JenniGee

Thought this was quite an interesting read:

http://bubblepedia.net.au/tiki-index.php

paulry

Thanks for sharing that. It confirms much of what I've been thinking about the situation.

fish.01

And then to confuse us the opposing view: http://www.businessspectator.com.au/...2576E6001C87A5

Vash the Stampede

If there is a genuine "burst" it will hit buyers at the high end of the market who have purchased over-valued properties at unsustainable prices. The average punter with his modest 3x1 in an ordinary suburb will not be affected because his house was valued correctly in the first place.

Amazulu

"Boom Boom Boom Boom" by the Vengaboys

Whoa oh whoa oh
Whoa oh whoa oh
Vengaboys are back in town
Whoa oh whoa oh
Whoa oh whoa oh
Whoa oh whoa oh
Whoa oh whoa oh

If you're alone and you need a friend
Someone to make you forget your problems
Just come along baby
Take my hand
I'll be your lover tonight

[Pre-chorus:]
Whoa oh whoa oh
This is what I wanna do
Whoa oh whoa oh
Let's have some fun
Whoa oh whoa oh
One on one just me and you
Whoa oh whoa oh

[Chorus:]
Boom boom boom boom
I want you in my room
Let's spend the night together
From now until forever
Boom boom boom boom
I wanna double boom
Let's spend the night together
Together in my room

Whoa oh whoa oh
Everybody get on down
Whoa oh whoa oh
Vengaboys are back in town

[Pre-chorus]

[Chorus x3]

Woooo!
Woooo woooo!
Woooo!
Woooo woooo!
Woooo!
Woooo woooo!
Woooo!
Woooo woooo!

Whoa oh whoa oh
Woooo woooo!
Whoa oh whoa oh
Woooo woooo!
Whoa oh whoa oh
Woooo woooo!
Whoa oh whoa oh

[Chorus x2]

Amazulu

I wanna double boom

JenniGee

Mmmm...I see where you are coming from, but particular properties in particular places do seem to be vulnerable to over-valuation...

Take the house we're currently renting...it's a 3 bed Victorian terraced, one living room knocked through to make a through lounge. It's a modest home by anyone's standards....10 years ago it was bought by the current owner for £70K.

Now, because of upwards pressure on housing stock at the higher end of the market, plus the fact that it is located near to the railway station for an easy commute into London, means that people who traditionally would have looked to get a better & bigger house as their careers progressed, are choosing to stay where they are.

These first time buyer houses are now short in supply as people can't move on, therefore pushing the price up far beyond it's true value...this house was valued at £255K last year & a similar one on the market in this street sold at £230 only a fortnight back.

The housing bubble will start to deflate I feel, but there are other factors at play & I'm not sure that even over-valued properties will reduce in price by a huge amount, at least not in the short term.

paulry

There are so many dynamics at work that it's anyone's guess what will happen over the coming months and years. Common sense dictates that the prices should deflate but since when has common sense had anything to do with it? The thing is the housing bubble should never have been allowed to grow so huge in the first place. None of us are any richer from it in fact the reverse is truer. The main winners appear to be the banks.

goat eyes

This article is over-simplistic.

I have been in (& still am!) in the property game for 15yrs & I am one of the few in it that does not agree that buy , buy , buy is always the answer.

I have 'sold to rent' property in the past & still hold a few investment properties.

However, renters can sometimes be better off if they invest the difference between the rent they are paying and what a mortgage would cost them.

If they dont.... what happens when you reach retirement age & the rent still needs paying for the rest of your life , but no income? (Where as the buyer should own outright by then.)

spottydog

I would think it would be the opposite. The bottom of the market has been pushed up by government bonuses causing people to overpay before they "lose out".

The top end of the market as a smaller pool of potential purchasers who are more considered about what they are spending and don't have competition pushing up prices.

paulry

So we're all agreed then

Vash the Stampede

That's an oversimplification. In any case, I am not talking about the top end of the market; I am talking about the mid- to high-end. People seem to think that it's perfectly normal to spend half a million bucks on a house these days. I find that utterly staggering.

In South Australia alone there are plenty of "working class" suburbs where prices have remained virtually static for years, while the price of new builds in new estates continues to skyrocket. And why? Because everyone seems to want a brand new 4x2 McMansion 15 minutes from the city. Nobody wants a 1960s 3x1 near a Holden factory 35 minutes north of the CBD.

Yet the 1960s 3x1 will hold its value even after the bubble has burst, while the McMansion is probably over-valued and will likely suffer an equity drop.

spottydog

I think we have different ideas on what is bottom, top and middle of the market

In Sydney half a million is the bottom end for a house and you won't find one for that within half an hours commute of the CBD! 2 beds in my area start at around $700k and 3 beds around a mil.

Vash the Stampede

Of course, I am talking about prices in the Adelaide suburbs. However, I do believe it is possible to buy a house for less than $500k within half an hour of the Sydney CBD.

A quick search on www.realestate.com.au tells me that you can buy a 3- or 4-bed bungalow in Yagoona for less than $450k (eg. here and here) and that's only 35 minutes from the CBD. Not exactly an impossible distance. Hell, even 45 minutes is perfectly acceptable. People travel a lot further than that to work in places like London!

Petals

As housing is one of the mainstays here I guess if it looks like prices are to slip then those that are in power will just import a few hundred thousand people to make sure it stays up