Joebloggs Posted June 3, 2011 Share Posted June 3, 2011 was listening to this on the radio the other night about the downturn in property, there is many different property markets especially around Sydney. I am no expert but the guy on the radio explained it in lay-mans terms which from I understand go like this (for simplicity I wil use A,B,C,D,E to denote the different markets discussed) A- High end markets $2m+ B- Average to High $850K-$2m (houses) C- Average $500K-$800K (houses) D- First Homeowner (units/townhouses/cheaper west sub houses) $300K- $500K E- Rural holiday home towns (North coast/South coast) Biggest risk at the moment is the E market ...ie the sleepy little towns that many city folk have second holidays homes, too many people trying to sell these properties because they feel the pinch and are trying to protect their main assets in the city. A & B are taking a hammering probably because the used to feed off each other and a bit from C market, C market is sitting tight because they are not confident in moving out of the market into the A or B market (good reason I think). There is also plenty of interest from those from the D market looking for a more family home rather than a first home owner home or those who live inner city unit moving to a similarly priced larger property in the outer suburbs. D market seems pretty safe market as there is still a demand for people wanting to own their own home even if its is only a small place start with, there is not as much risk involved and it feeds straight from the rental market. A few more interesting facts mentioned. 25% of Australians will never be able to afford their own home. (that would include immigrants I guess) Only 30% of Australians have mortgages, the rest own home outright or rent. Why would people they sell their property at a loss? Reasons 1. Divorce 2. Unemployment 3. Interest rates 4. Illness 5. Legal costs ( I assume the presenter means if person was sued they need to sell their house fast). Link to comment Share on other sites More sharing options...
fleabo Posted June 3, 2011 Share Posted June 3, 2011 That about sums it up. Thank you! Link to comment Share on other sites More sharing options...
Av8r Posted June 4, 2011 Share Posted June 4, 2011 The last house price boom ended in 1989 in the UK, and the trough was 1996. That was seven years of falls. Actually the 90's UK crash in nominal terms was much shorter and smaller than most people believe. Th initial falls lasted from 89 to 93, and prices dropped around 15%. They then stagnated for several years, before recovering. After a bubble, prices have a tendency of becoming very, very cheap. If you're willing to hang out until 2015 to 2020 then you could pick up a once-in-a-lifetime bargain. Also a bit of a myth, unless the bubble is accompanied by overbuilding on a massive scale. As can be seen by the different performances in various housing markets around the world today. The USA, the Republic of Ireland, and the UK have all had significant financial interventions like QE, low base rates, liquidity support, help for homeowners, bailouts, etc etc etc. Yet the prices of houses in Ireland are down 45% and still falling, in the USA down 35% and still falling, but in the UK now down just 11% from peak on average (Land Registry) and currently rising. Unsurprisingly, the empty house rates explain why such a difference exists: Empty houses: ROI - 17% and rising USA - 13% and rising UK - 3% and falling anyone who doesn't own property is going to benefit massively from price falls, as would those who want to upgrade. Perhaps. It just didn't work out that way in the UK though. Low interest rates and soaring rents have now levelled the playing field to the point there is no financial benefit, on average, to having delayed purchase and rented since. And the upgrading turned out to be a myth as well, because the FHB properties took a much bigger percentage fall in price than the 2nd homes, the gap actually widened instead of narrowing. For most people. any period of falling prices is going to be painful. It'll be another burden on the economy, so you'd be looking at recession, slow growth and unemployment. Look at the UK in the early nineties, or the US and UK now. Falling house prices led the economy into recession in both the UK and USA this time around. And it was rough. Human tragedy on an epic scale, and not the sort of thing you'd wish on your worst enemy. A million 18-24s unemployed, repossessions, bankruptcies, business failures, etc. Even some of the most ardent crash cheerleaders in the UK have now realised the error of their ways.... Nobody benefits from a crash. Most especially not the young renters or those in FHB homes looking to trade up. They end up as the lost generation, financially hurt for a decade or more. Anyone naive enough to think falling property prices are a good thing, or to be encouraged, quite frankly needs their head examined. Link to comment Share on other sites More sharing options...
Zack Posted June 4, 2011 Share Posted June 4, 2011 The government in Australia for the last couple of years have been kicking the ball up the pitch as far as recession is concerned. They have used hundreds of billions of dollars in stimulus money and recession is now starting.What will they do now to avoid recession ?The ammount of personal debt in Australia will start to catch up with people now. Of course this is only my personal opinion and I am by no means an expert in economics. Now that it has come out that Australia has a bigger houseing debt than Ireland,and that thousands are sitting on negative equity,Where i live in Queensland builders are selling brand new houses on 2 acres that have been on the market for 2 years,at $100,000 les than the original price,and still nobody is buying them.Anyone that has bought in the last 8 years are in trouble.The cost of liveing is still sky rocketing,and mortages are still set to rise,and Australian companies are moveing offshore.If Australian mineing resorces slows down to China,like we have seen with the floods this quarter.Australia would go in deep recession.As everyone is saying Australia relies too much, on one country to keep it going.Two of our friends have taken a big hit in what they got on their houses,selling up to go home to the UK,both say they are so much better off finacialy, cost of liveing ect much cheaper,both bought nice houses for cash, thanks to the High Aussie $.I think they have got out at just the right time. Link to comment Share on other sites More sharing options...
newjez Posted June 4, 2011 Share Posted June 4, 2011 I've always held these two sayings to be true. "Rising house prices just means that your children will never be able to afford to live where you do" "Falling house prices mean that it's easier to move up and buy a bigger house" I've never understood why people see falling house prices as a bad thing. Unless you own more than one house - it's either fairly neutral or a bonus. Link to comment Share on other sites More sharing options...
Guest chris955 Posted June 4, 2011 Share Posted June 4, 2011 Falling house prices are bad if you bought at the height and then try to sell when they start to drop, it's not hard to lose 10's of 1000's. Link to comment Share on other sites More sharing options...
newjez Posted June 4, 2011 Share Posted June 4, 2011 Falling house prices are bad if you bought at the height and then try to sell when they start to drop, it's not hard to lose 10's of 1000's. Why would you buy a house and then try and sell it straight away? Or even within a year or two? Houses are a long term investment. If you couldn't afford it - you shouldn't have bought it. Link to comment Share on other sites More sharing options...
Guest guest30038 Posted June 4, 2011 Share Posted June 4, 2011 good for you mate.so what have you got - 4 or 6 hundred thousand. what about people who go to try and carve a life for themselves with nowhere near this ammount. easy to boast over the net isn't it. He's been doing it for yonks :rolleyes: Link to comment Share on other sites More sharing options...
Joebloggs Posted June 4, 2011 Share Posted June 4, 2011 Falling house prices are bad if you bought at the height and then try to sell when they start to drop, it's not hard to lose 10's of 1000's. You would be safer not selling unless you really had to. Link to comment Share on other sites More sharing options...
Guest Gibbo Posted June 4, 2011 Share Posted June 4, 2011 Anyone naive enough to think falling property prices are a good thing, or to be encouraged, quite frankly needs their head examined. spot on Link to comment Share on other sites More sharing options...
Guest chris955 Posted June 4, 2011 Share Posted June 4, 2011 I didnt make mention of any time scale in my post. Why would you buy a house and then try and sell it straight away? Or even within a year or two? Houses are a long term investment. If you couldn't afford it - you shouldn't have bought it. Link to comment Share on other sites More sharing options...
tracy123 Posted June 4, 2011 Share Posted June 4, 2011 People can only afford to pay what they can pay. Some people will never be able to buy and that's life. I think though when "professionals" can't afford to get on the property ladder that's when property prices will fall, same thing happened in the UK just before the fall. I remember (I think about 6 yrs ago) it was national news that teachers, nurses, police etc couldn't afford to get on the property ladder. There are only so many people that have a house to sell that can afford to step up, at some point the lower end market will get out of reach for the normal person and when that happens things will come down! Link to comment Share on other sites More sharing options...
newjez Posted June 4, 2011 Share Posted June 4, 2011 Anyone naive enough to think falling property prices are a good thing, or to be encouraged, quite frankly needs their head examined. spot on Do you think the same way about petrol prices? Do you think the same way about car prices? Do you think the same way about - well just about everything really? Why are houses different? You think that way about houses - because someone has conned you into thinking that somehow houses are an investment, and that houses 'make' money. They don't. Not all countries treat houses the same way. If you treat houses as a speculative investment, then you can hardly complain when the price goes down. There is a warning when people buy and sell shares, that the price may go up or down. There should be the same warning on houses. If fact - I dare say that if people bothered to read the small print on their mortgages - they would find such warnings. Link to comment Share on other sites More sharing options...
fish.01 Posted June 4, 2011 Share Posted June 4, 2011 Average mortgage in Australia same as UK. Australian economy stronger, unemployment lower, outlook over next 2 decades brighter at the moment. Link to comment Share on other sites More sharing options...
Guest Anya Posted June 4, 2011 Share Posted June 4, 2011 Falling house prices led the economy into recession in both the UK and USA this time around. And it was rough. Human tragedy on an epic scale, and not the sort of thing you'd wish on your worst enemy. A million 18-24s unemployed, repossessions, bankruptcies, business failures, etc. Falling houses led the economy into recession - so nothing at all to do with with greedy and unscrupulous banks, ignorant central banks and law-makers, irresponsible borrowers (hundreds of other reasons...) who got everyone into this mess? Anyone naive enough to think falling property prices are a good thing, or to be encouraged, quite frankly needs their head examined. Why do you say that? I say bring on the falling house prices and bring it fast. Link to comment Share on other sites More sharing options...
fish.01 Posted June 4, 2011 Share Posted June 4, 2011 Australian Bureau of Statistics: Annual Changes (March Quarter 2010 to March Quarter 2011) Preliminary estimates show that the price index for established houses for the weighted average of the eight capital cities decreased 0.2% in the year to March quarter 2011. Annually, house prices increased in Melbourne (+1.1%), Canberra (+1.1%), Adelaide (+0.9%), Sydney (+0.8%), Hobart (+0.6%), and Darwin (+0.5%), and decreased in Brisbane (-3.6%) and Perth (-3.2%). Of course Brisbane had the huge flood so not surprising. Link to comment Share on other sites More sharing options...
Guest guest30038 Posted June 4, 2011 Share Posted June 4, 2011 Average mortgage in Australia same as UK. Australian economy stronger, unemployment lower, outlook over next 2 decades brighter at the moment. Agreed. Folk have been talking about the bubble bursting for at least 5 yrs that I can remember and at least 2 yrs on PIO. Link to comment Share on other sites More sharing options...
l1sa Posted June 4, 2011 Share Posted June 4, 2011 Australian Bureau of Statistics: Annual Changes (March Quarter 2010 to March Quarter 2011) Preliminary estimates show that the price index for established houses for the weighted average of the eight capital cities decreased 0.2% in the year to March quarter 2011. Annually, house prices increased in Melbourne (+1.1%), Canberra (+1.1%), Adelaide (+0.9%), Sydney (+0.8%), Hobart (+0.6%), and Darwin (+0.5%), and decreased in Brisbane (-3.6%) and Perth (-3.2%). One must always be careful of Government statistics, it depends what image that particular government is trying to portray. Just look at the UK Met office last year, actually turned round at the end of the year and said that last year was one of the hotest on record!!! WHAT??!!! Well anyone who was in the UK last year will know that the weather was utterly cr8p last year!! Just more incorrect data for the global warming conspirators to grab hold of and keep their jobs!!! Conspiracy theories RULE!!!!!!:jiggy: Link to comment Share on other sites More sharing options...
Guest marra2000 Posted June 4, 2011 Share Posted June 4, 2011 I hope it does fall and fall hard, crashes through the floor actually . Those who bought their house for a home then live in it and enjoy. Those who bought multiple homes for renting then I hope it destroys them all for life ! just like they destroyed the chances for many to get on the ladder as they funded a purchase by the value of their portfolio . After all the mess and repossessions that will come and a good fall then in years the next generation ( my children ) as yours can afford to own. I have fingers crossed that many of the multiple home owners will be financially destroyed and broke for life and I make no apologies in this. Link to comment Share on other sites More sharing options...
fish.01 Posted June 4, 2011 Share Posted June 4, 2011 According to Tim Lawless, RP Data’s research director, expensive suburbs have helped drag the overall market down. RP Data and Rismark divide their capital city index into three sub-indices: the bottom 20 per cent of suburbs ranked by price, the middle 60 per cent, and the top 20 per cent. Over the year to end April, dwellings in the most expensive capital city suburbs recorded a -5.4 per cent loss (see second chart). In contrast, home values in the middle 60 per cent of suburbs were down by only -0.9 per cent. Dwellings located in the cheapest 20 per cent of suburbs were the best performers, hardly moving (-0.5 per cent). RP Data’s Tim Lawless commented, “The solid performance of cheap suburbs runs against the grain of popular claims that default rates are rocketing up amongst first time buyers, which the RBA recently rejected.” Link to comment Share on other sites More sharing options...
fish.01 Posted June 4, 2011 Share Posted June 4, 2011 Graemsay said: ' The median (average) house in Sydney would need to halve in value just to get back to this level. To afford a typical property you need to be earning twice the median wage, or be in the top 10% of earners.' Or bring equity to the table which is what most trying to buy the median house should be doing given they are no longer after a starter house but rather a median house. Link to comment Share on other sites More sharing options...
fish.01 Posted June 4, 2011 Share Posted June 4, 2011 One must always be careful of Government statistics, it depends what image that particular government is trying to portray. Just look at the UK Met office last year, actually turned round at the end of the year and said that last year was one of the hotest on record!!! WHAT??!!! Well anyone who was in the UK last year will know that the weather was utterly cr8p last year!! Just more incorrect data for the global warming conspirators to grab hold of and keep their jobs!!! Conspiracy theories RULE!!!!!!:jiggy: Yes I agree....I much prefer to get my data and opinions off conspiracy websites as I find them so much more accurate :wink: Link to comment Share on other sites More sharing options...
Guest John Farley Posted June 4, 2011 Share Posted June 4, 2011 I hope it does fall and fall hard, crashes through the floor actually . Those who bought their house for a home then live in it and enjoy. Those who bought multiple homes for renting then I hope it destroys them all for life ! just like they destroyed the chances for many to get on the ladder as they funded a purchase by the value of their portfolio . After all the mess and repossessions that will come and a good fall then in years the next generation ( my children ) as yours can afford to own. I have fingers crossed that many of the multiple home owners will be financially destroyed and broke for life and I make no apologies in this.:mad: Link to comment Share on other sites More sharing options...
Guest The Ropey HOFF Posted June 4, 2011 Share Posted June 4, 2011 Average mortgage in Australia same as UK. Australian economy stronger, unemployment lower, outlook over next 2 decades brighter at the moment. Thats why its the second best country in the world to live in.:yes::wink: Link to comment Share on other sites More sharing options...
Guest Andy Posted June 4, 2011 Share Posted June 4, 2011 Why would you buy a house and then try and sell it straight away? Or even within a year or two? Houses are a long term investment. If you couldn't afford it - you shouldn't have bought it. I am sorry but i do not agree with that statement at all, there are plenty of professional people for instance, nurses, policemen, firemen whatever the list is endless who have bought a house and then fallen when they have been made redundant through no fault of there own, you could never predict that you may lose your job, the majority of people have a mortgage to buy a house and naturally if they lose there job they would not be able to afford the mortgage but you cannot go through life not buying things because you may lose your job as the world would grind to a halt. Link to comment Share on other sites More sharing options...
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