I apologise for the typo. You are correct at 3%.
So where is support for a decrease in property prices of 45% over the next 12 months?
I don’t see any evidence of doom and gloom or bubbles bursting.
Just regarding your comment about the March increase having ‘such a big impact’, can you please explain where this is evident?
Robert Bou-Hamdan
Mortgage AdviserI have clearly state 30-45% in real terms Robert. That is what it will take to return property values to trend. You can make the graphs yourself for your area using historic house price stats from your nearest Real Estate Institute and adjusting them for inflation (City & regional stats available from the ABS). Whack a trend line through it (make it as sophisticated as you like). There is not a single area in Australia where residential real estate is not overvalued – this includes apartments in Sydney and Melbourne.
There is absolutely no reason why house prices will not continue to fall to that trend or below.Just regarding your comment about the March increase having ‘such a big impact’, can you please explain where this is evident?How about today’s retail trade figures? The surveyed collapse in consumer confidence immediately post rate rise?
Also, don’t forget that it normally takes 18-24 months for the full effect of IR changes to fully work their way through the economy.
Cheers, F.[cowboy2]
So where is support for a decrease in property prices of 45% over the next 12 months?I didn’t say anythingh about property prices falling 45% in the next 12 months. I quoted a news report saying building approvals for apartments in NSW fell 48% in March.
As for March rate rise having a big impact try this:
Consumer sentiment down 16.5%
http://www.smh.com.au/news/Business/Consumer-confidence-rocked-by-rate-rise/2005/03/09/1110316081715.html
“The last time confidence dropped so dramatically was in April 1990 where it fell 15 per cent, just ahead of the unfolding recession.”The surveyed collapse in consumer confidence immediately post rate rise?Snap! [biggrin]
Just a final point for this thread which I have pointed out previously:
Trends change with technological advances and changes in comsumer spending.
Enjoy your doom and gloom boys. I prefer to surround myself with confident people who think for themselves and not reproduce other people’s work over and over.
Robert Bou-Hamdan
Mortgage AdviserTrends change with technological advances and changes in comsumer spendingHmmm, sounds very “new paradigm”. Don’t tell me, don’t tell me … its different this time?!
The people who are think for themselves are the ones who swim against the tide, not with it, and this real estate boom has been of tsunami proportions.
are you lot still working up a lather? maybe we need a new forum – Statistics to Support Any Given Argument. Could be quite a database that is constructed.
Not sure what all the arguments are about – things really ARE different this time. the world economic situation is so dire and unmanageable (and I have the stats to prove this!) that property is finished with as an asset class [wink] I am interested in this concept of putting cash in the bank… any ideas on what sort of leverage I can get?
http://www.megainvestments.com.auExtensive list of ‘Off The Plan’ property available for sale in Perth.
John – 0419 198 856
If statistics and graphs can prove any given argument, can someone please send me a link to anything at all showing house prices anywhere in Australia likely to rise over the next 5 years?
What about some workings applying the ‘doubling every seven to ten years’ rule from the current historically unprecedented high prices?Seriously, if stats are so easy to malnipulate, surely there should be plenty of supporting evidence (bear in mind that the soft landing scenario so often floated involves falling real prices and does not therefore represent a positive return on investment)?
I absolutely support the idea that we need a ‘market discussion’ or economics section in this forum.
Cheers, F.[cowboy2]
If statistics and graphs can prove any given argument, can someone please send me a link to anything at all showing house prices anywhere in Australia likely to rise over the next 5 years?My local real estate paper features a “projected capital growth” page for each suburb. Without fail they predict 15% growth for my suburb every year. The source of this prediction is http://www.homepriceguide.com.au.
Funnily enough the local McGrath agent put a leaflet in my letterbox this week with a section called “Overview of house and apartment prices in your suburb”. The YOY change for my suburb was minus 14.92%. The source? http://www.homepriceguide.com.au
What I’m saying is you can take any prediction from anyone involved in the real estate industry with a grain of salt. They will always tell you that prices will always rise. Ever met an agent who said now was not a good time to buy? Me neither.
Without pointing any fingers, a mortgage adviser or a developer is hardly likely to have an unbiased opinion.
No-one ever said that property is finished as an asset class. Five years from now might be a very good time to buy real estate, but blind freddie can see where we are in the cycle at the moment — at the top of a very big cliff.
PMI is a more respected company and one of the mortgage insurers who dominate the market. Their opinion of median property prices influences me far more than an American report by a fund manager. If anything, they would talk prices down to reduce their risk of loss. They have not done this in my opinion.
http://media.corporate-ir.net/media_files/irol/63/63356/AUS_Property_Report_March2005.pdf
Please take note of TABLE 4 on page 4.
Robert Bou-Hamdan
Mortgage AdviserI LOVE these threads. I never did economics at school, so I’m learning alot from reading opposing views. And I commend you all for putting your views so clearly and in such an entertaining way.
I agree with Foundation – we need a separate forum for discussions on the state of the market. Unfortunately many of these interesting discussions start out with thread topics totally unrelated to economics discussions. Hence it’s quite a task to seek them out.
My two-pence worth, and yes I’m quoting another newspaper article. Sorry, can’t remember the source (The Oz?), but it said that “the big players” are still staying out of property investment. In other words, that market conditions were still unappealing to experienced property investors. Yields are pathetic, and capital gains are many years away.
For those who missed the last price tidal wave, it doesn’t seem quite the time yet to dive in if a primary goal is to buy in at a good price. In my neck of the woods (Adelaide) houses are staying on the market for many months as sellers hang out for yesterday’s prices.
So I join those hanging out for another interest rate rise to give these sellers a reality check.
cheers,
CarlinOriginally posted by dmichie:Quote:Without pointing any fingers, a mortgage adviser or a developer is hardly likely to have an unbiased opinion.Hmmmmm………..
A mortgage adviser and a developer are totally different beasts. A mortgage adviser does not care if property prices go up or down or interest rates move hence their advice is unbiased. They make money from settling loans and do not make anything from property like a developer does.
You need to understand what people do when various market conditions exist to understand why a mortgage adviser is independent of property sales. If the market is good, people buy property and a mortgage adviser will write many new loans. If the market is bad, people refinance and debt consolidate and the mortgage adviser will write many new loans.
Please explain where the bias is???
Robert Bou-Hamdan
Mortgage AdviserJust Announced: Our trade deficit blew out again this month.
Trade gap bulges on record imports
http://finance.news.com.au/story/0,10166,15186410-31037,00.html“AUSTRALIA’S goods and trade services deficit with the rest of the world grew in March to $2.7 billion, the second-highest ever, and imports soared to a record $16 billion, new figures released today show.”
Connecting the dots:
Big deficit means lower AUD, means more inflation, means higher interest rates.Thanks for the link to the PMI report Robert, a good read, and supportive of the view that house prices will stagnate (fall in real terms) in most areas then fall moderately (sharply in real terms) throughout the country. Good stuff.
Regarding Mortgage broker bias, surely a booming property market is in their interest? Does not the dramatic fall in loan approvals mean the industry will need to contract?Cheers, F.[cowboy2]
Your little ‘real terms’ inclusions in brackets are of no consequence. As has been said numerous times, there is evidence to support or refute any economic theory. I believe Australia will not experience a recession and certainly don’t believe a property ‘bubble’ will burst. At worst, some air is escaping.
Regarding the mortgage broker bias debate, I am happy to discuss this in a new thread. Feel free to start one and ask any questions you feel require a response and I will be happy to answer them.
Robert Bou-Hamdan
Mortgage AdviserI believe Australia will not experience a recessionWhat?! Are you saying Australia will never experience a recession again? The business cycle is a fact of life. We’ve had boom and bust since the beginning of time, and as long as Australia remains a free market economy we will continue to have booms and busts.
dmichie, take a pill and chill mate.
If I was saying that, I would have wrote that.
We are discussing the current market and my comments refer to short-medium term economic outlooks.
However, if Labor wins an election, I would be predicting a rescession within 2 years.
Robert Bou-Hamdan
Mortgage AdviserRegarding Mortgage broker bias, surely a booming property market is in their interest?foundation, you keep taking the words out of my mouth. There has been an explosion in the mortgage broking business since the housing boom began. Think back to the early 90s (when I bought my first house). Who did you go to for a home loan then? A bank. Aussie Home Loans didn’t exist, neither did Wizard, or any of the myriad of smaller mortgage brokers.
You can’t tell me the housing boom hasn’t been good for the mortgage broking business.
We are discussing the current market and my comments refer to short-medium term economic outlooks.So when exactly do you expect a recession? This is already the longest post-war expansion (which IMHO has been prolonged by ultra-low interest rates and easy credit)
However, if Labor wins an election, I would be predicting a rescession within 2 years.Labor won’t be winning any elections until after the recession.
Your little ‘real terms’ inclusions in brackets are of no consequence.Ahhh … so its the nominal dollars that matter. Silly me, there I was thinking house prices should be adjusted for inflation.
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