Where the Australian Property market is heading

I personally think prices are going to decrease because of the change in immigration meaning less people are going to come to Australia and also since interest rates are going to increase then less people are going to buy properties

Any one have ne ideas? 

Hi Asoka,

Are you aware of the forecast for the Australian population? Last report by the ABS (I think) stated an estimate of 35 million people by the year 2050. Immigration might slow, but it won't stop.

With respect to interest rates, this worries me a little, but not for another 2 years. I expect that by the end of 2011 things will have begun to slow down (if not sooner).

Summary:
- In the short term we will continue upwards
- In the medium term we will flatten and maybe even decrease slightly (assuming int rates increase by 150-200 points)
- In the long term we will grow in line with China, and our population growth alone should be enough to keep the long term uptrend going.

My 2 cents.

Regards,
YI

"Knowledge is Power"

Hi Asoka,

I reckon property prices still have a long way away. We cannot deny that we have a major issue with an aging population, the goverment will try and get the number of younger people up, to help care/pay for these older generations. Furthermore, Australia is a very lucky country and we have the lifestyle of, which alot of people desire to live in.

Finally, the government are now moving toward building up density and making use of the existing infrastructure, which means "land" will get more and more expensive. We don't have a lack of supply of land, the true fact are that governemnt don't want to release new land, we cannot build houses with big blocks of land like we did in the past, it is un-sustainable.

Regards,
David

I have spoken to four principals of different real estate agencies in the last couple of weeks, and all have commented that the current Melbourne market conditions "can not be sustained".

This is the obvious comment one would have thought, with the real question being WHEN will it slow down?

Steve Mc's last e-mail newsletter stated something along the lines of "I agree that we are in a property bubble....but it is more likely to deflate than burst".

Once again, the question is one of time frame - so how far off are we from a change in the market?

The only sign of any slowdown I can start to feel at the moment is that perhaps whilst rentals are still fairly strong, the actual market rates for rent don't appear to be rising any further in the last few months. There is no longer a bidding war for rentals - rather it appears the bidding war has turned to auctions!

When 9 out of 10 metro properties on realestate.com.au and domain are listed as auctions, you know that agents have recognised an opportunity to take advantage of emotion and market sentiment - I wonder how long this will continue?

It appears we have had rising rents, rising prices and now rising interest rates... Perhaps rents will be the first to crack here - or perhaps not - but one thing is for sure... they can't all keep going up at the same time!

Regards,
YI

"Knowledge is Power"

Thanks YI,
I'd cannot agree more on your last comment. I've give you an 11/10 for that! haha

I believe the current boom had be driven mainly from the government handout and all the other stimulus. Once money gets put into people hands, it'll expand like a ripple affect and what is happening now is everyone is feeling a little richer than they are before the GFC. During period of inflation like this, smart investors will seek the safety of assets, to offset "inflation" and that is exactly what had been happening but the time is approaching for the cycle to reverse to a slowdown.

As the saying goes, what goes up, must come down... and in our current situation, I believe property prices will revert back close to what the price was at the beginning of 2010.

Regards,
David

There is a dramatic shortage of property in Australia that is leading to rising rents. There are a number of reasons this has happened however the main reason is that this is the tightest finance market I have seen in a long time. Funding of developments is very difficult and this is slowly the number of properties being built.

This will have a two fold effect, firstly we will see upward pressure on prices and secondly rents will keep rising.

The only exception will be in outer areas where first home buyers may have over paid. The first home buyers grant may have artificially raised prices. I am hearing that the default rate is rising rapidly. If rates move to 8%, many people in outer suburbs may loose there homes. To me inner city is the place to buy.

Nigel Kibel
Australian and New Zealand The United States Property Researcher and education
www.propertyknowhow.com.au

Interest rates will not go up for a while IMHO ... the RBA has stuffed up big time.

Rents will not go up a great deal because the average wage earner cannot afford to pay for them ... rents in QLD are dropping folks.

In Mackay 12 moths ago new 4 bed houses were selling for $525K at Blacks beach now they are going for $450K --- ah thats a drop ladies and gentleman ...

Markets change ... Bowen, Whitsunday and many other areas are falling apart ... people can only afford what they can pay ... water finds it's own level.

Melbourne is like QLD 2 years ago ... all markets correct ...

A friend bought a duplex in Mackay 2 years ago for $740K renting for $940.00 per week ... today they can't get 700K for it and the rent has dropped to 300.00 each or 600.00 for 2 ... but the commercial is going OK

Stay away from marketing companies and unlicensed sales people ... they will lose your money.

Yes the bottom prices in the market under ONE million dollars is hot ... but ask agents in affluent areas who they are going ... ??

They are going up!!!!!

Look at Camberwell and Surrey Hills which is just a joke at the moment. People are paying 1.5 for a block with nothing but a shack on it.  You tell me where this will go. Will it go up? Will it go down?

Will the Melbourne and Perth market shoot through the sky? Will first home buyers FINALLY be priced out of the market once and for all so there will be no more carping on Today Tonight? Will those wealthy Camberwell retirees sell their very expensive houses to me for $1? Will Labor be voted out at the next election due to a lack of Speedos on KRudd? Who knows what the future will bring?

All we can do is invest using the figures we have now.

D

Work Smart, Not Hard.

I think they are going to go up.

Population growth vs. available housing is getting more and more out of hand. We already have too many people and not enough housing and this problem will only get worse.

They are not making any more land either, so as more people come to Australia there will be more demand for land and thus prices will rise.

Interest rates fluctuate all the time, but in history the prices always seem to go up over the long run.

What about the lack of Speedos on KRudd? Ryan you have a comment on EVERYTHING!

D

Work Smart, Not Hard.

@ DWolfe - I am enjoying myself on this forum, and thus I like to make comments on everything.

By making comments the forum lets me know when an update occurs in a thread, so I can stay in on the conversation.

ps. I see your comments everywhere too :)