Okay, I need a lesson, oh wise ones, please inform me so I am not so ignorant.
When was the last couple of crashes. What happened to prices in the short and medium term, % wise, and how long did prices take to recover?
I really wanted to find out median price sales and volumes from as many years as I could find, and then plonk the numbers into my share analyser, but could not find the numbers anywhere (except at the official ABS site, who would sell me one set for about $17!)
Aaaaaaaaaaaaaaah master, your grasshopper wait for his lesso
Hi Wrap,
Look at http://www.navra.com.au then follow the links ‘news articles’ then ‘latest NFS articles’ and then ‘table of graph of median prices 83-04’
This gives you a 20 year snapshot – Steve Navra argues that any further back than this and your statistics are unreliable because of the significantly changed economic and social conditions as compared to today. He argues 10 years (?from memory)is a little too long ago too.
Derek
[email protected]Property Investment Support Available. Ongoing and never stopping. PM welcome.
Originally posted by Derek:This gives you a 20 year snapshot – Steve Navra argues that any further back than this and your statistics are unreliable because of the significantly changed economic and social conditions as compared to today. He argues 10 years (?from memory)is a little too long ago too.
So it’s different this time?
This is what the proponents of the “New Economy” were espousing ’round about the year 2000[whip]…and oftentimes before that.
All that graph shows is a 20yr bull market – I want to see what happened during a bear market.
Anyone know any good books/articles on the subject?
Rgds.
Lucifer_auThis is a graph showing the last crashes in NZ from the RBNZ (scroll down to page 2) for the NZ punters It shows nominal & real prices which illustrates the affects of inflation on value.
Just need an Aussie one now!!
This is a graph showing the last crashes in NZ from the RBNZ (scroll down to page 2) for the NZ punters It shows nominal & real prices which illustrates the affects of inflation on value.
Just need an Aussie one now!!
Hi All,
Whether people believe ‘this time’ will be any different to previous cycles only the individual concerned can make that decision.
But if one truly believes the same factors are playing in this cycle then I believe they are sadly mistaken.
The last and most recent crash (if that is the right description as not all cities were affected the same) was in the early 90’s and this is reflected in the Navra graph. The Australian economy has undergone significant changes (whether you consider them to be pos or neg is up to you) in the past 20 years.
Off the top of my head I offer the floating of the Aus$, the removal of trade barriers, deregulation of the banking industry, changes to retirement ages, introduction of compulsory superannuation, Keating’s macro & micro economic reforms, change in status of the Reserve Bank, increased migration, urbanisation of the Australian population, changing household demographics as examples of some of the more significant changes to our economy that were not present in previous cycles.
I have collated three graphs and tables (Sydney & Melb 1960-90, other cap cities up to 90’s & int rates/loans/values comps 84-92) from three of Jan Somers books for interested people, some of which go back as far as 1960. These graphs predate the Navra information.
I haven’t worked out how to attach files here so people will have to PM me their email address if they want the information.
Derek
[email protected]Property Investment Support Available. Ongoing and never stopping. PM welcome.
Derek, I agree with you wholeheartedly. Our economy is not recognisable from the early 90’s. One thing is also certain. In 2015, so to will today’s economy.
This then begs the question, what do you think this means for property within the new macroeconomy environment.
James
Hi George,
The only thing that I can guarantee is that 2015 will be different – how?
Just dusting off the ‘crystal ball’ now and finding the ‘thinking hat’ and what do I see.
1. Continuing seachange drift.
2. Urban sprawl being halted/slowed and ‘infill’ becoming even more prominent.
3. Continued expansion of ‘work from home’ policies.
4. O/seas migration increasing to offset the aging workforce.
5. Australia economy moving even further away from manufacturing base.
6. Increased development of ‘creative’ financial packages by lenders.
7. More and more people using the equity in their own homes as base for other investments
8. ++++++Ultimately I suspect property will continue to be a sound investment through the next 12 (or so) years – after all it was only 12/14 years ago people were saying that it was getting too expensive and repayments were a too large chunk out of the weekly pay packet.
Go even further back and there have always been times when property ‘wasn’t considered a good investment’ but as we know it has been a long term ‘success’
Derek
[email protected]Property Investment Support Available. Ongoing and never stopping. PM welcome.
I dont want to rain on anyone’s parade but looking at historical prices may not be all that relevant.
Before launching into why, it might be instructive to look at a few examples in other countries
Finland 1987. Real estate prices fell 50% in two years and still not have reached those boom levels
Japan 1989. Property market fell spectacularly (at the time Tokyo was worth more than the whole USA) and continues downwards 15 years later.
Early 1990s – Southern England house prices fall by 50%.
So why doesn’t it happen in Australia? Simple – immigration keeps pressure on housing markets so they never fall very far.
However with birth rates headed below replacement since 1991, in the manner of Europe and Japan, it is only a matter of time before we start to see stock market – type crashes in property markets.
In the meantime – house prices are pumped up by baby boomers seeking retirement nest egs. Possibly 10 good year left in it – so make hay!
I like that….red abysssss…
I agree with the message…caution required.
Abyss approaching and due..
Too much information overload from too many experts on interest rates, effect of interest rates, economic indicators, comaprisons with previous year, years, decade, global factors…wrappack, what will your share analyser spit out with all these numbers ?(if it doesn’t crash)
I’m curious…
KPThis market is different from previous markets – thats what they said about the IT Boom. And it came a crashing down.
My IT based shares are still recovering!!!!!
People still get greedy – overcommit and come a crashing back to reality when interest rates start to rise. This will be no different.
I will add to the list of other changes that have occurred of recent (the last 7 years) that have changed the RE market significantly:
* The ease of gaining finance- it simply wasn’t possible for people to get finance in the past as it is now. Lo-docs, no-docs, 105% loans… these all mean that every man and his dog can get a loan. This would link with the advent of mortgage broking as an industry (a huge growth industry that only originated about ten years ago)
* the internet… investors are much more connected and savvy due to the huge resource of the internet. RE books are also huge sellers. Every man and his dog is an author of RE, and we are all their hungry readers. This has never been the case before, in Australia at least.
* globalisation- again, the interconnectedness of the world means that people are now able and confident to invest overseas. Some global RE markets are deregulated to the extent of free reign of outside private investors.
* more gender equality: this means that women are increasingly developing a market share of RE that did not occur in past booms. The market has “doubled” if you will, having more females enter the market.
I do not believe that this boom and other booms can be compared. RE was once monopolised by higher income earners, and was much less regulated. It’s also why I believe that RE will maintain (to some extent) its value… because so many aussies are relying on RE for their livelihood, retirement etc. This was not the case in the past, except for a very few minority “in the know” investors.
kay henry
My reasons for why this is NO different to other Booms. I am not saying prices will come a crashing down all I am saying it that growth will be very low and may start to fall as we experience a soft landing. Therfore its not that good an idea to hold expensive negative geared properties at the moment . Dont Over commit.
<<<<<* The ease of gaining finance- >>>>
Yes , its easy to gain finance. But at some point you hit the wall and banks will not lend you further money. We are also experiencing historical low interest rates.<<<<<* the internet… >>>>
Is just a marketing tool. Instead of visiting agents and looking at newspapers you can view sites on the internet and use forums like this to spread the message. You can even buy interstate without seeing the property except on the internet.<<<<<* globalisation >>>>>>
I work for a US based global company. I have colleagues I work with from 15 different countries – Asia, EMEA and latin America. I am married to a candian. Not sure how this effects the property market except that its easier for ex-pats to buy while overseas. Non of my colleagues have ever mentioned buying property in Australia.
Are there not stats that suggest properties in Australia are overvalued by world standards. There are also barriers to buying in Australia for foreigners – they still need permission.<<<<< more gender equality:>>>>>
Males and females can still get greedy and over commit. They see their colleagues buying up and borrowing and think – why not.<<<<<I do not believe that this boom and other booms can be compared. RE was once monopolised by higher income earners, and was much less regulated. >>>>>>
And these same people bought IT stocks. You could buy stocks easily on e-trade and those internet based brokers. The internet was going to change everything.
All I am saying is dont overcommit and when buying, factor in a 2% interest rate buffer in your can I keep the property long term scenario.
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