By: mentawaisurf
27/07/2009
12:23 pm Yahoo! Profile:
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We've seen the top-end of Australia's housing bubble partially deflate while the lower-end has actually reflated! This is largely due to the enhanced FHOG & property bulls (agents, mortgage brokers, developers, builders & other vested interests) who continue to spruik housing for their own benefit.
This sector divergence is creating a market distortion that will only lead to even more pain moving forward, especially for those first-home buyers who were enticed to purchase on little or even no deposit (as developers like Devine & others continue to push). |
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By: jaymarcel
27/07/2009
7:03 am |
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By: puyi
27/07/2009
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Milanda Rout | July 27, 2009
Article from: The Australian
ANGUS Bissland thought he would have a relatively easy time buying his first home after working in Britain and the US and witnessing the impact of the global financial crisis.
But the 30-year-old, who works in finance, could not believe the state of the property market when he got home.
He thinks the combination of low interest rates, the first-home buyer grants and people still borrowing more than they can afford has created a false property boom that could come crashing down.
As Kevin Rudd warns of higher interest rates, Mr Bissland says he is concerned about buying in Melbourne at the height of what he calls a "false economy" and then seeing the market decline because of the impact of any rate rises.
"It's just madness at the moment," he said of the city's record 87 per cent clearance rates for the year.
Mr Bissland said the first-home buyers grant was artificially pushing house prices up and he was worried about the impact on the market when it ends.
"I call it the first-home sellers grant," he said. "It has led to a real sellers market and that is something of a false economy. It has pushed houses that used to be $500,000 over $500,000." |
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By: puyi
25/07/2009
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First-home incentive is deterring more buyers
Jessica Irvine Economics Writer
July 25, 2009
THE supersized first-home owners grant has become more of a deterrent than an incentive for buyers looking to enter the market in the next 12 months, according to a new survey.
After watching prices inflate on the typical first home since the grant was increased last October, 16 per cent of first-home buyers now say they will wait for it to end before buying, a survey commissioned by the Mortgage Finance Association of Australia and Bankwest to be released today shows.
Only 6 per cent of first-home buyers said the increased grant meant now was the time to buy. |
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By: puyi
19/07/2009
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The Sunday Telegraph, 19 July 2009
Mortgage brokers say investors have overtaken first-home buyers as the most active sector as applications for the First Home Owner Grant wind down.
"People who were serious about getting the grant made sure they bought well ahead of June 30, when it was originally scheduled to expire," Lisa Montgomery, of Resi Home Loans, says.
But although property is, and always has been, a solid long-term investment, potential landlords are being warned not to rush in expecting to make a quick buck.
Property prices in many areas have fallen from their 2006 peak.
Although prices of properties in the first-home buyer range have been rising because of government stimulus, there's no guarantee that growth will continue when the grant ends later this year. |
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By: ricky.rollings
7/07/2009
7:48 am |
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By: sly_guy_nsw
23/06/2009
8:05 am |
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By: vincenthavelundstephens
22/06/2009
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Am I fool to take opposition to Mr. Dent, maybe but why not? The direction of business will change and small business will finally get it fair recognition.
Big business with its affiliated problems have reached their Apex and are on s slide downwards, thats not hard to see, the share markets and attendant exposure to graft needs reshaping. Big Govt with its attendant over valued Beauracrats must also change, wasted expenditure for poor return will be eliminated. This is the Genisis of the future collapse, and it seems sure to happen but we can still hope, we escape unscathed!
Sadly our working population is aging not getting younger would that what Mr. Dench said was true. The western world has been stimulated not just Australia, but then we were in credit when this all started?
Our house prices in NSW are the result of Bank leverage when developers apply for loans, they must show a 25% margin in their application for funds if they want to borrow higher than 70% of finished value. Then they sell houses that are secured back to the banks and leverage them to 90%, the developers margin was their safety net.
As far as the world wide bubble is concerned, thats a differing reality depending on the mix of taxes, Govt add ons and council fees. I suspect NSW is as high as most countries, there fore developed sites are too expensive by far here.
Finally J @pan is a different case to anyone else, American money, a docile working force and indiscreet banking practices created their fantastic post WW11 performance, it finally blew up.
The increase in the cost of raw materials in tandem with the growth of its huge neighbor, has changed the world for them, the future will be interesting here in the Asian sphere.
Its so often we hear of these mesiahs of financial forecasting who have proved so accurate in the past. Often the truth is they have all bases covered in their messianic like predictions, and that coverage ensures they are correct.
Anyhow those are my thought. |
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By: puyi
22/06/2009
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Fleur Leyden
June 21, 2009
Daily Telegraph
AUSTRALIA'S sharemarket will halve in value, house prices will slump as much as 40 per cent and unemployment will climb to 10 per cent.
That's the bold prediction from economic forecaster Harry Dent, who says a bigger crash is ahead for the global economy within the next two years.
And while Australia's strong financial system, links to China and young working population have cushioned the nation from the economic turmoil so far, Mr Dent says smart investors are cashing up in preparation for "the Mother of all depressions", The Sunday Mail reports.
"When you have to deleverage a major bubble in stocks and housing and commodities ... it doesn't just get over with in one year with a nice stimulus program," he says.
Mr Dent, who predicted J apan's 1990s recession and the present economic crisis, yesterday began an Australian speaking tour in Brisbane.
He says our house prices are "among the most overvalued in the world" and will backtrack by as much as 40 per cent while unemployment – now at 5.7 per cent – will hit double digits.
"I would say Australia is not paying close enough attention to the worldwide housing bubble and banking crisis," he says.
"Look at J apan to see what happens when a generational trend finally slows your economy and a housing bubble bursts. Housing peaked in 1991 in J apan and is still down over 60 per cent from the peak 18 years later." |
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By: puyi
22/06/2009
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Monday June 22, 2009
Yahoo7 Finance
An international economic forecaster says another big crash lies ahead for global share and property markets within the next two years.
Harry Dent predicted the J apanese recession in the 1990s and also forecast the current global financial crisis.
"And then you'll see another crash late this year and into next year, as banking systems melt down again. I think the next one's going to start in Europe and Eastern Europe, housing prices would lag.
J apan an has already gone through a housing bubble, and a peak in generation spending, and you know what? Their stock market declined for years, housing declined 60 per cent, and all the government stimulus could not put Humpty Dumpty together again - that's what we're looking at."
Mr Dent says home owners and prospective buyers should look at the J apanese property bubble and bust to get an idea about where prices might head.
"Bubbles usually go back to where they start... in Australia, I'd look at my real estate and say 'what was it worth in the year 2000?' that's when the housing bubble started," he said.
"They have to go back down to where young families can afford a house again, so that's a good thing." |
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By: clairebearr66
22/06/2009
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| This is the first time I have read these blogs.. My eyes are glued to the screen. I am a first home buyer & have been researching the market the entire year (though interest to buy was prior to this fhb grant). The market prices are incredible - over the top. I'm anxiously waiting for the fhb grant to finish as a result. I also certainly agree with your comments in general, especially the 'American style implosion' |
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By: jaymarcel
22/06/2009
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Hi Al, You are correct which is why timing & location is so important.
Most people will always prefer to own property over renting, unless more property is built we will one day be in a situation where renting is much more than a mortgage & the only people buying or building new house are the ones with equity in their homes to buy investment property. Not a nice thought but just as likely as a 40 or 50% drop in property prices.
Homelessness is a sad situation which the gov are doing nothing about, they need to supply hotel style temp accommodation for these people with strict rules to enable them to get employment & back on their feet. I don't mind my taxes going up for that. |
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By: almurrie1@y7mail.com
22/06/2009
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Ancientsong
If houses don't go up by the cost of the interest less rent they will be running at a loss, and no investor will be interested. Also if rents are less than the costs of buying a new house ie mortgage interest, rates, repairs etc and house prices are static no one will want to own either. So no new houses will be built and homelessness will go through the roof, and governments will have to tax YOU EXTRA to get enough money to build shelters for the homeless. Not a nice scenario either way. Personally I think city land will continue to increase in value simply because of demand. When population declines then the pressure will go the other way, but I can't see that ever happening unless the flu takes off and then we are all in for it so it won't matter.
Al |
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By: jaymarcel
22/06/2009
10:28 am Yahoo! Profile:
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Hi milan,
The only thing I could disagree with is your option of buying a unit, if you bought a house & used the body corp fees towards the mortgage repayment instead you end up better off. Only buy a unit as an investment property as the body corp fees etc are reclaimable.
It all adds up mate, look after the cents & the dollars look after themselves. |
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By: ancientsong
20/06/2009
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Hi milan fan 04,
its true property prices have risen over time,so have wages though, but there is a difference this time, if you look at the stats on wages vs home prices, up until 2000, house prices have been between 3-4 times the average Oz wage,(In WA at least) wages and houses rose together..
since 2000, with all the goverment grants, no stamp duty etc.. houses are now sitting at 7 times average income...this generation is paying double what baby boomers have paid, 7 times their annual wage as opposed to 3.5 times
people used to pay 1/3rd of their income on mortgages, now they are paying that in rent..
so to think that these multiples will increase to 10, 15, 20 times average income over time is crazy.. because no one could afford them and no one could rent them either because the rent on this prices would consume 100% of the Australian wage..
it should be obvious to anyone that has done any research that prices are propped up, if they were truly worth what they are, the goverment should take away all fhb grants, stamp duty concessions, shared equity schemes, negative gearing.. then see how the market holds up.. if it was truly worth the prices they shouldn't fall..
and btw look at sydney prices, from 2003 - 2009, they hit their peak of $570k in 2003, they are currently at $530k,
they are down 7% in nominal terms over 6 yrs, while the average wage has gone from $46,436 in 2003, to $61,412 in 2009, so they have acutally lost more when you factor in wage rises..
the problem they are facing as everyone else is, is they have hit "peak debt" there is only so much a person, family, goverment can borrow..for house prices to keep rising above wages forever is crazy, the sydney market has already proven this.. |
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By: milan_fan_04
20/06/2009
3:13 am Yahoo! Profile:
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THAT WAS SOOO PAINFUL BUT I HAD TO DO IT!!!
This is my first ever blog and i am a first home buyer =) BUT
I have just read 6 pages of comments..i.e EVERY SINGLE POST!!
while it has been interesting and informative there has been more negative than positive comments regarding buying property which i am considering doing because of the obvious reasons.. lowest interest rate in something like 40 years.. immigration and population growth at all time high with not enough properties being built (creating big demand and pushing up rent~ great for positive geared investments).. *ever increasing rent.. the first home owners boost.. ect. IT SEEMS LIKE A GREAT TIME TO BUY! and after reading every negative comment i still want to buy the RIGHT property because, well check out a graph of property from 1909 to 2009 and it always goes up.. zoom in to see ups and downs but it is a great long term investment. do your research and the great risk becomes great opportunity. im 22yrs old and worked for RP data plus been looking at buying since i was 18yrs old. i always read Wealth Creator, Money, and API, and Property Investor magazines and they all say now is the best time to buy. ive been crunching numbers for longer than i can remember so i know the risk and will buy a 2 bed unit next month (July 2010~ if its at the right price) and i will not stretch myself and lock the interest rate so i know what i have to repay with out any nasty surprises to come with increased interest. I SAY BUY BUY BUY!!,.. if you find a bargain at the lower end of the market.. bargains are found buy researching the area, the average unit price and many, many other factors. rent money is dead money and if you can afford the repayments go for it! but watch for OVER-INFLATED PROPERTY. in the last two months alone I have seen prices in Alice Springs (where i live and will buy) go up at least $20,000. TELL'EM THERE DREAMING.. make an offer $20,000 LESS than asking price..no deal?, simply tell'em to shuv ... |
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By: almurrie1@y7mail.com
19/06/2009
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dishonestnzsheilainoz
please preface your statements with "In my opinion". Your statements are unprovable surmise and you have absolutely no right to make them. Or do you have years of research and degrees to back up your outrageous claims. If Australia is going to crash and burn, why do do you still live here. Oh that's right the Aussie pension is better than NZ. |
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By: almurrie1@y7mail.com
19/06/2009
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So puyi you are advocating a crash of such proportions most of the wealth of Australia is wiped out, or massive inflation of 400% with salaries increasing to match. I am sorry you have such desperate dreams because if either of these scenarios come to pass it will make no difference to first home buyers, because there will be no first homes to buy! It would be first tent buyers and they would still need a govt subsidy.
Al |
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By: puyi
19/06/2009
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Extract from a website:
The concern being that if enough people have not been shrewd enough to anticipate the higher rates, this may lead to higher forced sales and, dare i say it, an american style implosion of property prices.
• Posted by: Tony at June 17, 2009 1:41 AM
Properties don't always rise in value; what is today's treasure might be tomorrows trash; circumstances can change quickly - location included. You need to make sure your gearing is low and equity is high, otherwise you are taking too much risk and a potential loss might result in bad times.
• Posted by: DB at June 17, 2009 4:08 PM
I'm hoping the Rudd government quits "assisting" first home buyers with its ridiculous schemes - which are just driving up property prices and making them more unaffordable to young families trying to buy their first home.
A house(plus land )used to equate to 2 years of an average yearly salary .. not 8 years or whatever it is now !
I hope we get back to sanity and affordability soon.
• Posted by: chris jordan at June 16, 2009 7:10 PM |
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By: puyi
19/06/2009
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Extract from a website:
The problem is that the FHOG Boost has brought on a bubble in FHBs with maximum LVR loans that will start defaulting if variable rates start rising. This "Ruddprime" loan sector has added significant risk to the Australia housing market that could see a surge in foreclosures putting downward pressure on prices. I think the RBA's well aware of this risk and will likely be forced to cut the OCR should banks keep raising their variable mortgage rates in order to keep the housing bubble from popping.
• Posted by: DadOfSam at June 16, 2009 4:20 PM
I have been watching the price of residential units sky rocket since February. In my opinion, real estate agents are helping to manipulate the market to prevent it dropping (particularly in Sydney). It doesnt help that first home buyers will pay anything for a property, instead of the current valuation. Sydney real estate is over-priced, and is way overdue for a decrease.
• Posted by: Malcolm at June 16, 2009 4:46 PM
As a NON FHO who would like to buy a home in Sydney, I have been disappointed in the government's handling of the FHOG boosts, that have basically just handed the money directly from the government to vendors and real estate agents and forced prices up unnecessarily.
Simon
• Posted by: Simon at June 16, 2009 10:23 PM
Many consider it a great time to enter the market for the first home buyers for the reasons such as FHOB and low interest rate.
Property is a long time game with prohibitive entry and exit costs. Any myopia focus on the current little cash incentive and low interest rate will get caught short when rates rise rapidly and significantly.
• Posted by: Andy at June 16, 2009 10:29 PM |
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By: puyi
19/06/2009
9:59 am Yahoo! Profile:
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The Domain
Alex Brooks
June 15, 2009
When the Commonwealth Bank of Australia raised interest rates on its variable home loans last Friday, home owners went into a frenzy of fear.
Treasurer Wayne Swan and Deputy Prime Minister Julia Gillard called the bank selfish, which makes us cheer, because we like to hate the banks.
This may sound perverse, but banks charging higher interest rates could be a good thing for home owners. It will make residential property start behaving like, well, bricks and mortar, instead an asset class waiting to implode.
The ABS shows more first home buyers have financed themselves into property during 2009 than any other time in recent history. The size of a first-home buyers' mortgage has also increased by $52,000 in the two years to February 2008, to an average $280,600.
A small rise in interest rates could put an end to this madness.
The last thing residential property needs is more volatility, which could make it behave more like commercial property that's had disastrous asset write downs of up to 40 per cent.
A volatile housing market is not a good thing for investors, home owners or those first home buyers that have taken on ever-larger mortgages.
Since residential housing has been the only bright green shoot of economic recovery this year, isn't it time it was given a steadying hand so that shoot can grow steadily rather than like a hothouse flower that could keel over when all this economic madness has played out? |
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By: jaymarcel
19/06/2009
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dishonest if you think property has peaked & will never go above this price again YOU are the fool.
There's nobody rushing to sell property up here in QLD, I've been looking for about 6 months now & there is very little to pick from. If you don't buy property now & fix your rate now you will be buying at much higher interest rates. |
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By: dishonestnzsheilainoz
18/06/2009
10:46 pm |
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By: jaymarcel
17/06/2009
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| BUY, BUY YOUR FIRST HOME NOW WHILE INTEREST RATES ARE LOW & FIX IT. DON'T LISTEN TO THE ONE BELOW WITH MANY ID'S THAT HAS CONVINCED NO ONE OF HIS CRAZY IDEAS BY JUST CHANGING HIS ID & REPEATING HIMSELF. Should be RODNEY THE LOSER. |
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By: rodneythesaviour
17/06/2009
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To ANYONE considering buying their first home now - I urge you to RESIST the temptation to buy your first home now! Instead I suggest you Wait.. The prices are about to fall.
There is much truth in what has been posted here below concerning the forecasting of a pending economic disaster.
Indeed, we should all rally round steve_b_wilson and cry -
AUSTRALIA - ECONOMIC DISASTER LOOMS.
Indeed we should make every effort to support his CRUSADE to awaken the populace to the crisis at hand and seek to encourage each and every member of the population to take action now which shall secure their financial security in the difficult times to come.
Be cautious and maintain financial flexibility.
A positive outlook and confidence are not enough. |
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