Melbourne Property Market

[bunsen burner]

What is the NEXT correction? The one after the correction Mar08-Mar09 you didn't predict at all? The correction you were adamant 18 months ago wasn't going to happen?

The one I was adamant about was the 30-40% correction. Maybe you need to re read my posts?

As for the 2 years "biggest correction in history" - why would I predict something not happening when we were evidently in the middle of? "Say, there's a correction going on right now, but I predict it's not going to happen"

Who are you trying to fool here?

 

[Clay Davis]

Are you thick?

We were in the middle of a correction when I made those comments.

No we weren't. The growth in Dec07-Mar08 was positive.

I said over the next few years the market will rise and when there is a correction, the prices won't drop lower than they are today. Clearly I wasn't talking about the correction we were already in.

You denied that a correction was even on the verge of happening. From the same thread:

Won't happen. Prices in Melb will rise for next few years because:

a) rents are rising and many people who didn't get caught last time will enter the market
b) there's still plenty of people who are cashed up. Not everyone got burnt by the rate rises
c) Investors have a sniff and they will stimulate the market - probably too much.

It will go up for a few years and then there will be the usual small correction. Same as usual.

Where is any mention of an imminent correction? Surely a property investor of 10 years experience could have seen one coming?

 

[Clay Davis]

The one I was adamant about was the 30-40% correction. Maybe you need to re read my posts?

There were no 30-40% correction figures guessed at 18 months ago. Yet you were adamant that anyone who agreed with the premise that house prices might fall from Feb08 was a fool.

As for the 2 years "biggest correction in history" - why would I predict something not happening when we were evidently in the middle of?

As stated previously, we weren't in the middle of a correction in Feb08 when you made your statement. The argument was that we were on the verge of one. You disagreed.

Who are you trying to fool here?

Not you. You're doing a great job of it yourself. Good to see you're back, well, while the indices are positive anyway.

 

[bunsen burner]

No we weren't. The growth in Dec07-Mar08 was positive.



You denied that a correction was even on the verge of happening. From the same thread:



Where is any mention of an imminent correction? Surely a property investor of 10 years experience could have seen one coming?

links to threads please. Seems to me you are slyly taking me out of context

 

[Clay Davis]

links to threads please. Seems to me you are slyly taking me out of context

Click the arrow gif after your name. Links directly to the post quoted.

 

[bunsen burner]

No we weren't. The growth in Dec07-Mar08 was positive.

You denied that a correction was even on the verge of happening. From the same thread:

Where is any mention of an imminent correction? Surely a property investor of 10 years experience could have seen one coming?

Fair enough (regained my bearings). But big deal. There's been a correction and it's on the way up.

What has this got to do with a 30-40% correction that many talked about? You, what the OP is about?

 

[bunsen burner]

There were no 30-40% correction figures guessed at 18 months ago. Yet you were adamant that anyone who agreed with the premise that house prices might fall from Feb08 was a fool.

Link or quote please.

 

[Clay Davis]

Fair enough (regained my bearings). But big deal. There's been a correction and it's on the way up.

Agreed. But I don't think the reasons behind the market going back up suggest stability or are anything to crow about. It is 100% government intervention. Huge risks entailed with that. I think we're probably heading into a US post dot-com bust situation - strong growth over the next 4-6 years, followed by a strong correction.

That said, I believe any one who has stuck with renting over buying and has a decent amount of cash in reserve or a good income is probably a bit silly. There were some good bargains earlier this year.

What has this got to do with a 30-40% correction that many talked about? You, what the OP is about?

I just think it's easy to come back after a year and start a sniping thread when you were originally wrong yourself.

Nevertheless, I have always thought that people were putting precise numbers on things (30-40% falls) were idiots. No one can predict any market with such certainty. But those who were generally bearish 18 months ago were correct.

I have no idea where the market will go from here. It will probably stagnate for a couple of years. Some places will boom, probably Sydney as it hasn't for years.

Then again, the fact that houses in Sunbury are now $300k staggers me.

 

[bunsen burner]

Agreed. But I don't think the reasons behind the market going back up suggest stability or are anything to crow about. It is 100% government intervention. Huge risks entailed with that. I think we're probably heading into a US post dot-com bust situation - strong growth over the next 4-6 years, followed by a strong correction.

That said, I believe any one who has stuck with renting over buying and has a decent amount of cash in reserve or a good income is probably a bit silly. There were some good bargains earlier this year.



I just think it's easy to come back after a year and start a sniping thread when you were originally wrong yourself.

Nevertheless, I have always thought that people were putting precise numbers on things (30-40% falls) were idiots. No one can predict any market with such certainty. But those who were generally bearish 18 months ago were correct.

I have no idea where the market will go from here. It will probably stagnate for a couple of years. Some places will boom, probably Sydney as it hasn't for years.

Then again, the fact that houses in Sunbury are now $300k staggers me.

I see. So I didn't actually say what you claimed I said. Your credibilty has just taken a nosedive.

And it turns out you agree with the OP. Not sure why you are arguing with me.

 

[FIGJAM]

Just on the Melbourne property market, can someone in Melbourne explain to me the allure of suburbs such as Balwyn, Burwood, Mont Albert is? These areas in particular seem grossly over priced as a lot of the homes sold are fetching between $1-$2 million yet are generally conventional, uninspiring and unimpressive 1930's/40's/50's type houses on reasonable but not big blocks. Are there particularly good services in these areas? They don't seem to be that close to the city. Is it simply a case of these suburbs perception as being in the leafy east pushing up prices?

Properties anywhere within the Balwyn High School zone has always attracted extremely high interest.

Of late, the area has had the added pressure of very serious international money coming in from immigrants, particularly the Chinese immigrants, who also have an established and substantial Chinese community around Box Hill.

Most people think the 70,000 immigrants pouring into Melbourne each year start off managing fish and chip shops or driving taxi's, but a fair proportion of them are very well off to begin with. In some instances, it is the only way they can get out of their previous countries.

 

[SolidTiger]

I don't think there is going to be as a big a fall when the federal FHOG is finished as some people expect.

No doubt the FHOG has helped the housing market during the recession but with the economy turning the investors and those who are upgrading will return to the market just when the federal FHOG is finished which will keep it steady.

The purpose of the RBA is to try to control the economy through interest rates. The property market and those who have home loans is a big part of that. The RBA does not want want the property market to fall and see many people default into negative equity but they don't want to see inflation to increase either.

The three biggest factors that influences the property market is the availiability of land of where people would want to live, increase of population (through both immigration and natural means) and unemployment.

I think once the FHOG is finished there will be a small dip in the property market in the first quarter of next year but from the second quarter onwards the property market would rise at a slow but steady rate.

 

[bailz66]

I don't think there is going to be as a big a fall when the federal FHOG is finished as some people expect.

No doubt the FHOG has helped the housing market during the recession but with the economy turning the investors and those who are upgrading will return to the market just when the federal FHOG is finished which will keep it steady.

The purpose of the RBA is to try to control the economy through interest rates. The property market and those who have home loans is a big part of that. The RBA does not want want the property market to fall and see many people default into negative equity but they don't want to see inflation to increase either.

The three biggest factors that influences the property market is the availiability of land of where people would want to live, increase of population (through both immigration and natural means) and unemployment.

I think once the FHOG is finished there will be a small dip in the property market in the first quarter of next year but from the second quarter onwards the property market would rise at a slow but steady rate.

Im a wait and see kind of person at the moment... i really want to buy another house but i would just be taking to big a risk if i did. Just had a baby and already paying off my owner occupied house.

The key to the FHBG and property prices is going to be what the RBA does at the same time. If the RBA starts raising rates and the government cuts off the FHBG then you will get a lot of 23-27 year olds just putting their money in the bank and saving for a deposit. The top end of the market will possibly continue upwards but i expect the lower end will either stay the same or drop back slightly. I will be watching with a very keen interest at this time and if bargains do start to present themselves then that's when i will move if i can find the cash

Personally i want prices to keep going up so i can build up a bit more equity in my place for some investment properties down the track.

 

[Papa G]

Properties anywhere within the Balwyn High School zone has always attracted extremely high interest.

Of late, the area has had the added pressure of very serious international money coming in from immigrants, particularly the Chinese immigrants, who also have an established and substantial Chinese community around Box Hill.

Most people think the 70,000 immigrants pouring into Melbourne each year start off managing fish and chip shops or driving taxi's, but a fair proportion of them are very well off to begin with. In some instances, it is the only way they can get out of their previous countries.

Melbourne prices are getting ridiculous. Victorian's even seem to be moving to Adelaide (shock horror) for a better lifestyle. I have had my own home on the market for just over a week and 3 of the 4 interested parties are from Melbourne.

 

[Catz]

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.

 

[bunsen burner]

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.

That's not quite how it works. The real rate of property sits at about 10%. This does not mean that year in year out property will yield 10%. Cycles also vary, but for this example if we assume a cycle goes for 7 years then maybe there is falling prices for 2 years, stable prices for 2 years, steady rising prices for 2 years, and booming prices for 1.

All those Govt things do help, but the most important things are:

1. Govt -ve gearing policy
2. 70% of houses are not owned by investors
3. We love property. We love investing. The average mum and dad australia are investors in either property or shares. Australians love the owning your own home dream as well as the invest for retirement dream.

 

[Leper]

Agree 100% with above.

And after much thought and deliberation, I've come to the conclusion that Thomas the Tank Engine and Dora the Explorer really do suck balls.

 

[Mordecai]

Properties anywhere within the Balwyn High School zone has always attracted extremely high interest.

We sold from here recently. The BHS (where I went) zone is very important.

My parents have decided to rent for a year or two. They've been happy to buy at any moment (looking at Northcote (Westgarth), Fitzroy North, Carlton North, Brunswick East, Clifton Hill. That northern band of suburbs close to the city. Then also Albert Park, South Melbourne, Elsternwick, Prahran. That southern band of suburbs close to the city). Undecided on whether to get two 2 bedroom houses or keep the family together (I know what my vote is for).

My belief is that it's best to wait for these two (expected) rate rises before the end of the year then to reassess. Do you think that is a fair plan for someone sitting and waiting?

 

[SolidTiger]

The problem with housing affordability is mainly caused by supply and demand. There are too many people and not enough houses. This problem can't and won't be fixed over night.

What utimately needs to happen to fix the affordibility problem is for more houses to be built in areas that are disirable for people to live in. To get this to happen two things needs to be done.

First there has to be incentives for builders and developers to build houses, the more profitable it is for them to build a house the more houses will be built. It woud have been a better government policy if they used the money for the FOHG on incentives for builders and developers.

Second for an area to be disirable to live there will need to be infrastructure in place. It will be no good building houses if there are no schools, public transport, hospitals, commercial facilities etc near by. Obviously this will take a lot of government spending and time to put infrastructure in place.

 

[FIGJAM]

We sold from here recently. The BHS (where I went) zone is very important.

My parents have decided to rent for a year or two. They've been happy to buy at any moment (looking at Northcote (Westgarth), Fitzroy North, Carlton North, Brunswick East, Clifton Hill. That northern band of suburbs close to the city. Then also Albert Park, South Melbourne, Elsternwick, Prahran. That southern band of suburbs close to the city). Undecided on whether to get two 2 bedroom houses or keep the family together (I know what my vote is for).

My belief is that it's best to wait for these two (expected) rate rises before the end of the year then to reassess. Do you think that is a fair plan for someone sitting and waiting?

When it comes to property you can't ever know anything for certain.

The rates will impact affordability obviously, but then the 1500 or so per week pouring into Melbourne puts severe upwards pressure on the market.

Watching 4corners the other week, the extreme low income people are getting pushed out and having to live in government subsidised accommodation in hotels (for a grand a week!). Why the government thinks permitting so many foreigners into the country is sustainable is beyond me.

I've said that many times, and I do feel a bit 'Dey tuk ur jurbs!' when I say it, but if there's a legitimate housing shortage, why keep the tap on for people in? The government loves seeing economic growth is why IMO, and this is an easy way to acomplish this...even in sour economic times (eg. we had a per capita recession, but avoided a technical through intake of immigrants).

 

[evo]

I've been following Melbourne property closely for at least 25 years and I reckon right now it is about as hard to tell which way it will go as it has ever been.

I'm keen to do something at the moment but just can't get myself to pull the trigger.

**** noes what to do.

 

[evo]

Properties anywhere within the Balwyn High School zone has always attracted extremely high interest.

Of late, the area has had the added pressure of very serious international money coming in from immigrants, particularly the Chinese immigrants, who also have an established and substantial Chinese community around Box Hill.

Most people think the 70,000 immigrants pouring into Melbourne each year start off managing fish and chip shops or driving taxi's, but a fair proportion of them are very well off to begin with. In some instances, it is the only way they can get out of their previous countries.

Yeah. Most of the stuff I've done is in the Box Hill/Mont Albert area. And nearly every auction I've been to in the area this year has been secured by an Asian.

The trick around here is to buy the houses done up in Italian/Greek style( red brick, marble, and concrete columns) and redo it to suit the chinese tastes (mainly modernist).

 

[Mordecai]

When it comes to property you can't ever know anything for certain.

The rates will impact affordability obviously, but then the 1500 or so per week pouring into Melbourne puts severe upwards pressure on the market.

Watching 4corners the other week, the extreme low income people are getting pushed out and having to live in government subsidised accommodation in hotels (for a grand a week!). Why the government thinks permitting so many foreigners into the country is sustainable is beyond me.

I've said that many times, and I do feel a bit 'Dey tuk ur jurbs!' when I say it, but if there's a legitimate housing shortage, why keep the tap on for people in? The government loves seeing economic growth is why IMO, and this is an easy way to acomplish this...even in sour economic times (eg. we had a per capita recession, but avoided a technical through intake of immigrants).

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.

Anyone been to a few auctions/inspections recently? I did the whole looking at houses to buy thing 4-5 years ago, but now it is insane. I went to a few in Northcote and the numbers are huge - you can barely move when inspecting. The bidding at auctions is frenetic.... things are just a little bit manic at the moment. Very difficult to know what to do - only the biggest financial investment we're likely to ever make. (shakes head).

 

[FIGJAM]

The trick around here is to buy the houses done up in Italian/Greek style( red brick, marble, and concrete columns) and redo it to suit the chinese tastes (mainly modernist).

Don't forget the feng shui evo.

 

[bunsen burner]

The trick around here is to buy the houses done up in Italian/Greek style( red brick, marble, and concrete columns) and redo it to suit the chinese tastes (mainly modernist).

Don't forget having 4 feature walls per room. One in mint, one peach, one baby blue, and the other lemon. They love that s**t.

 

[evo]

I just go all white walls and polish the floor boards. Maybe one coloured feature wall in the main bedroom.

Sarah Beeny knows best.