Melbourne Property Market

[saj_21]

1. This is the most hot button political topic in Australia. The government that lets house prices go down will be voted out en mass at the next election by enraged baby boomers who didn't get the 10% yearly return on their massive leveraged bet on a single asset class. Although the government cant change interest rates, they can intervene (FHB grant etc) and will continue to do this to prop up prices.

Spot on KRudd and his merry men couldn't give a rats tossbag if it takes people till their 40 to buy their first home. As long as people are buying properties and stamp duty flows in and boosts his coffers thats all that matters. Imagine the fall out if the hosuing market feel on its arse, 90% of ppl would be affected the economy would go to s**t!

The extension and doubling of the FHOG wasn't to give the aussie battler an even chance to buy thier property, in fact it probably ruled more ppl out of buying than if it had remained normal levels. What it did was over inflate the market and suprise suprise increase the governments stamp duty revenue. And for the record any establish property over 300k the goverment will make money on stamp duty.

It is amazing how many ppl are dazzled by Krudds reckless splash of cash that rewards him with record popularity amongst the plebs. What the majority of ppl in this country need is low interest rates not $900 for a new tv or an extra $7 k for a their first home. He has spent to much money to quickly and now were going to have a "recession" to rapid inflation in the same year, that shouldn't happen. The economy should of bee left to fend for itself (a little bit) and let it work itself out as a natural cycle of economy.

 

[Clay Davis]

I was previously a property doomer. I didn't think 10% growth year after year was sustainable. I have now capitulated and think Melbourne RE will keep ripping 6-10% in perpetuity (YES, I MEAN FOREVER AND EVER AND EVER. Please don't consider what that entails, I dont think about that any more).

For the following reasons:
1. This is the most hot button political topic in Australia. The government that lets house prices go down will be voted out en mass at the next election by enraged baby boomers who didn't get the 10% yearly return on their massive leveraged bet on a single asset class. Although the government cant change interest rates, they can intervene (FHB grant etc) and will continue to do this to prop up prices.

2. It just will, I give up. Houses are different to other asset classes. You cant get a 5.5% loan from the bank to leverage 15:1 into a single company's stocks, but you can do it with your house. You cant live in your stocks etc. Also, the government doesnt attempt to prop up the your stocks if they start falling.

It isn't sustainable. Highly reliant on continuing foreign debt growth. Look at how the government recently shovelled in another $8 billion into RMBS. Even when they're not directly supporting the housing market through buyer grants, they do it indirectly via finance schemes. And they will keep on doing it.

When it ends is another matter. Could be 10 years, could be 50 years. The question is whether you can wait that long. Keynes once said 'the market can stay irrational longer than you can stay solvent'.

 

[Clay Davis]

Thanks for the response figjam.

Noticed today the ANZ chief economist came out and said it's a simple supply and demand problem and that house prices were always going to continue to rise.

Ha. He said that in early-2008. That prices were set to boom from the levels they were at. Many of the markets he named actually fell in the year since.

 

[Jimmy_the_Gent]

I figure that the Government is keeping house prices high for a good reason.

I'm too much of an economic rookie to know what this reason is but there must be something to it.

Is it that they want baby boomers to have expensive houses so that they have more wealth when they retire?

 

[evo]

I figure that the Government is keeping house prices high for a good reason.

I'm too much of an economic rookie to know what this reason is but there must be something to it.

Is it that they want baby boomers to have expensive houses so that they have more wealth when they retire?

- The housing market underwrites the whole system. It is the only 'real' asset most people have to guarantee their debt.

- Australia is spending beyond what it saves so the differential has to be made up in borrowings

- the banks are forever nervous they may not be able to get their money back.

- Nervous banks make governments nervous.

-governments pump primes the housing market to keep it 'stable'

- people become confident again and borrow more money to buy property.

-the ponzi scheme roles on......

 

[Papa G]

I read somewhere that nearly 20% of all residential sales in the last year (in Melbourne) have been from foreign investors. That would be pushing up your house prices.

Also House prices relative to the ASX have risen at a faster rate over the last two decades, so with that, I would say that we are due for a bust.

QBE says No

Shortcut to: http://www.theage.com.au/business/house-prices-set-to-jump-report-20091014-gwm3.html

I understand that a property insurer is possibly a dubious source, but I'm inclined to agree with them. As Evo said, people are now becoming more confident and are willing to borrow again and with the exception of another world financial meltdown, confidence is coming back into all markets and fast.

 

[Jimmy_the_Gent]

20% in three years. Ridiculous.

I'm no housing genious, but I've always though that perhaps they should cap the amount of houses/properties a person can own personally. After a certain number, they have to list as a business. Pay more tax ect.

Maybe this is already the case, just thought of it the other day after overhearing some clowns talk about all the houses they own.

If you make it harder for property investors they'll just find somewhere else to put their money, like equity, and there will be less houses to rent. This will increase rents and slug the poor, not the rich.

Something like this actually happened when they abolished negative gearing decades ago.

The best thing to Gov. could do to meet your objective is to release heaps of land and increase housing supply, which would then decrease price. As a result investors would leave property but renters would be able to buy their own places.

 

[Monkey Worshipper]

hmmmmm, fail.

Yep, looks like you went down in straight sets.

Personally I'm happy to hold my opinion. What about you guys? Any changes?

Still happy to hold my opnion.

No, it hasn't all coming tumbling down like I thought it would. No anarchy and every man fighting for his life on the streets like I thought there might be. No great depression.

If anything, if I'd had a spare $500K lying around I'd get into an investment property to hold for about 5 years, especially in WA. My gut feeling on the streets is we're on the cusp of a massive boom time again real estate.

However, I still stick by my beliefs that a massive bust is coming. You might say, "Well thats just hedging your bets because if you keep saying every year a bust is coming... and it comes in 5 years...30 years... we then you'll tell everyone, I told you so". And that would be a fair call.

I still come down to property not having had a major correction, which will set it up for an even bigger bust than I predicted 1 year ago. At some point... houses cannot be afforded by average Joe. Gen Y can't afford them... at some point people will realise that its overvalued and we cannot service this ever increasing debt.

Who does the ever increasing property benefit?

Banks
Real Estate Agents with bigger Commissions
Home Owners retiring and selling up out of housing permenantly.
Investment Schemes

Doesn't help the average family. If my house went up by 20% this year, and I made $100K profit on selling, so what? The house (on average) I buy in the next suburb also went up by 20% minus fat cat Selling Fees & Fat Cats Stamp Duty Money Laundering Tax.


Edit:

My gut feeling on the street is that Unemployment has pretty much peaked, so no housing crash there.

Its interest rates now that will cause a problem. How many First Home Owners got suckered into $14K or $21K Grant and have a mortgage of around $400K (for a below average home). Interest rates only need to increase by a measly 1 - 3% for the majority of these suckers to be stuffed.

I object to my hard earned taxes (my money) having gone to First Home Owners to prop up the Ponzi Scheme <cough> Property Market <cough> all whilst this Country has racked up Record National Debt... which is now my debt that I own... as ultimately I'm going to get slugged for extra taxes to bring the country back out of debt. Unbelievable stuff.

 

[bunsen burner]

Still happy to hold my opnion.

Why would you hold an opinion that has already proven wrong. It's like saying you still think the Saints will win the 2009 flag. You said this:

I wholeheartedly agree that the property market will drop 30% in the next couple of years.

However, I still stick by my beliefs that a massive bust is coming.

Anyone can say that and be right when it eventually happens. I can only laugh at people who do the "i'm going to hang on because there might be a bust". They keep holding and holding and by the time there's a big bust 4 cycles have gone buy and if they bought in the first one they'd still be miles ahead even after the big bust.

Unless the market is over heated (ie everyone is talking about real estate) it's not a good idea to "wait for everything to be perfect". It never will be. You can't not invest because "there might be a huge bust like Japan".

I still come down to property not having had a major correction, which will set it up for an even bigger bust than I predicted 1 year ago. At some point... houses cannot be afforded by average Joe. Gen Y can't afford them... at some point people will realise that its overvalued and we cannot service this ever increasing debt.

Unfortunately for you you fail to understand the most basic concepts of real estate.

Who gives a flying spoon f*** whether average Joe or Gen Y can't afford a house? Why do they matter? What matters is supply and demand. What demographic it does or doesn't come from is irrelevant. For the foreseeable future there will be short supply. And there's plenty of people who can afford the prices - just not so much Joe.

This concept of the typical Australian being able to afford a house is fast becoming a thing of the past. This is not unusal in other parts of the world.

Who does the ever increasing property benefit?

Average Joes like you who need a place to rent.

Banks
Real Estate Agents with bigger Commissions
Home Owners retiring and selling up out of housing permenantly.
Investment Schemes

Doesn't help the average family. If my house went up by 20% this year, and I made $100K profit on selling, so what? The house (on average) I buy in the next suburb also went up by 20% minus fat cat Selling Fees & Fat Cats Stamp Duty Money Laundering Tax.

Chip on your shoulder much?

I object to my hard earned taxes (my money)having gone to First Home Owners to prop up the Ponzi Scheme <cough> Property Market <cough> all whilst this Country has racked up Record National Debt... which is now my debt that I own... as ultimately I'm going to get slugged for extra taxes to bring the country back out of debt. Unbelievable stuff.

If you weren't so shortsighted you could have got into the market.

You have the same opportunity as everyone else so it's a bit rich resenting the people who took up the offer. You have a serious attitude problem and unfortunately it will stop you from getting very far. Do yourself a favour and rid yourself of that resentment. if you want to own your own house and provide for your future family it will be near impossible because of the way your brain is programmed.

Often I think I'm lucky with what I've got. Then I come across scowling chip on the shoulder battlers like yourself and I almost get tricked into thinking i'm superior. But you'd like that wouldn't you? Give you something to complain about.

 

[Monkey Worshipper]

Why would you hold an opinion that has already proven wrong. It's like saying you still think the Saints will win the 2009 flag. You said this:

I wholeheartedly agree that the property market will drop 30% in the next couple of years.

Anyone can say that and be right when it eventually happens. I can only laugh at people who do the "i'm going to hang on because there might be a bust". They keep holding and holding and by the time there's a big bust 4 cycles have gone buy and if they bought in the first one they'd still be miles ahead even after the big bust.

Unless the market is over heated (ie everyone is talking about real estate) it's not a good idea to "wait for everything to be perfect". It never will be. You can't not invest because "there might be a huge bust like Japan".


Unfortunately for you you fail to understand the most basic concepts of real estate.

Who gives a flying spoon f*** whether average Joe or Gen Y can't afford a house? Why do they matter? What matters is supply and demand. What demographic it does or doesn't come from is irrelevant. For the foreseeable future there will be short supply. And there's plenty of people who can afford the prices - just not so much Joe.

This concept of the typical Australian being able to afford a house is fast becoming a thing of the past. This is not unusal in other parts of the world.


Average Joes like you who need a place to rent.

Chip on your shoulder much?


If you weren't so shortsighted you could have got into the market.

You have the same opportunity as everyone else so it's a bit rich resenting the people who took up the offer. You have a serious attitude problem and unfortunately it will stop you from getting very far. Do yourself a favour and rid yourself of that resentment. if you want to own your own house and provide for your future family it will be near impossible because of the way your brain is programmed.

Often I think I'm lucky with what I've got. Then I come across scowling chip on the shoulder battlers like yourself and I almost get tricked into thinking i'm superior. But you'd like that wouldn't you? Give you something to complain about.

I think you've mistaken a hell of a lot about me and made a fair few assumptions, without asking.

I own my own house, have done for 10 years, gradually upgrading.

Mortage is minute. They could go to 17% and I still wouldn't be struggling on repayments. Wife is a fulltime housewife, doesn't work and never needs to work. I'm on a reasonable salary.

I have admited that a boom is on the way again (supply and demand thing). I have admitted that I wouldn't mind buying an investment property and would be happy to hold for about 5 years.

And I also say the minor correction in housing was nothing which sets things up for a bigger fall in the future, Which I previously admitted as sounding like I'm on the fence, waiting for an eventual fall, so I can tell everyone, "I told you so".

As far as the the Gen Y and average Joe thing goes, its not a chip on my shoulder, I actually feel sorry for most of society not being able to afford homes... especially when my children are in the market for one in 20 years time.

 

[Z_K]

It's getting ridiculous now.

Joint in Jacana went for 450k on Saturday. ****ing Jacana!! I went past for a look at there were about 3 smack dens not 50 metres either way. I went home and hugged my inner suburban parcel of land I bought for **** all 3 years ago.

It has to burst. Surely. There are units in mediocre suburbs clearing for 400k. Who is buying this s**t?

 

[HolyWars]

It's getting ridiculous now.

Joint in Jacana went for 450k on Saturday. ****ing Jacana!! I went past for a look at there were about 3 smack dens not 50 metres either way. I went home and hugged my inner suburban parcel of land I bought for **** all 3 years ago.

It has to burst. Surely. There are units in mediocre suburbs clearing for 400k. Who is buying this s**t?

It's just a complete joke isn't it? Not that its going to affect me too much as I wont be buying in Melbourne or the burbs.

 

[Clay Davis]

It's getting ridiculous now.

Joint in Jacana went for 450k on Saturday. ****ing Jacana!! I went past for a look at there were about 3 smack dens not 50 metres either way. I went home and hugged my inner suburban parcel of land I bought for **** all 3 years ago.

It has to burst. Surely. There are units in mediocre suburbs clearing for 400k. Who is buying this s**t?

Yeah, it's rubbish. The suburb I bought in had about 20-30 properties listed each week when we did the deal and now there are only 5. Listings in general have halved.

I'd like to think it will end, but I can't see this government not bailing out the property market when they can. There's still a ridiculous amount of weapons they can use to battle price falls.

 

[evo]

Yeah listings are right down, eh.

It is madness at the moment.

 

[Monkey Worshipper]

How does everyone think this will end?

In 'normal' times, parents will go guarantor (at 95% leverage) for 5% of First Home Owners.

This rose to 40% in August.


Our very own Sub Prime brewing?

 

[Brad Goodman]

I kinda hope so.

 

[Clay Davis]

How does everyone think this will end?

In 'normal' times, parents will go guarantor (at 95% leverage) for 5% of First Home Owners.

This rose to 40% in August.


Our very own Sub Prime brewing?

It's certainly troubling, but consider the tools the government has to throw at any potential problem. For instance, they could change the laws to allow super fund to invest in RMBS. This is something Keating is pushing.

 

[Z_K]

How does everyone think this will end?

In 'normal' times, parents will go guarantor (at 95% leverage) for 5% of First Home Owners.

This rose to 40% in August.


Our very own Sub Prime brewing?

I'm not an economist, but Australians are greedy and ****ing stupid. It wouldn't surprise.

 

[SolidTiger]

I kinda hope so.

Why are you hoping for our own sub-prime? With the sub-prime it not only caused the American property market to crash but the stock market also crashed, unemployment shot right up and the America went into heavy recession. I don't know about you, but I prefer to keep my job.

 

[FIGJAM]

The only negative variable at the minute is interest rates which will hopefully go up 0.5% next month.

Saw KRudd on the 7.30 report talk about how he wants a "big Australia" (in population), so I presume they won't be turning off the tap in terms of letting immigrants in anytime soon.

Our lenders are fairly sane, and the governments interventions, as much as it shits me, aren't as inflationary as many think. The first home buyers have dropped of a bit as expected, but the rest of the market is still booming.

People who keep barracking for a crash need to realise they are pretty rare and require most variables to be spiraling into the negative. Most corrections are usually plateaus.

For mine, we'd be in a fairly content plateau right now if we weren't pumping so many people into the country.

 

[Clay Davis]

FHOG is only a small piece of the puzzle. They've shovelled around $16 billion or more into financing RMBS thus far, which is much larger than the $1.5 billion doled out to FHBs.

 

[bunsen burner]

How does everyone think this will end?

In 'normal' times, parents will go guarantor (at 95% leverage) for 5% of First Home Owners.

This rose to 40% in August.


Our very own Sub Prime brewing?

Highly unlikely i the forseeable future. We don't have oversupply. We also have plenty of people who can afford these places.

People are too ready to assume that if the average person can't afford property then the market will crash. This is incorrect on two fronts.

a) The average person can afford property. A couple on $50k each pa can easily afford $500k (Average Melb price is $480k)

b) Even when it gets to the point that it's not affordable for the average person, there are enough buyers who are on above average wages who can afford it. This will only change if there is over supply.

The major Australian residential real estate markets are very stable at the moment. For this to change major changes have to occur which won't happen over night.

 

[bunsen burner]

Why are you hoping for our own sub-prime?

Some people resent others getting ahead.

 

[bunsen burner]

I'm not an economist, but Australians are greedy and ****ing stupid. It wouldn't surprise.

Are we? Because the last time I checked, the US and Continent were in turmoil and we have been relatively stable.

And to suggest the average mum and dad investor are greedy for trying to set themselves up for retirement......

You should have a good hard look at yourself. It's unhealthy to resent other people's success.

 

[Tonche]

Are we? Because the last time I checked, the US and Continent were in turmoil and we have been relatively stable.

And to suggest the average mum and dad investor are greedy for trying to set themselves up for retirement......

You should have a good hard look at yourself. It's unhealthy to resent other people's success.

Nope, its the people like that Carmel lady from the Apprentice who was living it up in her mansion with her fancy car and such, all on borrowed money, that are greedy.

And there are too many out there like that.