Why house prices set to jump up to 15pc

[Ajax]

Link to complete article in Financial Review on Monday 24/9/12

http://www.afr.com/p/markets/why_house_prices_are_set_to_jump_8aS1vZiz4f1mBi3d1wEEiO

"DAVID BASSANESE
Along with my call for a likely lowering in official interest rates by 1 percentage point over the coming year, it stands to reason that this might well be positive for house prices. Indeed, my research suggests that given the prospective improvement in home affordability in the coming year, nationwide house prices could be ready to pop 10 to 15 per cent higher by late 2013...."

If there were 10-15pc gains in house prices by late 2013 it would give some solace to those holding IP's that are negatively geared and wondering where is the payback.

Shades of the year 2000 I reckon. Some experts calling on a fall in property prices after Sydney Olympics only to see prices climb strongly for the next 4-5 years (in Sydney at least).

I think David Bassanese is on the money.

 

[cu@thetop]

Will revisit this thread in 15 months to see how accurate he is. ;-)

 

[willair]

Link to complete article in Financial Review on Monday 24/9/12

http://www.afr.com/p/markets/why_house_prices_are_set_to_jump_8aS1vZiz4f1mBi3d1wEEiO

"DAVID BASSANESE
Along with my call for a likely lowering in official interest rates by 1 percentage point over the coming year, it stands to reason that this might well be positive for house prices. Indeed, my research suggests that given the prospective improvement in home affordability in the coming year, nationwide house prices could be ready to pop 10 to 15 per cent higher by late 2013...."

If there were 10-15pc gains in house prices by late 2013 it would give some solace to those holding IP's that are negatively geared and wondering where is the payback.

Shades of the year 2000 I reckon. Some experts calling on a fall in property prices after Sydney Olympics only to see prices climb strongly for the next 4-5 years (in Sydney at least).

I think David Bassanese is on the money.

Only my opinion but as unemployment rises in Qld as it is,Government debt out of control,and a new Government on the way in time,there is the likelihood of interest rates will trend up,not down over the 2013-2015..

 

[buzzlightyear]

Assuming per capita household incomes grow by around 4 per cent and mortgage rates drop another 1 percentage point, repayment levels would drop to 20 per cent below their long-run average by next year – around the lows of mid-2009.

So are interest rates going to reduce by 100 basis points? Mmm... That would have to mean that our economy would have gone off the rails. Not sure the RBA is going to reduce rates for other reasons eg exchange rate

Like the idea of 10-15% gains however the preconditions for the increase I believe wont occur and the sentiment for the economy in those circumstances would delay any appreciation of house prices for sometime and probably hasten their downfall.

However fixed rates are much lower the SVR, so there is an opportunity for this to happen if borrowers avail themselves of these rates.

 

[Aaron_C]

Ah **** I better buy that new PPOR I've been gawking at before the rise!

 

[matto_]

Saw this article linked to elsewhere - sensationalism to sell more copies of AFR????

I am with others - would like to see lower rates and 15% inc in prices but not sure how believable.

 

[Rixter]

One needs to ask David where he is personally on the wealth accumulation ladder? I prefer to listen to those people above my rung than those that are paid cash for comment.

 

[Aaron Sice]

2013? what the fark?

try 2016.

the WA inst for quant surveyors is putting contruction price growth of nearly 5% pa compounded between then and now.

that alone will push prices up.

 

[Indifference]

....*sigh*..... must be another slow news day.

With the massive Fed Govt spending cuts just announced, the economy slowing, global economy highly stressed, energy and food prices set to rise yet again..... I just can't swallow the hype. More chance of a 10-15% drop IMO, particularly with this government destroying all hopes of improved productivity in the mid-long term.

 

[devank]

We should lock this guy and the prof. Steve Keen in one room and throw away the key

Here is my prediction - Next year will be same as this year .
I bet I will be lot closer than any of these experts!

 

[truong]

David Bassanese should not be dismissed out of hand as there are others who share some of his views. Time will tell.

Louis Christopher from SQM:
http://www.afr.com/p/business/property/house_prices_set_to_jump_next_year_8PXKdTSKVDTOcBFvCi5y7H

SQM expects a cut in official interest rates of half a percentage point from 3.5 per cent by June 2013 in response to those challenges.
In that situation, the report predicted an increase in Sydney house prices of between 5 per cent and 9 per cent for 2013, after a rise of between 3 per cent and 5 per cent in 2012.
In Melbourne, it predicts an increase of between 2 per cent and 5 per cent for 2013. The forecast range for 2012 is between a fall of up to 3 per cent and an increase of 2 per cent.
Perth could surge by up to 12 per cent in 2013, after growing between 1 per cent and 5 per cent in 2012.

Stephen Koukoulas:
http://www.businessspectator.com.au...enders--pd20120926-YGS7C?opendocument&src=rss

House prices are climbing higher, reversing what were steady falls from early 2011 through to about May this year.

According to the RP Data series, house prices have risen 1.2 per cent so far in September to be 2.7 per cent higher than levels at the end of May. Even though the data are not seasonally adjusted, it is building to an impressive rise in a relatively short time.

There are sound reasons to think that house prices will continue to move higher. The fundamental underpinnings of housing demand and house prices are extremely favourable and are likely to stay that way for some time.

But he added

The outlook suits further gains in house prices at least in the next year or so. If the current favourable influences start fuelling house price growth that is too strong, say around 10 per cent per annum, the RBA would view this unkindly and if other circumstances allow, it may react to cool them with higher interest rates. But that is a hypothetical issue for the moment – let’s first see if these recent rises continue before getting carried away.

 

[Ausprop]

energy and food prices set to rise yet again.....

so iron ore prices fall and this is bad for the economy. energy and food prices rise and this is ______ for the economy?

US has bottomed out and on the improve. strong domestic economy with resources boom unfolding. If the AUD drops (which everyone seems to love the idea of yet I can't think of anything worse) and the RBA cuts rates because of the negative hype drummed up in the media, it will be like sticking a fireligher under the economy

 

[Ausprop]

2013? what the fark?

try 2016.

the WA inst for quant surveyors is putting contruction price growth of nearly 5% pa compounded between then and now.

that alone will push prices up.

long bow to stretch there Aaron - Perth prices have been below replacement in many cases for years now. Markets don't make sense for long periods of time.

 

[Andrew_A]

Link to complete article in Financial Review on Monday 24/9/12

http://www.afr.com/p/markets/why_house_prices_are_set_to_jump_8aS1vZiz4f1mBi3d1wEEiO

"DAVID BASSANESE
Along with my call for a likely lowering in official interest rates by 1 percentage point over the coming year, it stands to reason that this might well be positive for house prices. Indeed, my research suggests that given the prospective improvement in home affordability in the coming year, nationwide house prices could be ready to pop 10 to 15 per cent higher by late 2013...."

If there were 10-15pc gains in house prices by late 2013 it would give some solace to those holding IP's that are negatively geared and wondering where is the payback.

Shades of the year 2000 I reckon. Some experts calling on a fall in property prices after Sydney Olympics only to see prices climb strongly for the next 4-5 years (in Sydney at least).

I think David Bassanese is on the money.

Interesting call, it's not a popular view at all but I personally think it's got a healthy chance of happening, that could be said for all predictions though and will need to revisit as CU said

I thought Brisbane might just do something high single figures in 2012, looks most unlikely now but I note SQM are predicting that for 2013, we know that interest rates are powerful drivers of growth and whether that is offset by other considerations.. time will tell.

 

[Aaron Sice]

so iron ore prices fall and this is bad for the economy. energy and food prices rise and this is ______ for the economy?

US has bottomed out and on the improve. strong domestic economy with resources boom unfolding. If the AUD drops (which everyone seems to love the idea of yet I can't think of anything worse) and the RBA cuts rates because of the negative hype drummed up in the media, it will be like sticking a fireligher under the economy

US is not on the improve - nominal GDP doesn't equal anything - if we remove "nominal GDP" that makes up the "National GDP" figures, the US is in decline by nearly 6% YOY

 

[Ausprop]

US is not on the improve - nominal GDP doesn't equal anything - if we remove "nominal GDP" that makes up the "National GDP" figures, the US is in decline by nearly 6% YOY

you could complete a degree on this argument. US house prices are on the increase

 

[Aaron Sice]

long bow to stretch there Aaron - Perth prices have been below replacement in many cases for years now. Markets don't make sense for long periods of time.

it was a bit of a snipe, not a prediction.

i was merely replying to the article that reckons 2013 is the time period - i think BEST CASE is 2016 for those kinds of jumps and ONLY becaus eof construction price rises.

i understand the established perth market is below replacement (as are most markets) but the drive in new home prices is pushing yanchep / clarkson / ridgewood prices up with it - along with surrounding suburbs like kinross, currambine etc.

these are established suburbs with serious price pressures.

but again, 2013 - what the fark?

 

[Ausprop]

but again, 2013 - what the fark?

you've said it twice now but I am not sure why... how do you see this pressure on demand and spiralling rental yields abating? isn't 2013 realistic in this environment, particularly if the RBA drops rates as seems to be the building sentiment?

 

[Aaron Sice]

you could complete a degree on this argument. US house prices are on the increase

you certainly could!!!!

US house prices are on the increase.....where?

i can tell you it aint cleveland, detroit, kentucky, florida, iowa, n dakota, s dakota, hawaii, wisconsin, arizona, california .....

new york has shown some promise, conneticut, boston, texas, a bit in seattle...

 

[Aaron Sice]

you've said it twice now but I am not sure why... how do you see this pressure on demand and spiralling rental yields abating? isn't 2013 realistic in this environment, particularly if the RBA drops rates as seems to be the building sentiment?

the end of 2013 is 16 months away.

i dont think we saw price rises of that magnitude in that timeframe even in 2006....

i guess my point is that sentiment rules the day. even glenny-boy is upset that aussie sentiment is so low considering the fundamentals at hand.

fundamentally - we're set. sit back, relax, watch your neg geared property become positive cashflow and wait for equity.

sentiment tells another story.

which is why i've ALWAYS said that sentiment rules the day, fundamentals be damned.

and until people start to get agents door knocking saying that prices-have-gone-up-40%-and-would-they-consider-selling, sentiment will stay supressed.

that's what glenny boy wanted - negative sentiment to destroy any notion of a housing bubble - now he got it.