JasonFK

This is exactly why I reckon now is a good time to buy.. right now you can get a 5 year fixed interest mortgage for 7.07% maybe a little cheaper if you shop around. In 12 months who knows rates could already be 8%+. If the so called experts are right about 10% interest rates in 2006 then the rises have to start coming sooner or later. You might save 20-30 even 50 grand by holding off for a while but then you might lose it back in interst rates. Prices are great right now & it's already a buyers market any real estate agent will confirm that.

As for the Australian proprty market collapsing like a house of cards..I wouldn't hold my breath, it would take a global depression as our economy is outperforming most of the rest of the world per capita head. And in my town of Brisbane, region of South East Queensland the migration rate means demand is barely being met by the current rate of building & developing. Predictions for Brisbanes Capital Growth are a slowdown growth rate of 35% over the next 4 years (the approx rate of growth for last calendar year), but thats certainly not disasterous in anyones language. Hobart is tipped to be the other star performing city but hell who wants to live in the cold..not I!

just my 2 cents
Cheers

JasonFK

MikeStanton

Get real. Are you a rep from the Oz Real Estate institute? Excuse my cynicism, but I take comments like 'Now is a good time to buy' with a huge pinch of salt from people who are have bought properties in Oz. Have you?

It's true that now is a better time to buy than a few months ago, but 5-6 months time will probably be even better. Only a very brave person will state that prices will increase in that time. Sorry, but your ensuing comment re: waiting means higher interest payments is totally illogical. If you pay less, then you borrow less (if at all) - which means lower interest payments.

Fixed interest loans (vs variable): the research shows that people are better off with variable over the same life as fixed interest. Hardly a surprise considering the bank wants to profit. In other words, borrowers pay a lot for the ability to make fixed repayments.

Oz has a small economy - ~2% of the world's share market. It will not require a collapse in the global economy to bring Oz down. Severe loss of confidence will do the trick aided by a significant upward movement in interest rates and/or irresponsible media reporting. In an Oz paper today I read an article that mentioned that prices had started to 'crash' on two occasions.

Edit: the argument that house prices are being driven primarily by the large number of immigrants doesn't hold water. I arrived in '88 - one of the peak years of Oz immigration. It still didn't stop a big drop in house prices - driven by very high interest rates and a faltering economy.

If I was still in Oz, I'd wait for lower prices - and pocket the extra savings. After all, you never know when you might want to go back and visit relatives and friends in the UK.

sembonor

Crash happens all the times and everywhere, be it in UK, US, Hong Kong, or Japan.

My common sense tells me, even Japan the second biggest economy could not prevent property crash that dragged the nation into 10 years long depression; it would be very hard to believe what you said.

What happens now in Japan after 10 years long recession (nobody wants to use the word depression), banks offer mortgage that can be carried over by the mortgagee's children.

By the way, US property crashed in mid 1980s and a lot of people had to let go their beloved houses bought at the peak.

sembonor

100% agree. Some people are just so ignorant to the facts. Or, should I say some people are really good in taking advantage from gullible people. Psychology of fear and greed, if you know what I mean.

I mentioned Japan the second biggest economy after US is not even immune to property crash that dragged the nation into 10 years long recession. How big Oz economy compared to Japan?

I call that self justification to say something that ignores the fact.

shanghaiman

I arrived at Mel about 40 days ago. As a new arriver, I am of course happy to see house prices drop.

but as for comparing HK and Japan's real estate markets with Oz's , I would remind that the reason for HK's real estate groom in 1997 was largely political; and the Japanese one was/is also due to a combination of political and structural factors.

Megalania

Who can say what real interest rates will be - noone.

With the uncertainties of emigration and rents vs mortgages, instead of fritering your dough away on fripperies, save it, invest it and buy a house with cash when you are certain you need one.

More people avoiding the ‘risk’ in home ownership

Megalania

Welcome.

sembonor

- largelly political -
- political and structural factors -

Sounds very political. And as always, it never gives direct answer and it can be anything under the sun.

Why is it hard to accept that greed causes so much misery to so many people, be it in stock market, property, etc. etc.

Alan Greenspan:

Irrational exuberant.

This I understand.

jad n rich

Semboner, one big thing is being overlooked, the average home buyer on this forum would be buying a home to live in, long term not only as a financial move but as a lifestyle choice too, same as for many Australians. A lot of comments in this thread are alarmist to say the least, and in complete conflict with todays article in the Australian newspaper which suggests interest rates should rise to curb yet another surge in the housing market.

Over say a 10 year home ownership most people expect several rate changes in their home loan rate and many fluctuations in the market too, but long term at the end of say 10 years, most will undoubtedly come out in advance over those who rented.

Why keep trying to scare people? anybody buying a nice house at a well researched price will undoubtedly be better off in the long run. Australia is not Hong Kong, Japan or the UK it is Australia and most people simply prefer the many advantages of owning their own home.

JasonFK

Ok it was late when I posted so I will qualify a few things, first of all yes I would be taking some time out and waiting IF I was intending to buy in Syd & Melb as those markets are definitely inflated IMO & are bound to come down a bit futher. But if I was intending to buy in Brisbane, Hobart or some of the regional centre hotspots (ie Rockhampton) I would be getting in asap. For the original reasons I posted as I doubt you'll see any significant cooling from where it is now.

Talking to Real Estate agents in Brisbane at the moment they say it is already a buyers market & prices have already dropped but most property owners are not selling in a hurry. No doubt there will be some exceptions to the rule...some ppl that have over extended themselves in the "boom" & are now preparing to face up to the reality of their circumstances. But I somehow doubt this will be a major trend. If it was you'd start to see sales signs with 'Mortgagee repossession' attempting to attract buyers with 'bargains' but so far I'm yet to see one in Brisbane & I am out looking in the streets 3 days a week full time.

Also to note NO I am not a real estate agent sorry, I'm just a part time small investor. I am however keen to buy another property & will be doing so as soon as I can which should be in the next few months.

The above post was simply my opinion & if you think back to the last 'bust' in the property market it happened at a time when Unemployment & inflation were out of control. Presently most of the major economic fundamentals/ indictaors look pretty healthy jobs are on the rise & unemployment relatively low, consistent 2-3% inflation, constant GDP growth, exports improving & closing the deficit gap by another 200 million in the March quarter etc. I still fail to see where the percieved disaster is coming from???? Sure propertty boomed for a while & in the major market
s (Syd/Melb) where prices were the most rampant there has been a correction trend. To my mind this is prefecrtly natural in fact preferable..who wants an ever climbing median house price? that would only be bad in the long term as the bust would bigger & would have a greater impact on the economy in general.

Japans economy failed primarily because their banks lent irresponsibly large sums of money (that they didn't have) to (too many unsecured) big businesses, Hong Kong was busy being handed back to The Chinese in 1998 so I fail to see how anyone could compare their 1997 situations to Australia's in 04.

Anyhow only time will tell who is right. I just think you never know what is around the corner interest rates could jump in the second half of 2004 & the money you save by holding off could be balanced out by geting a better rate now...maybe I'm wrong but at least at the moment you know what you are getting, in 6 months time you don't..it's that simple.

JasonFK

MikeStanton

Simple. All bubbles - whether housing, shares, tulips - are the victims of their own success. Most of the recent Oz housing boom has been driven by people buying investment properties. But, the investment property returns are now very low ~3% ( a bit higher in Brisbane), while property prices are just past an all-time high - exactly what's required for a bubble to burst.

As the world economy continues to recover, other investments eg shares - and increasingly term deposits (driven by higher interest rates) - will be seen as increasingly attractive. This will divert money out of investment properties - causing the prices to remain static or fall (at least in the short term).

The boom in Sydney and Melbourne started to come to a halt at the end of 2003 - because of low returns and property prices that were too high for first-time buyers. And much of the Oz market is oversupplied. Just look at rentals again - in most areas they haven't moved up for at least a year (ie they have fallen in real terms). That spells 'oversupply' - not helped by some builders who have a backlog of units and houses that they committed to building when times were good.

Nobody is suggesting don't buy in the future. However, there is very little justification to buy now. By end of this year prices could easily have dropped another 5%, especially if there is an interest rate rise. So why not wait until (at least) then?

An increase in interest rates will need to come soon - unless Oz wants a heavily devalued currency. One thing I've learnt living in Oz is that it is a very jittery market.

True. But, I wonder how many of the Real Estate 'professionals' said to buyers 6 months ago "Don't buy now - the prices are likely to drop in a few months"?

ABCDiamond

Australian Bureau Statistics report out today 3/6/04

http://www.abs.gov.au/Ausstats/abs%4...2568a90013937b!OpenDocument

* The price index for established houses in Australia rose 2.5% in the March quarter 2004, compared with an increase of 6.0% in December quarter 2003. This was the lowest quarterly increase since March quarter 2001.

* House prices fell in Melbourne (-1.3%) but rose in each of the other capital cities:
Brisbane (+6.2%),
Darwin (+5.7%),
Hobart (+4.3%),
Canberra (+4.2%),
Sydney (+3.5%),
Adelaide (+3.0%) and
Perth (+1.2%).

these figures are all for the quarter ended March 2004.

OzTennis

It is beginning to look like it is a fall in the rate of increase rather than a fall in the absolute figures? It's like when they say in the news that the rate of inflation is falling and people say, 'I don't see prices falling'.

OzTennis

65 million

I like this part of the report...

CONSIDERATIONS WHEN INTERPRETING THE ESTABLISHED HOUSE PRICE INDEX


It is important to note that the established house price index is specifically designed to measure the medium term rate of change in the price of established houses. To ensure the index is based on a sufficiently representative sample of transactions prices, the prices used are for properties which were settled during the quarter rather than those for which contracts were exchanged. One of the effects of this approach is that the date of recording a price will lag the date at which the price was effectively determined. Because of this, there is likely to be a lag in identifying the turning points in the house price cycle.

It basically says it's "out of date" info!!!!

ABCDiamond

Unfortunately that's something we have to accept with all these property price figures. By the time the sale in completed, and the info is logged into the statistics, it is normally quite some time after the original price was agreed.

And of course, the June figures won't be released until September.

What is everyones "definition" of falling prices ?