Buzzy--Bee

Hello, well,having accepted an offer on our house here in the UK we have in effect now "stepped off the housing ladder".

Our concern now is that if Australian prices rocket over the next 18 months - 2 years, we will be financially disadvantaged.

Thankfully we're not looking to move to Perth, but would be very interested to hear from people in Melbourne or Brisbane who could offer an unbiased view of what the market might do. With the recent interest rate rise I would hope that it would not go up.....

Thanks for any advice and opinions

Buzzy

Wol

Like for like, the Oz housing market is very overpriced compared with most countries.

The mentality is still to pile into property - not only to live in, but as an "investment" - which may or may not start the climb going again. As interest rates go up though, reality may set in but don't hold your breath!

I don't think you will lose out by waiting to buy.

Buzzy--Bee

Thanks Wol, reassuring.

sassenach

the problem with the housing in australia is it is advantages to invest in property as there are so many tax breaks involved with it .You are lucky you arnt going to perth as its getting quite unaffordable and there seems to be no sign of it slowing because of the spin off from the resources boom in china ,either perth prices will collapse and drop just below brisbane prices of which traditionally that is where they usually are or the eastern states will fire up again and follow perths lead in the market in regards to house price accelaration .If i was moving over east i would buy ASAP as its been stagnant for quite a while now and i dont believe they can stay that way .I do believe australia is no longer a cheap country to live in and is on par with the uk in everyway if you want infrastructure[ie bus routes,trains,corner shops ,pubs ].

Wol

Certainly around here the selling - as opposed to asking - prices have dropped between 15% and 40% over the last year or so.

There are still many agents who just want listings so hype the price to start with before telling the seller to be realistic. We've seen many houses drop $500,000 and still be on the market a year later We actually agreed to buy one a few months ago which had dropped $550,000 from the initial asking price but we then dropped out because it was still very overpriced and we found land anyway.

Ways to go, methinks!

Amazulu

My view for what it's worth:
WA house prices will keep rising as resources boom shows no sign of slowing in short/medium term. WA economy is based on reality (resources & the world's need for them) unlike the boom caused by the dotcom bubble in the late '90's,
This is affecting the whole Australian economy. WA's 'V8' economy (not my words) is propping up the east coast at the moment,
This is causing an imbalance in the economy. Interest rates need to be rising in WA but not on the east coast where the housing market is flat,
Interest rates are set on the east coast. Interest rates ARE going to rise because of the WA effect & because of the extra money flowing into the economy due to the budget,
This is going to hurt everybody but especially the east coast,
The joker in the pack is the oil price, if this goes up to $100/bbl & stays there then all bets are off & we'll all be f**ked.

Hutch

Not in quite the same buying bracket as you (!!!) but the same things happening down the lower end. We've been actively monitoring the real estate market in the three towns we're looking since we decided to emigrate nearly two year ago. It has been in the doldrums for the duration of that period - in fact there are houses we viewed in December '04 that are *still* on the market. I really don't understand what the vendors are playing at - if my house hadn't sold in 18 months I'd be starting to think that maybe, just maybe, it was over-priced!

I suspect the answer is that many of these home owners are in a negative equity situation - they couldn't afford to sell at a considerably lower price, even if they wanted to - because doing so would take them close to, or over the edge to bankruptcy. So they're all sitting tight, praying for some sort of upward movement. The real estate agents we spoke to were all trying to egg things along by talking up the market but it sounded like bullshit to us, and the fact that those agents are marketing the same properties a year on would suggest it was indeed a load of crap.

That said, we want to buy a home, and if we see the right property and can afford it - then we'll buy it.

Exile

From a purely financial perspective, it sounds like anyone with property in Perth should hang on to it for a bit longer, and then pick the best time to sell up and move east.

Or has there been a fundamental change and we're entering a new era in which little old Perth is lining up long-term with the big cities in terms of real estate attractiveness? I guess resources could be seen as a fundamental change, but can you really see Perth prices closing the gap further with Sydney? Doesn't seem right.

With investors fueling demand, it has the classic signs of bubble formation. People rushing to buy just because they think prices will rise further, without thinking about underlying value.

galloping gaijin

Have a look at this link..
http://www.domain.com.au/Public/Arti...=1146940522716

OzTennis

For a detailed review of the Melbourne property market go to:

http://www.domain.com.au/Public/Guides.aspx

Sydney, NSW, Vic, Qld as well.

The latest Melbourne tome is a weighty document and gives you suburb by suburb prices but you'll see in the opening pages that the outlook in the next year or so generally is for prices to not rise dramatically. Some suburbs will experience significant rises but generally the feeling is of steady or slow rises, particularly since interest rates were increased 0.25% last week.

Fire away if you have any further questions about Melbourne and Vic but I thoroughly recommend the latest Melbourne report.

OzTennis

Amazulu

I work for one of the biggest mining companies in the world. At a company function recently I got talking to a mining analyst who's job is to look at demand for resources (iron ore in this case) worldwide & how to supply them. He reckons WA's economy has gone up to a new level & is getting beyond the extreme boom/bust cycles that have happened in the past. He reckons that there could be downturns in the future, but not the immediate future & that these downturns will not be as extreme as in the past. He says that he can only see a bright future for Perth/WA. WA's contribution to the Australian economy as a whole is growing & shows no sign of slowing. All these factors are going to support the housing market.

House prices here will probably never catch up with Sydney (that would be like saying Leeds will catch up with London) but could surpass everywhere else including Melbourne. I'm confident, time will tell.

Wol

>>I suspect the answer is that many of these home owners are in a negative equity situation - they couldn't afford to sell at a considerably lower price, even if they wanted to - because doing so would take them close to, or over the edge to bankruptcy. So they're all sitting tight, praying for some sort of upward movement. The real estate agents we spoke to were all trying to egg things along by talking up the market but it sounded like bullshit to us, and the fact that those agents are marketing the same properties a year on would suggest it was indeed a load of crap.<<

You are spot on in a lot of cases!

The same scenario occurred in the eighties property boom/collapse in the UK: many who piled in at the end especially when the advance announcement about stopping double mortgages' relief was made, found themselves unable to afford the payments or to sell at a loss.

IMO the situation is worse by far in Oz, 2006. Mainly because of the "investment" paradigm.

For most people who buy a home to live in, they may be embarassed by say increases in repayments but can usually sit it out. OK, some *have* to sell because they have to move or something, but mostly they can cope - even when mortgaged right up to the hilt as many are here.

But there are many who have been bragging for years about how they are making money hand over fist with their "investments" and now find that the sound of chickens coming into the roost is deafening. If they are reasonably liquid they can probably get through the next five years, but there are an awful lot who are going to get burned when they cannot sell and cover their mortgages and can't rent to do the same thing.

I am renting in a very similar situation: the landlord is between a rock and a hard place. He can't afford to have me move out, and he is trying to sell at a price which will cover his loan at the same time: the price has dropped $300k and there's no buyer in sight at anything like the new asking price.

OzTennis

You say Leeds prices can't be expected to catch up with London but you think Perth might catch up with Melbourne but it probably won't catch Sydney. Umm, seems highly unlikely, possible mining boom notwithstanding!

I don't know the Perth market in detail but what is the average Perth price now? Melbourne is high $300's. (Toorak has an average price of just below $2 mill for a few hundred sales per annum). Some Perth suburbs might fetch high prices but personally I can never see prices across the board challenging those in Melbourne, let alone Sydney. Perth's comparative remoteness, lower population and narrower based economy doesn't seem suggest it's a strong runner in the Melbourne Cup! A surprisingly high proportion of people on BE's seem determined to boost Perth prices though.

OzTennis

Wol

The comment about the commodities boom is probably right - it will go on for a long time.

When the whole of WA and half of the red centre has been dug up and flogged to China to make $55 refrigerators the Indian Ocean will flow in to fill the hole and the Western border of NSW will be a beach resort. THEN we'll rely on tourism!

sassenach

maybe west australia should go independant and stop propping up our cash strapped eastern staters then west australia wouldnt have to worry about eastern state prices .