Where are all the posts relating to what is actually happening in the market? Have you all got you blinkers on? Why arnt there more discussions on whats looming? Instead we have the normal questions about how to buy another investment property before the year is out…Just another reason why interest rates will continue to rise-people still arnt heading the freight training staring them down in the tunnel…?
Auction clearances rates are not good.
Sydney 48.3% Not Good
Brisbane 24% Shocking
Melbourne 67% Not Bad but slowingJohn Stapleton | March 17, 2008
AUSTRALIA'S property market has taken a nosedive, with falling auction clearance rates in most capital cities at the weekend.Brisbane performed worst, with a clearance rate of 24 per cent, less than half the rate at the same time last year.
In Sydney, the clearance rate dropped below the psychologically important 50 per cent mark, with only 48.3 per cent selling, a drop of 11 per cent on the same time last year.
Volumes were markedly higher than last year in all states, partly because of the coming Easter weekend but also because mortgage stress is forcing a large number of people to put their homes up for sale.
Experts said the falling clearance rates reflected the dramatic drop in consumer confidence.
In Melbourne, clearance rates were 67 per cent on record volumes, with more than 1400 homes and units up for offer.
President of the Real Estate Institute of Victoria Neil Laws said clearance rates had been slowly declining since a peak of more than 80 per cent last October.
"The market is very delicately poised," he said. "Anecdotal evidence from agents suggests interest rates have affected buyer confidence. The auctions this weekend were erratic; some went gangbusters and some were disappointing. These are very interesting times."
Australian Property Monitors general manager Michael McNamara said present circumstances made it "hard not to be pessimistic about the property market".
He said the sharp fall in consumer confidence, widely reported last week, was being reflected in the property market.
He said confidence had been "beaten around" by two month-on-month hikes of 25 basis points in the cash rate, which had been compounded by the banks increasing their rates independently of the Reserve Bank.
"The fall below 50 per cent in Sydney is not a good sign, which is a shame because there were signs of a recovery late last year," he said.
"Now any hope of a strong recovery in the Sydney market has pretty much vanished. There are a lot of people for whom these last couple of lifts in the cash rates are the straw that broke the camel's back. The rise in the cost of living, record petrol prices – all of these things are biting."
He said Melbourne's clearance rates, which had gone up to 90per cent last year, were now hovering in the 60s. In Adelaide, clearance rates were at 50 per cent, a drop from 62 per cent only last week. Brisbane's abysmal clearance rate of 23.7 per cent was less than half the same time last year.
"I think the auction clearance rates will get worse than this by the end of the year," he said. "The party is over."
Meanwhile, the Royal Australian Institute of Architects has warned that the mortgage crisis and the flood of home owners being forced to sell because of mortgage stress would increase the number of houses coming on to the market with serious faults.
Robert Caulfield, Head of Archicentre, the institute's building advisory service, said the record number of properties for auction over the weekend and the record number of unsold houses created a buyer's market, but present circumstances meant this really was a case of "buyers beware".
He said home buyers usually added the cost of repairs or renovations on to their mortgages, but this had stopped as interest rate rises and family budgets came under pressure.
"The fact that we have 300,000 families likely to lose their homes this year because of interest rate rises and 750,000 families coming under extreme mortgage pressure, means the quickie makeover is a popular strategy for a quick sale."
In normal circumstances these home owners would spend the necessary funds to repair their properties."
Most of those posts seem to be concentrated in the Property bust not here yet … worse to come thread, which seems to have become hand wringing central these days and will surely be more so over coming months. Do we need regurgitate the media still more?
If people want to share strategies to deal with these more difficult times that might be interesting. We havent been all that creative, we cashed out of shares to super about 6 months ago and are in the process of selling a couple of properties that we think are less solid long term value propositions. We will stay engaged with property though and will hold long term.
You have to be careful predicting what is going to happen to the property market as that sort of information is considered to be financial advice which can only be given if you are a licensed financial advisor.
see
https://www.propertyinvesting.com/forums/property-investing/help-needed/4323829
https://www.propertyinvesting.com/forums/property-investing/general-property/4323521I'm sure more posts will follow. This is possibly a unique market at present, as far as property prices, sharemarket, and interest rates go, and then strong inflation and a strong aussie $. While the media has been negative, and 'bank bashing' (as you do
) people tend to have overlooked that several non bank lenders(Rams being the first and most prominent), non confirming lenders, and wholesale funds providers have simply gone bum up or had o withdraw from the market. This alone points to both a quieter market, and the rapid increas in the cost of funds, along with peoples attitude to risk.In general, it appears most people (inc myself) are keen to stay with the majors at present, and there are still people investing in property – usually cashed up or using equity. That said, I think anyone in RE or finance you talk to unless they are in a so-called boom area) would be lying if they said things had not got quieter.
The next few months will be very interesting to say the least. Make or break for many I'm sure. My 7c worth.I think everyone is agreeance that the market is about to/already slowing down.
But it's not everywhere – there are some areas that will boom or simply keep on growing regardless of the rest of the market and what the media say. Go find those areas.
We don't need more discussion about the gloom and doom. If you want to discuss it more, go over to Global House Price Crash and you'll have a great time.
What we need more of is what to do when the market moves in the direction it is seemingly headed.
Me; I'm cashing up as always, keeping the LVR low, and making sure the servicability is good so I can take advantage of the buyers' market that is developing.
There will be many opportunities in the near future.
Heavily neg geared investors, and owner occupiers – both with very high LVR's and low servicability will be the providers of these opportunities.
L.A Aussie wrote:We don't need more discussion about the gloom and doom. If you want to discuss it more, go over to Global House Price Crash and you'll have a great time.Sorry mate I think we do. Knowledge is power-why stick your head in the sand. Already we are seeing posts from people who are finding their properties arnt worth anywhere what they paid for them, that they are having trouble seeling etc. If discussions were more balanced and opened peoples eyes to the facts that realestate isnt a simple fast track garaunteed way to become a millionaire then some people would be spared. Its funny-there was so much hype about a PROPERTY SHORTGAGE-well you can bet your bottom dollar there wont be a shortage of properties for sales over the next 2-3 years. Lets just keep it balanced instead of only looking at the positives thats all. For example-why would ANYONE be in a rush to go out and buy an investment property when by all accounts property is flatlining at best, falling at worst?
Home loan defaults rise as rates bite
- Leon Gettler
- March 19, 2008
MORTGAGE defaults are on the rise, driven higher by a perfect storm of rising interest rates, property prices flat-lining or falling, a slowing economy and higher food and petrol prices.
The latest figures from mortgage insurer PMI Australia show the number of households that have defaulted on their mortgage in the past 12 months is up almost 17%. Out of a million mortgages on PMI's books, the number in default has risen from 2281 to 2666.
PMI's accounts also show that over the same period, its loss ratio — the amount paid out plus provisions as a proportion of money earned from premiums — has risen from 25% to 46.4%.
The size of the claims has gone up too, from $51,600 in 2006 to $61,300 in 2007.
However, defaults as a proportion of total loans and policies remain low, at 0.25%, compared with 0.22% a year ago.
Because PMI Australia is a subsidiary of the American mortgage insurance company, the numbers are reported in US dollars.
The figures suggest that home buyers have been caught off guard by rising interest rates. Taking on more debt over the past 12 months, they would have been unprepared for the increased costs of serving their loans.
Over the past year, the size of the average loan has increased from $US145,600 ($A157,188) to $US172,300.
PMI's figures show that despite unemployment being at its lowest level in 33 years, borrowers are clearly feeling the impact of rising interest rates.
The revelations also follow a JPMorgan/Fujitsu Australian Mortgage Industry report last week suggesting that more than 700,000 households would experience some degree of mortgage stress by June, resulting in forced sales, missed repayments and foreclosures.
PMI Australia chief executive Ian Graham said interest rates had driven the increase in defaults.
"It's definitely trending up and that trend will continue in 2008," Mr Graham said.
He said another reason for the increase would have been borrowers stretching themselves and taking on more debt to get into the market when property prices were rising and interest rates were low.
"In a low interest rate environment, it's easy to gear up and buy that dream home and, as interest rates move up together with pressure on petrol prices, for some of the outlying areas they are finding the going tough."
He said most of the defaults were happening in south-west Sydney, western Sydney and the outer suburbs of Melbourne.
Most of PMI's business comes out of Sydney.
He said he expected the figures to get worse. "We certainly expect it to deteriorate."
However, it was nowhere near as bad as the housing crunches of 1994-96, when the loss ratio blew out to 60% and the early '90s when it hit 90%. And, while defaults were up, they were still coming off a low level.
"We are not in a recessionary environment in the Australian market," Mr Graham said.
PMI makes its money from banks that take out insurance to cover loans where borrowers have put up a deposit of 20% or less.
Despite the growth in defaults, PMI Australia was the bright spot in the parent company's accounts. PMI Australia reported a profit of $US80 million, down from $US84.5 million in 2006. The lower profit resulted from bigger claims and an increased loss ratio.
But the global insurer reported a net loss of $US915.3 million, with the US housing market in free fall and the company being forced to pay out more with defaults on home loans reaching record levels.
Lets just be careful out there people. The next few years will be your biggest opportunity in your lifetime to really set yourself up financially-take your time, do your research and be open to ALL sides of the story.
What is generally overlooked is that any article predicting the future is simply someone's opinion. For every point of view there is an opposing point of view that is equally valid.
This is the third real estate downturn I have seen (and being in Brisbane it really can't be called a downturn yet, more a slightly slowing down). Auction results are unreliable for Brisbane as it is NOT the most popular method of selling.
Will this downturn last 6 months or 10 years?
I don't know and neither does anyone else. At work yesterday I was looking through 3 month old copies of the Business Weekly Review where "experts" were giving their predictions for 2008. Sadly, nearly all of them have since been proved very wrong. Just goes to show that no matter how respected and well-researched the contributors were, life has a habit of throwing curve-balls every so often.
At the end of the day, read widely and form your own opinions to base your actions on.
My advice, for what it is worth, would be to take a conservative view and build up a cash buffer – to protect you if you think things will get worse, or to build up a deposit in case you are more optomistic.
MargDoom and Gloom…listen to it at your peril! This world is an amazing place and if you think good things will happen to you, they will. And if you dwell on the negatives you will draw negatives to you. Change your thinking and see the opportunities, they are everywhere. Just follow your thioughts ( if they are positive) and dont look back. NO REGRETS! No-one can tell you what you are doing is wrong, 'cause its right for you. I for one am seeing investment opportunities ever other day and am actively engaging as many as I can.
L.A Aussie wrote:I think everyone is agreeance that the market is about to/already slowing down.But it's not everywhere – there are some areas that will boom or simply keep on growing regardless of the rest of the market and what the media say. Go find those areas.
We don't need more discussion about the gloom and doom. If you want to discuss it more, go over to Global House Price Crash and you'll have a great time.
What we need more of is what to do when the market moves in the direction it is seemingly headed.
Me; I'm cashing up as always, keeping the LVR low, and making sure the servicability is good so I can take advantage of the buyers' market that is developing.
There will be many opportunities in the near future.
Heavily neg geared investors, and owner occupiers – both with very high LVR's and low servicability will be the providers of these opportunities.
I agree Mark,
Blogs no offence but you seem to be constantly posting media quotes and negative sentitment.Hi
There are positives around this great southern land try Adelaide for a start.
Uranium, gold, nickel are all on the up………..real estate reliant on these commodities (and not in remote areas) are all doing well. Follow the asx.com all the company announcements are there daily. if you find a series of good announcements in one area "google the info"…………………………………
I too get sick of pesimistic attitudes in real estate investments. You can make alot more money in soft market than a strong one and the media will always try to advertise adversity especially when shares/property investing are not as strong as they were.
My opinion is south Aussie all the way (even though I'm in Bunbury WA). Xenia seems to be switched on in Adelaide the info received from this person has given me great insights so far which is turning into profit as we speak.
I agree a few more positive posts would be awesome.
I am not endorsing sa do your own research but i am investing there and loving it!!!!!!!!!!!!!!!!!!!!.
Mikeyseank wrote:I agree Mark,
Blogs no offence but you seem to be constantly posting media quotes and negative sentitment.No offense taken mate
All Im trying to do is make sure people are aware off all the information-both sides. After all, we are all here to make a quid and if we can save an extra 5% by taking note of the broader market, economics and changing market sentiment it empowers our position as investors. Why stick your head in the sand?See 4 corners last night? A perfect example of the mentality of so many people who have bought in the current realestate market. The owner, being forced to sell due to being too far in debt was absolutely AMAZED that she couldnt get what she paid for her $650k house, sniping 'what do they want it for? 50 cents?" She couldnt fathom that property prices dont just always go up and I think it got passed in for around $600k?
blogs wrote:seank wrote:I agree Mark,
Blogs no offence but you seem to be constantly posting media quotes and negative sentitment.No offense taken mate
All Im trying to do is make sure people are aware off all the information-both sides. After all, we are all here to make a quid and if we can save an extra 5% by taking note of the broader market, economics and changing market sentiment it empowers our position as investors. Why stick your head in the sand?See 4 corners last night? A perfect example of the mentality of so many people who have bought in the current realestate market. The owner, being forced to sell due to being too far in debt was absolutely AMAZED that she couldnt get what she paid for her $650k house, sniping 'what do they want it for? 50 cents?" She couldnt fathom that property prices dont just always go up and I think it got passed in for around $600k?
Yes blogs I did see it. However I think all states are perfoming different, I live in Brisbane and I can tell you it is quite different here, sure things have slowed and prices may/may not drop, however the overall feeling is positive. Also if "worst case" as you predict does happen I'm sure many smart investors here are prepared. Me personally, I have invested in the s/market, also waiting on the sideline for property, and putting all my money into reducing LVR.
Sure it is ok to post as you do, how about some solutions/strategies also for the novice investors?seank wrote:Sure it is ok to post as you do, how about some solutions/strategies also for the novice investors?O.K, well my advice would be the same as Steves-Cash is King!!! Save all you can, cut personal debt and play a wait and see approach.
) people tend to have overlooked that several non bank lenders(Rams being the first and most prominent), non confirming lenders, and wholesale funds providers have simply gone bum up or had o withdraw from the market. This alone points to both a quieter market, and the rapid increas in the cost of funds, along with peoples attitude to risk.In general, it appears most people (inc myself) are keen to stay with the majors at present, and there are still people investing in property – usually cashed up or using equity. That said, I think anyone in RE or finance you talk to unless they are in a so-called boom area) would be lying if they said things had not got quieter.
My 7c worth.
You must be logged in to reply to this topic. If you don't have an account, you can register here.
