Forums / Property Investing / General Property / October 09 Property Crash Begins

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  • Profile photo of WJ HookerWJ Hooker
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    Lets have an update.
    December rate up 0.25% plus bank increases….more to come.

    Home rates 'to hit 8.5%'

    Author: Peter Martin, Economics Correspondant
    Date: December 10, 2009
    Publication:  The Age (subscribe)

    Leading economists have forecast a rebound in Australia's economic growth rate that will force another series of interest rate rises, adding at least $300 a month to the cost of servicing an average home loan by 2011.

    A week after the Reserve Bank imposed its third official rate rise in as many months, a survey of economists has predicted a lot more pain ahead for Australian borrowers.

    The economists expect growth to rebound to 3.2 per cent next year and the Reserve Bank to respond by pushing up its cash rate from 3.75 per cent to 4.75 per cent, and then to 5.5 per cent in 2011.

    Profile photo of devo76devo76
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    And its now December almost January 2010. Are we moving the goal posts back again ?

    Profile photo of DWolfeDWolfe
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    If the rate rises are so bad, the property market is in free fall (or soon will be) then sell me all your properties. I'll take them all off your hands for this discount of 40 % or in other words the fall in price that is being predicted. It is not 1929…….. DO NOT JUMP!!! Things will get better! I have some tissues!!!

    Time heals most investments and if it doesn't heal yours you bought the wrong thing. Even Alan Bond has managed to get rich again!

    While all this hot air is being puffed out by these people I will be buying all the property they shoulda, coulda and woulda (if only…) Australia doesn't need an ETS just get some of these people to be quiet for a few minutes, that should clear the air a bit!

    D  

    DWolfe | www.homestagers.com.au
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    Profile photo of WJ HookerWJ Hooker
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    Jan update.

    No Reserve Bank meeting this month.
    First Home Owners  – Existing House bonus reduced from $10,500 to $7,500
                                            New House bonus reduced from $14,000 to $10,000
    Headlines of Plunge in home loan approvals.

    Profile photo of Dan42Dan42
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    From The Age:

    A revival in sales of luxury homes has helped drive nationwide house prices to their biggest annual gain in six years, with all but Perth among the capital cities to end 2009 at record highs.

    After posting a 4.8 per cent gain in the December quarter, average prices nationwide clocked up an average increase of 12.1 per cent in 2009, Australian Property Monitors said.

    "While the First Home Buyer sector kept the overall market afloat through the end of 2008 and the first quarter of 2009, it's been the activity at the top end of the market that has driven the extraordinary overall result for 2009," said APM economist Matthew Bell.

    Profile photo of WJ HookerWJ Hooker
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    Feb Update:
    Interest rates left on hold – despite 100% economist predictions ( and banks increasing rates more than reserve bank increases for Dec 09 ).
    Wespac – Loans to require greater deposit 87% from 92% loan to value ratio.
    Rental vacancies rising across Australia
    New homes sales down 4.6% in Dec.

    Dan42 – OK so 10million dollar houses have gone up in value – big deal.

    Still on track..

    Profile photo of Dan42Dan42
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    WJ Hooker wrote:

    Dan42 – OK so 10million dollar houses have gone up in value – big deal.

    Still on track..

    WJ, I'm not sure what your agenda is. The article I linked to focuses on the higher end, but also says that the entire market rose by 12% for the 2009 year.

    Perhaps you could read the link again, a little more slowly this time.

    WJ Hooker wrote:
    Still on track..

    Still on track for what? An October 09 price crash???

    Profile photo of Dan42Dan42
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    WJ Hooker wrote:
    August 12 2009

    Yes,
            I admit I am a follower of Steve Keen, eventually Australia will catch up with the rest of the world. Mind you I think that the sharemarket will crash again, so maybe I am too pesimistic a person. I am eager for house prices to crash so I can buy a big pile of them, I predicted a large drop this year, but, interest rates dropped 3% to save people. BUT… as they now start to rise finally we may see some real action.

    WJ Hooker wrote:
    May 18 2009

    Jarra,
              The country is going broke, and you beleive that house prices will rise?

    Debt is going to make all of us worse off, things will get worse over the next few years, everyone will be selling, over a million on the dole, government will put them all on food vouchers, things are going to get a lot worse than you all think.

    Do not go into debt now.

    WJ Hooker wrote:
    April 28 2009

    I see problems coming, unemployment to reach 10%, its going to be a terrible few years.
    House prices will fall, unfortunately its a reality.

    WJ Hooker wrote:
    April 21, 2009

    undecided.
                       If you want to wait for house prices to go up again…. then you better be prepared to wait a lllooonnnggg time.

    Profile photo of WJ HookerWJ Hooker
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    Dan 42,
                  Thanks for being so keen to chase up my earlier blogs. It shows that I predicted house prices to fall earlier in the year 2009 but then interest rates were dropped keeping prices up together with first home owners grants etc.
                   Note my heading is Oct 09 the beginning of the house price falls not this is the point that house prices fall through the floor, it will take more than a month or two, more like a year or more before we get to the bottom of the market.

                   I have no agenda as such, just trying to put my view across that house prices cannot keep rising at historic rates, we are in a housing bubble that will eventually burst, just trying to warn people of the facts.

                   On track for a price fall this year and into next, by how much ?? maybe 10 -20% ..   It's only my guess, I'm sure you have a prediction of 10 – 20% growth, I'm happy for you to make a prediction. Problem is when we make predictions is the government or banks or some country defaults or bombs another country etc and throws your prediction out the window..

    Profile photo of Dan42Dan42
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    My prediction? I'm not predicting huge growth, and I don't know what will happen. I'm not someone who thinks property doubles every 7-10 years automatically, and realise that prices go both up and down.

    But I do think that a 20% across the board fall is very unlikely to happen, because ot the very reasons you mention. Govt intervention foiled your earlier predictions (although you should have seen that coming), and no Australian govt will want a huge house price drop on their hands. Especially in an election year, seeing as 70% of Australians are home owners. (One of the highest rates in the world).

    Profile photo of SHalesSHales
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    Hi
    Love a debate, so I'll put in my two cents worth.

    "We are in a housing bubble" – agreed, but I also think that the govt and the banks will do absolutely everything they can do to stop a dramatic busting of the bubble.  I wish they wouldn't.

    Maybe the enormous rate of immigration, the trade shortage and the cost of development will mean the bubble is sustained for the time being.

    My prediction – at risk of being shot down, I'll go out on a limb.  Stagnant or low price growth until everything else catches up with the price of housing.  No dramatic plunge, at least not across the board.  Possible a plunge in values in some areas.  I think that if the RE market does drop by 20%, across the board, then there will be some serious economic problems in Australia.  It will mean that the govt and the banking sector have lost control of the economy and we will be in some sort of free fall.  It's scary and unlikely but possible.  I wonder what the banking sectors tolerance of a correction would be.  I mean, how much would have to be wiped off the value of Australias real estate to destabilise the banking system?  You should see the price of farming land.  I don't mean hobby farms, I mean real pastoral land.  I can't work out how graziers are paying what they are paying for the land.  Perhaps because of drought subsidies on interest, don't know.  But I think that the banks have got themselves in a situation where the market is overpriced, but they daren't make any moves which may stimulate a correction because it would wipe too much off their own books.  That might be happening in other types of RE too.   

    So what am I doing – continuing to reduce debt, monitor the market and invest in cattle for the time being.  Planning an investment strategy that focusses strongly on cash flow (generating equity by paying off debt).  Considering investments in areas that may experience strong growth due to local factors.  Also considering making some investment in shares.

    shoot me down – love the debate.  Makes us all smarter

    Profile photo of rscovellrscovell
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    What is the next bull market is it commodities? is this asset class undervalued, I like getting value for my money I guess I would be what you call a "bargain hunter" that is my style.

    Profile photo of WJ HookerWJ Hooker
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    Government still trying to keep the housing buble going by encouraging Chinese to buy expensive properties.

    http://www.smh.com.au/business/property/australias-mortgage-debt-blowout-20100224-p1ex.html

    Profile photo of Dan42Dan42
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    Profile photo of ten_burnerten_burner
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    Have the doomsayers set a new date yet ???  

    we are in nearly in March 2010 no sign of slow down or property crash in Sydney yet, Im making more money than ever

    Profile photo of DWolfeDWolfe
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    Yep! Same here! Is anyone NOT making money from property? If you are not in it you can't win it.

    D

    DWolfe | www.homestagers.com.au
    http://www.homestagers.com.au
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    Profile photo of fWordfWord
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    DWolfe wrote:
    Is anyone NOT making money from property?

    Yeah, me, for one. That aside, a mortgage is a good thing to have.

    Maybe I'm a little simplistic here. But assuming a person owns a number of properties but is not geared up to their eyeballs, a lag in the property market isn't going to hurt them. If the first-home buyers are over-committed and have to release their properties to the market, it's going to be soaked up by investors at reduced prices.

    And then these same first home owners need a place, so they need to rent, hence keeping the investors around. Really, unless people start living in tents or on the street, I don't understand how a huge fall in prices is going to occur. Small drops will happen with shares or any other investment I suppose, but a drop in the property market of 40% or so is something I wouldn't expect.

    Still, I'm a newbie, so all this discussion is good.

    Profile photo of Sailesh CSailesh C
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    I will be bold and predict another two years of property growth.

    The economy is improving people will feel confident and people will feel confident again in buying instead of renting. Historically all property booms have happened in the face of rising interest rates and this boom will be the same.

    What happens at the end of the property boom?…well read the history books.

    Profile photo of hleunghleung
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    I'm with you, Sailesh.  The demand, particularly from immigration and overseas investors, is still there.  A lot of these migrants are cashed up in a market where there is a shortage of land for housing.  Many investors are shying away from the stock market.  They've got to put their money somewhere, and at the moment, it appears to be in property.

    I predict a 6-7% increase in prices across Australia with Brisbane and Perth being the standout cities.

    Profile photo of Sailesh CSailesh C
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    hleung wrote:
    I predict a 6-7% increase in prices across Australia with Brisbane and Perth being the standout cities.

    Traditionally Sydney and Melbourne kick off early then soon followed by the other states. However, with all the talk of another mining boom could see Queensland and WA benefiting as well. I think Brisbane has had a longer stagnant period than Perth hence, properties in Brisbane could be regarded as better value.

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