I'd be very suprised if they do. There are already signs that the economy is turning.

Next year will be a big year in Industry for Australia. Migrants are still flocking to our shores. Thay all have to live somewhere.America is still a gazillion $$$ in dept but they claim things are turning
(Pity China owns them).
Oil price is slowly climbing.
Employment is starting to drop so more work starting to float around which means intrest rates will go up- as they allready are.
Really Australia is in an ok position financialy.
Put it this way, I wouldnt sell ur house !!!

If anything Im concidering locking the mortgage up

What does every one else think?

latedropeddy said...

Will house prices crash?

I doubt it. There is still a significant undersupply in housing, and as we all know an oversupply of people wanting to live in Australia. That alone should prop up house prices for some time.

aust house prices are maybe highest in the world.

the usa economy will sink.

the reason is high deliberate quotas given to india + china.

usa is mostly service industry.

when you pump trillions of paper money into circulation[aust gov did this on lesser scale too] the value of that paper will fall.

the manufacturing industry of usa would probably double if these high quotas were not given to china/india.

if the corporate establishment decide to pull the pin on american stockmarket, millions will go from weathy+employed to opposite.

on anniversary of sept 11 chicago futures finished days trading on 911.00

you still dont think the stockmarket is controlled after finding that out.


http://www.infowars.com/print/Sept11/911nylotto.htm

Yes, but you're missing a BIG part of the picture. Sure it may be as simple as supply/demand but supply and demand aren't so simple!

Just because a house is as you said a necessity, that does not imply that prices are always going to be stable or have an upwards trend.

Look at the US financial institutions. They had this invincible attitude upon in which they lent under the premise that their collateral (housing) would appreciate so much that it would virtually offset the high default risk of their borrowers (re: GFC). The availability of such loans would obviously have contributed to the inflated house-prices as well in the first place.

Here in Sydney Metro it's tough to find an OK place to rent for under 400p/w for 2 people.

There are MASSIVE vacancy rates in small units in all my surrounding suburbs - mind you these only seem to be in units and smaller houses. Even so rent is still too high.

We're trying to sell our house now - in a fairly upmarket Sydney suburb. There is no doubt that the market is more lethargic than when we bought 7 years ago when we had to compete with offers.

How about the fundamentals? Are Australian incomes rising as quickly as house prices put out... no. However a lot of demand is from foreigners.

In the end remember that a large proportion of the statistics we get come from REAL ESTATE companies. There IS a massive bias in almost every figure they put out (just ask any of my econ lecturers at uni).

From the (attainable)sale vs. buying price of our house over the last 7 years, the average appreciation per year has been 3-3.5% compound, so just about the inflation target - and I think a smidgen about average actual inflation.

Sure there is demand - in many cases for you need to park in the opposite street to get to auctions in melbourne...

....but how are people affording it? Is it sheep mentality?

What type and income are the majority of new aussies (ie "the demand") pulling?

Don't these guys have any hobbies that require "moderate" financial commitment?*



*disclaimer - I haven't bought new windsurfing gear in 2 years

I'd rather own something i can physically see and touch than having some cowboy playing around with my money.

No Mark, you're not on your own (well, maybe not crash, but stop going up to ridiculous levels). I think it's poor that a country as big as Australia has a 'shortage' of land. Surely it is just the rate at which they release it that is the reason the prices are held high.

Even Sydney, where I live, it is argued to be running out of land... you've got to be joking, there's heaps, and if the government invested in decent rail connections and freeways to new areas there would be a lot more accessible from the city.

I once suggested in a lunch time work discussion that I think negative gearing on housing should be slowly reduced/phased out; I got a lot of people angry.

Maybe if they made it only applicable to new housing they could encourage new building without the need to inflate the cost of existing housing.

Just for the record, I also negative gear a house, but I still don't think its the right thing for an economy to do with its housing.

The demand is obvious - we all need a roof.

At the bottom end of the market, the marginal cost of supply is set by new land and house package releases on the fringes.

To the extent that this release is constrained, then prices will rise to above what the simple supply economics would imply, all other things equal. The current debate on house prices has a large focus on this as a cause.

If we had faster land release, and fully withdrew the first home owner's subsidy, then there could be a step down in prices at the lower end of the market (unlikely in Perth, IMHO, fasten seatbelts).

I reckon Rockingham is a great place to buy a house. Interesting coast WITH WAVES, close to the jobs epicentre in Kwinana, on the trainline (or freeway for off peak). You can wear your uggies down the shops...

You can get in for less than $350K - plus you've got a high chance of doing REALLY well over the next 20 years (Cisco is right, buy four).

Just make sure your 20 year investment isn't close to where a possible sea level rise is going to wash it away. And hopefully Ken Henry won't move the goal posts on us all.

THE MARKET CAN REMAIN IRRATIONAL LONGER THAN YOU CAN REMAIN SOLVENT

arancini said...

The first house I bought was no where close to where I wanted to live, but after 2 subsequent homes we are getting closer to the beach all the time.

Agree, you should never look at your first house as your final...more as a stepping-stone. Too many first home buyers mortgage themselves into ridiculous debt, instead of buying on a lower scale, and saving to take the next step in a few years.

weve got 2 brick n mortars but from now on its stocks. property is great but its also nice to have some liquid and appreciating assets with equity.
ive seen 2 property corrections in the last 10 years in 2 different areas. keep in mind property is a locally fluctuating asset and can not be generalised, just like the stock market. theres stock that out did the all ords in every correction. mind you it helps the mrs is a certified stock trader.

you guys have gotta be ****ting me,

that would be the lovely stock market that robbed everyone of thier super funds ?

Gestalt said...

you guys have gotta be ****ting me,

that would be the lovely stock market that robbed everyone of thier super funds ?

yep but the people who are greedy or dont watch what their investments are doing are the ones that get burnt. i lost a little bit too but moved most out a year or so before. after a long run of making money wouldnt you assume that its got to end soon, pull the $ out and wait or put it some place else? its all in cycles be it property, shares, even the chooks dropping eggs

Money is not lost or gained on the share market until it is crystallised. The share price is a combination of true value and perceived value. In a boom or bull market, the perceived value is high, and as soon as a lot of investors start selling the shares, the perceived value will decrease in turn.

I find Perth house prices hard to understand... In one camp there is the people who say that Gorgon (plus other resources projects) will keep things on the up and up... In another camp (which seems to have more tent space), there are some finance writers saying China is experiencing its own bubble, and look out for the 2011 crash...