An bullish article on the property market.
Hi D Wolfe, Thought it would be a good idea to reply while I am having some lunch in my office.
Interesting article though, but being only 10 days into the new year it is too early to speculate on how things are going to turn out.
My view has always been this, In boom and bad times, Each suburb, each state and house type will provide a different result, some being positive and some being negative.
I strongly believe the Melbourne market is going to be a flat for quite some time, allot of changes are happening within the market place and I also believe the government is going to increase the VCAT fee’s. This is only going to hold buyers more back. Also a few friends who work in real estate (property managers) have said that 2012 the amount of times they went to VCAT was astonishing, Allot of people just cant pay the rent.
Sure interest rates are going down, But are banks tightening up their criteria? (just a question lol), The rental market in Melbourne as well has been interesting, There is a huge demand for rentals but people are not prepared to pay the amounts that landlords want. My generation the famous Y generation is even more interesting, Friend who lived with just one house mate are now looking for another house mate. People are opting to share more. Demand for renting might be their but people are also looking at sharing.
For me I almost have my deposit for another IP ready, But i will not be rushing to buy, There are going to be some great bargins in the near futurecoloradospringspropertyParticipant@coloradospringspropertyJoin Date: 2013Post Count: 1
I read your blog its describe 10% hike in property price in 2013.
Isnt it so much?
What more do you think about that?jmsrachelParticipant@jmsrachelJoin Date: 2012Post Count: 711
Like the movie "The castle", tell em his dreaming!
This article is really going to pi$$ freckle off.
I think it's interesting.
Everyone's always happy at the start of a new year, it's new! I think there is good an bad with everything.
Sure interest rates go down, but that mean a recession really. Banks need to profit, so they will need to find new customers and entice existing customers to borrow more…. That's good for borrowers, but tight lending criteria means developers get $0, or interest rates of %%.
Developers not building means less new housing, no more glut. House prices go up, more demand less supply, good for anyone who holds property, bad for new buyers. Good for banks. Good for government.
I don't think anyone can predict the future. Melbourne has a big problem that the houses in sought after areas are overpriced for the hideous aging shacks they are, and everyones looking for a bargain. Then there are all the new houses in the places no one wants to live coz there is nothing for miles. You can pick up a 'Melbourne' house and land package for diddley squat but it's practically in NSW.
SO when new property (brand new or renovated property) comes online in desirable areas it's snapped up. Not at super duper huge prices. But it's selling, and easily. Which makes me think that maybe Melbourne isn't quite the dead duck yet.
It only takes a swing in confidence the other way (election – we are awaiting) and then people start to spend again. Hesitantly at first, then when the painful memories start to fade away and people 'forget' there every was a GFC then the market will swing along again.
My two cents. And I'll wait with baited breath what Freckle will say. I personally find graphs in the middle of text distracting.
This one too from Terry Ryder
The value of things is quite often related to "perception" or "confidence". This is why you can put shiny new taps in a place and nobody notices they are not the expensive brand, yet it improves the value of the place. It's also why the value of the British Pound crashed the day one very foolish then-Prime-Minister Gordon Brown got in the media and said of the GFC "It's bad. It's really really bad." There were no accompanying comments indicating how he planned to lead his nation to glory through the badness. Just a scary comment about that it was really really bad. The value of the pound plummetted that day and has not since recovered.
DWolfe makes a very valid point that markets can move around election time, because the leadership of the country will either remain the same or change. This will dictate who gets to talk to the people via the media and model their perceptions.
Good points JacM.
It'll be an interesting year, I think people are sick of it. All of it.
Most people are happy with their lives, but if you get told every day (media input) that you should be miserable, then you probably will be.
I think an uptick in sentiment will come when people can see a change starting to happen, which will begin around election time. Both parties will wheel out the policies which they have had in their pockets for the last year or two and haven't wanted the other team to see. Look for lots of 'talking up' of the economy, Wayne Swan will either be put in the back seat (every time he talks the market loses some points) or be told to only talk nice.
Libs will kick out Abbott, my moneys on Turnbull, but Hockey might even be up to bat.
Julia will hang on to see out the next election, Labor cant afford to off another one in public, and they don't really have anyone but has beens kicking around in the back.
I agree Media and government do have a large part to play, but like it or not there are other factors that are contributing to this downturn.
1) Europe: stuffed, I wok for a European shipping line the 2nd biggest in the world and trade from Europe is almost at nothing
2) talking to contacts in china who are in the shipping industry have noticed a downturn as well
It's not the end of the world it's just a challenge that's all, I know I might sound negative but I am a positive person
for me the share market has been my cup of tea
The only thing most general people need is fincial education, the amount of people who can't budget or save is incredible, I'm waiting for ASIC to come back with a positive reply to give me permissions To write a book about how to save for a deposit, how to budget etc, how to build up knowledge
Wish me luck anyways
Good call Johann.
Financial education is lacking, desperately lacking.
It's interesting because today everyone (business people) are happy as China looks like it is not going to sharply slowdown. And the big problem is how much you can base economic decisions on a country that has no opposing voice. (I'm watching the next series Niall Fergusson has done all on China)
I did enjoy a dabble on the share market. But when the cash is gone… it's gone.
Not really. I don't read the Kouk. Not enough economic brains to butter a cracker.Andrew_AParticipant@andrew_aJoin Date: 2003Post Count: 392
The future.. pretty much like the past, opportunity mixed with difficulty! To quote Jim Rohn
For some punditry who has time to do anything else than defer to someone more intelligent, and with considerably more time to read the tea leaves, than themselves when it comes to Global Macro? Of all the commentary I've ever read on that score I can't think of any much better than Cam Hui. Not the most well known money manager but I've found him to be impressive. http://humblestudentofthemarkets.blogspot.com.au/Scott No MatesParticipant@scott-no-matesJoin Date: 2005Post Count: 3,847
My 2c, there's little chance of 10% + median price increases for several reasons:
- affordability (unless wages increase substantially)
- lack of new projects coming out of the ground (ie supply isn't going to go thru the roof so there is no stock of new property which will be driving prices upwards)
- lack of new (green) blood in the market – migration levels aren't going to change a great deal
- election process puts a dampener on sales activity until the outcome is known (ie uncertainty slows the market not increases activity).
When Terry Ryder starts waffling about a great year 2013 will be you know we're doomed.
Economically it's bush fire season and the fire rating is extreme. All it'll take is one spark and look out if turns into a Black Swan event.
A theory developed by Nassim Taleb to explain:
- The disproportionate role of high-profile, hard-to-predict, and rare events that are beyond the realm of normal expectations in history, science, finance, and technology
- The non-computability of the probability of the consequential rare events using scientific methods (owing to the very nature of small probabilities)
- The psychological biases that make people individually and collectively blind to uncertainty and unaware of the massive role of the rare event in historical affairs
Think about internal migration. In other words, circumstances that cause people already residing here in Australia to relocate to another part of Australia. Perhaps just half an hour down the road.
Some of the reasons people might do this are:
– They are retiring and want to move to somewhere "nice" (segment 1)
– Their family unit is starting or indeed expanding. The family home needs to be bigger and cost less, because there are more mouths to feed on either the same household income or a lesser household income, because mum has taken time off to look after the kids (segment 2)
– To move for employment purposes (segment 3)
So. Let's ignore the retiree market for now, because I don't know much about that market segment.
Segment 2: the expanding family. They are going to need a bigger house than they currently have and a patch of grass out back, but they cannot afford the inner city suburbs. So they move further out. But daddy still needs to be able to commute somewhere that offers lots of jobs. So let's say somewhere within a 1 hour commute radius of a major employment centre. So if we're talking Melbourne you could go as far as Geelong or Ballarat. If we're talking Sydney I think you can go as far as Penrith, which is one perfectly reasonable explanation as to why the St Marys, Mt Druitt etc district went nuts.
Segment 3. To get these people you follow the infrastructure. Mining towns if your heart can stand the risk, or normal infrastructure if you have a lower risk profile. So you might prop your investment dollars near a forthcoming airport, desalination plant, or new major shopping centre perhaps.
The easiest segment to hit is segment 2. Get out your google maps, figure out what is within a reasonable commute of major centres, and also happens to be on a train line. Easy Now imagine if you could hit 2 segments at once. Segments 2 and 3. Let's say you are within an hour of a major centre that has a major infrastructure project coming its way. That's some good hedging. This is why I like Geelong. It's within a reasonable commute of Melbourne, the prices are lower than Melbourne, Avalon Airport is going from little Jetstar airport to International Airport (enter the jobs), and you've got the lovely surfcoast too for lifestyle. Noice. Not hard to see why all suburbs of Geelong have been enjoying great growth. You could almost throw a dart at a map of Geelong and buy in whatever location it hits and not mess it up.
I remember looking at Rockbank VIC on the map about 18mths ago and thinking that was a logical place to establish a township, because an existing trainline passes straight through the guts of it, as does a major freeway. But no of course local council was going on about how Rockbank was special and they wanted to keep the blocks large and exclusive. Whatever. That lasted about as long as it took their accountant to get back from his lunchbreak and ponder how many council rates dollars they could charge if they carved the big pieces up into little pieces. Sure enough, it seems Rockbank will be carved up into bits. Not where I would choose to park my dollars, but if people already had landholdings there they would be rubbing their hands in glee.
Hi jac M
i literally live 10 mins away from rockbank, your spot I believe by the end of the year development might start.
A few friends of mine who live there own large parcels of land. The developers are taking there ttime i think there is a gas line issue. But once it goes through $$$$
aldo people like this country because they get ccenter link payments lolTheFinanceShopParticipant@thefinanceshopJoin Date: 2012Post Count: 1,271
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