|
Re: "1 in a 100 year slump"
Originally Posted by Tableland
(Post 6654436)
Well it's already come off Californian house prices and property there was over-valued to a similar percentage as Australian stock. People waiting there didn't need luck and neither will people waiting in Australia. Several leading financial institutions have forecast a major drop of between 25% - 30% off these prices, but I guess you know better.
I'll enjoy catching up with you in 2010 to talk about who was right. a) differences in lending requirements between Aus & USA b) lack of credit in USA over the past 18months c) key differences in legislation between USA foreclosures and Aus foreclosures. I'm not saying that Australian house prices won't fall...I'm sure they will. I think that many householders in WA will be particularly badly hit, along with folks who paid too much for homes in the first place. But these will largely be offset by other sections of the market. In summary, when we return to this thread in 18months time, you'll see that Australian median home prices dropped 15% from their peak...not 30%. (Just my guess though. :thumbup:) |
Re: "1 in a 100 year slump"
Originally Posted by markallwood
(Post 6654945)
Yes, you're right, I do know better. There are several reasons why Australian median house prices will not fall 30% as they have done in California:
a) differences in lending requirements between Aus & USA b) lack of credit in USA over the past 18months c) key differences in legislation between USA foreclosures and Aus foreclosures. I'm not saying that Australian house prices won't fall...I'm sure they will. I think that many householders in WA will be particularly badly hit, along with folks who paid too much for homes in the first place. But these will largely be offset by other sections of the market. In summary, when we return to this thread in 18months time, you'll see that Australian median home prices dropped 15% from their peak...not 30%. (Just my guess though. :thumbup:) The Australian economy is no better placed to deal with this than anywhere else. On the contrary - the absence of legislation to secure funds in banks is just begging people to start bank runs. Worse still, the Australian housing market was expanded to its present ridiculous levels by the commodites boom and foreign money - both of which are rapidly going south. In the last year the Shanghai Composite has dropped 50%, one of the biggest collapses of a market anywhere, so Asian investors will start to get thin on the ground. Meanwhile, all those rich poms bringing their HPI equity to Perth have stopped too as they can't sell their houses. If that wasn't bad enough, Australian core inflation is at a 17 year high and getting worse, and the RBA looks like it is intent on stoking this inflation up even more by cutting rates. Yes you read that right - they are thinking about cutting rates. Employment up more than expected thismonth and they want to cut rates. Anything to keep the people in the debt cycle. They want to do this because they want to keep the lunatic house prices artificially high and they have watched Uncle Sam cut rates to 2% and vaguely slow reverse the credit crunch in the housing market. Three problems with this, US inflation has not been as bad as Australian inflation, US houses were actually affordable even before the crash, and US has much higher unemployment. Here's the weird thing: everyone should want a housing crash now. Because if it doesn't happen now it's going to happen in a short while from now, and it will be even worse. House prices will drop until the average price is 3.5 times the average wage. This is corrected. Then they will go up again, and so on. You talk about lending practices being different - Australians have borrowed FAR more than Americans to buy their houses, it will be worse in Australia. Right now, the average Australian house price should be about $205,000. It's 350,000 in Melbourne and over $500,000 in Sydney. My guess is they will drop in price by around 2010 to practically unsaleable ($0) in many areas, as many UK houses are right now, but this over-stretch will correct itself to about a 30% decrease from current prices on average. Then, over the next four or five years they will go back up in nominal terms to today's prices. They will not be worth their current value in real terms for decades. I have seen houses for sale that have dropped 30% and still cannot sell - this should tell you all you need to know about ther market and where it is going. You can't force people to buy, and by now everyon ehas got the message: a crash is on the way. Who is going to get themselves into $400,000 debt months before a crash? And if no one buys then prices collapse. It's a self-fulfilling nightmare. |
Re: "1 in a 100 year slump"
Originally Posted by Tableland
(Post 6655106)
In case you haven't noticed, this is a global credit crunch, and it's heading Australia's way.
Growth reasoning in past for house prices: Increased population growth ???? - band wagon comment which does not really hold up in my opinion. "The market is stablising with moderate growth for the near future"... as if - property markets are either going up or going down and never stationery. Market momentum is everything. Benchmarking the economy through my interactions with various socio economic spectrums we are in a serious downturn and look forward to the prospects this offers. |
Re: "1 in a 100 year slump"
Originally Posted by Tableland
(Post 6655106)
In case you haven't noticed, this is a global credit crunch, and it's heading Australia's way. It started in the US, moved to the UK and then Asia, and now it's en route to You-Know-Where. 30% off in CA and other states, and the UK is steadily on course to lose 30% in total. It has already lost nearly 10% in less than one year! Meanwhile in Australia, prices are stagnating and houses staying on the market for longer and longer - just how it started in the US and UK. 30% is not a figure pulled from the air; it is the amount they are over-valued by, and the amount a correction will take them back to.
The Australian economy is no better placed to deal with this than anywhere else. On the contrary - the absence of legislation to secure funds in banks is just begging people to start bank runs. Worse still, the Australian housing market was expanded to its present ridiculous levels by the commodites boom and foreign money - both of which are rapidly going south. In the last year the Shanghai Composite has dropped 50%, one of the biggest collapses of a market anywhere, so Asian investors will start to get thin on the ground. Meanwhile, all those rich poms bringing their HPI equity to Perth have stopped too as they can't sell their houses. If that wasn't bad enough, Australian core inflation is at a 17 year high and getting worse, and the RBA looks like it is intent on stoking this inflation up even more by cutting rates. Yes you read that right - they are thinking about cutting rates. Employment up more than expected thismonth and they want to cut rates. Anything to keep the people in the debt cycle. They want to do this because they want to keep the lunatic house prices artificially high and they have watched Uncle Sam cut rates to 2% and vaguely slow reverse the credit crunch in the housing market. Three problems with this, US inflation has not been as bad as Australian inflation, US houses were actually affordable even before the crash, and US has much higher unemployment. Here's the weird thing: everyone should want a housing crash now. Because if it doesn't happen now it's going to happen in a short while from now, and it will be even worse. House prices will drop until the average price is 3.5 times the average wage. This is corrected. Then they will go up again, and so on. You talk about lending practices being different - Australians have borrowed FAR more than Americans to buy their houses, it will be worse in Australia. Right now, the average Australian house price should be about $205,000. It's 350,000 in Melbourne and over $500,000 in Sydney. My guess is they will drop in price by around 2010 to practically unsaleable ($0) in many areas, as many UK houses are right now, but this over-stretch will correct itself to about a 30% decrease from current prices on average. Then, over the next four or five years they will go back up in nominal terms to today's prices. They will not be worth their current value in real terms for decades. I have seen houses for sale that have dropped 30% and still cannot sell - this should tell you all you need to know about ther market and where it is going. You can't force people to buy, and by now everyon ehas got the message: a crash is on the way. Who is going to get themselves into $400,000 debt months before a crash? And if no one buys then prices collapse. It's a self-fulfilling nightmare. I don't get this magical "3.5 times the average wage" theory. There is no hard and fast rule. It's all about supply and demand. Australians place a high premium on owning a chunk of this great country - it's a cultural thing as much as anything. |
Re: "1 in a 100 year slump"
Originally Posted by Tableland
Right now, the average Australian house price should be about $205,000. It's 350,000 in Melbourne and over $500,000 in Sydney. House prices will drop until the average price is 3.5 times the average wage Latest figures put the median wage at $80000 X 3.5 = $280,000 (Murdoch Uni-Economics course August 2008) US houses were actually affordable even before the crash June foreclosures in US stood at 250,000 Usually means that they could not afford them US has much higher unemployment. Australia 4.5% US 10%+ The Australian economy is in far better condition than the US As for Asian investors affecting the housing market ,unless they are residents they can not invest unless they pass the wealth test so it is only the "top" that they invest in. (Super Luxury ) The Australian base market (first home owners etc) has already bottomed and thou flat an increase in clearance rates at these levels has been seen currently 15% to 20% of the peak set inlate 2006 early 2007 |
Re: "1 in a 100 year slump"
Originally Posted by mulben
(Post 6655523)
Originally Posted by Tableland
Right now, the average Australian house price should be about $205,000. It's 350,000 in Melbourne and over $500,000 in Sydney. House prices will drop until the average price is 3.5 times the average wage Latest figures put the median wage at $80000 X 3.5 = $280,000 (Murdoch Uni-Economics course August 2008) err.... nearer $60,000 with an average house value at $458,000 and an average mortgage of $341,000, "6" times the average income. http://www.news.com.au/story/0,23599...017313,00.html US houses were actually affordable even before the crash. Succesive rate hikes left people unable to afford mortgages that they should never have had in the first place. Many people have since lost their houses. Not my idea of affordable housing !! June foreclosures in US stood at 250,000 Usually means that they could not afford them it was 740,000 in the 3 months to June 2008. US has much higher unemployment. Australia 4.5% US 10%+ Not true. Actually 5.7% as of end July 2008.(US Bureau of Labor Statistics) The Australian economy is in far better condition than the US. At the moment..... As for Asian investors affecting the housing market ,unless they are residents they can not invest unless they pass the wealth test so it is only the "top" that they invest in. (Super Luxury ) Not true. Any foreign person can buy new property or land to build on (in the 12 months after purchase).There is no "wealth test". I've done it, so I think I should know ! The Australian base market (first home owners etc) has already bottomed and thou flat an increase in clearance rates at these levels has been seen currently 15% to 20% of the peak set inlate 2006 early 2007 Supply and demand is a red herring. Their is a shortage of housing in the UK but prices are still going down because mortgages for investors and home owners alike are not that easily available anymore. And once the Oz banks realise that international credit is not that available (which is why they will NOT pass interest rate decreases on to their customers) they too will stop the madness of 100-125% home loans. People will steer clear of houses as prices drop (as they are). Why buy now (unless you absolutely HAVE to) when it'll cost u less in a year's time ??...unless you're blindly following the "Oz Dream" of course????? I'm increasingly amazed at the Oz attitude that "we're different...it's not gonna happen to us"...... |
Re: "1 in a 100 year slump"
Your average Aussie is quite aware Australia is not immune to whats
happened in the US you only have to look at some of the Australian media thay are turning to doom and gloom as we are used to for example Andrew castle on GMTV the grim reaper of morning TV But on the flip side BE is not a view of your average Aussie its a view from mostly expats who in many case has invested all there hard earned in a house, thousands of miles in a different country and will not exept its going down in price, and you can side a bit with that, it is harder to exept a situation so far from your roots IMOA. |
Re: "1 in a 100 year slump"
Originally Posted by Hotton
(Post 6655990)
Your average Aussie is quite aware Australia is not immune to whats
happened in the US you only have to look at some of the Australian media thay are turning to doom and gloom as we are used to for example Andrew castle on GMTV the grim reaper of morning TV But on the flip side BE is not a view of your average Aussie its a view from mostly expats who in many case has invested all there hard earned in a house, thousands of miles in a different country and will not exept its going down in price, and you can side a bit with that, it is harder to exept a situation so far from your roots IMOA. I can sympathise with those expats who may have bought property in Oz in the last coupla years, but the reality is, if they'd stayed at home their properties there would be going down in value already. It's only just starting in Oz. You'd have "lost" wherever you are. |
Re: "1 in a 100 year slump"
Originally Posted by Budawang
(Post 6655326)
I think we're looking at 15% rather than 30% in Oz. Australians are tied to their mortgages much more closely than Americans who can more easily declare bankruptcy and walk away. Population growth is strong in Australia, there is a housing shortage (not oversupply as in US) and we're at the peak of our interest rate cycle. Inflation is at about the same level in the US at the moment.
I don't get this magical "3.5 times the average wage" theory. There is no hard and fast rule. It's all about supply and demand. Australians place a high premium on owning a chunk of this great country - it's a cultural thing as much as anything. australia is much more leveraged than US everywhere from companies' balance sheets to households' balance sheets, so it's simple math that they did better when times were good and they'll do worse when it gets tough. CA is off 40% already and that is a tech/intellectual hub where all the good jobs are, and one of the WORLD's best climates. not sure how "Australians place a high premium on owning a chunk of this great country" stakes up. 1 year after the fed started cutting overnight rates the mortgage rates are actually 1% higher than they were, so none of that passed thru. aus banks rely on INTERNATIONAL financing, so RBA putative cuts will have 0 impact on RE. however, aus trade deficit is financed by the carry trade from japan. if stevens even hints he's going to cut, hot money walks. i think aud is down some 7% already in the past week w/o even cutting. a 20-40% decline in the currency combined with the CO2 trade scheme and poor productivity (laid back, no worries mate and all that crap) will shut down the economy for good. is this the 6th year of severe drought? who's to say another 60 years won't follow? all in all, personally i think people with families who sell everything they have and move to the edge of the world to buy property now, are asking for it. |
Re: "1 in a 100 year slump"
Originally Posted by Tableland
(Post 6655106)
In case you haven't noticed, this is a global credit crunch, and it's heading Australia's way. It started in the US, moved to the UK and then Asia, and now it's en route to You-Know-Where. 30% off in CA and other states, and the UK is steadily on course to lose 30% in total. It has already lost nearly 10% in less than one year! Meanwhile in Australia, prices are stagnating and houses staying on the market for longer and longer - just how it started in the US and UK. 30% is not a figure pulled from the air; it is the amount they are over-valued by, and the amount a correction will take them back to.
The Australian economy is no better placed to deal with this than anywhere else. On the contrary - the absence of legislation to secure funds in banks is just begging people to start bank runs. Worse still, the Australian housing market was expanded to its present ridiculous levels by the commodites boom and foreign money - both of which are rapidly going south. In the last year the Shanghai Composite has dropped 50%, one of the biggest collapses of a market anywhere, so Asian investors will start to get thin on the ground. Meanwhile, all those rich poms bringing their HPI equity to Perth have stopped too as they can't sell their houses. If that wasn't bad enough, Australian core inflation is at a 17 year high and getting worse, and the RBA looks like it is intent on stoking this inflation up even more by cutting rates. Yes you read that right - they are thinking about cutting rates. Employment up more than expected thismonth and they want to cut rates. Anything to keep the people in the debt cycle. They want to do this because they want to keep the lunatic house prices artificially high and they have watched Uncle Sam cut rates to 2% and vaguely slow reverse the credit crunch in the housing market. Three problems with this, US inflation has not been as bad as Australian inflation, US houses were actually affordable even before the crash, and US has much higher unemployment. Here's the weird thing: everyone should want a housing crash now. Because if it doesn't happen now it's going to happen in a short while from now, and it will be even worse. House prices will drop until the average price is 3.5 times the average wage. This is corrected. Then they will go up again, and so on. You talk about lending practices being different - Australians have borrowed FAR more than Americans to buy their houses, it will be worse in Australia. Right now, the average Australian house price should be about $205,000. It's 350,000 in Melbourne and over $500,000 in Sydney. My guess is they will drop in price by around 2010 to practically unsaleable ($0) in many areas, as many UK houses are right now, but this over-stretch will correct itself to about a 30% decrease from current prices on average. Then, over the next four or five years they will go back up in nominal terms to today's prices. They will not be worth their current value in real terms for decades. I have seen houses for sale that have dropped 30% and still cannot sell - this should tell you all you need to know about ther market and where it is going. You can't force people to buy, and by now everyon ehas got the message: a crash is on the way. Who is going to get themselves into $400,000 debt months before a crash? And if no one buys then prices collapse. It's a self-fulfilling nightmare. But I disagree with quite a few of the statements you make, which seem to have more of a basis in popular media than in real evidence. For instance, this magic 30% that you talk about. California median prices have dropped 30% in a very short time.... does it follow then that the UK and Aus prices will drop 30% ? How about property prices in Japan? I don't think so, because each market faces a different set of circumstances. Then there is the magic 3.5 multiple. Do you really believe that house prices will fall to 3.5 times the average wage ?! This would make house buying affordable to practically every Australian with a full time job. This would be absolutely fantastic...but unfortunately we don't live in an ideal world and there are numerous factors which would prevent such a large drop occurring. This whole debate reminds me of the saying "If it looks too good to be true - it probably is". |
Re: "1 in a 100 year slump"
Originally Posted by Tableland
(Post 6655106)
If that wasn't bad enough, Australian core inflation is at a 17 year high and getting worse, and the RBA looks like it is intent on stoking this inflation up even more by cutting rates. Yes you read that right - they are thinking about cutting rates. Employment up more than expected thismonth and they want to cut rates. Anything to keep the people in the debt cycle. They want to do this because they want to keep the lunatic house prices artificially high and they have watched Uncle Sam cut rates to 2% and vaguely slow reverse the credit crunch in the housing market.
|
Re: "1 in a 100 year slump"
This is an interesting article in todays financial review quoting Goldman Sachs who reckon Australian house prices will fall less than 5%, even though they are probably 20% overvalued at the moment.
http://www.afr.com/home/viewer.aspx?...t+sign+of+hope As mentioned in an earlier thread - for every 'expert' predicting one thing, there's another predicting wildly different things... Cheers, Graham |
Re: "1 in a 100 year slump"
Originally Posted by northerner
(Post 6657039)
This is an interesting article in todays financial review quoting Goldman Sachs who reckon Australian house prices will fall less than 5%, even though they are probably 20% overvalued at the moment.
http://www.afr.com/home/viewer.aspx?...t+sign+of+hope As mentioned in an earlier thread - for every 'expert' predicting one thing, there's another predicting wildly different things... Cheers, Graham |
Re: "1 in a 100 year slump"
My financial outlook -
1) house prices go up and house prices go down currently they are going down. 2) how much will they drop? nobody f@cking knows! 3) will beating your head against a brick wall change any of this? no 4) should I go to the pub tonight? yes I would love to see a graph showing the overall trend for house prices in UK and AUS but I am to lazy to find one. I can guess that after every fall they have rebound stronger than ever. |
Re: "1 in a 100 year slump"
Originally Posted by TrickyTree
(Post 6657699)
My financial outlook -
1) house prices go up and house prices go down currently they are going down. 2) how much will they drop? nobody f@cking knows! 3) will beating your head against a brick wall change any of this? no 4) should I go to the pub tonight? yes I would love to see a graph showing the overall trend for house prices in UK and AUS but I am to lazy to find one. I can guess that after every fall they have rebound stronger than ever. |
| All times are GMT -12. The time now is 11:33 pm. |
Powered by vBulletin: ©2000 - 2024, Jelsoft Enterprises Ltd.
Copyright © 2024 MH Sub I, LLC dba Internet Brands. All rights reserved. Use of this site indicates your consent to the Terms of Use.