I think the balance is about even.
People aren't fighting over properties because they're correctly priced. When people start fighing over real estate you see swift increases in price, alternatively if there is a drastic over supply then prices soften.
Current statistical evidence is showing negligible gains and falls across the country over the past 3 months. I believe the gains over the past 18 months were due to the drastic reduction in interest rates in the wake of the GFC. For a brief period it was relatively easy to purchase cash flow positive properties in close proximity to infrastructure right off the shelf (no reno or development required). That time has now passed, interest rates are about right and there is an even mix of dooms dayers and active purchasers. The perfect mix for a holding pattern.
I also don't believe there are a glut of vacant properties. I work in the commercial property industry in Sydney and I can confirm that after a significant drop 12- 24 months ago, now space is beginning to lease and sell quicker than I have seen for years. Confidence has returned and experienced investors have returned to the market.
eloi wrote:Here is an interesting article i just read which coincides with what ive been saying for a few years.But you've only joined here a few weeks ago, can you give us the previous user name you used here so we see what you have been saying for the last few years ? Ta.
As far as the over or under supply goes there is a simple indicator to tell us what is going on and that is property prices.
Does this chart screams oversupply to you ?
Hi Harb,
I have seen that graph before, it looks like Niall Fergusson's work.
That fact that the House price Index goes up exponentially is very misleading and kills all credibility.ummester wrote:Recent history has shown that property is the winner, not all history. And that is a recent history with sever market distortions.
Depends what you consider recent.
Australia being a young country only allows us to look back a couple of hundred years but boy how I wish my great great great grandparents bought me a few acres of land around Sydney Bridge 200 years ago.
Of course there probably wasn't much capital gains to be made between the Roman times and a couple of hundreed years ago so in that respect you are 100% correct about property being the winner only in recent history.Mick12345 wrote:Hi Harb,
I have seen that graph before, it looks like Niall Fergusson's work.
That fact that the House price Index goes up exponentially is very misleading and kills all credibility.It may well be, I goggled for Aus property prices and pasted the first chart I came across. You could hardly expect to see monthly fluctuations in a 130 years chart. The point I was trying to make was that any long term oversupply would have shown up in the chart as long term falling prices.
well if there is an undersupply then wouldnt the rental market be the first to snapped up because its a much cheaper option than a mortgage. I mean really how many people do you see living on the streets. I see a handful in sydney cbd but thats it so we know people have housing. Then how much pop growth we see for next few years and thats including immigration, births, deaths. Even though these are hard to determine they are very influentual in determining pop growth. Now we know that pop is ageing, immigration is going to be cut back, birth rates have jumped the last few years and in most states alot of new housing came onto the market this year and more will be coming next year that has oversupplied the market on the current pop growth so one would think an oversupply would be very easy to see occuring if not all ready here.
I read an article today on the property investor which states that the current rental vacancy rates are at %4.1 and not the %2 stated by the housing department because they only count any new properties coming into the rental market and not existing vacancies. This to me is showing me signs of an oversupply of housing.
Nationally building approvals (and commencements) have been falling since 2005. This against a trend of rising fertility supported by farsighted government policy – we need to increase the tax base to support an ageing population. ABS figures confirm net immigration is increasing – and why wouldn't people want to migrate here as Australia has demonstrated a robust economy through both the Asian Financial Crisis AND the Global Financial Crisis. Speaking of which, 1500 projects across the country were pulled due to lack of construction funding in 2008/09. This is not rocket science – fewer new properties being delivered and national pop growth currently at 2.1%pa against an average rate of increase of 1.6%pa only 5yrs ago. What we need now more than ever is affordable housing close to infrastructure and employment hubs. Medium density housing is about efficient use of resources as much as it is about affordability. This is sensible and socially responsible investment.
Graeme Freer | Freer Property and Finance
http://www.freerpropertyandfinance.com
Email Me | Phone MeBuyers Agent
I live in a city South of Perth.
House prices have been falling here for approximately 2 1/2 years.
There are loads of houses are on the market, to sell your house, you need to drop the price by tens of thousands..
Rents on existing properties haven’t risen in a year or two.
The main local paper has an abundance of houses for rent.
I blame the First Home Owner’s Grant of last year for the current over-supply of houses for sale, and the over-supply of tenants – all those prospective tenants have vanished, into their own brand new 4 x 2’s, paid for to a large extent with their First Home Owner’s Grant, leaving other houses on the market, with no-one to buy them.
The government supports the construction industry, as they make up a large proportion of wage-earners. But for landlords, BAD LUCK!hey freeenterprise can you please explain why there is new unsold properties in sydney, perth, brisbane, gold coast. if its like you say that we have an undersupply of property by %1 then why do we have these unsold brand new apartments and houses. im baffled by this because if there is an undersupply then we would not have one vacant property. Why have rents only increased by %1 the last year when all the real estate people where saying %3 to %7 increase over the year. really come on guys wake up to yourselves. its media propaganda paid for by the real estate people and banks so they can keep making money. out of the 1000's of immigrants that do come into australia i bet that not even half will ever buy property or if they do it will be when they are married and have a partner to help out with payments, Kids are staying longer at home andelderly are downgrading or moving into retirment homes so what do you think happens when we have this scenario. Just look at cuteyoungchic comments and you will see whats going on in the real world and not the fantasy that the media pump out for you.
harb wrote:ummester wrote:Recent history has shown that property is the winner, not all history. And that is a recent history with sever market distortions.
Depends what you consider recent.
Australia being a young country only allows us to look back a couple of hundred years but boy how I wish my great great great grandparents bought me a few acres of land around Sydney Bridge 200 years ago.
Of course there probably wasn't much capital gains to be made between the Roman times and a couple of hundreed years ago so in that respect you are 100% correct about property being the winner only in recent history.You can still crack me up harb.
For the argument I'm representing here, I mean recent as in the last 10-15 years and not the latest Epoch:)
cuteyoungchic wrote:I live in a city South of Perth. House prices have been falling here for approximately 2 1/2 years. There are loads of houses are on the market, to sell your house, you need to drop the price by tens of thousands.. Rents on existing properties haven't risen in a year or two. The main local paper has an abundance of houses for rent.Must be a low demand area, most rents in the metro areas have gone up over the past year.
Quote:http://au.news.yahoo.com/thewest/a/-/mp/7946270/finding-space-for-556-000-perth-residents/Finding space for 556,000 Perth residents
MARISSA LAGUE, The West Australian September 15, 2010, 6:55 amIf forecasts are right, Perth will be home to 556,000 more people in the next 20 years and finding space for an extra 328,000 homes has put the spotlight on urban infill housing targets for the metropolitan area.
eloi wrote:hey freeenterprise can you please explain why there is new unsold properties in sydney, perth, brisbane, gold coast. if its like you say that we have an undersupply of property by %1 then why do we have these unsold brand new apartments and houses. im baffled by this because if there is an undersupply then we would not have one vacant property. Why have rents only increased by %1 the last year when all the real estate people where saying %3 to %7 increase over the year.Maybe new apartments are over-priced. Just because there are properties on the market does not mean there is an oversupply. People still have to be able to afford the property, they just can't rush in and buy because the property is on the market.
If there was an oversupply, as you suggest, wouldn't rents have decreased?
Quote:You can still crack me up harb.You too unmester, I gather you have not purchased your dream home yet and are still waiting for that major market correction ?
ummester wrote:For the argument I'm representing here, I mean recent as in the last 10-15 years and not the latest Epoch:)
Ok. I will agree with you that recent history has shown property to be the winner. But even going back 50 years or more you would have done alright investing in property and even more so if you disregard median prices (which represent properties further and further away from the CBD) and focus on actual properties. Take for example investing in something on the outskirts of Sydney or Melbourne 50 years ago, something at the dirt cheap low end of the market, these days the same property would now be located in an area that is in the median to high price range of the market..
eloi wrote:hey why there is new unsold properties in sydney, perth, brisbane, gold coast. if its like you say that we have an undersupply of property by %1 then why do we have these unsold brand new apartments and houses.what does unsold properties have to do with under or over supply ? Is there an oversupply of Toyota cars if there are unsold Toyotas in a used car dealers yard ?
harb wrote:cuteyoungchic wrote:I live in a city South of Perth. House prices have been falling here for approximately 2 1/2 years. There are loads of houses are on the market, to sell your house, you need to drop the price by tens of thousands.. Rents on existing properties haven't risen in a year or two. The main local paper has an abundance of houses for rent.Must be a low demand area, most rents in the metro areas have gone up over the past year.
Quote:http://au.news.yahoo.com/thewest/a/-/mp/7946270/finding-space-for-556-000-perth-residents/Finding space for 556,000 Perth residents
MARISSA LAGUE, The West Australian September 15, 2010, 6:55 amIf forecasts are right, Perth will be home to 556,000 more people in the next 20 years and finding space for an extra 328,000 homes has put the spotlight on urban infill housing targets for the metropolitan area.
thats just hilarious. This is classic propaganda and your using it as an example of an undersupply. Look at the rpdata for perth and u will see an oversupply of housing, prices dropping and rent vacancies increasing but yet u go with a yahoo article design to fool the blind.
harb wrote:You too unmester, I gather you have not purchased your dream home yet and are still waiting for that major market correction ?Nah, not yet. 2014 probably now. I took some of your advice, though. I decided not to buy in ACT. Will build my FHSA all the way up to 80 odd k (combined with Mrs ummester) and buy at a place we want to retire to when my LSL is due. Then, after living there for 6mths, I will put it up as a rental and use the tax savings to pay down the loan 10 years faster. Best of all worlds and should give me the option to leave work in 15 odd years. Good enough for me.
Now, I just have to find the right coastal town, with a heap for sale, that isn't going to grow too much over the next 20 odd years.
harb wrote:Ok. I will agree with you that recent history has shown property to be the winner. But even going back 50 years or more you would have done alright investing in property and even more so if you disregard median prices (which represent properties further and further away from the CBD) and focus on actual properties. Take for example investing in something on the outskirts of Sydney or Melbourne 50 years ago, something at the dirt cheap low end of the market, these days the same property would now be located in an area that is in the median to high price range of the market..Of course. I've never denied that property is a good long term investment just that it hasn't been the right time to buy since I've been looking. End of 2008 was – when I was last making serious offers. But then the gubberment went and overstimulated the thing and now its heading for serious problems.
eloi wrote:Quote:http://au.news.yahoo.com/thewest/a/-/mp/7946270/finding-space-for-556-000-perth-residents/Finding space for 556,000 Perth residents
MARISSA LAGUE, The West Australian September 15, 2010, 6:55 amIf forecasts are right, Perth will be home to 556,000 more people in the next 20 years and finding space for an extra 328,000 homes has put the spotlight on urban infill housing targets for the metropolitan area.
thats just hilarious. This is classic propaganda and your using it as an example of an undersupply. Look at the rpdata for perth and u will see an oversupply of housing, prices dropping and rent vacancies increasing …
Not sure where I used it as an example of undersupply but I'm glad you found it hilarious and "classic propaganda". If anything I believe that based on the previous 20 years growth of around 50% increase the numbers forecasted are on the low side.
I looked at the home page of rpdata and it shows Perth median at 465k and overall growth of 5.7% for the year. Have you got any links to where I can "see an oversupply of housing, prices dropping and rent vacancies increasing" ? I did find the suburbs growth here http://reiwa.com.au/res/res-pricegrowth-display.cfm and there are a few suburbs which fell but the majority of them were up.Quote:…but yet u go with a yahoo article design to fool the blindThere is no fooling you mate.
Just in case /thewest/ in the yahoo link wasn't enough of a clue and readers couldn't be bothered to click on the link to see the full article I left the source of the article as well but it was obviously too small for you. This time I enlarged it and changed the colour to green to make sure even the blind can see it.Oh, and just in case you have not heard of this source previously I've pasted the wiki description for you.
Quote:The West Australian
From Wikipedia, the free encyclopediaThe West Australian
Front page of The West Australian
12 December 2005Type Daily newspaper Format Tabloid Owner West Australian Newspapers Limited Editor Brett McCarthy Founded 5 January 1833 Headquarters 50 Hasler Road,
Osborne Park, WA, AustraliaCirculation 195,033 Daily
342,787 Saturday [1]ISSN 0312-6323 Official website http://www.thewest.com.au The West Australian (often simply called The West) is the only locally-edited daily newspaper published in Perth, Western Australia,
ummester wrote:I took some of your advice, though. I decided not to buy in ACT. Will build my FHSA all the way up to 80 odd k (combined with Mrs ummester) and buy at a place we want to retire to when my LSL is due. Then, after living there for 6mths, I will put it up as a rental and use the tax savings to pay down the loan 10 years faster. Best of all worlds and should give me the option to leave work in 15 odd years. Good enough for me.Only wished you listened to reason 2+ years ago and did something like that in Sydney or Melbourne over 2 years ago so you'd be up 100k+ in CG, a couple of fat tax returns and the rental income covering the mortgage repayments by now. Still you know what they say, ' you live and you learn' and 'better late then never'.
Quote:Now, I just have to find the right coastal town, with a heap for sale, that isn't going to grow too much over the next 20 odd years.Only problem with that is the nice coastal towns will be overcrowded coastal towns in 20 years time and meanwhile the rental returns won't be as good as something in the major capital cities. Wouldn't the better strategy be buying a lower priced place on a larger block closer to the CBD that gave you a better rental return and then selling it to buy a place in a coastal town that will still be the "right coastal town" in 20 years time when you actually want to retire ? By then you may change your mind and want acreage in the hills instead of a beach house in some overcrowded town.
Quote:Of course. I've never denied that property is a good long term investment just that it hasn't been the right time to buy since I've been looking. End of 2008 was – when I was last making serious offers. But then the gubberment went and overstimulated the thing and now its heading for serious problems.Australia is not one uniform property market, there is always the right time to buy property somewhere.
harb wrote:Only problem with that is the nice coastal towns will be overcrowded coastal towns in 20 years time and meanwhile the rental returns won't be as good as something in the major capital cities. Wouldn't the better strategy be buying a lower priced place on a larger block closer to the CBD that gave you a better rental return and then selling it to buy a place in a coastal town that will still be the "right coastal town" in 20 years time when you actually want to retire ? By then you may change your mind and want acreage in the hills instead of a beach house in some overcrowded town.And lose 50 odd K in fees and stuff for the transaction in 10 years time?
I don't really care if I get a tenant or not. Once I have the place brought, I'm happy to just claim the losses and leave it empty so that I can visit for 'renovations' frequently. If I get someone in, just as good.
But yea, picking 'the right coastal town' for retirement is the biggest issue. I agree that many will see a lot of growth over the coming years but there are also places where sales will continue to decline. Our population is aging, especially along the coast. Either by death or moving, I see some of those places as becoming more empty, without the youth and local work available to replenish them. Mrs ummester isn't interested in buying inland acreage, so its coast or bust for me.
Dan42 wrote:eloi wrote:hey freeenterprise can you please explain why there is new unsold properties in sydney, perth, brisbane, gold coast. if its like you say that we have an undersupply of property by %1 then why do we have these unsold brand new apartments and houses. im baffled by this because if there is an undersupply then we would not have one vacant property. Why have rents only increased by %1 the last year when all the real estate people where saying %3 to %7 increase over the year.Maybe new apartments are over-priced. Just because there are properties on the market does not mean there is an oversupply. People still have to be able to afford the property, they just can't rush in and buy because the property is on the market.
If there was an oversupply, as you suggest, wouldn't rents have decreased?
As Dan42 says, rents have continued to increase because there is a disconnect between supply and demand in many Aus cities. Each capital city moves in a different cycle and are affected to some extent by State Govt policy eg NSW & VIC FHB Boost Schemes have been an effective stimulus. The timing seems right for property purchases with Futures markets factoring in only one more 25 basis point rise in the cash rate over the next 12mths. Housing starts among the nation's top 100 builders rose 23% in FY2010 to the highest number since 2005. This will help affordability.
Graeme Freer | Freer Property and Finance
http://www.freerpropertyandfinance.com
Email Me | Phone MeBuyers Agent
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