If the recession bites do you think housing will plummet?
Mar 11th 2009, 10:32 am
#181
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Re: If the recession bites do you think housing will plummet?
There would however be a shortage of builders to build them
Mar 11th 2009, 11:00 am
#182
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Re: If the recession bites do you think housing will plummet?
In Pine Rivers, it is about 4% more, so maybe about $65,000
Mar 11th 2009, 11:23 am
#183
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Joined: Mar 2006
Location: Sunshine Coast
Posts: 136
Re: If the recession bites do you think housing will plummet?
Actual quoted average earnings are:
May 2008 Full-time ADULT total average earnings
Australia
$66,232.40 Male
$53,414.40 Female
QLD average wages
$62,119.20 Male
$51,266.80 Female
(Trend Estimates before the addition of the 9% Super)
When I was a first home buyer, most families only had one income in the household, and house was about 3 or 4 times the annual income.
These days, many households have two incomes, and using the QLD average wage figures of about $113,000 per year, a $440,000 house is a multiple of about 4 times the household income.
Things have changed, but we continue spending up to the maximum that we can, so that things never seem to change
May 2008 Full-time ADULT total average earnings
Australia
$66,232.40 Male
$53,414.40 Female
QLD average wages
$62,119.20 Male
$51,266.80 Female
(Trend Estimates before the addition of the 9% Super)
When I was a first home buyer, most families only had one income in the household, and house was about 3 or 4 times the annual income.
These days, many households have two incomes, and using the QLD average wage figures of about $113,000 per year, a $440,000 house is a multiple of about 4 times the household income.
Things have changed, but we continue spending up to the maximum that we can, so that things never seem to change
Lies, damn lies and statistics.
That will include mining and Brisbane though.
No way the average wage on the Sunshine Coast is $62k - i work in recruitment and i can catagorically tell you it's no where near that figure.
Mar 11th 2009, 11:29 am
#184
Lost in BE Cyberspace
Joined: Feb 2005
Posts: 15,526
Re: If the recession bites do you think housing will plummet?
Especially when that average is boosted by the London average of 40,000 pounds ?
Mar 11th 2009, 8:46 pm
#185
Joined: Jun 2006
Posts: 4,555
Re: If the recession bites do you think housing will plummet?
Australian banks do not have the exposure to the US CDO that have affected others, especially the European investment banks. Australian banks are currently in profit and predicting profits. There are increased provisions for bad debts.
The danger for the Australian banks is that the Australian economy deteriorates worse than expected and the bad debts become more significant. They also have the government guarantee to fall back on which worries me as it may encourage irresponsible lending.
I have heard a number of reasons why the banks here have not been hit as hard. IMO the one that has had the biggest affect is that in the early nineties Westpac nearly went the way of Northern Rock. Supervision by APRA was significantly tightened. A few years ago non bank lenders were gaining significant ground on the banks. The banks responded by relaxing their lending criteria. APRA pulled them back in line and we all know what has happened to RAMS, Wizard etc.
You also identify investment firms. Some of these are adept in the Alan Bond school of finance. Raptis, City Pacific etc just seem to burn investors cash. They are not banks.
The biggest two failures in finance have been Allco and B&B. The former went into administration and the latter is now owned by the banks. May the clearup carry on.
The danger for the Australian banks is that the Australian economy deteriorates worse than expected and the bad debts become more significant. They also have the government guarantee to fall back on which worries me as it may encourage irresponsible lending.
I have heard a number of reasons why the banks here have not been hit as hard. IMO the one that has had the biggest affect is that in the early nineties Westpac nearly went the way of Northern Rock. Supervision by APRA was significantly tightened. A few years ago non bank lenders were gaining significant ground on the banks. The banks responded by relaxing their lending criteria. APRA pulled them back in line and we all know what has happened to RAMS, Wizard etc.
You also identify investment firms. Some of these are adept in the Alan Bond school of finance. Raptis, City Pacific etc just seem to burn investors cash. They are not banks.
The biggest two failures in finance have been Allco and B&B. The former went into administration and the latter is now owned by the banks. May the clearup carry on.
I'm by no means an expert on finance, but it depends what you mean by "capitalised". If a very significant percentage of a bank's asset base is invested in loans on housing, and repossessions climb dramatically (as they are going to) the fact that the cash is "backed by bricks and mortar" becomes less appealing. We see it around here, where investment firms are having to sell repossessed housing and are unable to move it at a fraction of previous valuations. My final rental was one of six, repossessed from the developer and they have been on the market for 18 months at a 30% discount to valuation. The investment company did the repossessions, then - when they couldn't recover the investment - went belly-up and the administrators are now trying to flog them, all the while paying out the running costs.
Mar 11th 2009, 8:52 pm
#186
Joined: Jun 2006
Posts: 4,555
Re: If the recession bites do you think housing will plummet?
The other thing for certain is that wage growth will be suppressed and unemployment is on the rise. The main job creation I have seen is in retail (Woolworths) and PIzza (Dominos). Mining to retail. 100k to 35k.
Mar 11th 2009, 8:55 pm
#187
Joined: Jun 2006
Posts: 4,555
Re: If the recession bites do you think housing will plummet?
The only hole in that theory is that until June 2007 even an Alan Bond bank could have got capital.
Another theory from a former RBA chairman is that the four pillars policy held them up.
I outlined my opinion above.
Another theory from a former RBA chairman is that the four pillars policy held them up.
I outlined my opinion above.
This is interesting - I read the other day that the only reason that Australian banks aren't in the same deep doo-doo that US and UK banks are iin s because they didnt have the available capital to invest in the same dodgy loans.
If they had have, they would have and they would now be in the same pickle.
All kind of ironic don't you think?
If they had have, they would have and they would now be in the same pickle.
All kind of ironic don't you think?
Mar 11th 2009, 8:56 pm
#188
Forum Regular
Joined: Mar 2006
Location: Sunshine Coast
Posts: 136
Re: If the recession bites do you think housing will plummet?
Exactly, State wage averages in the mining states are irrelevent due to those micro-economies. The Average wage in a mining area (or atleast up until recently) would be far higher than the rest of Regional QLD - same in WA i'd suspect.
IMO, it's the regional average wage that's important when determining whether house prices are over valued in that area.
Mar 11th 2009, 9:18 pm
#189
Lost in BE Cyberspace
Joined: Mar 2003
Posts: 9,397
Re: If the recession bites do you think housing will plummet?
Oh, I didn't mean to imply that they *were* banks, only that the investment in bricks and mortar isn't necessarily a surefire bet. Hastings Capital was the outfit that financed our six-villa development, and I well remember phoning the CEO when they repossessed them, and threatened eviction, to tell him exactly that. He would have nothing of it, saying that housing was always a solid investment. Now they are in receivership and his investors have lost most of their money.
Mar 12th 2009, 9:33 pm
#190
Joined: Jun 2006
Posts: 4,555
Re: If the recession bites do you think housing will plummet?
Unemployment went up yesterday and more soundings indicating an end to the increased FHOG. The FHOG may get a last minute reprieve.
Mar 12th 2009, 10:35 pm
#191
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Re: If the recession bites do you think housing will plummet?
Mar 12th 2009, 10:44 pm
#192
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Joined: Jul 2008
Posts: 1,048
Re: If the recession bites do you think housing will plummet?
Actual quoted average earnings are:
May 2008 Full-time ADULT total average earnings
Australia
$66,232.40 Male
$53,414.40 Female
QLD average wages
$62,119.20 Male
$51,266.80 Female
(Trend Estimates before the addition of the 9% Super)
When I was a first home buyer, most families only had one income in the household, and house was about 3 or 4 times the annual income.
These days, many households have two incomes, and using the QLD average wage figures of about $113,000 per year, a $440,000 house is a multiple of about 4 times the household income.
Things have changed, but we continue spending up to the maximum that we can, so that things never seem to change
May 2008 Full-time ADULT total average earnings
Australia
$66,232.40 Male
$53,414.40 Female
QLD average wages
$62,119.20 Male
$51,266.80 Female
(Trend Estimates before the addition of the 9% Super)
When I was a first home buyer, most families only had one income in the household, and house was about 3 or 4 times the annual income.
These days, many households have two incomes, and using the QLD average wage figures of about $113,000 per year, a $440,000 house is a multiple of about 4 times the household income.
Things have changed, but we continue spending up to the maximum that we can, so that things never seem to change
Mar 12th 2009, 11:06 pm
#193
Joined: Jun 2006
Posts: 4,555
Re: If the recession bites do you think housing will plummet?
The impact will be on units and townhouses in the sub 500k market and housing in the less expensive areas.
7k is 5% of 140000
24k is 5% of 480000
I still do not think the increased FHOG is dead but the indications are that the government budget is a lot tougher.
Mar 13th 2009, 12:22 am
#194
Account Open
Joined: Jan 2005
Location: Brisbane
Posts: 4,298
Re: If the recession bites do you think housing will plummet?
On the new housing market a massive impact. It is the bulk of the deposit for new buyers in that market. When you consider the 5% equity requirement by banks you can see that leverage the 24,000 has over 7,000.
The impact will be on units and townhouses in the sub 500k market and housing in the less expensive areas.
7k is 5% of 140000
24k is 5% of 480000
I still do not think the increased FHOG is dead but the indications are that the government budget is a lot tougher.
The impact will be on units and townhouses in the sub 500k market and housing in the less expensive areas.
7k is 5% of 140000
24k is 5% of 480000
I still do not think the increased FHOG is dead but the indications are that the government budget is a lot tougher.
Personally I think that this would be a "real" drop, because when this scheme was introduced I don't think we saw prices of first homes suddenly increase to compensate for the FHOG increase...
Mar 13th 2009, 3:56 am
#195
Joined: Jun 2006
Posts: 4,555
Re: If the recession bites do you think housing will plummet?
I reckon it is pretty safe to assume that reducing the FHOG from $21/14 back down to $7k, will see an immediate corresponding drop in prices of approx $7k to $14k, in the market you describe.
Personally I think that this would be a "real" drop, because when this scheme was introduced I don't think we saw prices of first homes suddenly increase to compensate for the FHOG increase...
Personally I think that this would be a "real" drop, because when this scheme was introduced I don't think we saw prices of first homes suddenly increase to compensate for the FHOG increase...