Are we looking into the abyss (property prices)

[Captain_Rightfoot]

I've been thinking for some time now that property is overpriced, and that we are due a bust. Primarily because we've got historically low affordability. I've been saying this for 2/3 years now but it just keeps going up.

However I think the combination of factors brought about by local sources and very very large international ones is making me think that the time has come. I think we are staring onto the abyss and people are only just starting to realise it now.

Here is some of my reading from today.

Property will suffer - Robert Gottliebson (http://www.businessspectator.com.au/bs.nsf/Article/Property-will-suffer-JXV9B?OpenDocument&src=mp)

The Banks are petrified - Alan Kohler (http://www.businessspectator.com.au/bs.nsf/Article/Its-not-over-yetLast-Chance-Saloon-JYSJJ?OpenDocument&src=mp)

The sense of property prices - Neil Jenman (http://jenman.com.au/news_article.php?id=244)

Rates Uncertainty - Melissa Ketchell (http://blogs.news.com.au/couriermail/publicproperty/index.php/couriermail/comments/rates_uncertainty/)

It would appear that it's not interest rates that are going to be the tipping point - but the lack of availability of money.

Please Discuss :)

[incisor]

i was watching something on the abc the other night and the head of the economics dept of some big name australian university was telling one and all to sell to convert to cash as he foresaw doom and gloom on a grand scale...

he had just sold his castle for some princely sum and was well pleased ..

its all relative, if you have lots to lose you will lose lots...

if you have sweet ****all you get to lose sweet ****all but you will most likely be screwed over in other ways.

in the great depression the big winners were the banks, they went from owning 3% of the country to over 25% if what i read was accurate...

maybe this is the market correction to fix that :p

in my segment of computer industry the wholesalers are reporting a 26% downturn over the last month or so.

thats a frightening drop in sales in one month esp at a wholesale level.

october is traditionally my quiet month and today must have been national pin dropping day as it was that quiet....

luckily i made a few bucks on phone support otherwise it was cheerios for tea tonite ...

[Hucksta]

i'm no financial guru but something has to give. I think that we are on the verge of an economic downturn and a lot of people are going to go bust.

More and more jobs going down the gurgler, economy is stalling and we have a masive credit debt that is unprecedented in this country and that's just a basic summation.

Now, I barely passed gumby maths at school but all that adds up to 'no good for anyone'.

[weeds]

i sold our house the other week:o
brought another house a week or so later:D

tipped a sizeable sum into the share market last week:o

i reckon....and i'm by no means an eggspert

buy and sell in the same market (i learned the hard way:( a few years ago)
you only make a loss if you sell
invest within your means
reuce bad debt
increase good debt

geez, i starting to sound like my financial advisor, i hope he has a handle on things or else:rocket:

[JDNSW]

Property prices in much of Australia have been overpriced in historic terms for quite a few years, and the affordability has got so low that a decrease in real terms was virtually certain. The international situation is the trigger for this, but I do not expect the situation in Australia to get as bad as in the US and perhaps some other economies - largely because the financial system is much more regulated here, and as a result, banks have not behaved in such a silly manner. The Australian economy is fortunately less dependent on the US economy than it was a few years ago, which will also reduce the impact.

Even at an international level I do not expect anything like the Great Depression (at least in duration), mainly because with this historic example in mind, all major economies are much more closely controlled by governments which in financial terms are far more powerful than they were eighty years ago, and these governments are prepared to act, as is shown by the US Republican executive planning and fully intending to go ahead with action that is anathema to the party's philosophy. And Congress will eventually come around. Further, despite the fact that I have little respect for "the dismal science", I still believe that government actions are likely to be closer to what is needed than in the Great Depression as a result of advances in economic theory.

John

[scrambler]

FWIW, I've been of the opinion for a while that property values had to come down. If it takes two people on six-figure incomes to afford an "average" house in a "decent" suburb, then prices have nowhere to go but down.

I think the housing price will not fall anything like as dramatically as the share markets - partly because people will get out of shares into property for a while. i agree that availability of money will be a bit of an issue, but with Australian banks less exposed than US banks there should be less of a credit clampdown here. Particularly as there will be less opportunity for them to make money overseas.

I'd be surprised it it's an "abyss." I'd be VERY surprised if property affordability gets down to what it was a decade ago, let alone 20-30 years ago. The day of anyone on a single average wage easily affording an average house in an average suburb are behind us, I'm afraid, and won't return IMHO.

[mcrover]

Im a mechanic and have very little to do with all of this but this is how I see it and it is kinda on the same lines of you lot are thinking.

US gov subsidised farming lost Aussie farms millions in the 80's, they removed subsidies in the 90's and their farm industry colapsed due to the massive debts and so the US gov brought back some of the subsidies.

US Gov is now looking at propping up the finance sector in the same way.

IT WONT WORK, they are just delaying the inevitable........that Australia is the next.......low budget super power :p

But it still wont work.

As far as aussie house prices go, they are way high due to the ease of getting finance.

When you can buy a house with payments that are 3/4 of your income then your over stretched no matter how you put it and Im sorry to say that it is these people who are going to go bust and that will happen very soon due to the fact that more than likely they wont be financed through a bank but a building society which will be financed by one of these over stretched US finance companies.

On top of that, a lot of the Mortgage insurance that these over stretched people have to be insured by are underwritten by.......yes the US insurance companies that are calling out for a bail out.

If they bail them out they will just continue on the same path of pushing prices up through speculation and driving other prices down by dumping stock and then rebuying it when the bottom falls out of the stock.

I dont think prices will drop but they will stall for a long time.

The problem is with these "Experts" that want to dump property/stock is that all that will do is put a glut in the market which will bite everyone and in the case of dropping stock will force a crash and when the market bottoms out we will all get bitten in 1 way or another as Inc said.

What ever your house is worth now is what it will be worth in 5 years is my prediction, I hope Im wrong.....I often am but I have said since the 80's that thier policy of subsdising everything couldnt last forever.........and look now, it cant but everyone new that.

[inside]

I think generally Australians are good at paying off their homes. Australians will sacrifice a lot before the bank takes the roof above their head. There are still plenty of jobs around to make ends meet. If you have two people earning $18 an hour that's still $1100 in the hand a week, put $500 on the mortgage and you have $600 a week to live off. You could have a modest car, eat well and even bring up a kid or two if you planned for it.

But there's a lot of people these days who want the new house, two new cars in the driveway, big TV, eat out a lot, etc etc. Those people will have to learn to cut back on their spending, they might not lose their home but will have to cut back on the other items. This desire to keep our homes will keep prices up I think, you have to live somewhere and it may as well be where you are now.

[DiscoDan]

I believe they have to come down, even now looking in the local paper there are houses discounted $24k

If enough people say the market is depressed, then the sellers drop their price and the buyers say lower and then the market prices drop.

Mind you I still don't think my house is worth what they say about 100k over priced IMHO, saying that my sister in law is renting on the coast and paying $400 per week nice house but way over my mortgage.

A mate was looking and told not to wade in for at least 3-6 months.

Danny

[DiscoStew]

The survey question was for a prediction for two years away. They will probably drop a bit but I think in that time frame they will be about where they are now.

As one commentator said last night, in the face of a channel 7 journo who was doing his best to make it sound like the world is collapsing, if you are successfully paying your mortgage now, and you keep your job, then there is no reason for you to lose your house given that interest rates are going down.

The US situation is very different as bank's might go bust and creditors may force loans to be paid back, forcing sales where the sales price is less than the mortgage: a lose-lose situation. (I am no financial expert so I am not sure if taht is right). There is no prediction that sees this happening here. It appears the only Aussie bank with exposure is the Macquarie which is so ironic given they are so famous for paying their executives top dollar. I wonder how many will offer to give back some of those million dollar bonuses:mad:

The proposed US buyout does not seem like a bail-out to me as they are not giving money away through subsidies. Rather they want the government to buy the under-valued assets to put cash in the system. The assumption is the assets will eventually return to a sensible value where the government can sell them and recoup the outlay (that is according to George W anyway). To me that is no different to a gov't buying some of it's own currency when their dollar drops so that confidence is boosted again. I would be against any donations/subsidies in a free market. If you take the risk then you need to wear the cost, even as a home owner on the so-called "Main Street".

[BigJon]

My response to the poll was that prices would rise, but that is my answer for the market that I have invested in. What happens in other parts of the country, particularly big cities may be different to that. The house prices where I own property are more likely to be tied to local market conditions than overseas or even Australian economic changes.

[Captain_Rightfoot]

I've just been watching an old economist talking on ABC lateline (Keating). Fascinating. Basically banks are no longer willing to loan each other money because they don't trust each other to be solvent. Money moving around the economy is how it all happens. Fascinating stuff.

I was watching this with the wife and I said this is **really** big. Just then I leafed through the mail and saw a leaflet from a local builder "no job too small" and handed it over. Sometimes we don't see the forest for the trees.

I must be loosing it as the last time I felt like this was 911, and it was because I thought the world was changing in front of my eyes. That's the same way I feel tonight. :o :eek:

Of course this will go far beyond just house prices. :eek: I wish all my AULRO friends well :o

[Reads90]

Prices will go down in some parts more than others but they will go back up . Time to stay cool and sit and wait it out.

Belive me Aus is far better off than others. I am glad i am here

In the uk (where my brother still lives ) the house prices went down by 11% last month alone. Banks are being very difficult to lend money . To get a mortage you have to have a min of 25% and not be late with any payment on your account for 5 years and not have an overdraft for 5 years. Also if you miss one payment on a credit card then they want the full amount owed back the next month.
Builders have just stop building houses as no one is buying them at all . So everywhere there is half built houses and loads of tradies on the dole with no work for them . As nothing is being built and no one doing any work on there house as they can't afford it
Ridiclous amount of Real estate companies going bust every day
MFI one of the biggest companis iin the Uk has gone bust along with many other retail outlets
The Uk is a real sh*t state and this is manly due to the uk banks playing around far too much in the US ecomoy

So all can say is Aus will be alright but the worse everyone can do is panic

Ali

[Xavie]

I think generally Australians are good at paying off their homes. Australians will sacrifice a lot before the bank takes the roof above their head. There are still plenty of jobs around to make ends meet. If you have two people earning $18 an hour that's still $1100 in the hand a week, put $500 on the mortgage and you have $600 a week to live off. You could have a modest car, eat well and even bring up a kid or two if you planned for it.

But there's a lot of people these days who want the new house, two new cars in the driveway, big TV, eat out a lot, etc etc. Those people will have to learn to cut back on their spending, they might not lose their home but will have to cut back on the other items. This desire to keep our homes will keep prices up I think, you have to live somewhere and it may as well be where you are now.


500 bucks per week doesn't get you much of a mortgage. Especially if you take in to account that you should be leaving a minimum of 100 bucks left over in case interest rates surge. or maybe 500 doesn't go far in sydney haha.

It is interesting to read things like this because in my family it was said that you need to be on over 80 grand per annum to be comfortable and that was over a decade ago:eek:.... Not by any means saying it is right but I wouldn't mind being on 80 big ones.:cool: And your saying that 55,000 is suffice for a couple. I don't think it would be very comfortable on 55 grand.

[Reads90]

500 bucks per week doesn't get you much of a mortgage. Especially if you take in to account that you should be leaving a minimum of 100 bucks left over in case interest rates surge. or maybe 500 doesn't go far in sydney haha.

It is interesting to read things like this because in my family it was said that you need to be on over 80 grand per annum to be comfortable and that was over a decade ago:eek:.... Not by any means saying it is right but I wouldn't mind being on 80 big ones.:cool: And your saying that 55,000 is suffice for a couple. I don't think it would be very comfortable on 55 grand.

mmm my mortage is 500 a week and fixed for the next 18 months and has been for the last 18 months :):)
But as you say 55 grand a year for a couple is making things very tight even in brisbane
But half the problem with mortages is people borrow the max they can and forget that interest rates go up. Then when they do they blame everyone aoart from them selves.

I was watching ACA the other night and they were moaning about banks and credit and i was think when did people stop take responable for what they did themselves. After all if you get a credit card and run up 10 grand on it you have to pay it back tough sh*t thats life , you spent it you pay it back. Its not the banks fault you went out every night and have a massive Plasma, and now can't pay it back . Same with a mortage in my mind. If you over spend on a house and the rates have gone up and you afford to pay it. It is your fault not the banks not the goverment . It comes under growing up and taking responablity for what you do and not blaming it on everyone else. After Banks are in it to make money and not a charity and the best thing you can do is remeber that when dealing with the bastards. As Spike Milligan once said . "Banks are the people who give you an Umberlla when it is sunny and take it back again when it starts to rain" and he was so right

[Captain_Rightfoot]

All it will take is for banks to say "no mortgage without a 20% deposit" and it will be on. The current median house in Brisvegas is 455k. That means a 20% deposit is 90k or thereabouts. I'm pretty sure that would slow lots of people up. We bought this house 10 years ago and our entire mortgage was 130k. :o

Steve Keen is an economist and on lateline last night he said the bottom will go first, and then the top. Last of all the midrange stuff.

Interesting.... (http://www.abc.net.au/rn/counterpoint/stories/2008/2369074.htm) Click show transcript to see the text.

It does interest me that so far the poll indicates that more people think the property market will hold or go up rather than go down. 27 up or same, 17 down.

[ariddell]

I don't think prices are really going to be effected too much, especially in the big cities.

Yes the credit market is going to make it more difficult for people to get finance and will cut a lot of the low/no doc options out of the market but the population influx into Melbourne/Sydney especially is going to keep demand pretty high to balance it off I think.

With predictions of Melbourne alone doubling in size over the next 10 years i don't see the situation getting anywhere near as bad as in the UK with its currently shrinking population.

We bought just over a month ago and have settlement on our new place going through tomorrow. I think certainly in the short term we probably bought at around about the right moment - just before interest rates were dropped but before the drop was announced as a pretty much certainty. A whole load of the properties that were sitting on the market and had been for quite some time when we bought ours have now also now gone, and new listings seem to be back at higher prices than we paid/exceeding their price ranges for auction sales again as opposed going for under the asking price like we paid for ours.

If another drop comes along this time around it should help things stay stable too, which is looking likely considering the currency exchange markets seem to be pricing in interest rates here beging down around the 5.5% mark this time next year - hence the dropping AU$ value.

It all then gets even more complex as a weaker $ is good for exports, so that too will keep the economy moving a long a bit better too...

Waaaaaaaaaaay too complex to fully predict methinks. :)

[mns488]

---edit---
I was watching ACA the other night and they were moaning about banks and credit and i was think when did people stop take responable for what they did themselves. After all if you get a credit card and run up 10 grand on it you have to pay it back tough sh*t thats life , you spent it you pay it back. Its not the banks fault you went out every night and have a massive Plasma, and now can't pay it back . Same with a mortage in my mind. If you over spend on a house and the rates have gone up and you afford to pay it. It is your fault not the banks not the goverment . It comes under growing up and taking responablity for what you do and not blaming it on everyone else. After Banks are in it to make money and not a charity and the best thing you can do is remeber that when dealing with the bastards. As Spike Milligan once said . "Banks are the people who give you an Umberlla when it is sunny and take it back again when it starts to rain" and he was so right

I agree with you, but going further the same could be said for the US banks in trouble in that they should NOT be bailed out by the US govt because they made their own mess and should deal with the consequences!

On the housing front, I heard this economist the other day spruiking the consequences of this 'credit crunch' will be that all credit is harder to get. He suggested a return to the old days and needing 25% deposits!

That alone would slow the housing demand (if it happens).

[adm333]

I didn't vote because I think the question is too general. Sorry.

By that, I mean I would have to vote all 3, dependent on location, property type etc etc.

I think its all based on supply and demand. There will always be a high demand for property within a certain radius of capital cities and business hubs. Supply does not increase a lot and therefore those properties will probably hold value or increase.

Further out estates where there are larger volumes of land releases and more new construction = supply more in line with demand, will probably suffer decreases. Unfortunately its these areas where people have generally stretched themselves to get a foot in the property door.

I have probably over generalised as well, just some thoughts.

Dave

[Davo]

It used to be, (I'm getting old enough to say that now!), that your first house would be something really modest and you could stay there forever, or extend it, or move on. Now people have got these weird ideas about buying a mansion and builders, not being stupid, can see that this is where the money is, not in building modest little affordable homes.

Every time I visit Perth I can't believe what people are buying, and building, and getting into horrendous debt for. My brother-in-law reckons they'll only service their mortgage, not pay it off. What? So they can live in a fancy-pants suburb?

If that many people are pushing their finances that much, it can't go on forever. Whether or not this is just a blip or a sign of things to come, it simply isn't financially natural for such a high percentage of wages to go only on a mortgage. How that changes is the big question. I think homes have to become more affordable in the long term. Unfortunately, there aren't that many affordable homes being built.

[stevo68]

What I know. As some of you know I am a finance broker, running my own business...mainly in the commercial equipment area. The last 10mths have been the worst I can remember, I'd be down close to 50% on income, which makes life bloody hard...especially with 5 kids. Many of the lenders I deal with have written down their budgets by up to 40%. When businesses aren't buying/ financing, it is a pretty good indicator of how things are. Having said that, over the last 8 wks, equipment rates have come down by almost 2% with some lenders for the first time all year. Some of the Lo Doc lenders I dealt with have gone out of the market and some 2nd tier lenders will not do equipment funding due to their exposure to the property development market.

Problem is that the average joe would be unaware of that. If the RBA drops interest rates by 0.5% and the banks pass it on, I feel that will start to get things going across the board as that tends to be the key indicator.

Despite that, and I have seen it once before, is that lenders are getting very tight on their lending criteria. Deals that would have once sailed through are getting declined or conversely they want so much information its not funny. Then what will happen they will start to chase business and the criteria will relax again.

As for property prices, I also didnt vote as it is too general. What I do know is that despite being a buyers market, not a lot of people are buying. I think that if investors pull out of the share market and we get another interest rate cut, I feel that could actually start to push up prices again. At the moment, prices have definately come down...hence a buyers market, but if those 2 factors happen, they could go up again as demand increases,

Regards

Stevo

[PAT303]

My family and I are morgage free for the first time in 15 years and I won't be rushing back into the market anytime soon.Being able to buy what I want anytime I want is great after all those years and the market in my opinion is overprice and the cycle is near where in the past it has gone bust-.I would hold off,prices can't go anywhere but down. Pat

[Olive Drab]

I'm trying to get a mortgage, no-one wants to know at the moment. this may change now the American situation seems to be sorted. the advice from a financial advisor friend is get in if you can but don't expect much help from the banks for the next couple of months. I earn enough to pay a mortgage but no bugger will give me one. I hope the prices come down or at least stay where they are.

[gdcd74]

BUY BUY BUY. Guys , there are four rules to property
1. Location
2. Location
3. Location and becausei am in the game of property development

4444444. TIMING

Buy in the slump and sell in the boom. oldest trick in the book.
Statistically property has doubled in value over the last 100 years of recorded sales EVERY 7 YEARS!!!!! think about your area 7 years ago. Sorry people but its black and white.
There are bargains out there now to be had. By the sounds of it, most of you need some one on one property advice -happy to help where i can but ideally even if you remortgage your house now to buy an investment, prepay 2-5 years worth of interest shortfall(dont forget the rent that will come in and help) , then sell it.
I am no share guru but the pro's work on the same principal - buy in the gloom and sell in the boom. The real winners in today's economy are the simple people who arent stretched financially and plan for a healthy profit in 2-7 years.
Have you ever seen those people who go from bankrupt to a 5 million dollar property portfolio in 2 years- well together with an upturn in property prices they look for bargains, when they gain a little value they remortgage and buy another, and another and another.
havent we all seen property prices go up over the years AND having we all said at some point in time............if only i bought that ten years ago blah blah blah. Well i say do it.
Happy to help any fellow land rover owners if you like.
Cheers

[mark2]

I think that the story on Counterpoint explains it well why property prices can't continue to keep pulling away from average income levels. Once the multiplier of prices to average income levels hits an unsustainable level, prices have to fall as has happened elsewhere around the world. Prices which are 11 times average income levels are not sustainable.

Bubbles always burst eventually.

Property can be (and usually is) a good investment but this market is due for a correction to get things a bit closer to reality. The people who've followed the advice of the "get rich quick" gurus and then heavily leveraged by buying more and more properties as soon as they get a tiny bit of equity are most at risk in a correction like the one which is coming.

Buy at the bottom of the market, but its not there yet........

[Slunnie]

There has been a lot of talk about how this all affects the property market in terms of those that are buying or selling. Though how would all of this affect somebody who is about to build?

[mark2]

There has been a lot of talk about how this all affects the property market in terms of those that are buying or selling. Though how would all of this affect somebody who is about to build?

Do you already own the land or are you yet to buy? It will probably be easier to get tradesmen to show up on site as the domestic construction industry slows. The massive price increases in building materials of late may ease up as demand decreases. As long as you dont plan on selling too soon and you can comfortably meet the repayments with some in reserve you should be fine.

If prices fall as far as some are predicting, many will find themselves in the undesireable but hopefully temporary, position of owing more than their property is worth. The worst thing to do would then be to decide its all too hard and give up the property.

[Slunnie]

Do you already own the land or are you yet to buy? It will probably be easier to get tradesmen to show up on site as the domestic construction industry slows. The massive price increases in building materials of late may ease up as demand decreases. As long as you dont plan on selling too soon and you can comfortably meet the repayments with some in reserve you should be fine.

If prices fall as far as some are predicting, many will find themselves in the undesireable but hopefully temporary, position of owing more than their property is worth. The worst thing to do would then be to decide its all too hard and give up the property.
I've had the land for a while now, but still owe on it. I also dont plan to sell over the next couple of years. I'm right at the point now where I need to either make it all happen or postpone it. I'm trying to read between the lines what the situation would be, though at this stage the credit union is good but conservative, and the building services are keen and surprisingy efficient and the building suppliers are sitting on their hands. I'm just uncertain if that is telling me to cash in while they're slow or that people are nto building for a good reason.

[dobbo]

I've had the land for a while now, but still owe on it. I also dont plan to sell over the next couple of years. I'm right at the point now where I need to either make it all happen or postpone it. I'm trying to read between the lines what the situation would be, though at this stage the credit union is good but conservative, and the building services are keen and surprisingy efficient and the building suppliers are sitting on their hands. I'm just uncertain if that is telling me to cash in while they're slow or that people are nto building for a good reason.

As I told you when you bought it, get a caravan and live in it for 12 months like a dirty Pykie whilst you built the chateau la slunnie

[Captain_Rightfoot]

I've had the land for a while now, but still owe on it. I also dont plan to sell over the next couple of years. I'm right at the point now where I need to either make it all happen or postpone it. I'm trying to read between the lines what the situation would be, though at this stage the credit union is good but conservative, and the building services are keen and surprisingy efficient and the building suppliers are sitting on their hands. I'm just uncertain if that is telling me to cash in while they're slow or that people are nto building for a good reason.

just wait! If things keep going like they are going then existing buildings will be far more competitive against building. That could well mean that construction costs go down to maintain competiveness.

Either way I can't see us bounding out of this quickly so why not wait and see how things go?

[JohnF]

You should try to get the video "the money masters" to show you quotes from international bankers to show that every crash in the past has been planned so they make lots of filthy Lucre at your expense.

[Captain_Rightfoot]

Couple of articles from today.

The first is a bit trashy but suggests that some Gold Coast property is already 20% down. (http://www.goldcoast.com.au/article/2008/10/03/17025_gold-coast-top-story.html)


And...

Suncorp is also dealing with emerging bad debt problems through its exposure to the Queensland property sector. (http://www.news.com.au/business/story/0,27753,24437472-462,00.html)

[Slunnie]

Ad perhaps rates wont continue their downward trend.

Banks say rates could rise on some services | NEWS.com.au (http://www.news.com.au/business/money/story/0,25479,24434215-5016110,00.html)

[Captain_Rightfoot]

Latest news after the bailout...

Prepare for a global credit crunch (http://www.businessspectator.com.au/bs.nsf/Article/gottie-K3SNZ?OpenDocument)


Now we can worry - not panic (http://www.businessspectator.com.au/bs.nsf/Article/Phew-Now-we-can-worry-not-panic-K3RS7?OpenDocument)

EDIT: I might toddle along to this auction (http://www.realestate.com.au/cgi-bin/rsearch?a=o&id=105184330&f=0&p=10&t=auc&ty=a-res&fmt=&header=&cc=&c=3687229&s=qld&tm=1223071114) for a look. Mostly because it's nearly the only auction on the north side of Brisbane!

Anyone want to take a bet on the outcome?

I'm saying IF there are buyers and IF there is no reserve it won't make 400. Otherwise it will be passed in/not called.

[stone]

the nexdoor nabour payed $2500000 for 100ac with 2 houses 3 years ago now he wants $6500000 what a ripp offffff city slickers (pitt st farmers what else wold you expect ) now my rates go up thanks a lot how am i to compete with doctors and vets and sutch what a life for a farmer

[Captain_Rightfoot]

I honestly think all this finance storm will be enough to push things over the edge into a property market crash (20-40% drop). Some of the articles on Business Spectator (http://www.businessspectator.com.au/bs.nsf/Article/Eastern-promises-K6858?OpenDocument) have been very interesting in the last couple of days. I'd suggest a read there if you've been under a rock.

Unfortunately the stock market is being hit with about five blows simultaneously – concerns about the China story; the US recession; the NSW downturn; the looming fall in property prices and of course the extremely high levels of consumer debt.

Are there any who voted stay the same or go up that wish to comment again on why you think they will continue to rise?

[Captain_Rightfoot]

and the outcome was?...........

$436.. I was wrong! But not by a huge amount. There were lots of people (phrases Mortgagee auction brings people out apparently). The house was better than I thought. Quite solid, and in a nice street.

Clearly they were in the process of renovating it and the bank stepped in before they could finish it. Several of the rooms had even had primer on the walls in anticipation of a final coat. The only drama was it was a three bedroom, and they had merged the master and a smaller bedroom with the intent of making a large robe or ensuite I think. To convert it back to a 3 bedroom would probably only take a weekend or two.

Given that it is only about 8k from the CBD I still think that's a bit of a steal. I would have expected that to go for 500 in the peak if their mods had been finished.

Auctions were quiet across the city last weekend. Read about it here. (http://blogs.news.com.au/couriermail/publicproperty/index.php/couriermail/comments/latest_auction_results6/)

[adm333]

I honestly think all this finance storm will be enough to push things over the edge into a property market crash (20-40% drop). Some of the articles on Business Spectator (http://www.businessspectator.com.au/bs.nsf/Article/Eastern-promises-K6858?OpenDocument) have been very interesting in the last couple of days. I'd suggest a read there if you've been under a rock.

Unfortunately the stock market is being hit with about five blows simultaneously – concerns about the China story; the US recession; the NSW downturn; the looming fall in property prices and of course the extremely high levels of consumer debt.

Are there any who voted stay the same or go up that wish to comment again on why you think they will continue to rise?

I will.

I don't quite understand all of the doom and gloom. Unless you are talking very short term, I still believe that prices will rise in the long term.

They have done for the last 100 years.

Sure if you bought a place a year ago, its valuation may be less now, but in 3 years time I very much doubt it will be the same or less.

It has been said plenty of times on here, that if you have the resources, and the patience to hold for the longer term, now, or the next few months would be an excellent time to buy well researched real estate.

[adm333]

$436.. I was wrong! But not by a huge amount. There were lots of people (phrases Mortgagee auction brings people out apparently). The house was better than I thought. Quite solid, and in a nice street.

Clearly they were in the process of renovating it and the bank stepped in before they could finish it. Several of the rooms had even had primer on the walls in anticipation of a final coat. The only drama was it was a three bedroom, and they had merged the master and a smaller bedroom with the intent of making a large robe or ensuite I think. To convert it back to a 3 bedroom would probably only take a weekend or two.

Given that it is only about 8k from the CBD I still think that's a bit of a steal. I would have expected that to go for 500 in the peak if their mods had been finished.

Auctions were quiet across the city last weekend. Read about it here. (http://blogs.news.com.au/couriermail/publicproperty/index.php/couriermail/comments/latest_auction_results6/)


Your prediction was that it would probably not sell at all, let alone for over 400K ....... it did.

I'm willing to bet that in 2, 3 or 4 years time it will be worth that much or (significantly) more.

Which is why I am sticking to my "maintain or increase" viewpoint.

:cool:

[mns488]

Drop in interest rate today might make things interesting.

1% big drop, wonder how much the banks will pass on???

My guess is 0.5%

Dirty dirty banks:twisted:

[Captain_Rightfoot]

Dave, I do 100% agree with you that prices will go up. As you've said they always will. I was mostly interested in the next couple of years as we are looking to buy.

However it became clear to me that prices were very over valued. They had long ago stripped affordability. It seemed that the only way to enter the market was to already be in it.

"Investors" were flooding the market because the banks were happy to give them the money, and every year prices were going up 20-30%. Clearly this is unprecedented and not sustainable. People were buying "investments" that went nowhere near to paying for themselves. The only reason it was viable was for capital gain. That doesn't sound like investing to me. It sounds like property speculation.

Anyway, I've been watching all this global financial stuff and find it very interesting in how that will affect local stuff, and particularly the local housing market. If you want evidence of how the RBA is worried look at the 1% interest rate cut. Fascinating stuff.