Wol

Quite apart from all the other economic problems, there are lots of unintended consequences building up.

One example: thousands of folk are possibly being drawn into the housing market by the FHOG and very low interest rates. But at some stage, interest rates are going to rise substantially: many will find that they can no longer afford the repayments and repossessions will rise.

I think the situation we're in is unprecedented, quite unlike the thirties. Interesting times.

IvanM

You would also have to plot against average income to get something meaningful and for Sydney go back further. Another hard thing for Sydney is that it is multiple markets. There is the Eastern market which I define as Northern Burbs, Beaches, City, Inner West, Eastern Burbs, Ste George and some of the Shire. There are few ways to add to the housing stock other than subdivision and apartment blocks. Then there is the rest including the hills, Western and SW Sydney. Supply can be added to and there is not the proximity to the jobs of the CBD. The fundamentals mean that housing will only rise with the income of the areas unless supply increases.

A big wealth driver of SE QLD has been the influx of migrants. Add in the increase in resources wealth and it is sustainable as the wealth is there to provide infrastructure. The latest QLD budget figures show what has happened to that wealth. Lets hope Brisbane does not do what is happening in Perth.

DownUnderPaddy

It is a rather dubious statement be 100% sure of something that is absolutely 100% unpredictable.

Just an observation !

Geelong Gent

Interesting also that low interest rate period we are now in affects different countries in different ways.

Unlike other countries a majority of Australian mortgages are variable and therefore taking advantage of the downward period. Others are fixed and therefore ####d

ABCDiamond

I agree, and that is something that should be emphasised more, including the fact that Australia itself consists of many multiple markets.

I was doing some figures earlier on, after reading the Financial Review
Smart Investor Nov 2008.


A report in the above magazine shows the property price performance in the following areas:

Dover Heights, Sydney East:
Units have increased at an average of 12.32% pa for the last 14 years, and have increased by 137.29% in total over the last 3 years.

Fairfield, Sydney South West:
Units have increased at an average of 7.01% pa for the last 14 years, but have reduced by 33.94% in total over the last 3 years


and for Brisbane:

Point Lookout, Brisbane East:
Units have increased at an average of 30.6% pa for the last 14 years, and have increased by 293.87% in total over the last 3 years.

Coppers Plains, Brisbane West:
Units have increased at an average of 8.83% pa for the last 14 years, but have reduced by 26.39% in total over the last 3 years

There are some big variances in each capital city.

WA varied between 30.5% pa over the 14 years to 1.8% pa over the same period, in different suburbs.

ozzieeagle

Similar thing happening in Melbourne. The trend seems to be the gap between the top end of the Market and the bottom end seems to be narrowing dramatically. The middle seems to be maintaining the status quo, or dropping very slightly.

So looks like it is the FHOG that is keeping the market going.

scamp1976

You be the judge then...
The first one is one from the USA
The second one is from Australia.

DownUnderPaddy

I never look at graphs without taking into account the overall context. That's just me though, go figure !

Here's the full RBA speech that makes reference that Australian 'Real House Prices and Fundamentals graph'.

http://www.rba.gov.au/Speeches/2008/sp_so_270308.html

It's good reading for anyone interested, but needs to be done over a decent coffee break to fully absorb.

ABCDiamond

What about this one...

• UK, Ireland, Canada and NZ are all still rising
• USA and Australia have both already dropped.

• Australia began to drop in 2003
• USA began to drop in 2005

I just noticed that my graph is also shown in downunderpaddy's link

jond

I think I know who scamp1976 is, it is eatstatic reborn under yet another username


Do a search for him, he did the same doom and gloom posts a few years ago.
Always banging on about how house prices are set to crash

ABCDiamond

I was on a different forum in 2003, and I remember one guy saying that prices in Brisbane were about to drop 50%, and that he had sold up in anticipation.

As I was buying in Brisbane at the time I was a bit concerned. I always wondered what happened to him...

Carbery

If you want a bargin house, are cashed up (most poms are when first coming over) come to the Gold Coast - the only downside is the pretty strong aroma wafting over the area of burnt fingers!

lastere

no matter what happens, even if the whole world crashes around, house prices in australia will continue to rise, or at worst move sideways for a couple of years. it's all about the lifestyle and beaches. and fresh vegetables

ABCDiamond

If you live in Helensvale, Gold Coast, then Units in that area have dropped by 40% in the last 3 years.

However, units in Highland Park, in the Gold Coast, has risen by 376% in that same period.

Which bit of the Gold Coast are you referring to ?

Carbery

I am making a general off the cuff statement based on my experience of speaking to customers in my business (the customer counter in my daily report stated 548 people passed through yesterday), with there experiences of the housing market locally - our business is in Clear Island Waters.