Where the Australian Property market is heading

Hi Asoka,

Are you aware of the forecast for the Australian population? Last report by the ABS (I think) stated an estimate of 35 million people by the year 2050. Immigration might slow, but it won't stop.

With respect to interest rates, this worries me a little, but not for another 2 years. I expect that by the end of 2011 things will have begun to slow down (if not sooner).

Summary:
– In the short term we will continue upwards
– In the medium term we will flatten and maybe even decrease slightly (assuming int rates increase by 150-200 points)
– In the long term we will grow in line with China, and our population growth alone should be enough to keep the long term uptrend going.

My 2 cents.

I have spoken to four principals of different real estate agencies in the last couple of weeks, and all have commented that the current Melbourne market conditions "can not be sustained".

This is the obvious comment one would have thought, with the real question being WHEN will it slow down?

Steve Mc's last e-mail newsletter stated something along the lines of "I agree that we are in a property bubble….but it is more likely to deflate than burst".

Once again, the question is one of time frame – so how far off are we from a change in the market?

The only sign of any slowdown I can start to feel at the moment is that perhaps whilst rentals are still fairly strong, the actual market rates for rent don't appear to be rising any further in the last few months. There is no longer a bidding war for rentals – rather it appears the bidding war has turned to auctions!

When 9 out of 10 metro properties on realestate.com.au and domain are listed as auctions, you know that agents have recognised an opportunity to take advantage of emotion and market sentiment – I wonder how long this will continue?

It appears we have had rising rents, rising prices and now rising interest rates… Perhaps rents will be the first to crack here – or perhaps not – but one thing is for sure… they can't all keep going up at the same time!

There is a dramatic shortage of property in Australia that is leading to rising rents. There are a number of reasons this has happened however the main reason is that this is the tightest finance market I have seen in a long time. Funding of developments is very difficult and this is slowly the number of properties being built.

This will have a two fold effect, firstly we will see upward pressure on prices and secondly rents will keep rising.

The only exception will be in outer areas where first home buyers may have over paid. The first home buyers grant may have artificially raised prices. I am hearing that the default rate is rising rapidly. If rates move to 8%, many people in outer suburbs may loose there homes. To me inner city is the place to buy.

They are going up!!!!!

Look at Camberwell and Surrey Hills which is just a joke at the moment. People are paying 1.5 for a block with nothing but a shack on it.  You tell me where this will go. Will it go up? Will it go down?

Will the Melbourne and Perth market shoot through the sky? Will first home buyers FINALLY be priced out of the market once and for all so there will be no more carping on Today Tonight? Will those wealthy Camberwell retirees sell their very expensive houses to me for $1? Will Labor be voted out at the next election due to a lack of Speedos on KRudd? Who knows what the future will bring?

All we can do is invest using the figures we have now.

D

What about the lack of Speedos on KRudd? Ryan you have a comment on EVERYTHING!

D