Joebloggs Posted March 31, 2011 Share Posted March 31, 2011 have to agree I reckon around my area in Sydney prices will probably be 5% lower over the next few years, on a house now worth $750K that would be $37.5K saving. In saying that if you Paid $750K in Jan 2007 you would be buying it for £300K but if it simply dropped 5% less tomorrow (great bargain at $712.5K) its going cost you £453.8K. (today the $750K house is worth £480.7K) Link to comment Share on other sites More sharing options...
Joebloggs Posted March 31, 2011 Share Posted March 31, 2011 To those that are saying house prices will drop do you think that when/if the bubble bursts people will be left with negative equity or will it just be a case of the property market slowing down considerably? Maybe if they bought in the last 6 months, but unless they have no option but to sell ( ie. Divorce or redundancy) it will probably recover. Link to comment Share on other sites More sharing options...
Guest jamax2020 Posted March 31, 2011 Share Posted March 31, 2011 Have you ever thought of an interest only mortgage mate? Hi guys just a quick not on I/O mortgages. I currently work for NAB as a mortgage advisor here in the Uk and beleieve me getting an I/O mortgage from this lot is extremely difficult we ask for everything (inside leg measurements, when you last went to toilet) seriously it is torture, this is not a simple request, you need to prove everything before the conversion will be approved. Changed days in Uk mortgage market and Nab has the same criteria throughout the world. If this is something you need help on Pm me and i will tell you how to get through the hoops that you have to jump through. Link to comment Share on other sites More sharing options...
newjez Posted March 31, 2011 Share Posted March 31, 2011 You have to remember that property prices in Australia look very high when looking from overseas because the exchange rate is so high. If the dollar dropped to it's 'normal' rate of 2.2 to the pound, property would seem much more reasonable. a $700 000 house at the moment would cost £450 000 but - say Aussie prices dropped 10% over two years in real terms, and the exchange rate returned to 2.2 a $630 000 house would cost £290 000, which is about a 35% reduction in price for anyone migrating, but would be barely noticable to anyone living within Australia. When the correct does happen, I think it will be more like my example, rather than having a $700 000 house crash to $450 000 and the exchange staying the same. House prices only crash when there is a force driving them to collapse. You need high unemployment, high interest rates or a big bad recession. That's why the UK hasn't crashed. The cream has come off the top. I expect the same to happen in Oz. Link to comment Share on other sites More sharing options...
newjez Posted March 31, 2011 Share Posted March 31, 2011 Just a quick point on I/O mortgages too - I have a friend who has one, and he makes lump sum payments whenever he has the cash. He treats it like a flexible mortgage - and he seems to be doing ok. The only problem with them is, they tend to be a sign that the market is turning, and you do have to pay them off one day. However, you could do that by downsizing I guess when you retire. Link to comment Share on other sites More sharing options...
Guest Bobby Posted March 31, 2011 Share Posted March 31, 2011 Demand is massive in OZ and where there is demand houses will fetch top dollar, the Goverment really needs to build affordable houses as it is impossible to get on the ladder with the average wage in Oz, I earned a good wage but could have never been able to afford to buy a half decent hous...cheap house in a bad area yes, but a good area was out of my reach. Link to comment Share on other sites More sharing options...
thombatt Posted March 31, 2011 Share Posted March 31, 2011 A couple of fundamentals need considering 1 As long as there is immigration to Australia and an increasing population there will be a demand for additional housing 2 Australians congregate in effectively 4 spots, so there will always be a contining deand for properties there. 3 Those spots are pretty densly populated at the moment, with continuing urban sprawl. To my mind the medium to long term is an increase in the price of housing. Sure there can be blips that need short term corrections, and Australia may be in one of those. Link to comment Share on other sites More sharing options...
legoman Posted March 31, 2011 Share Posted March 31, 2011 the west today, perth house prices fall..again, worse perforing behind flood hit brissy. should be good news for those moving wa, Link to comment Share on other sites More sharing options...
gpo1971 Posted March 31, 2011 Share Posted March 31, 2011 There will be a new stimulus package announced soon I reckon. Link to comment Share on other sites More sharing options...
legoman Posted March 31, 2011 Share Posted March 31, 2011 strange house prices dropping in uk and perth, hopefully what people lose in uk on property they claw back in wa for those wa bound, maybe even a rise in ftbg Link to comment Share on other sites More sharing options...
newjez Posted April 1, 2011 Share Posted April 1, 2011 Everyone is quick to point out that massive demand will keep prices up - but there is a level of people in the UK and Oz that are migrants and are mobile. If the jobs go, the people go. Plus - housing ha always been a pyramid scheme. When you run out of punters, you have to wait awhile for things to move. Land prices in Oz have always been a bit artificial. If the govt wanted housing to be affordable, they could release crown land and house prices would drop. But it wouldn't make them that popular with the people who already own. Prices in Oz tend to stagnate and then jump. I can't see any upside, but I think those in Oz looking for 50% reductions will die waiting. Those looking externally though may be pleasantly surprised though. Link to comment Share on other sites More sharing options...
Guest Bobby Posted April 1, 2011 Share Posted April 1, 2011 This makes intresting reading A tiny land tax lobby group has sparked a storm by suggesting first home buyers go on strike to force property prices lower. The homebuyer strikes back - ABC News (Australian Broadcasting Corporation) Link to comment Share on other sites More sharing options...
BrisDubBris Posted April 1, 2011 Share Posted April 1, 2011 Everyone is quick to point out that massive demand will keep prices up - but there is a level of people in the UK and Oz that are migrants and are mobile. If the jobs go, the people go. Plus - housing ha always been a pyramid scheme. When you run out of punters, you have to wait awhile for things to move. Land prices in Oz have always been a bit artificial. If the govt wanted housing to be affordable, they could release crown land and house prices would drop. But it wouldn't make them that popular with the people who already own. Prices in Oz tend to stagnate and then jump. I can't see any upside, but I think those in Oz looking for 50% reductions will die waiting. Those looking externally though may be pleasantly surprised though. Bulldozing crown land to build houses would not go down well will the voters even if it did help reduce prices. Link to comment Share on other sites More sharing options...
Addy Posted April 3, 2011 Share Posted April 3, 2011 I don't think that things look good for 2011; National Australia Bank finance chief Mark Joiner yesterday said the property market was fully valued and likely to languish. Read more: House investors to lose interest | News.com.au THE impact of last year's interest rate rises is still hitting the construction industry with building approvals dropping 7.4 per cent in February. Read more: Australian building approvals dive again | News.com.au Northern beaches property buyers are shunning auctions, with the clearance rate slumping to 36 per cent this month from 50 per cent in February. http://smh.domain.com.au/real-estate-news/hammer-time-for-powerhouse-inner-west-20110325-1ca0m.html Melbourne’s auction market appears to be struggling to digest the massive amount of stock on offer, with the clearance rate falling to 61 per cent yesterday. http://news.domain.com.au/domain/home-investor-centre/soaring-stock-nears-record-high-20110328-1cckv.html All these stories were published in the main stream press this week. As someone who went through the UK housing crash and finally managed to sell after 18months on the market, I have no desire to risk the equity I did manage to get out of that fiasco in a risky market. I consider this market very risky. :goofy: Link to comment Share on other sites More sharing options...
Addy Posted April 3, 2011 Share Posted April 3, 2011 This may interest some of you - the latest official figures Housing flat in February with only 0.8 per cent growth over last year In summary; Over the 12 months to end February, Australia's capital city home values have hardly moved, rising by only 0.8 per cent. The story is the same in the rest of state regions, where home values remain unchanged (-0.2 per cent) over the last year. The median dwelling price in the capital cities has eased down to $459,000 over the three months to end February from a peak of $473,000. Over the 12 months to February, Sydney (+3.3. per cent), Melbourne (+2.5 per cent), Canberra (+0.7 per cent) and Adelaide (+0.6 per cent) have ground out modest capital gains. In contrast, Brisbane (-5.3 per cent) and Perth (-4.1 per cent) have experienced more material corrections. Link to comment Share on other sites More sharing options...
fish.01 Posted April 3, 2011 Share Posted April 3, 2011 Also from addy's article: "Australian home values have therefore underperformed disposable household income growth by a striking 1.1 per cent per annum since 2003. In cumulative terms, Australian household incomes have risen by 11.0 percentage points more than Australian dwelling values over this period." "If one simply looks at 'average' dwelling prices, rather than RP Data-Rismark's more accurate hedonic indices, and compares them to the ABS's quarterly estimate of 'average' disposable household income from the National Accounts (adjusted on a per household basis), one finds that Australia's dwelling price-to-disposable income ratio was 4.5 times as at December 2010." "Importantly, this ratio has not increased since the end of the last housing cycle in 2003. And if we measured the change in the cost of Australian housing using RP Data-Rismark's regression-based hedonic indices, rather than via simple 'averages', the house price-to-income ratio would have actually declined materially during this time." Link to comment Share on other sites More sharing options...
robfromdublin Posted April 3, 2011 Share Posted April 3, 2011 I'd love to know what a simple 'average' is. I'm guessing they want to say 'mean' and not 'mode' or 'median'? Link to comment Share on other sites More sharing options...
stevemalbec Posted April 4, 2011 Share Posted April 4, 2011 I'd love to know what a simple 'average' is. I'm guessing they want to say 'mean' and not 'mode' or 'median'? Good question! There's a huge amount of data out there, and to go into it here would take up a lot of time I haven't got. Suggest you take a look at another forum devoted to the subject. I think the best is Australian Property Forum There is a great debate on there with views for and against the view that Australian property prices are due for a major correction. There are others, but they are mainly either for or against rather than a mix of views. Link to comment Share on other sites More sharing options...
robfromdublin Posted April 4, 2011 Share Posted April 4, 2011 Yeah I do browse that forum from time to time alright. Just landed in Oz so trying to get a handle on the market. Although the point I was making was that the author used a term that has no mathematical meaning. We're none the wiser from his writing what he means by 'simple average', and therefore can't agree or disagree with his point. For example, if he means 'mean' then how does he account for the small number of high house prices (eg 9 houses sell at $100k, one house sells at $2m. Therefore the mean house price is $290k. Is that representative, or would the median, $100k, be more indicative of the market?) (I know I'm being nerdy and pedantic, I can't help it!) Link to comment Share on other sites More sharing options...
Parley Posted April 4, 2011 Share Posted April 4, 2011 Usually the median price is what is used in australia when talking about housing prices. This is the middle price of all the houses sold in an area. Ie list all the selling prices from lowest to highest, and the median is the middle one. Link to comment Share on other sites More sharing options...
stevemalbec Posted April 4, 2011 Share Posted April 4, 2011 Yeah I do browse that forum from time to time alright. Just landed in Oz so trying to get a handle on the market. Although the point I was making was that the author used a term that has no mathematical meaning. We're none the wiser from his writing what he means by 'simple average', and therefore can't agree or disagree with his point. For example, if he means 'mean' then how does he account for the small number of high house prices (eg 9 houses sell at $100k, one house sells at $2m. Therefore the mean house price is $290k. Is that representative, or would the median, $100k, be more indicative of the market?) (I know I'm being nerdy and pedantic, I can't help it!) Don't worry, I'm a pedant myself. But the point I'm trying to make is that this is a very complex question (although personally I think the outlook is very simple - purchase prices are way too high!) and there are some very bright guys on that forum who have debated the subject to death. So far it has thousands of posts; some with very complex data and others with very forthright views that would probably offend a lot of people on this forum . No holding back punches there! If someone is seriously interested in whether there will be a correction in property prices, I don't think this is the place to look, that's why I pointed people elsewhere. Link to comment Share on other sites More sharing options...
stevemalbec Posted April 4, 2011 Share Posted April 4, 2011 Usually the median price is what is used in australia when talking about housing prices.This is the middle price of all the houses sold in an area. Ie list all the selling prices from lowest to highest, and the median is the middle one. Agreed. e.g. from 1001 selling prices listed from highest to lowest, the median would be the 500th. It removes any distortions from very high or very low prices. Link to comment Share on other sites More sharing options...
Graemsay Posted April 4, 2011 Share Posted April 4, 2011 The RP Data / Rismark figures about affordability are rather cooked... RP Data argue that a broader measure of household income is needed instead of simply relying on wages. They include all assets (savings, pensions / super, shares, and the family home) in their calculations. I know that they include imputed rent, which is what a tenant would pay for that property as one source of earnings. That's not something a homeowner actually gets to see. And my back of the envelope figures suggest that house price rises are another stream. So basically houses are affordable because they're so expensive and rising so quickly. :idea: Jeremy Grantham, who spotted the developing train wreck in the financial industry, and profited handsomely, reckons that Oz houses are in a bubble, and will spectacularly revert to their long run value. Though he does point out that the market has defied his expectations. Chris Joye (or RP Data) publicly challenged him to a wager on property prices, but I don't think he took it up. So, yes, I'd say that there are people with a good track record predicting a correction. He also says the same thing about the UK before British readers feel too smug. :wink: Link to comment Share on other sites More sharing options...
stevemalbec Posted April 22, 2011 Share Posted April 22, 2011 Good article in today's SMH about the property market. Recommend that you read the comments that follow. http://smh.domain.com.au/home-investor-centre/blogs/domain-investor-centre-blog/the-folly-of-first-home-grants-20110421-1dpvs.html Link to comment Share on other sites More sharing options...
Guest MaybeOz Posted April 23, 2011 Share Posted April 23, 2011 I dip in and out of realestate sites every few weeks, and have done for over 5 years :rolleyes: Lately I personally have noticed that house prices in Melbourne seem to be dropping, there appear to be a lot more nice properties cropping up matching our criteria of price, land, bedrooms, area etc rather than mainly do-er-uppers! Kari :wubclub: Link to comment Share on other sites More sharing options...
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