is not just an Australian phenomenon, it has been the case internationally during previous downturns.
Lower immigration levels will mean all other things being constant, real estate prices that will be lower had there been higher levels of migration.
On the other hand, this government is so popular, it might be able to get away with keep migration levels high during the downturn. For all sorts of reasons I won't go into here, governments love love love immigration.
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On the positives-
1) Governments tend to cut back on immigration when unemployment rises
2) There is a noticeable increase in the number of rental properties over the last 6 to 12 months. Have a look at the rental vacancy charts on sqmresearch.com.au.
3) Many previously unoccupied holiday homes are coming onto the market due to the economic times. Seaside towns and the Gold/Sunshine Coasts have a vast supply of excess houses.
4)Agree with you on low interest rates - but for how long?
5) Govt incentives may be increasing demand now at the expense of later - can't be good for future prospects.
6)Increases in wages will be outweighed by unemployment imo
Of the negatives, the increase in LVRs is the biggest risk. given a particular deposit level, a 10% deposit will only allow you to borrow half the amount of money as a 5% deposit. ANZ will not lend over 90%. CBA wants a genuine savings history over 3 months. All the banks are moving to higher deposits.
That property on Beaconsfield Parade was originally listed by another REA a few months back now at $2miliion. Seems like the banks have moved in now.
This Albert Park property has been on the market for many month now, and was originally listed at $900k+. Doesn't seem the vendor has changed their mind about the price.
Higher priced property in the areas such as Prahran and South Yarra, South Melboune, Albert Park has definitely come off its highs, but amongst this softening, recent auction results have shown a few good prices being paid. It is difficult to rationalise and understand why one property gets a good price and another does not, for what are similar quality dwellings. Whether its the REA, marketing or even just luck. So the often heard comment about high end properties coming down substantially, is a far more nuanced one, than some would have you believe. And to worry about properties that are in the multi-million dollar range, is to really over emphasise a very small % of the market, whose impact on the rest of the property market negligible.
On the other hand, in commercial property there is this example in the Age about pubs/hotels.
Last time I was in Melbourne I was amazed at the difference in displays of 4 wheeled wealth on the roads compared to Brisbane.
I think some of these people wouldn't blink an eye at spending $1.5m on a house.
Dave
Sales of prestige cars are drastically down. Extrapolate that to blue chip housing prices...
fortunately prestige cars are mostly imported, where as blue chip property supply is generally static
anyway...., so I go along to the auction to buy me some prime 250 sqm of RE as we all know there is a major depression on and there is no buyers and im going to be able to buy this wreck for 300k as keen etc say.
however, to my dismay, despite the end of the financial world and in the midst of the great depression mk2, there was 200+ people there but of course there all unemployed and have no coin
sold for 1.8
pieman
however, to my dismay, despite the end of the financial world and in the midst of the great depression mk2, there was 200+ people there but of course there all unemployed and have no coin
sold for 1.8
pieman
