DownUnderPaddy

Some of the 'professionals' seem to have made the call on the bottom of the market being over in Australia.
Whats the call from all of the armchair experts ?

http://www.smartcompany.com.au/Free-...ty-market.html
and
http://www.theaustralian.news.com.au...28-601,00.html
"The doom and gloom merchants have misunderstood the fundamentals and the diversity of the Australian residential property market by predicting that Australia was headed for a market-wide implosion in 2008," according to RP Data head of research Tim Lawless.

I have to say that with petrol now at only 99cents a litre today and our monthly mortgage interest bill dropping faster than I can keep up with, this is certainly the most well off we have been in years in our household !

ABCDiamond

I was just reading this information myself...

What the above doesn't take account of, is that property prices in some areas have already dropped by up to 30%, so a rebound now is not surprising to those people.

ABCDiamond

Also, with the numbers of new properties being approved dropping so fast, the looming property shortage will tend to hold up or push up prices, at a guess.

Dwelling units approved

Oct 2008 Total dwelling units approved 10,730. Down 26% on Oct 2007.

DownUnderPaddy

A very true point, although hard for us to comprehend those kind of drops from here in Melbourne as most suburbs here have either increased in value or stayed flat in the last 12 months. If they believe the bottom of the cycle has been hit though, does that mean even more increases again here in the next 12 months ?

Burbage

I don't think it's anywhere near the bottom yet. I heard, out of the corner of my ear yesterday, that the Rudd misgoverment has now introduced legislation to stop banks selling repossessed houses at below the market price. This might suggest a few things:

1. The gorvernment doesn't think that the market has bottomed and they are trying to artifically keep the market high by making sure banks don't offload bad loans by selling property cheap.

2. The banks and other lenders will want to offload these houses if they can and if they can't sell them they'll be doing everything they can to drive the market lower so that they can ell them at the market price. Since the property market price is about 80% dependent on the size of a loan a buyer can get, the banks are in a prime position to control the market.

3. "The market price" is an entirely artificial entity.

As far as I can see, if the market has shown no signs of recovery by June 30 next year (ie when the new first homebuyer bribe has ceased and can't be replaced due to the surplus being gone) then the market will have to go even lower to get people buying.

ABCDiamond

From some figures that I got the other day, showing some areas had gone up 40% and other areas had gone down 40%, the final figure we get is an average.

Property prices began to steady or drop, when the interest rates began going up, and petrol prices went skyhigh, and rents were also relatively low compared to buying a property.

Petrol is now dropping faster than a lead balloon, and so are interest rates.
And Rents are rising...

The question is... what will most people do ?

Will they hang back waiting for prices to drop further, or will they get scared that prices may go up again, and jump in quick ?

Only time will tell.
We cannot predict what Joe Public will do.

My personal feeling is that the areas that have seen big drops will go up, as buyers see them as good opportunities, but the expensive properties will stay level, or maybe even drop a bit.
We will see some big jumps, and some big drops, just like last year, but in different areas.

Check back later to see if I am right ....

jad n rich

One factor is savings interest rates, 3%/4% in the bank minus tax. Hardly an investment now is it. People will be comparing that to the 8% that was available even 2 months ago.

Lower mortgage rates please those with debt, on the other end of the scale investors, retires etc are now getting zippo return on their money.

My guess is the housing market and to a lesser extent the share market will see a surge because of this factor.

comet555

What do you think is going on in our neck of the woods? I've been watching the houses in the Bayside area since we bought our house last year. So far it seems as though our house is about level or possibly about 2-5% increase from a year ago. Although it's hard to tell for sure since I'm only basing that on similar houses for sale, so who knows if the list price is close to the sell price.

Just curious, as we will probably end up selling our house in about 2 years time. So I'm hoping even if there is a dip in value now it will level out over the next year or two.

Burbage

Absolutely. Real value of savings is actually falling. But the question is, how many Australians have any savings. They've had 20 years of government telling them to borrow and spend, borrow and spend, borrow and spend...

If they have savings they would be better off doing up their homes. Upsizing to a new home is going to be tough because they need the first home buyers in the market, and the first home buyers are waiting. Selling your own home is the only capital gain you aren't taxed on here.

Grayling

Indeed....it is making me think.

G

jimbo_d

I'd say the crash hasn't even started yet. Oz is a year behind the rest of the Western world in terms of credit crunch only hitting in October, so as more and more lose their jobs i'd say it's a year behind on its' property crash, expect even bigger drops early next year. By June 30th the gov't will extend its homebuyers con as the crash will be in full swing.

Here in Perth next year is going to be a shocker, prices down already 10-20%, without the mass of unemployment currently hitting the mining sector feeding through it will be carnage - but good for people without property and or debt with a safe job.

Petals

It will depend on employment I expect, if people lose their jobs then they cannot pay the mortgage.

I always think property goes in cycles and now its the down side.

They want first home buyers to buy but would you. People need to know they have secure jobs. With all the contract positions in Australia these days people need to be pretty sure their contract will be renewed before putting a noose around their neck.

IMO the banks should be allowed to sell if they want to and buyers should be able to buy at reduced prices, supposed to be a free market. Wage to price ratio is way too wide at present and needs to narrow to proper levels.

I also do not understand why everyone wants a free market when they are making money but a controlled market when things go bad. You have to take the good with the bad.

We are self funded retirees and not happy about the interest rates, it depends where you are in your life and the gov is not protecting our income or our lifestyle by giving us higher interest rates. We all pays or taxes. Just my opinion.

big_matt

Nobody knows if the market has bottomed. I suspect it hasn't but if you knew exactly when a property/share market was turning you would be a very very rich person.

ossigeno

This market still has a lot to play out.

Generally the safest option is to do the opposite of what the professionals advise.

Petals

I think this is just the start Macquarie Bank shedding staff just read on newscom.

http://www.news.com.au/business/stor...49-462,00.html

There are going to be a lot of bank workers losing their jobs and they need to find new ones that is the problem.

The papers always are upbeat they have to be and the experts have to say things are going to turn but we have to make up our own minds about that.