Re: Bottom of the property cycle reached ?
 

I agree Real Estate Agents talk crap, but put the panic aside and look at a few factors, some unique to OZ.

I really doubt with mortage rates going so low that many people will bail out of their homes. Most are now financially much better off.

In OZ even if you lose your job and have 2+ kids your welfare and benefits are going to be close to the average income.

Investors are hardly going to be in a rush to sell a rental property, pay capital gains tax on the proceeds, then get 3% minus tax on the funds in the bank, yes they might but most would hold out for a recovery.

Australian pension is means tested, many dont get one:blink: hence it has a lot of self funded retires, now unable to live on the bank interest on offer. Will they look at shares and property instead, remember even personal superannuation funds here can buy property and shares not just Fix term deposits etc.

Australias not going to escape world turmoil however you do have to look at individual factors relating to that country, before topping yourself:rofl:

Re: Bottom of the property cycle reached ?
 

I agree ^^^

Its also worth noting that every part of Aus has its diffences. W/A with its mining, QLD with its cyclone rebuilding etc ....There are factors which will obviously make each state differ.

Also within these states there are a lot of differentials to factor too....

But you may yet see me with my "end of the world is nigh" sandwich board yet:eek:

Re: Bottom of the property cycle reached ?
 

Australia relies on overseas borrowings to fund the mortgages which sustain its property market, as its inhabitants don’t save enough.

With governments of nations around the world looking to borrow money to fund their bailouts of insolvent banks etc, there is only so much money available.

Banks will be selective in who they will lend to – those with a good credit rating (a dwindling number as unemployment starts to kick in) or those with a sizeable deposit of 20% or more.

A better title for the thread “Bottom of the property cycle reached” would be “Top of the property cycle reached”, as another bubble will not happen, as there is no money to drive it.

The recession hasn’t even really started yet – wait until after xmas, when the redundancies start kicking in big time.

Re: Bottom of the property cycle reached ?
 

The investors are all going to be fine for the moment, but when prices come down enough the people who are renting now will buy. Then there is less demand in the rental market and investors will be left with houses that aren't paying rent, and because they were idiots and followed the advice of the bank, these investors are mortgaged up to the hilt. So another batch of properties come on the market and the spiral continues...

Downward.

Re: Bottom of the property cycle reached ?
 

been looking at houses in perth over last 18 months. 500ish houses seem to me are now going for the high 300 thou is this correct. As i am in uk I can only go on what i can get from the web.If this is correct any migrant worried about loseing on there uk house has no worries.

Re: Bottom of the property cycle reached ?
 

One of my workmate's sister's boyfriend has been trying to sell an investment property in North Melbourne for around the $200k mark. He bought it a few years back for $150 so he's hoping to make a profit.

The tenant thought about buying it so went to the bank to enquire about a home loan, and was told no - and it was the same from the other lenders.

OK, I don't know the financial history of this person, including whether he had a deposit. But, I am surprised how quite a few people have a view that once rent goes high enough everybody will 'just buy'. From what I see that's not going to happen. All that seems to be going on is that the banks want a chunkier deposit, unless the person has been saving for a few years they are now in a situation where they are paying more for rent and thus are saving less. Therefore they will take longer to get a deposit together hence will put of buying - which just reduces demand.

Re: Bottom of the property cycle reached ?
 

We're renting a stunning flat for less than half price of what the mortgage would cost - and of course we have no maintenance etc issues.

Re: Bottom of the property cycle reached ?
 

Reduction in demand reduces prices, of course.

Re: Bottom of the property cycle reached ?
 

Hamilton, QLD 4007

Median Price April 2008 $858,000
Median Price Oct 2008 $1,710,000

looks like it is going the wrong way in some places......

Re: Bottom of the property cycle reached ?
 

I think the problem is that so few houses are selling that the statistics become unreliable. In a slow market it only takes a couple of top end properties to sell to blow the figures. You need to remove outlyers from the dataset, but if you haven't got the dataset then you just have to view current statistics with suspicion.

Re: Bottom of the property cycle reached ?
 

I agree 100%. (And Hamilton is a small and generally very expensive area.)

And in this climate, all over most of Australia, very few high priced houses will be selling, but the lower priced properties are, therefore bringing down the overall median price. Even though those cheaper properties may have risen a bit in price.

Median prices currently seem totally unreliable.

Re: Bottom of the property cycle reached ?
 

The most useful thing would be a marker price average. The average selling price of a house with a specific set of characters:

3 bedroom, brick built, 800m2 block.

Anything like that available?

Re: Bottom of the property cycle reached ?
 

The economic pain has not even started yet IMO. There is not an ounce of good news in the global economy, in fact it is looking extremely dire and much worse than many thought. The central banks and governments are fast running out of tools to manage the crisis and boost the economies - where do you go after interest rates are 0%?? How much money can you realistically print before it's worthless?

2009 should bring some significant collapses to many markets.

Re: Bottom of the property cycle reached ?
 

I actually have a property in NSW that has some accurate data:
2001 Cost $280,000
2003 Bank valued $380,000 conservative price
2004 Real estate agent valued $460,000 (to get the business)
2004 Real estate agent revised price $410-430,000 for actually selling it
2008 Actual offers $380,000
Rental income $420 pw

So, that property shows a 16.5% pa rise in 2 years 2001-2003
or 14.5% per year for 3 years 2001 to 2004
or ZERO growth for the 6 year long term
or 4.45% pa for the 7 year long term
or
negative -4.7% pa for the period early 2004, when it may have sold for $460k, to 2008.
:ohmy:

Just a thought, for long term prices.
I bought a 3 bed, 1 bath, 1 garage, house in Erskine Park in 1991 for $105,00, the going rate for new houses at the time, and probably about the median price as the whole area was new.
An almost identical one is currently for sale at $349,000.
An average rise of 7.2% per year for the last 17 years.
That's about a doubling in value every 10 years.

There would probably have been no new houses built there for some time, therefore the median should be about the same as that.
And the actual median is $363,000

Figures for my current area, quoted earlier, show a different story, as there are lots of new houses being sold, mainly 5 bed, 3 bath, 2 garage etc, to push up the median prices.

Re: Bottom of the property cycle reached ?
 

And the next arsey thing is how I'm trying to keep my savings in a bank out of harms way, but with interest rates falling that means I'm wondering whether the interest will be enough to offset the inflation which comes around from a bank printing too much money.:huh: