Forum Replies Created
- As 20% is more than 10%, that makes it a majority
I don’t want to be too pedantic, but a majority is generally defined to mean a number more than half the total, and 20% is less than half.
Anyway, I would argue that the percentage of people who are renting (or living with family) because they can’t afford anything is much larger than you suggest … and is growing.
Why can not you use the negative to bring up some good points such as how to make money in a down marketActually I thought I’d put forward several reasons why a down market is a positive thing; improved housing affordability for first home owners, buying opportunities for investors, reduced cost of trading up for existing home owners … that was in fact the whole point of the article.
I have just thought of a person that would benefit from a house price crash – DMICHIEGuilty as charged. It would be nice if a few people here admitted that they would benefit from contiunued growth in house prices.
As for your mate, you don’t sell to rent while prices are still rising. No-one can pick a top or bottom, you can only make a judgement many months down the track that there has been a top or a bottom. I reckon the top was sometime in the second half of 2003 and I don’t see any sign of a bottom.
Anyway, I sold for practical reasons of needing more space for a growing family. Once I started looking however I realised that vendors are asking 10-20% more than houses are actually selling for, so its a standoff ATM.
Interesting to see the polarisation of the comments; a crash will either be 100% bad or 100% good. My own view (not Peter Parsons) is that it will be somewhere in between. Good for housing affordability but it will probably result in an economic downturn.
Luci, no idea who Peter Parsons is or what credibility he has (if any). I thought he made some interesting points that’s all, whether you agree with them or not. I always post links to articles as Robert knows.
Luci wrote:
If property is suddenly only worth $100, then how many people are going to continue renting for $300 per week? Of course they’ll opt to buy insteadObviously the market isn’t going to fall 99.9%, if it did, rents would probably fall 99.9% as well. So no-one is going to walk out of their rented house and buy three houses.
Sure some people will be left with negative equity, but those will be in groups 4 and 5 as discussed. The vast majority of home owners who bought 10, 20, 30 years ago will still have considerable equity in their homes, even if the market fell 30%
The Mortgage Adviser wrote:
that means 70% of the populations does not careAgreed, the vast majority (existing home owners who bought >5 years ago) don’t care. This group might feel less wealthy, but they also have the opportunity to trade up a better property at a much lower cost.
So is this your percentage breakdown?
Group 1 (renters looking to buy) 5%
Group 2 (existing home owners) 70%
Group 3 (professional investors) 5%
Group 4 (recent purchasers) 10%
Group 5 (amateur investors) 10%So 80% either don’t care if there’s a crash or actually benefit. How then do you come to the conclusion that a MAJORITY adversely affected?
AUSPROP wrote:
if a property crash were to occur the ramifications would be far greater than this simplistic analysis. negative equity, people walking away from mortgages, tightened lending policies, employment (as a result of falling expenditure) etc.This is a valid point. The risk with a house price crash is that so much of the Australian economy revolves around real estate that there would be a recession … but that’s really a structural problem with the economy that has to be corrected one way or another.
WHO CARES!!!Someone does [biggrin]
I thought the article made a good point that rather than a house price crash being a disaster, most people in the community (even professional property investors) would benefit. I’m sure many here would see a crash as a great opportunity to pick up some cheap properties.
3 out of 5 groups either don’t care about a crash, or actively want one … they comprise over 80% of the populationblind Freddy could see the boom has ended in sydney… surely, we are not in denial about that?I dunno, cmhall seems to think I’m delusional for even suggesting that prices are falling in Sydney.
While it’s obvious the Sydney market is heading slowly south, it is also clear that real estate agents have two very solid reasons to talk the market DOWN.First, they want to put pressure on the Reserve Bank so that it doesn’t increase interest rates AND second, in the case of NSW, they want to put pressure on the Carr govt to revoke the vendor tax.
carlin, you must be living in a parallel universe. I’ve never met a RE agent who wanted to talk prices down. In my experience RE agents will only tell the price that a property sold if it was a good price. If the sale price is “confidential” you can be pretty sure it sold well below the asking price.
BTW, the RBA doesn’t target asset prices (it probably should, but that’s another matter) its prime role is to control consumer price inflation.
By the way, Dmichie, if you’re having agents calling you and dropping the prices, have you bought your family a new home yet? Or are you waiting for that bell to ring at the bottom of the market?I’m not expecting any bells to ring, but after a bull run of almost 10 years, I think we’re a long way from the bottom. The market generally takes a long time to recover after the top of a boom. Here’s my chart again: http://203.26.51.178/cracker/51242_1.jpg
What about these mum and dad investors who many years ago bought their holiday home/ investment property in coastal towns of NSW to help with their retirement?These people are pretty well off by any measure, and have done very well out of just sitting on a property that they bought decades ago. As for retirement, why shouldn’t investment properties and holiday homes be taxed if superannuation is taxed three times; when you contribute, on the earnings of the fund, and when you are paid out.
Anyway, I’m glad that someone (kay henry) doesn’t see that the vendor duty is totally evil.
you ar delusional in thinking Sydney prices are falling , the prices MAY have plateaued IN SOME areasThe deluded are those who believe that house prices cannot, will not, and do not fall.
BTW, if prices have plateaued then they are already falling in real terms.more accurately NSW are the horrendous taxes the state govt place on home- ownersActually, NSW does not have the highest taxes (stamp duty) on home owners, it has the highest taxes on investors. If Bob Carr wants to give stamp duty relief to first home owners by slapping a vendor duty on investors I say good on him! Property investors get so many tax breaks from the federal government, the little 2.25% vendor duty only goes part way in redressing the balance.
Now that should stir up a hornet’s nest of outrage [biggrin]
11 consecutive months of falls doesn’t sound too healthy to me. Also, 2.3% doesn’t sound like much, but if inflation is say 3%, that’s a fall of >5% in real terms.
Somehow I can’t see this chart stabilising, or gently falling back to earth:
http://www.housepricecrash.co.uk/forum/index.php?act=Attach&type=post&id=501
It could happen, but it seems extremely unlikely.Yes David Morgan was at Westpac during the last property bust (not that there are property busts of course [biggrin])
One of the big banks has got to be wrong
http://smh.com.au/articles/2005/05/16/1116095907818.htmlWestpac keeps its powder dry
http://www.smh.com.au/news/Business/Westpac-keeps-its-powder-dry/2005/05/05/1115092628749.htmlYes, the UK bubble could even be worse than ours, and looks like its bursting now.
Some nasty looking charts here:
http://www.graphicinvestor.com/econo/UK/MORTGAGES/Mortgages.htmI sold a house and a car in the past month. The value of the house was approx 60x that of the car.
The purchaser of the car organised an NRMA check which took about two hours and was very thorough.
The bank valuation guy (contracted out of course) looked at the house for about 5 minutes and did litte more than count the number of rooms.
BTW, there’s an interesting divergence of lending strategies between two of the major banks at the moment. The NAB is chasing growth with low doc loans and easy housing finance, while Westpac is being much more cautious, cutting back on the number of low doc loans it issues. So far the stockmarket has rewarded the NAB, and punished Westpac. It will be interesting where the share price of two banks stand 12 months from now.
And – as mentioned already – if you had chosen to sell at the right time, you would have made a huge profit in real terms.True, if you had chosen the right time, but if you’d bought at the peak in say 1988, you wouldn’t have made any profit until 1998.
Look at the chart: http://203.26.51.178/cracker/51242_1.jpg
The peak in 1988 is around the same level as 1998.Now if you believe that 2003 was the peak of an even larger bull run than the late 80s, its possible that if you buy now (or have bought recently) you may not see a profit until 2013.
I concede that most 10 year periods over the past 40 years you would have done very well, but not now, not after this huge boom has so obviously peaked.
And if instead you had kept your money in the bank you would have suffered greater losses in real terms. Inflation in that period was high teens!Of course. 90% of the time, you are much better investing your money in property, shares etc rather than keeping it in the bank. I think now might be one of those rare occasions when the bank is the best.
Dmichie, this was not my posting you were quoting or refering to – so please don’t answer it after addressing me personally… others not reading the whole comment chain may be mislead.I wasn’t responding to you, I was responding to goingup. I apologise if you misunderstood or took offence.
Michael,
You say Sydney and Qld are flat, but is anything actually falling? My (Sydney) suburb was down 15% YOY between 2003 and 2004, and I reckon its fallen further in 2005.
I am interested to know your views on the QLD market to property investing as a strategy v’s investing in Sydney.IMO the only place to invest in property at the moment is WA, and then only in the short term. Once the heat comes out of the resources boom, the Perth market will follow the rest of the country.
As this is an investment forum what other areas do u think will perform well over the next 3 years based on stastics.Honest answer: buggered if I know.
The Sunday papers were talking up talking up a stockmarket rally … “Shares are the cheapest in more than 10 years and primed to climb to record levels in coming months, experts say”. Can’t see it myself. Methinks these ‘experts’ may have a vested interest in talking up this rally.
http://www.smh.com.au/news/Business/Shares-head-north-as-fuel-inflation-tamed/2005/05/21/1116533578737.htmlIn the medium term, if you believe Australia’s current account deficit is unsustainable (as I do) and if you believe the forex markets will correct this (by devaluing the $AUD) Australian exporters will benefit from a lower currency.
Dimichie, good idea however u should know that the Share market and Property market work differently with this type of information in Australia … get a solicator to explain it to you.Please do tell. Why is it recent sales data freely available in the UK, or Canberra for that matter, and not in the rest of the country? One could be forgiven for thinking its not in the interests of the real estate industry for the punters to know what houses are actually selling for (unless they’re selling for good prices of course [biggrin])
Luci, I’m glad that you have 100% faith that house prices never go down. If that’s what you believe then keep buying property. I am quite happy staying on the sidelines for now, because agents keep calling me to tell me about price reductions. Two just this morning.
Also, this graph is skewed to only count property growth after inflation.Yes, that’s called real growth. That’s hardly “skewed”, its the only sensible way to measure the capital growth of your investment. BTW, a growth rate below inflation is a real decline.
Residex predicts that my area will bounce back to 12% growth p.a. over the next 3 years.LOL! Residex predicts 12-15% for my suburb year in year out. They never predict anything different. Fact is, my suburb was down 15% YOY from 2003 -> 2004, and probably another 5-10% this year. I can assure you Residex never predicted that!
Neither of you are posting information that is paticularly helpful or interesting.Fair point. I try not to make accusations or make personal comments but Robert persists with this “alterior motive” thing over and over.
I truly have no vested interest (that I know of) in whether the Sydney market goes up or down.Well I apologise then. One could easily get the wrong impression from the links in your posts.
markpatrick, as for balance I often find myself fighting the bullish case in ultra-bearish real estate forums like this one:
http://www.housepricecrash.co.uk/forum/index.php?showforum=22
Many Brits are under the impression there has been a catastrophic real estate crash in Australia, and I am forever telling them it isn’t the case.I make some money through people visiting my website and some other money if someone asks me for a referral which is paid by the broker I refer to (fully disclosed of course).This is how you make your living I assume? Please correct me if I’m wrong. Perhaps it is just a hobby?
