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June 28, 2008 - 4:55 pm

I think Australians are BLIND.

MIAMI, FLORIDA: HOUSING CRASH 50% OFF!!!!

This little video was created about 9 months ago……just think that things have got worse since.
 
http://www.youtube.com/watch?v=tkuW8bCjC6c

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June 28, 2008 - 3:41 pm

I invite you to read this:

http://www.smh.com.au/news/national/coughs-and-splutters/2008/06/27/1214472770918.html?page=fullpage#contentSwap2

And also this one for our market:

http://www.smh.com.au/news/national/house-prices-falling-and-spreading/2008/06/27/1214472770814.html

IT COULD be a warning sign, or maybe just a blip. Property sales are flashing a signal that the fall in Sydney house prices will not be limited to the city's west.

An analysis of 2008 sales reveals that the great Sydney equation – take property, mix with water views, and you cannot go wrong – could be breaking down.

Even at Bondi, where prices have jumped 12.6 per cent in the past four years, the median price has fallen 1.6 per cent this year after 42 sales, figures from Australian Property Monitors show.

At Avoca Beach on the Central Coast, 115 houses have changed hands this year for a median price of $546,000 – 5 per cent lower than last year's.

In the nearby holiday spot of MacMasters Beach, median sale prices have fallen 15.6 per cent. A few falls do not necessarily make a trend. But property insiders are warning there is little confidence in a market rocked by rising interest rates, fuel prices and a skittish stockmarket.

"Everyone is sitting on their hands," said Kim Quick, a property valuer at Herron Todd White.

The AMP Capital Investors chief economist, Shane Oliver, warned that Sydney property was about 20 per cent over-valued.

Property prices are tumbling in the US and parts of Britain, and Australian house prices are even more expensive in comparison.

In the US the ratio of annual income to house prices is about 3:1. In Australia it is about 6:1.

"I think the weakness we are seeing out west will start to spread to the better suburbs," DrOliver said.

"It wouldn't surprise me if they came off about 10 per cent over the next 12 months, and that fall being widespread."

In Newport, on the northern beaches, 163 houses have been sold this year, the most recent figures from Australian Property Monitors show. This year's median house price has been 2.2per cent lower than last year's.

Real estate agents in some Sydney beachside suburbs say the local downturn is little more than a quirk. Water views will always generate plenty of interest.

In Tamarama, tucked between Bondi and Bronte, a house in Thompson Street sold for a record $10million this week.

The principal at Raine & Horne Palm Beach, Glenn Lee, said: "What we're seeing now is a patchy market in some sectors and strength in others.

"With the premium properties, these are sophisticated players who are simply waiting for the right place to appear." The agency is listing a waterfront house in Newport at $1.85 million, after it failed to sell at an auction with a reserve price of more than $2million.

At the top end of the market, in Palm Beach, 58 houses have been sold for 5.6 per cent less than the median price last year.

The fall comes after a 62 per cent jump in the median house price, to $2.55million, in the past four years.

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June 22, 2008 - 12:13 pm

There is another reason why prices will drop in many suburbs that are too far from the cities. With soaring petrol prices people can`t keep up anymore to pay the bills and the mortgages so either choose to sell the house and relocate closer to work maybe renting or in a smaller property or they`ll have to quit the job.

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June 19, 2008 - 6:51 am

BATTLERS in outerlying suburbs are being hit the hardest by rising fuel prices, as their distance from the city leaves them little option in curbing fuel use, an economist says.

Westpac senior economist Matthew Hassan says the impact of the latest round of fuel hikes had left two distinct groups of households – those that can and are cutting back on fuel consumption and those that can't.

Mr Hassan says the second group is facing a "fuel-constrained" world in which they have less to spend on other household items as their petrol bill increases.

Australians who live in outerlying suburbs are the among the hardest hit, relying on cars to get to work, and travelling further than people who live in the inner suburbs.

"When you think about those most likely to be affected by high fuel prices, they'll be households that are already relatively stretched financially that are living in outer suburbs where they don't have the option to use public transport," he said.

Mr Hassan said fuel-constrained households were among the most severely affected by higher interest rates, a weak housing market and rising food prices.

Mortgage defaults telling

Higher petrol prices could be the straw that breaks the backs of people struggling with their mortgages.

Data released yesterday by Moody's showed that it’s battlers living in outerlying, commuter suburbs that are falling behind in their mortgages.

According to Moody’s, Australia's top five suburbs for mortgage delinquencies were Paramatta, Liverpool, Canterbury and other western and south-western suburbs of Sydney.

"They don't have the option to cut back on their consumption of fuel," Mr Hassan said.

"There facing other pressures from other parts of their finances – in particular from interest rates and quite clearly are feeling the pinch from petrol up around $1.50 a litre."

Petrol prices have shot up in recent weeks as world oil prices hit record highs close to $US140 a barrel.

Squeezed from all angles

Mr Hassan said it wasn't surprising the surge in price at the pump was causing angst amongst households struggling to keep up.

"There is an exposed segment that's been squeezed from all sides, whether it's the weak housing market, whether it's interest rates, whether it's fuel prices.

"That's why it feels a lot worse than it appears to be in terms of the total numbers," Mr Hassan said.

Data released by Westpac showed although household spending on petrol remained around 3 per cent, households were buying much less fuel.

While spending on fuel has risen to $16.80 a week, per capita fuel consumption has slipped to 12.93 litres a week, Mr Hassan said.

Pain on the road ahead

Mr Hassan says there is still “quite a way” Australians can go in terms of reducing consumption of fuel.

"If you think about 2007 for example, we had record vehicle sales last year with what had been a major ramp up in the cost of fuel," he said.

Mr Hassan said consumers would reduce their fuel consumption even further as petrol prices go higher this year.

"I think we'll see that over the course of this year when people really start to reconsider … their overall usage of fuel."

Despite pain at the pump, Mr Hassan said fuel prices would not be the main driver of households in deteriorating arrears.

"Clearly there’s a segment that is going to find it very difficult this year, and fuel is only going to part of the problem of making ends meet.

"Interest rates will be the dominant driver in terms of arrears and bankruptcies, which are clearly going to start to rise to some extent."

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June 19, 2008 - 6:51 am

Higher petrol prices could be the straw that breaks the backs of people struggling with their mortgages.

http://www.news.com.au/business/money/story/0,25479,23884172-5013951,00.html

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June 18, 2008 - 2:47 am

http://www.news.com.au/business/money/story/0,25479,23877696-5016110,00.html

Property becomes an investment turn-off

By Nicki Bourlioufas June 17, 2008 12:40pm

• Investors are turning away from property
• RBA sees "flat" house prices
• More investing news in our Money section

WITH mortgage interest rates sitting at a 12-year high, investors are turning away from property as credit costs mount , with some investors opting to sell up before they go under.

"I have already have listed investment property for sale hoping to sell before I go under," said one NEWS.com.au reader in a recent survey on interest rates.

The Reserve Bank has warned that it may need to raise interest rates again if the economy doesn't slow down and inflation remains high, according to minutes released today of its June meeting on interest rates. 

The Reserve Bank also indicated houses prices would likely remain "flat" in the m onths ahead.

"Falls in auction clearance rates in both Sydney and Melbourne from the highs reached late in 2007 to below-average levels in the past few months were consistent with a continuation of flat house prices," the RBA minutes said.

Property less attractive

A survey of 2331 NEWS.com.au readers in March – which was the last time the RBA hiked rates – found property investment intentions were at their lowest in the three-year history of the survey.

Just 9 per cent of people were more likely to buy property in the months ahead compared to the current quarter.

The survey conducted by NEWS.com.au with online polling firm Coredata found that if there was another 1 percentage point rise in interest rates, 47 per cent of property investors would be likely to sell their assets.

Higher official interest rates have pushed up mortgage repayments towards 10 per cent this year. Higher rates have also weighed on property values by reducing demand, especially in the outer suburbs of big cities.

Costs too high

Many NEWS.com.au readers expressed the view that it was no longer worth investing in property due to increases in interest rates, which have coincided with a sharp rise in living costs.

One NEWS.com.au reader with investment properties said: "I have sold my investment property before getting into trouble. I am a real estate agent and business is now very quiet.”

“I was concerned I would not meet investment property loans," said another reader.

Some investors are keeping their options open and holding into their property, but are prepared to sell if economic growth slows.

"I have a rental investment property and use negative gearing to offset my losses each month. I'm becoming more reliant on monthly rental income to keep me afloat. If the worst comes to the worst (that is, economic recession), I can always sell my investment property and be debt free. I'm grateful that I have that choice."

Another less upbeat reader said: "I have to sell my investment property. But nobody wants to buy it!!!"

Some economists expect the Reserve Bank of Australia to keep on raising interest rates this year while others say slowing economic growth in Australia will cap interest rates at current levels.

The official cash rates stands at 7.25 per cent, and standard variable mortgage rates are currently at a 12-year high around 9.5 per cent.

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June 15, 2008 - 4:32 pm

Maxxi wrote:

It's all relative to income and supply and demand…. and global forces eg immigration and foreign investment just to name a couple.

As far as I know immigration in the USA is way much higher than here, still prices are dropping an average 30 % accross the USA.

You simply don`t get it:  once prices goes too high, they need to come down at some point before they rise again.

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June 15, 2008 - 4:30 pm

Scamp wrote:

So why should houseprices not go up further you say ?
The answer is simple : We have now reached a social limit on the amount of money 'households' can borrow.

We have maximized the incomes ( two per household ). We have maximized the amount of hours that people want to work ( 50-60 hours per week on average, counting traffic hours etc ). We have maximized the repayment period ( 40 years ).

So we have people sitting with :
two incomes at 60.000 p.a.
40 years mortgage repayments
both working 60 hours

Unless we prohibit people from having kids and thus be able to keep this going, we're up for trouble. As now the double incomers want kids, or they get unemployed because of the incoming recession. Their HUGE mortgages are only sustainable if they BOTH work, and both work 60 hours or more, and have no kids.

On top of all this, Australia has a unique problem : Negatively geared property investors ( the likes of those on this forum ). When houseprices drop, the banks will foreclose the house. ( read the small print in your contract that says that if the amount of money due is higher than the valuation of your house you HAVE to pay the bank the difference back ). So, we get foreclosures of the investors. Those investors usually have 2-3 ( sometimes 20 ) properties that are all interlocked with equity. ( ie : they have bought a second home using equity on the first home, and a third home with equity on the second and first home, and a 4th home with equity of the 3rd, 2nd and 1st home etc ). So if the 1st home goes, the whole chain goes. This means we'll see a lot of properties on foreclosure auctions soon. Whole chains of properties.

This is reality, it's not something I make up. Do the maths, and you will see that I am speaking the truth.

Well said!

I guess the people posting here are just hoping no one read your posts otherwise they`ll lose money.

Somewhat like NZ real estate blackmailed the media the other day. They don`t want people to know about the crash.

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June 14, 2008 - 2:36 pm

elkam wrote:

Hello ItalianDragon

http://www.realestate.com.au/cgi-bin/rsearch?a=bhp&t=rur

http://www.rural-real-estate-guide.com/

Just  to start you off.

Elka

Thank you!

I knew realestate.com.au but did not know the second one.

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June 14, 2008 - 12:48 pm

ormeau wrote:

yarpos wrote:

ormeau wrote:

What makes you feel that I went to a school of concise-ness?

its not about you ormeau, the quote(refer heading and last line) is hollandguys

My apologies yarpos, and sorry if I come across a little pessimistic regarding oil.

When I first started researching the matter it took quite some time before the reality of the situation sunk in, I find it tough to keep a smile on my face regarding my outlook on life nowadays. I know I cant control the future but it has taken its toll on my business and property accumulation. Its been quite a few years since I have been on this site. From memory SM was just entering the US property market, it would be interesting to know how he fared regarding that considering they have had a 25% average fall in price. I believe it there is much worse to come.

Currently I am researching productive agricultural land in areas that are of close proximity to Ocean access, and rail. From the research that I have done its helped me come to the conclusion that these parcels of land will be the ones of high value. The burbs are in trouble and I agree that inner city will hold some level of value too because of rail.

And  HOW / WHERE do you find agricultural land ? I`m interested in that too.

Thanks

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June 13, 2008 - 12:28 pm

Maxxi wrote:

Italian Dragon,

I lived in Adelaide for many years until recently … I also agree that it is not likely that the property prices will double in 10years but they will continue to rise.  In spite of the economic conditions …. the defense contracts and the mining boom will hold the SA economy relatively stable for the next few years at least …. do your homework and read the articles … Adelaide is having a Mini Boom just like Perth did and Qld did!  The Govt is spending big still on infrastructure to support this …. also …. as the employment figures just came out with 20,000 jobs disappearing …. it is unlikely we will see another rate rise till next year.

Dear Maxxi,

I`m afraid to warn you that due to rising oil prices inflation is not under control and we`ll be lucky in August to see only a 0.25 % rise, because I expect a 0.50 % rise if oil prices keep staying this high.

Regarding the mining boom, as happened for the asbestos mining boom many years ago in WA, once the poor ignorant people will find out how dangerous is uranium and all the radioactive stuff that RIo TInto and BHP are shifting accross SA, you`ll see that from Mining Boom we`ll go to Healt Care Boom to take care of all people diying from cancer.

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June 13, 2008 - 12:22 pm

devo76 wrote:

ItalianDragon wrote:

devo76 wrote:

ItalianDragon wrote:

devo76 wrote:

ItalianDragon wrote:

Skip101 wrote:

gmh454 wrote:

In Sydney we have already seen 850K homes (asking price pre slump) sell for under 500K, Kellyville, the divorce capital of Australia.

Palm Beach $6.25M to $4.5M in under a year, both ends of the market.

Wonder how many of the bulls here are taking there own advice and swooping in to prop up there portfolio before the market jumps again ????

what is more relevant to property investors on this board is that properties ideally suited for rentals throughout Australia in the $180,000 to $300,000 range have only experienced minimal downwards pressure on price, in other words drops of 20 to 30 percent are not happening unless the property is grossly overpriced to start off with.

Every property in Australia is OVERPRICED.

Now let me see. I bought my IP in a central location in a desirable location for $295,000. Replacement cost of the building alone is about $250,000. Making my land value $45,000( Yeah right). Vacant land nearby is selling for $180,000 to$260,000.Not all property is overpriced.

if you think that a 600 sqm of land is worth $200,000 (which is about 4 times the average Australian income) is cheap then, any comment is useless.

Your comments are truly useless. making reference to ALL Australian property within one sentance
So you are saying that a block on sydney harbour and a block 3 hours south of broken hill are worth the same.Extreme example but im sure you get the picture.If land is scarce in a desired location with no room for more dvelopment. Its going to go up.($200,000 for land which is four times the average income). Whats that in reference to. Do you think Sydney harbour property is linked to the average income.There is land available for less than one years income in some areas.Nowhere near Sydney but.If you are going to post please add some substance to it. Leave the one liners to the terminator ILL BE BACK.

I`m pretty sure that 600 sqm on the harbour won`t cost only $200,000 but maybe $2,000,000 !!

We were talking of your land. Is that on the harbour?

The harbour i wish. But its not in the middle of the desert either. Its in a cbd area that cannot expand anymore due to things like cliffs,rivers etc. Its a desirable area to live with only a handfull of blocks remaining in the cbd.So if you want to live close you will have to pay a premium. This is the same everywhere. I do agree that there are many overpriced properties around but i do not think that this can be said for all property.Choose well and pay a good price and you will be OK. Not rocket science really. I will admit that my first Ip is not ideal but i have learnt alot and know exactly what to look for know and how much to pay. Im looking foward to the next step.

I wish you the best mate, really. From what you say it sounds like a great deal you found. But for many others out there, mothers and fathers with children to look after, the mortgage nightmare is just going to get worse if oil keep rising, because it will push up inflation and the RBA won`t have a choice but to rise again the rates.

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June 13, 2008 - 12:10 pm

devo76 wrote:

ItalianDragon wrote:

devo76 wrote:

ItalianDragon wrote:

Skip101 wrote:

gmh454 wrote:

In Sydney we have already seen 850K homes (asking price pre slump) sell for under 500K, Kellyville, the divorce capital of Australia.

Palm Beach $6.25M to $4.5M in under a year, both ends of the market.

Wonder how many of the bulls here are taking there own advice and swooping in to prop up there portfolio before the market jumps again ????

what is more relevant to property investors on this board is that properties ideally suited for rentals throughout Australia in the $180,000 to $300,000 range have only experienced minimal downwards pressure on price, in other words drops of 20 to 30 percent are not happening unless the property is grossly overpriced to start off with.

Every property in Australia is OVERPRICED.

Now let me see. I bought my IP in a central location in a desirable location for $295,000. Replacement cost of the building alone is about $250,000. Making my land value $45,000( Yeah right). Vacant land nearby is selling for $180,000 to$260,000.Not all property is overpriced.

if you think that a 600 sqm of land is worth $200,000 (which is about 4 times the average Australian income) is cheap then, any comment is useless.

Your comments are truly useless. making reference to ALL Australian property within one sentance
So you are saying that a block on sydney harbour and a block 3 hours south of broken hill are worth the same.Extreme example but im sure you get the picture.If land is scarce in a desired location with no room for more dvelopment. Its going to go up.($200,000 for land which is four times the average income). Whats that in reference to. Do you think Sydney harbour property is linked to the average income.There is land available for less than one years income in some areas.Nowhere near Sydney but.If you are going to post please add some substance to it. Leave the one liners to the terminator ILL BE BACK.

I`m pretty sure that 600 sqm on the harbour won`t cost only $200,000 but maybe $2,000,000 !!

We were talking of your land. Is that on the harbour?

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June 13, 2008 - 11:50 am

devo76 wrote:

ItalianDragon wrote:

Skip101 wrote:

gmh454 wrote:

In Sydney we have already seen 850K homes (asking price pre slump) sell for under 500K, Kellyville, the divorce capital of Australia.

Palm Beach $6.25M to $4.5M in under a year, both ends of the market.

Wonder how many of the bulls here are taking there own advice and swooping in to prop up there portfolio before the market jumps again ????

what is more relevant to property investors on this board is that properties ideally suited for rentals throughout Australia in the $180,000 to $300,000 range have only experienced minimal downwards pressure on price, in other words drops of 20 to 30 percent are not happening unless the property is grossly overpriced to start off with.

Every property in Australia is OVERPRICED.

Now let me see. I bought my IP in a central location in a desirable location for $295,000. Replacement cost of the building alone is about $250,000. Making my land value $45,000( Yeah right). Vacant land nearby is selling for $180,000 to$260,000.Not all property is overpriced.

if you think that a 600 sqm of land is worth $200,000 (which is about 4 times the average Australian income) is cheap then, any comment is useless.

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June 13, 2008 - 6:22 am

Skip101 wrote:

gmh454 wrote:

In Sydney we have already seen 850K homes (asking price pre slump) sell for under 500K, Kellyville, the divorce capital of Australia.

Palm Beach $6.25M to $4.5M in under a year, both ends of the market.

Wonder how many of the bulls here are taking there own advice and swooping in to prop up there portfolio before the market jumps again ????

what is more relevant to property investors on this board is that properties ideally suited for rentals throughout Australia in the $180,000 to $300,000 range have only experienced minimal downwards pressure on price, in other words drops of 20 to 30 percent are not happening unless the property is grossly overpriced to start off with.

Every property in Australia is OVERPRICED.

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June 12, 2008 - 4:12 pm

Linar wrote:

Hi ID

I didn't say that property prices will double in 10 years.  I said that a house bought today would be worth in 10 years time.  And the recession that happened in the late 70s?  Well, property prices have gone up substantially since then.

And your suggestion that an average house (being "your house") will be worth $10 millions when incomes haven't risen at all is  a hypothetical gross exaggeration.  What, house prices rise rapidly to be worth "$10 millions" while the median income stays at the same level ad infinitum?

Give me a break.

K

K

If you are saying that 30 years are not too much to wait then I agree with you, by or before 2038 people will see higher prices more than likely.

And regarding my $10 Millions example: is not what every investor and real estate agent would like as scenario?

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June 12, 2008 - 12:18 pm

Skip101 wrote:

Quote:

well, how about "shill bidding" at some auctions?

Friends of the seller or of the realestate agent who offer fake bids just to show more interest in properties?

I should search a news about this, it was found to be popular in Sydney.

Clearly you have a dislike for real estate agents, that's fine, however by carefully building working relationships with Selected Agents, you can profit.
Dummy bidding no doubt occurs at some auctions, although steps have been taken to rid it some states.

Real Estate investing is not that different from a lot of areas of investment.
You have to Speculate to Accumulate.  There is risk involved, you have to do your homework, set your limits (price/return/capital growth) and act accordingly.

If you are bidding at an auction, and the price goes higher than you believe the property is worth, its not hard to make the right decision, and stop bidding, regardless of whether your competitors in the auction are genuine or not.

Whilst I don't agree with a lot of the negative comments earlier in this post, there has obviously been a slow down in the market, and that presents a major opportunity.

In a nutshell, investors need to research and buy wisely. Or, you could leave the money in the bank for 3 to 4 years at minimal return, but chances are in 3-4 years you'll wish you had bought when the value/prices were much better. How many properties do you wish in hindsight you had bought 5 years ago?

It's not rocket science.

You know, I`m a very open minded person so I accept your view but there are many "bad apples" in the Real Estate industry unfortunately.

Have a look at this recent news from New Zealand:

http://tvnz.co.nz/view/page/411749/1843300

Now, how would you describe that?

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June 12, 2008 - 7:29 am

Skip101 wrote:

Quote:

I disagree, I have been dealing with lots of agents and everytime there is an open inspection they claim there is already an offer on the house, sometimes even 2 !!

Then 2 months later the house is till there unsold and at a cheaper price!

This confirms what I said, ultimately it is the market (buyers) who determine the sales price of a property. The real estate agent can put any price on it (generally upwards pressure is put on the agent by the vendor) but supply/demand & market conditions will dictate eventual price movement.

well, how about "shill bidding" at some auctions?

Friends of the seller or of the realestate agent who offer fake bids just to show more interest in properties?

I should search a news about this, it was found to be popular in Sydney.

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June 12, 2008 - 7:18 am

Linar wrote:

Hi Katherine

I have heard some fantastic snippets of advice along my investing journey.  One of them was something to the effect of:

"In 10 years time you will look back at the investment property you bought and think that it was a bargain and you should have bought more of them".

Property goes up in price.  Sure it may go up and down along the way but it will always go up, just like the share market.  Property today is worth more than it was 10 years ago.  In 10 years time it will be worth more than it is today.

I don't have a problem at all with Adelaide (I live here).  House prices in other cities may increase in value more than Adelaide or Adelaide may see better growth.  I don't know.  But GENERALLY SPEAKING, properties double in value every 7 – 10 years, whether it is in Adelaide, Sydney, Bunbury or Mt Isa.

If you can afford, get in the market.

Cheers

K

HI Linar, I live in Adelaide too but to say prices will double in 10 years is simply wrong.

YOu should read the report above and understand that $300,000 today are not the same $300,000 in 10 years due to inflation. And since inflation is rising due to oil and other commodities price increase, the future is not a normal 10 years ahead.
I have never seen a worse scenario in the last 30 years. This may be even worse than the recession which happened in the laste 70s since at that time there was only the oil problem. Now there are too many too list.

Prices can go up and go down. Or do you think that people will buy your house for $10 Millions one day when their income is just $50,000 a year?

Please, stop the no – sense hype.

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June 12, 2008 - 7:11 am

Skip101 wrote:

Too much negativity and not much common sense/fact in a lot of this thread, personal opinions, often from people who have no idea of the Australian market, in some cases not even residing in the country, hence no first hand knowledge.

ItalianDragon wrote:

The most annoyning thing is that REALESTATE agents are the number 1 people who inflate prices and they keep trying to pump and pump despite the market is collpasing.

The market (Buyers) determine the actual sale price, not the real estate agent.

Quote:

I thing realestate agents should NOT be paid in % but  on a fixed income.

If you were selling, you would think differently, you would want the agent striving to maximise the sale price on your behalf, the % commission is an incentive.

I disagree, I have been dealing with lots of agents and everytime there is an open inspection they claim there is already an offer on the house, sometimes even 2 !!

Then 2 months later the house is till there unsold and at a cheaper price!

And this is just one of their multi-lies-strategies.