All Topics / General Property / No Housing Bubble in Australia…is there?

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  • Profile photo of susie843susie843
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    With regards to this, I found Catherine Cashmore's write-up in particular helpful: 

    All future analysis is to some extent speculation and although I can ‘envisage’ temporary drops in the market – 5/10% in some areas, I honestly don’t feel we’re heading for a 40% drop or more which has been suggested.

    In the US borrowers with little income, no equity, and poor credit were allowed to take on mortgages they simply could not service. The system was unregulated and therefore even with a shortage of homes in areas such as California, a crash could not be avoided.

    In Australia our lending rules are different. We don’t have sub-prime lending – high LVR loans are subject to mortgage insurance which protects the lender against the loss. In the US this wasn’t the case. They gave ‘non-recourse’ loans allowing home owners to ‘foreclose’ and walk away from the debt This resulted in a large number of properties suddenly hitting the market creating a huge surplus in stock.

    ……..

    Read full article here:

    http://www.propertyportfoliospecialist.com/2010/09/property-market-crash/

    Profile photo of realestateedu.com.aurealestateedu.com.au
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    Hi Guys

    Well I'm sitting in the Sheraton N0.1 hotel in Rome we just did a 18 day tour of Italy and over the Swiss boarder.

    Tomorrow I go to Paris and then London, I have 3 mates from the states with me and a few others.

    There are opportunities in the states for sure, Europe is quite different BUT I am blown away with the number of tourists, one bus company has put on another 100 buses just for September to handle the demand _ go figure that.

    All the talk is that Aussie will drop by 20% in the top end … lets see if it does happen.

    Remember that if all real estate goes up and you want to upgrade you are further behind because every thing else is rising as well. In Europe tourism is a big booming business.

    Your home is not an ASSET if it the only thing you own, like in the game of monopoly you need to be in a position of getting 4 green houses to pay for your PPOR and not your take home pay.

    I'm enjoying being away from Australia and encourage everybody here to travel and see what is happening in other parts of the world.

    Take care all i'm looking forward to checking out Paris and London.

    Regards Philip Sigglekow
    LREA author

    Profile photo of WynyardWynyard
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    A good point being made here:
     
    With a Million Dollars in 1980 a investor could buy 25 houses at the 1980 Median price of $40K & rent them out @ $100pw or $130K PA giving you a yield of 13% less 1980 interest rates of 10% & you had a investment that paid for itself to hold plus a investor could sit back& enjoy the capital gains… Fast Fwd to 2010 $1 Mi…l will buy you 2 houses at todays Median of $500K & rented @ $500 pw you would take in $52K pa or a yield of just 5.2% not enough to cover the interest let alone other holding costs.

    Of course the investor in 1980 now has a $12.5 million asset in 2010 but to achieve the same outcome as a 1980 investor, todays $500K house would need to go to $6.25 milion by 2040 Now if wages also follow the last 30 years ages will only get to $325K PA and with the banks only lending @ 5 times income this will constrain a 2010 propertys worth to only $1.65 Mil in 2040 a capital growth of only 3% PA making property investment in the future unattractive. Anybody disagree?

    Quoted from comments section on today's otherwise fairly watery bubble article:
    http://theage.domain.com.au/real-estate-news/could-investors-create-housing-bubble-20101006-166z5.html

    The Age has a property bubble article every second day, which I think reflects a growing attitude that things are well out of whack. Surely something has got to give, sooner or later.

    Profile photo of realestateedu.com.aurealestateedu.com.au
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    Yes W agreed.

    What is a millionaire in 1980 today is probably valued at 10 million dollars to be a millionaire.

    This all began (inflation) in 1971 when Nixon too away the cash value from gold … read the conspiracy of the rich by Kiyosaki.

    Here in Paris and London the sentiment is the same … affordability.

    Cheers Philip Sigglekow

    Profile photo of realestateedu.com.aurealestateedu.com.au
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    The federal reserve bank in america is not federal is not a bank and they have no reserves, but make decisions to print cash more than they have in assets (gold) , go figure that.

    Nixon changed the rules of money in 1971 when he took away the gold standard from cash.

    Philip

    Profile photo of Scott No MatesScott No Mates
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    a couple interesting articles today in business spectator & the eureka report. Banks withholding finance to new developments as a form of ‘price support’ ie withhold supply & cause demand to build up.

    Profile photo of realestateedu.com.aurealestateedu.com.au
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    Hi Scott,

    Lets see, ah we have no funds? or we have no confidence? or we read in the age that property is overvalued by 15% or we are waiting for the FRB in USA to announce on tuesday what is happening, or I know we want 110% pre-sales before we lend any money aaahhhhh

    Philip

    Profile photo of Scott No MatesScott No Mates
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    more like banks are overexposed to residential, however will increase that by taking on presold residential developments (go figure) but have little confidence in commercial markets and are very underweight in this area by historical averages.

    Profile photo of realestateedu.com.aurealestateedu.com.au
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    Hi Scott,

    "The Age" believes that property prices on the top end will drop by 15%

    Banks r in the business of lending money to make profits … ah how much profit did ANZ make for the year?

    The rich r getting richer and the middle class is being wiped out …. quote by Robert Kiyosaki

    Inflation began in 1971 with Pres Nixon and it it compounding into a massive bubble.

    Aussie dollar at 97.6 and inflation kicking in … higher taxes, governments running out of money, grow yr own veggies and raise goats hehe

    If property prices double who will afford it?

    Philip Sigglekow
    LREA author
     

    Profile photo of nicolas_bnicolas_b
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    Our banks have mark to market RMBS debt held on their books. The only way property can continue to rise is IF international investors continue to rollover the banks finance at affordable levels.

    The banks and LMIs have been reducing capital requirements by continually updating valuations and doing capital calculations on the updates.
    Which explains the residential development finance requirements. 

    I fear the Game is over.

    Profile photo of hschmidhschmid
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    Hi all, I just read this very interesting report

    http://www.moneymorning.com.au/reports/mm-aussiehouseprices-2010.pdf

    It’s fresh, very current… and Australian!

    Enjoy

    Profile photo of harbharb
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    realestateedu.com.au wrote:

    Aussie dollar at 97.6 and inflation kicking in … higher taxes, governments running out of money, grow yr own veggies and raise goats hehe

    Yeah , let all stock up on baked beans and head for the hill (again)

    Quote:
    If property prices double who will afford it?

    People who's incomes will also double ?
    I've heard the same 'who will afford it" when prices where 1/3 to 1/2 of what they are now and guess what , someone can still afford them.

    Profile photo of realestateedu.com.aurealestateedu.com.au
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    <moderator: delete flame>

    Philip Sigglekow

    Profile photo of Dan42Dan42
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    Is it just me, or do Philip's posts make no sense? And the attack on Harb is out of line. He's just pointing out we have heard all the doom and gloom talk before.

    Yes, Nixon took the gold standard away from the USD, so what?

    And no, I don't want to read a book by a guy who has failed at every business he has ever undertaken, other than writing books about how to get rich! God bless Aamerica.

    Profile photo of WynyardWynyard
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    Geelong now more expensive than London!

    The report is a few days old, but in case you missed it

    http://smh.domain.com.au/real-estate-news/melbourne-housing-now-severely-unaffordable-20110125-1a396.html

    Profile photo of DWolfeDWolfe
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    Welcome back Wynyrd!

    This article is full of 'whatever' numbers.

    "Demographia listed Melbourne as the world's 321st most affordable city, more reasonably priced than only Sydney, which came in at 325th, and a handful of other locations."

    Umm sure, so how many cities are in the world? According to GOOGLE there are 2469501 cities in the world. So being 321st isn't really that bad.

    "Brisbane's affordability trailed London’s so-called  exurbs, which stretch into neighbouring counties in east and southeast England. Queensland’s capital ranked 303 in terms of affordability, with a ratio of 6.6 per cent while the English markets were 297, with a ratio of 6.5 times."

    Brisbane trailed Londons outer suburbs is what I get from the paragraph above. Nowhere in the above or the Demographia quotes says that LONDON IS CHEAPER THAN GEELONG.

    Sorry to say but "English markets" is not LONDON.

    Please don't bother trying to tell us all how unaffordable everything is. The question you should be asking my friend is "what do fear mongerers have to gain" People who spruik the market "what do they have to gain?", people who spook the market, "what do they have to gain?".

    Simple.

    People will afford what they can when they can. When they can no longer pay what vendors expect then the price will dip.DIP not crash. There will not be a fall of $200k on a $400k house just because people don't "want to" pay that price.

    Any more articles? You know what I can do with Google my old friend! ;)

    D

     

    DWolfe | www.homestagers.com.au
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    Profile photo of fWordfWord
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    Wynyard wrote:
    Geelong now more expensive than London!

    The report is a few days old, but in case you missed it

    http://smh.domain.com.au/real-estate-news/melbourne-housing-now-severely-unaffordable-20110125-1a396.html

    Looking at that comment, I'd have to question if the article is referring to Geelong as a suburb or Geelong as an LGA. If the latter, then there is still much affordable housing around. There are decent, detached houses on land (600sqm or so) going for around $200K. My tax agent once made this comment: 'Geelong is still cheap.' And I'd have to agree.

    In Singapore (where I was born), $250K would only buy you a shoebox apartment in the 'suburbs'. This is government subsidised housing and you buy the said apartment on a 99-year lease. Terrace houses in these 'suburbs' in need of work generally go for around the $1.6-1.8mil mark. That's not to mention most working-class people struggle to even put up the $30K for an older second-hand Corolla to drive their family around, plus the ERP costs (similar to Eastlink gantries in Melbourne, except the ERP gantries are EVERYWHERE).

    On the flip side, public transport in Singapore is excellent, but how many people really want to shuttle their kids around by accompanying them to school on public transport, and then catching this to their workplace? One of my friends works as a veterinarian in Singapore and is hence on a decent job and on a decent wage. Yet she is nowhere near buying her own place. I do not disagree that Australian property is getting expensive, but to say that Australian property is unaffordable would mean prices in Singapore are highway robbery (which I agree they are).

    But going back to the 'Geelong is more expensive than London' comment, I must say that this is truly baffling. Geelong is massive and becoming a CBD in its own right, with similarities to Melbourne if albeit less congested and probably several years behind. If I were cashed up, I'd be buying in Geelong right now!

    Profile photo of WynyardWynyard
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    Hey DWolfe!

    See second para, and I quote: "London is more affordable than Geelong."

    The print article (from the Age, syndicated with SMH – I just did a quick google to dig up the spooks) had numbers to back this up (in graphic form, prob why not shown here). Yes, it is more affordable to buy in London, taking into account cost of living vs expenses, not just house prices. London, not exurbs. Roughly translates to Geelong is more expensive than London. Brisbane more expensive than the exurbs.

    And, what do your market spooks have to gain? Maybe a valid point. If I am one, what I hope to gain is affordability and hope for my generation to own their own place! Some hope for creative people how don't work 60hours a week and might pursue an arts career/study and meager living but still want to live in the city that thrives of the 'culture' the poor bastards provide (not to sing that poor-artist song too loudly, it might offend then new neighbours wanting a piece of the inner city action). That's all.

    I'll try find a list of the 325 cities they looked at, and see what basis they chose these 325 cities on. I'm sure they were chosen for the desirability to live in. There may be 2469501 worse cities to pick from yet. But I do love an article that is sympathetic to my anguish.

    Profile photo of WynyardWynyard
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    "prices in Singapore are highway robbery"

    Why are we in this position?

    Indeed, that is all news to me, thank you for lifting the wool from my eyes. In someways I'm glad to know we're not alone, it strengthens my feeling that we are all screwed – and that perhaps there could still be a revolution (several, a la Egypt). Maybe there is a latent communist in me yet.

    Profile photo of DWolfeDWolfe
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    Wynyrd,

    That is not a direct quote from the Demographia study, just journalism.

    I have read through the other post you have put on other threads and honestly it seems like u are just waiting in hope for some one to hand to a nice house in a thriving area. Aint gonna happen.

    You need to get up, stop worrying about what "the market" is doing and make an active choice to change your own life.

    I'd like to meet any investor from this site who just got handed multiple properties (or even one) I think they would be thin on the ground.

    As for your comments about Egypt, that really shows me how immature you must be. People rebel as there is genuine problems such as no food, high crime and corrupt officials, and limited choice.

    I see no parallels between Australia, being the land of choice and opportunity and Egypt where at the moment there is none.

    Get up and get going. This is as much of a hand out as you are going to get. YOU are the only person who can change your life. I can't come over to you and hold your hand and buy you a house. You need to go out there and take what opportunity there is in your life.

    I really hope in 6 mths time you are not still on here complaining because that will really tell me and everyone else that you are not interested in changing your life.

    D

    DWolfe | www.homestagers.com.au
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