sembonor

It seems that property in Oz is going to free-fall.



Urban apartments in market 'free-fall'
By Barclay Crawford
May 22, 2004

http://www.theaustralian.news.com.au...5E2702,00.html


After the boom, the bankrupts
May 22, 2004

http://www.smh.com.au/articles/2004/...120120184.html

Don

Tits up for housing mkt in Aus followed by UK pretty soonish IMO. Did you see this week (minutes) the UK's MPC nearly went half a % point instead of 0.25%? They are worried.

ABCDiamond

Different areas, and different types of accomodation will be affected differently

from the first link:
nation's biggest property market - Sydney - prices continue to drop, with one senior property economist claiming inner-city apartment prices were going into free-fall.


and from the second link:
Because the loan they have defaulted on is costing them a staggering 102 per cent a year - about $300 a day - at a time when normal mortgage rates are around 6.5 per cent

Another report quoted Brisbane property having dropped by 2% in the last qtr. However, some areas here had gone up by 6.5% at the same time.

I agree it is worth keeping it all in mind, but also check the areas.

Price drops in most inner city apartments have been expected for quite some time, but at the same time, most experts are expecting QLD houses, for example, to keep rising.

Don

Last time round (UK 1989-1995) it was the crazy areas that suffered most (ie London, south-east, hotspots like best Edinburgh areas). Whereas the bits that got there last in terms of HPI didn't really go backwards but just stagnated for a few years, backwards in real terms I suppose when you take inflation into account.

sky

We made a killing on our first house in the 80's and sold just in time our next house didnt make anything but the third we made a killing on again in the 90's ... swings and round a bouts. We have bought a house in nz because we needed to and I hate renting. The speculation is that the housing market is about to plummet but I dont give a hoot, we needed somewhere to live like back in the 80's in the uk

sembonor

You are right.

But it is also true when the average is x% (here you said 2% drop) and you said some areas 6.5% rise, it also means at the same time that some areas drop 10.5% { (-10.5% + 6.5%)/2 = -2%}. Dropping by 10.5% in a quarter is as crazy as rising 6.5% in a quarter. We are talking six digit money here.

Of course if the 6.5% rise only happens in a small area (few houses), the rest should not be much lower than 2% drops.

That's the meaning of average, some drops, some rises, but the trend should follow the average.

ABCDiamond

The 6.5% rise is an area with a 21,000 population ( I am one of them )


I agree that some areas will compensate. What I haven't been able to work out is where the 2% drop actually cames from. Curiosity has me working on finding it

sembonor

You are so lucky with 6.5% rise!

Those with 10.5% drop, please don't get jealous.

ABCDiamond

It's down to Planning and Research Plus a bit of luck, in getting it right

sembonor

House prices fall, but experts disagree on numbers

http://www.theage.com.au/articles/20...461833593.html

You decide who's right. One is the monitoring agency, the other is Real Estate that comprises property agents. The former says Melbourne median house price falls 12.9%, the latter says 0.8% drop.

If I take the 12.9% fall, I guess it doesn't make sense to buy now and see my money vaporizes together with the downfall of the property market.

I'd say I will rent for one or two years.

ABCDiamond

According to Sydney-based Australian Property Monitors, Melbourne had the worst performing property market of all capital cities between January and March this year.
APM reported yesterday that Melbourne's median house price fell 12.9 per cent

Real Estate Institute of Victoria paint a far less dramatic picture, saying Melbourne's median house price fell just 0.8 per cent in the March quarter


The latest figures for houses from real estate.com show:
Melbourne Postcode 3000 as a 17% drop in the last 12 months. Median $261,250

Brisbane Postcode 4000 as a 7% rise. Median $425,000

I agree with waiting and renting in Melbourne Central.
Other areas ? thats difficult, as it depends so much on individual locations.

eg: some random results:
Postcode 3102 Houses +10% in 12 months, but units dropped -23%
Postcode 3122 Houses +12% in 12 months, but units dropped -4%

Postcode 4102 Houses +27% in 12 months, but units dropped -16%
Postcode 4122 Houses +24% in 12 months, and units increased +15%

joh117

I agree we made a killing in the last few years in the UK. We moved 5 times in 4 years and made a profit every time. I hate renting and we have just bought a house in rural victoria. It is swings and roundabouts. The house is lovely and worth every dollar we spent.

Jo

Don

New house sales down 12% in USA last month, biggest monthly drop since 1994. USA = presager of things to come in the western countries with recent over-strong housing mkts (USA, UK, Ireland, Spain, Aus, NZ amongst others.)

Vicky88

What you have to remember is if you buy today and the price drops by 10% over the next year it is only a loss if you have to sell. The key is not being overextended. I would factor in any possible loss against wasted money for rent.

As others have mentioned, do your homework and you are less likely to suffer. Houses always perform better than units in Australia. Nothing would get me to buy an inner-city unit, it has been said for the longest time their prices would crash so it is no surprise that it has eventually happened.

sembonor

A lot of people think that rental money is lost. But that all depends.

If I have $300K cash in my hand:

1. I can buy property and expecting that the price will increase. Which may or may not happen. So the yield can be +xx% or -xx%
2. Invest in stock, or other investment vehicle. It is not that difficult to have yield at least 6% - 7%. Divident usually gives that much of return.
3. Renting it out. But the yield can be small.
4. Buy a property and stay in that property to save rental money.

Now for option no. 4, if I buy and then stay in that property, yes, I save rental say $1200 a month, but at the same time I also do not enjoy any investment return on it, i.e. 0%. BUT, if I park the money somewhere with just 7% annual return, I can get $1750 a month. I even have $450 extra!

That situation will get worse if I buy the property with mortgage with high interest.

Of course it does not always happen that rental is more cost effective. It all depends on the supply and demand. BUT it is never true that rental ALWAYS throwing money. That IS only a myth.