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October 09 Property Crash Begins

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Viewing 6 posts - 141 through 146 (of 146 total)
  • Profile photo of harbharb
    Member
    @harb
    Join Date: 2006
    Post Count: 324
    WJ Hooker wrote:
    harb and DWolfe,
    I was wrong…there I said it.

    No worries W.J, it sometimes happens to everyone. :)

    Quote:
    But don't call victory just yet, the fat lady hasn't sung yet..the world economy is going to catch up with us sooner or later. Lets see how prices are going in another few month's.

    What do you expect to change over the next few months ?

    Quote:

    Why home prices are not about to crash and burn

     
    James Kirby

    October 10, 2010

    IS THE value of your house about to plunge? Macquarie Bank has tipped a 20 per cent drop in housing construction next year while commentators say the smallest lift in interest rates will pop the ''home price bubble''.

    House prices have been sliding for months. Industry estimates suggest that over the past quarter Melbourne prices are down 2 per cent and Sydney is off by 0.5 per cent. But these figures are nothing compared with those for Britain and the US, or Ireland, where home prices are down 40 per cent and falling.

    So it is no surprise that every time anything remotely negative happens in the wider economy – this week it was the mere threat the Reserve Bank might lift interest rates – there are suggestions home prices are about to go over a cliff.

    The doomsayers' arguments have been well aired. They pivot mainly on the sheer price of our real estate in relation to average income. There is also a lot of credence given to household debt levels and the presence of incentives that prop up the market, such as negative gearing.

    Invariably the doomsayers are economists, especially offshore, while the bulls are linked to the success of the property industry (mortgage financiers, builders, developers and real estate agents).

    Associate Professor Steve Keen, of the University of Western Sydney, for example, who has gained national prominence for his dire warnings on house prices, is still talking about a sharp home-price downturn. On Friday he told the ABC that property investors on average incomes would not be able to endure even flat prices in the coming years. Keen estimated property investors earning less than $80,000 a year make up 20 per cent of the market and the slightest pinch in the market would prompt this sector to sell out, causing ''the bubble to burst''.

    Alternatively, we get experts such as ANZ economist Paul Braddick, who made his name with a presentation he took round the country called ''the mother of all housing booms''. Braddick believes the outlook for house price appreciation is now ''soft'', but he is convinced the momentum is strongly upwards over the long term.

    Fresh voices are rare in the debate. But in recent days a new perspective emerged from John Wilson, the Australian chief executive at Pimco, the world's biggest bond fund. Wilson, in a paper on Australia's housing market, argues forcefully that our market is no bubble.

    He begins with some obvious points – worrying that Australia may follow the US or Britain is pointless because we have an utterly different economy with relatively strong growth and high employment. Likewise, where the US and other nations built too many houses in recent years, we have not built enough.

    He follows with a range of points:

    ? We have relatively high mortgage repayments but the ratio of housing costs to household disposable income (a key indicator of people's ability to finance mortgages) has remained unchanged at 30 per cent for more than a decade.

    ? Australians pay a relatively high amount in cash for their homes, but a closer look shows that one-third of repayments go on principal, not interest – that's saving and investment, and because housing has risen steadily (6 per cent a year) the situation is better than you think.

    ? Our household debt figures are high, but the debt relates to bricks and mortar – we are not spending any more on cars or credit cards. What's more, the average equity we have in our homes is 60 per cent and that has remained steady.

    Wilson also suggests the worst of the interest rate rises may be over: a view that is gaining momentum.

    Add it all up, and though it is clear home prices may be experiencing a weak patch, the merchants of doom have got it wrong so far and there's little reason to believe the local fundamentals have changed.

    http://www.theage.com.au/business/why-home-prices-are-not-about-to-crash-and-burn-20101009-16d3p.html

    Profile photo of realestateedu.com.aurealestateedu.com.au
    Member
    @realestateedu.com.au
    Join Date: 2009
    Post Count: 84

    Good comments

    IMHO I believe we are separating the wealth from the middle class into the poor and and rich classes.

    Will we ever see another BOOM like the last in our life times?

    Paris has a population of approx. 10 million people, a 15 square bed sitter rents for $1,500.00 per month – London prices are dropping, Rome prices are dropping, USA most ares are still dropping BUT in all the areas I visited in the last month the cheap end is getting the best ROI not “houses” as we Aussies talk about them.

    Theres and old saying “there is money in sh.t and now I believe it seeing it personally.

    Phil Sigglekow
    LREA author

    Profile photo of BennyteeBennytee
    Participant
    @ten_burner
    Join Date: 2006
    Post Count: 243

    I stumbled upon this old post, what are your thoughts now?

    I am still optimistic about the short and medium term future of property investing, as long as unemployment and interest rates remain low.

    Profile photo of simplesimple
    Participant
    @simple
    Join Date: 2006
    Post Count: 237

    Mine are: Hope for the best, plan for the worst!

    :)

    Profile photo of alfrescodiningalfrescodining
    Participant
    @alfrescodining
    Join Date: 2012
    Post Count: 160

    These doomsday people tend to scurry away when they realise they're wrong.

    Profile photo of BaysideBayside
    Participant
    @tesla-electric-cars
    Join Date: 2018
    Post Count: 64

    Mt Eliza has been a great area to invest in for capital growth. The premium suburbs such as Mt Eliza (Toorak of the Mornington Peninsula) have been performing really well in the past year or so.

    Bayside

    Coastal markets 2019

Viewing 6 posts - 141 through 146 (of 146 total)

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