Steve2009

He meant they drive prices. Not necessarily the same as growth.

MartinLuther

The post was in response to a quote that started "The growth..." so I had to assume he meant growth. Maybe he could clarify.

Steve2009

Apologies, he replied to my post, I intended to refer to capital value growth.

MartinLuther

Fair enough

asprilla

Yes, I meant capital growth.

fish.01

Interesting how the crash played out differently in each place and was caused by different combinations of factors. I guess the friend didn't really understand that everywhere is not operating under exactly the same circumstances as her place. Wish they were...we'd all be nostradamus's....

Being cyclical I guess we all know it will either crash bigtime or maybe just drop a little and then stay static for years to let wages catch up (like last 2 bubbles in Australia). Knowing "when" that will start to happen is a lot harder.

asprilla

To me, your post is full of flawed logic. Why do you think that the presence of Shanty towns indicates a shortage of housing supply?! Perhaps you should consider some of the other factors at play, I don't think I really need to expand on this point.

Then you state that there is a disconnect between rental and purchase pricing. Yet you will struggle to back up this statement, because it simply isn't true. Yes - I agree that perhaps 1% to 5% of properties exhibit the disconnect you are talking about.... $1m shacks being rented out for $300 per week. But by and large, your statement is simply false. The vast majority of properties show a relationship between capital value and income.

To me, this thread demonstrates a few things :
1) people will read what they want to read, not what is written in front of their eyes.
2) property - whether it is purely for investment purposes or "a home, because I didn't buy it to make money, I bought it as a place to live in" - is simply an asset, just like any other. A lot of people don't seem to understand this point.

TakenThePlunge

And here's my only contribution, too

coolshadows

people keep telling me that there's not much land left in Australia suitable for housing, and this is a key factor in driving house prices...

http://www.anra.gov.au/topics/land/landuse

asprilla

There's still plenty of land left that can be covered in concrete... Like you I don't believe that line.

But the bigger picture is that planet earth has a finite supply of land, and a human population that is growing fast. The number of people on earth has doubled in the past 45 or 50 years, and it is still increasing.

Not many people want to live out in the livestock grazing areas of Australia... they are generally very boring places, and very hot too.

It's the same story the world over. There are good places to live, and there are rubbish places to live. Practically everyone wants to live in the good places.

So it is pretty easy to conclude that the "good" places will simply get more and more expensive over time (for as long as they remain "good").

Perhaps if world population growth becomes negative, and we see deflation across the globe, then we'll also see land prices heading south in the long term. Doesn't seem likely though.

Steve2009

That's not a correction (crash), that's a pause at best.
http://www.nytimes.com/2010/03/08/op...08krugman.html

Stitchy

RE: LAND

I'd just like to add that it's true there's finite usable land in Australia.

But land isn't a requirement for a home. Only space is.

We can and should greatly encourage the building up of what land we've already released.

Steve2009

We have seen land prices heading south in the long term: Japan, USA, Ireland, Netherlands.

Steve2009

Theres is no shortage of supply in Australia over a third of housing units in Australia have two or more vacant bedrooms as of 2008. There are hundreds of thousands of vacant units in a country with just over 8 million households. Every other economy in the world where there has been a bubble has thought that they were 'different' and that their bubbles were predicated on fundamentals. Even Ireland with it's inclement climate thought that the migration gravy train would never end. Our builders thought that 60 to 80 thousands new units per annum was a sustainable level of demand. Queensland is the Florida of Australia.
Any properties I have looked at have rental yields of less than 5% given that interest rates are currently historically low at 7% they are non-performing assets. Show me a suburb that yields an actual 10% plus per annum and I will invest today.
Your first point is redundant and a poor basis for debate. I could equally accuse you of ignoring what's written in front of you. Hence I'll ignore that point.

Your second point is very valid. Property is no different to any other other investment asset or class, yet Australian's treat it differently and invest for a tax break on a loss making investment on the hopes of a capital gain. It's a 'greater fool' investment. They would not adopt the same approach to equities over the long term, but property is 'different'.

Steve2009

The Amsterdam Study:
http://www.nytimes.com/2006/03/03/wo...lips.html?_r=1

If you think this thread is long then look at these:
http://www.askaboutmoney.com/showthread.php?t=31710
and it's successor:
http://www.thepropertypin.com/viewto...t=264&p=362366