Hi
Was wondering about this article…
http://www.smh.com.au/business/property-prices-on-way-down-warns-bank-20091204-kays.html
1 – There is a general perception that many FHBs have become highly geared in their rush to get into the property market during the low interest months of late 2009
2 – Credit has been restricted by the banks and will likely continue to be so for 2010
3 – Rising interest rates put pressure on FHBs, wannabe investors and those who are too highly leveraged, leading to more forced sales ni 2010 and maybe even 2011, although lowering unemployment may mitigate this factor to an extent
4 – Rising interest rates mean another rush to get into the market before it becomes too expensive to buy, leading to a surge in prices in recent months, which could lead to a correction
What is the analytical thought / gut feeling on this?
Regards
Daniel Lee
See my post
October 09 Property Crash BeginsNote each month has another reason to sell now or miss out.
OK my prediction up to June 2010 in writing …
Low end new properties will rise because of civil works and building materials increases …
Top end market over 1.2 million will struggle … Rich end over 2.5 million will drop by 10% as those buyers are REALLY fussy and know the owners are business people in trouble … IMHO
Second hand well located real estate close to bus, trains, hospitals, schools, shopping centres etc will increase.
I bought a house in Warrawee on 904 m/2 14 months ago for 700k and have offer on the table now for 900k (not taking it gong to build a new house on it) … bus stop at the front door and 5 minutes to private schools and shops … FLAT land over 900 m/2 – age of owners 84 & 81
Hi everyone
this the same media that told us the sky was falling on property 12 months ago and the last 12 months have been the best growth ive had(12%+) http://www.smh.com.au/business/sydney-house-prices-surge-a-record-12-20091231-lkyl.html in Sydney compared to the 2 yrs prior and in that article the NAB predicts a 5% decline in property end of next yr (nearly 2yrs away)
big deal 5% is a minor correction compared to the growth most capital cities have had in the last yr and the future growth between now and end of next yr which is when the NAB predicts a market correction of 5%, guys you will still be up.some people on these forum threads wont buy any IPs and watch the market grow for the next 2 yrs as it has in the last yr potentially missing out on good growth so that when it drops by a lowsy 5% you guys can say I told you so
all the best
Oh Wealth,
I started drooling when you said 900m and FLAT…………!
Bully for first home buyers, box head "investors" who are too busy looking to buy and people who leveraged up to their eyeballs on speculative property. People have brains and property buyers are over 18 and are technically adults.
If you are waving your hand around at an auction and paying far to much for property, tough. If you can't get a loan because the money is too tight, tough (Hey I might end up in this boat). You can't wait around spinning your wheels, for a better time to buy.
This is why investors do research etc and work out where is going to have solid growth, yield, deductions etc.
Sorry, needed a rant, pretty sick of hearing how tough first home buyers have got it, I didn't get a grant! You never used to be able to get a loan years ago unless you already had money. What has changed?
Grrr
D
DWolfe | www.homestagers.com.au
http://www.homestagers.com.au
Email MeIn the spirit of “research etc.”, can people please elaborate on what statistical methods they to pinpoint states and suburbs that are poised for growth?
I have been trawling through the ABS website, and I am keen to see what statistics people track in order to make a confident decision. People talk about approvals, population growth, incomes, average time for houses on the market etc.
What are people’s TOP 5 stats to follow? and why?
Looking forward hearing people’s lists.
.
This article advises us that the average mortgage in NSW just hit a new record of $414k. That isn’t the average house value, but the average mortgage!!
http://www.smh.com.au/business/westpac-rate-rise-pushes-customers-to-switch-banks-20100105-lsbd.html
Let’s combine that with median household income stats…
Median household income is only $1036 in NSW (2006 census), so lets assume it may be $55k per annum now to allow for wage growth.
http://www.leaseinfo.com.au/docs/research/2006%20National%20Census.pdf
After tax this equates to just under $44k per annum. When interest rates are back at 10% again, interest alone without paying back any capital will take $41,400 of this $44k income. This is a serious problem waiting to happen!!
So yes, people are too highly geared and increasing interest rates are a guaranteed property bubble collapse.
Apparently the "Henry report" is recommending a "second home owner grant" starting with this years may budget, and there is rumour of possibly a third home owner grant somewhere in the pipeline…….
sorry if this has already been posted,
well said dwolf.
FHB would of needed a good size deposit last year, something around 20% I would have thought so this means that if they paid say $400k thats $80k deposit if properties drop 10% then i guess there $40k outa pocket but even with this they should still be okay as there mortage should only be around lets say 6% $369 pw, thats ok. it costs this much to lease a house.
I thought we would have got hit harder last year with the economy but with a few changes around the place made us stay quite solid but even still there were people running scared and there were still plenty of deals around.
I still think where gonna get hit hard if its not this year it will be next and when it does come i think the lower end of the market may take a hit of 20%wealth forlife $2.5m with only a drop of 10%? I watched 30% drops last year, got offered a property for $1.7m which the owners bought in 2005 for $2.550 I also seen plenty of others out there. there was one asking $1.8m then the next time i seen it they reduced it to $1.2m that was in the middle of the melt down, I am sure today they want more than that but I think we will take another hit and then it will stay still for a few years.
thats only my thoughts thoYeah depends on the are, state etc. You can say the bottom part of the market will drop but in which state and which bottom. Are we talking bottom in Melbourne of 400k or bottom in Perth of 200k? Or regional in Melbourne which hasn't even really hit 200k? It is really going to depend on where and what it is. There is still good development opportunities and renovation properties.
I think anyone who has bought a buy and hold that can't have value added is a middle bracket home and is is a middle suburb will stay exactly there doing nothing. Anyone who has bought something to value add or develop will see good growth no matter where because they will create it.
Sydney will be alright this year. Melbourne will only be good if you are developing units. Perth will be good to snaffle a few land deals which get missed as everyone plays snap in Melbourne. Good way to spend 2 yrs developing waiting for the next price rise. Anyone wanna tell me how Adelaide and Tas and NT will go?
New money will see the top end go ok as everyone wants to invite their friends over to a nice big house with a Beemer in the drive.
I'll finish my rant now!
D
DWolfe | www.homestagers.com.au
http://www.homestagers.com.au
Email MeI only study the Qld market and nz market but for the above I am talking about Qld
My apologies I missed QLD!
DWolfe | www.homestagers.com.au
http://www.homestagers.com.au
Email Meusually the people that make these predictions are journalist making speculative headlines to try and sell papers and deffinately dont make a living through real estate investing…
mattnz wrote:This article advises us that the average mortgage in NSW just hit a new record of $414k. That isn’t the average house value, but the average mortgage!!http://www.smh.com.au/business/westpac-rate-rise-pushes-customers-to-switch-banks-20100105-lsbd.html
Let’s combine that with median household income stats…
Median household income is only $1036 in NSW (2006 census), so lets assume it may be $55k per annum now to allow for wage growth.
http://www.leaseinfo.com.au/docs/research/2006%20National%20Census.pdf
After tax this equates to just under $44k per annum. When interest rates are back at 10% again, interest alone without paying back any capital will take $41,400 of this $44k income. This is a serious problem waiting to happen!!
So yes, people are too highly geared and increasing interest rates are a guaranteed property bubble collapse.
where does it say that the average mortgage has to be in line with the median wage ?
A house is a big purchase so why should it be affordable to low incomes. The two are not connected
daniellee wrote:HiWas wondering about this article…
http://www.smh.com.au/business/property-prices-on-way-down-warns-bank-20091204-kays.html
1 – There is a general perception that many FHBs have become highly geared in their rush to get into the property market during the low interest months of late 2009
2 – Credit has been restricted by the banks and will likely continue to be so for 2010
3 – Rising interest rates put pressure on FHBs, wannabe investors and those who are too highly leveraged, leading to more forced sales ni 2010 and maybe even 2011, although lowering unemployment may mitigate this factor to an extent
4 – Rising interest rates mean another rush to get into the market before it becomes too expensive to buy, leading to a surge in prices in recent months, which could lead to a correction
What is the analytical thought / gut feeling on this?
Regards
Daniel Lee
Daniel, have a read of this.
mattnz wrote:This article advises us that the average mortgage in NSW just hit a new record of $414k. That isn't the average house value, but the average mortgage!!
http://www.smh.com.au/business/westpac-rate-rise-pushes-customers-to-switch-banks-20100105-lsbd.html
Let's combine that with median household income stats… Median household income is only $1036 in NSW (2006 census), so lets assume it may be $55k per annum now to allow for wage growth.
http://www.leaseinfo.com.au/docs/research/2006%20National%20Census.pdf
After tax this equates to just under $44k per annum. When interest rates are back at 10% again, interest alone without paying back any capital will take $41,400 of this $44k income. This is a serious problem waiting to happen!! So yes, people are too highly geared and increasing interest rates are a guaranteed property bubble collapse.Not to nitpick, but the average household income would take into account pensioners, welfare beneficiaries etc. It would be interesting to see what the average household income is of people with mortgages, as opposed to those without.
You also have used AVERAGE mortgage, yet used MEDIAN income. Is it safe to assume that the MEDIAN mortgage would be less than $414,000? I would say yes.
How many people/households on the average income buy a median priced property?
Dan42 wrote:daniellee wrote:HiWas wondering about this article…
http://www.smh.com.au/business/property-prices-on-way-down-warns-bank-20091204-kays.html
1 – There is a general perception that many FHBs have become highly geared in their rush to get into the property market during the low interest months of late 2009
2 – Credit has been restricted by the banks and will likely continue to be so for 2010
3 – Rising interest rates put pressure on FHBs, wannabe investors and those who are too highly leveraged, leading to more forced sales ni 2010 and maybe even 2011, although lowering unemployment may mitigate this factor to an extent
4 – Rising interest rates mean another rush to get into the market before it becomes too expensive to buy, leading to a surge in prices in recent months, which could lead to a correction
What is the analytical thought / gut feeling on this?
Regards
Daniel Lee
Daniel, have a read of this.
Hi Dan,
Yup. Read it. Back to good old demand and supply. Better steady appreciation in dwelling value…
Cheers
Daniel Lee
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