All Topics / General Property / Property Market Has Bottomed?

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  • Profile photo of hbbehrendorffhbbehrendorff
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    http://www.news.com.au/business/money/story/0,28323,25288311-14327,00.html

    AUSTRALIA is facing a homeless crisis with more than 200,000 tenants in rented accommodation forecast to face eviction by next year – 80,000 in NSW alone.

    Research conducted for The Sunday Telegraph by Fujitsu Consulting shows that as many as 183,000 rental households across Australia could be in arrears by December, assuming unemployment rises to 7.5 per cent, with 68,000 in NSW.

    But if unemployment rises to nine per cent next year, as many economists predict, the number of tenants facing eviction rises to 216,000 nationally, and 79,000 in NSW.

    The actual figures may turn out to be significantly higher because research could only take into account those landlords with mortgages. It is not known how many more landlords there are who own their investment properties outright.

    The rise in unemployment will lead to a flood of claims to Centrelink for rent assistance, but the state benefits are often not enough to meet the rent payments in full, leaving landlords with little choice but to evict the occupants.

    Tenants are deemed to be in breach of contracts if they fall two weeks behind with rent. With many of Australia's 1.9 million landlords needing the rent to cover mortgage payments, few give the tenants much extra time to pay arrears and tenants can find themselves on the streets within weeks.

    "Our research shows that landlords are being hit hard by the falling stock market and low returns on savings," said Martin North, executive general manager of Fujitsu Consulting.

    "Therefore they need the rent to come in to cover their mortgage payments. If the rent stops, they need to act quickly, otherwise they fall behind with mortgage payments."

    Shane Oliver, chief economist at AMP, says the findings represent a "social problem" and will get much worse before it gets better.

    "In this tight rental market, landlords know they can get new tenants quickly, so they won't put up with tenants in arrears.

    "Also, rents have been rising because demand for accommodation is so great. And that is placing more pressure on tenants."

    Mr North says that Fujitsu's economic modelling shows that in economic downturns, unemployment tends to rise fastest among people who rent their homes.

    "As unemployment rises, it is likely that the supply/demand situation in Australia will reverse, so there will be more properties than buyers – a classic sign of a property bubble," Mr North said.

    Profile photo of devo76devo76
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    hbbehrendorff wrote:

    http://www.news.com.au/business/money/story/0,28323,25288311-14327,00.html

    AUSTRALIA is facing a homeless crisis with more than 200,000 tenants in rented accommodation forecast to face eviction by next year – 80,000 in NSW alone.

    Research conducted for The Sunday Telegraph by Fujitsu Consulting shows that as many as 183,000 rental households across Australia could be in arrears by December, assuming unemployment rises to 7.5 per cent, with 68,000 in NSW.

    But if unemployment rises to nine per cent next year, as many economists predict, the number of tenants facing eviction rises to 216,000 nationally, and 79,000 in NSW.

    The actual figures may turn out to be significantly higher because research could only take into account those landlords with mortgages. It is not known how many more landlords there are who own their investment properties outright.

    The rise in unemployment will lead to a flood of claims to Centrelink for rent assistance, but the state benefits are often not enough to meet the rent payments in full, leaving landlords with little choice but to evict the occupants.

    Tenants are deemed to be in breach of contracts if they fall two weeks behind with rent. With many of Australia's 1.9 million landlords needing the rent to cover mortgage payments, few give the tenants much extra time to pay arrears and tenants can find themselves on the streets within weeks.

    "Our research shows that landlords are being hit hard by the falling stock market and low returns on savings," said Martin North, executive general manager of Fujitsu Consulting.

    "Therefore they need the rent to come in to cover their mortgage payments. If the rent stops, they need to act quickly, otherwise they fall behind with mortgage payments."

    Shane Oliver, chief economist at AMP, says the findings represent a "social problem" and will get much worse before it gets better.

    "In this tight rental market, landlords know they can get new tenants quickly, so they won't put up with tenants in arrears.

    "Also, rents have been rising because demand for accommodation is so great. And that is placing more pressure on tenants."

    Mr North says that Fujitsu's economic modelling shows that in economic downturns, unemployment tends to rise fastest among people who rent their homes.

    "As unemployment rises, it is likely that the supply/demand situation in Australia will reverse, so there will be more properties than buyers – a classic sign of a property bubble," Mr North said.

    Yes this is one possible outcome. Just as there are thousands more available showing all possible directions. I kind of start to zone out once i read " economists predict"

    Profile photo of jazz77jazz77
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    ummester,

    overpaid tradies??

    how much should they get paid then?

    Profile photo of shanemattshanematt
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    ummester wrote:
    harb wrote:
    How will the bottom fall out of a $400K market if you need $500K to replace it and because of increased population numbers there is an increase in demand ? 

    Some ideas follow. Some could be prolonged but some are impossible to avoid in the short term. I will note those with an *

    1 – FHOG boost gets taken away.
    2 – Unemployment keeps increasing. *
    3 – Immigration keeps decreasing. *
    4 – Stock increases as BB leave work and sell both PPOR and investment property. *
    5 – Negative gearing is reassessd.
    6 – Bank lending criterior is tightened further. *

    As for the 500k replacement cost, that can easilly decrease.

    1 – Land is in a bubble because state govt and developers have been maximizing revenue but soon they will realise that 10 sales @ 250K is worth more than 2 @ 500K.
    2 – Commodoties have already dropped so building materials will end up costing less.
    3 – Overpaid tradies will become increasingly desperate as construction decreases and work for less.
    4 – REAs will start talking vendors down in bids to stay employed.

    It's all tightly connected Harb. Already, near me, 4 bedddys on reasonable blocks are getting close to what I would consider worth buying. And they are only 40K more than a tiny townhouse is worth??? Yeah right. The buyers that have been supporting the market these past few months have little to no deposits and have had finite amounts extended to them as a mortgage. Poor buggers have been sucked in by some pretty evil federal policy. That is the only real floor at the moment.

    Profile photo of shanemattshanematt
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    Sydney market under 600k is on fire.Its like a buffet line going through the open inspections at the moment.Even if first home buyers grant was taken away,they are only 15% of the market.Interest rates are low and will go lower.Investers like myself are definately getting in.I can feel the competition when putting bids in on properties.

    Immigration is still very high even with the reduction.No land available to build on unless you knock something down in the sought after suburbs.rents going up all the time.Very,very low DA approvals for new construction in Sydney.Less than SA for the coming year.

    Profile photo of mrkueh80mrkueh80
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    the most curcial figure is umemployment rate, if the rates is keep going up, it surely not good for property and possibly property price will continue to fall….

    Just think logically, if umemployment rate rise, ppl cant afford to pay mortgage, and will fire sale the house and move to cheaper surburb.

    and tanent will start moving into cheaper area.
    just like US market right now,

    So what I believe those 300k range will be safe, but not for those high end property, will continue to fall.

    I am a business owner in Perth, but I dosent feel like is going to have recession, Business still running well and actually the order is starting to pick up.

    so I believe this quater will be much better than last quater. Just finger cross ><

    We are much better position than US market as we have very strict regulations.

    Terrance

    Profile photo of harbharb
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    @harb
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    mrkueh80 wrote:

    the most curcial figure is umemployment rate, if the rates is keep going up, it surely not good for property and possibly property price will continue to fall….

    Just think logically, if umemployment rate rise, ppl cant afford to pay mortgage, and will fire sale the house and move to cheaper surburb.

    and tanent will start moving into cheaper area.
    just like US market right now,

    So what I believe those 300k range will be safe, but not for those high end property, will continue to fall.  

    I sort of agree with you there however unemployment rates would have to go into double digits like back in early 80's to have a big effect on prices. In Perth the stamp duty, REA fees and other expenses makes downgrading from $600K-$300K a very expensive exercise that is almost not worth the effort. Then moving from say a $600K house in Melville to a $300K+ in Baldivis would add something like 10hrs and $100+ a week in traveling time and fuel expenses to get to work so the incentive to downgrade just isn't there.

    As for Sydney's under $600K that shanematt mentioned they are the cheaper suburbs.

    Profile photo of ajaydee73ajaydee73
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    We definitely haven't reached the bottom. We have only just seen the edge of the cliff. http://financialdisasters.blogspot.com

    Profile photo of KailynKailyn
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    How will the property market will move in 2 years in gurgaon?

    high interest savings

Viewing 9 posts - 21 through 29 (of 29 total)

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