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Forum: Australian Bubble Forum

Forums->Australian Bubble Forum->Sorry to rain on your parade

Davo	Sorry to rain on your parade
	The Newcastle Herald reported last Saturday (6/2/10) that Newcastle property prices had increased by nearly 17% since 2003 (or 2.5%pa) and Sydney only 5.5% (or 0.9%pa). That growth is about in line with inflation running at 2-3% (?) since the last property correction in 2001-2003. Seven years or more of below inflation growth leads to a property price correction. In the property news section of the same newspaper it reported that a property listed at $568,000 last week had 8 interested parties and the final sale price negotiated was just over $600,000. At another local property open house over 70 people attended. My brother-in-law and his wife had a first open house for their Sylvania unit last weekend listed for sale at $390,000. It has sold this week for $420,000. I have not seen these types of reports or market activity since 2001. I think there could be a property correction in the wind, but I regret that it might not be the direction that you guys are expecting...
	on: Mon 08 of Feb, 2010 [06:33 UTC] reads: 2479

Posted messages Messages 10 20 30 All Style Plain Threaded Headers Only Sort Newest first Oldest first Find author message erutangis  Re: Sorry to rain on your parade on: Mon 08 of Feb, 2010 [06:43 UTC] Huh? Newcastle must have had the most expensive RE in the country in 2003 or the local press was wrong. Houses in my area are selling for 450kish and they were selling for less than 200k in 03. author message bps  Re: Sorry to rain on your parade on: Mon 08 of Feb, 2010 [06:47 UTC] Looks like the market is hotting up, how could it do anything else with house prices so cheap. Been reading today that investors and upgraders are flocking back into the market and high auction clearance rates last weekend especially in Melbourne. I know two different parties looking to buy in Sydney and say it is still depressing as there is so much competition. Maybe Australia is different! author message Macster  Re: Sorry to rain on your parade on: Mon 08 of Feb, 2010 [06:56 UTC] Yep here we go, looks like bubblepedia has garnered enough attention to attract the inevitable "trolls" (or in this case, it'll be "bulls") that come with the territory of a growing public online community. As for anecdotal evidence, I'm sure you can find examples anywhere to back whichever side of the arguement you partake in. author message Pragmatist  Re: Sorry to rain on your parade on: Mon 08 of Feb, 2010 [07:17 UTC] come on - the property industry has many different numbers depending on what they are trying to prove. http://www.smh.com.au/articles/2003/05/28/1053801430124.html This 2003 article puts the median Sydney price at the time at about $450-460k (depending on which part of 2003 you consider) according to the REINSW not the $563k referenced in Saturday's article. This is a difference of over $100k (or about 25%) I don't know about a correction in 2001-2003 as that article from 2003 indicates that prices increased 23.8% over the year to March 2003. This is not really the sort of pattern seen in a correction. In case anyone wants to quibble about definitions, both articles are talking about house prices, not units. Ratios of prices and debt to incomes are what count in the long term. Right now, they are at record levels all around Australia so prices can't get any higher unless interest rates are dropped (significantly) and lending standards loosened again. Current indications are that lending standards are being tightened (decreasing LVRs) and interest rates are on the way up. author message Clawhammer  Re: Sorry to rain on your parade on: Mon 08 of Feb, 2010 [07:53 UTC] Wow...makes you wonder why they were selling? author message Davo  Re: Sorry to rain on your parade on: Mon 08 of Feb, 2010 [10:22 UTC] The Newcastle Herald article last Saturday refers to December 2003, prices escalated rapidly during early 2000 to end 2003. Clawhammer: My brother-in-law and his wife sold because two weeks ago they bought a house in South Sydney for $700k, as they dont want to have kids in a unit. They said the competition to get their house was extremely high, in fact after they had signed the contract the agent still held another openhouse during their 5 day "cooling off" period, just in case they didnt go ahead, and wanted to make sure he had other buyers lined up to step in! no joke! I thought they were mad taking on the risk of committing to buying a place before they had even tried to sell the unit they were living in, but obviously they had no worries at all... author message Pragmatist  Re: Sorry to rain on your parade on: Mon 08 of Feb, 2010 [11:02 UTC] The numbers in that article still don't add up right. According to the article, prices in Sydney were $450k in Dec 2002 and the ABS data shows a 15.5% increase from Dec 2002 to Dec 2003. This still only gives a median value of $520k. This is still a long way shy of the $563 quoted in the recent article. Keep in mind that 2003 was the peak of a rapid growth in prices, not the bottom of a 2001-2003 correction as you state. author message Clawhammer  Re: Sorry to rain on your parade on: Mon 08 of Feb, 2010 [13:15 UTC] Thanx for the reply Davo. Don't get me wrong... I'll pat anyone on the back for making money in this bubble. (just as long as I'm not bailing them out when it pops that is) Good on 'em. Anyone capable of paying off a $700k house as well as raising a kid in Sydney's south is doing way better than me! author message IVKristin  Re on: Mon 08 of Feb, 2010 [18:30 UTC] Nowadays, the free ringtones or mono ringtones become very best selling, but, there are different persons, which order the smashing topic like your. author message altakoi  Re: Sorry to rain on your parade on: Mon 08 of Feb, 2010 [22:28 UTC] Don't tell me not to live, just sit and putter Life's candy and the sun's a ball of butter Don't bring around a cloud to rain on my parade Don't tell me not to fly, I simply got to If someone takes a spill, it's me and not you Who told you you're allowed to rain on my parade I'll march my band out, I'll beat my drum And if I'm fanned out, your turn at bat, sir At least I didn't fake it, hat, sir I guess I didn't make it But whether I'm the rose of sheer perfection A freckle on the nose of life's complexion The Cinderella or the shine apple of its eye I gotta fly once, I gotta try once, Only can die once, right, sir? Ooh, life is juicy, juicy and you see, I gotta have my bite, sir. Get ready for me love, 'cause I'm a "comer" I simply gotta march, my heart's a drummer Don't bring around the cloud to rain on my parade, That pretty much sums it up for risk analysis in the bubble age. author message hojusaram  Re: Sorry to rain on your parade on: Mon 08 of Feb, 2010 [23:06 UTC] Not sure exactly the point of this post. So just a couple of comments and my personnel perspective. I bought my house in Townsville in 2002 for $221,000 I sold it in 2007 for $545,000. That is a 200% growth in 5 years. I don't know what that is annualised but it must be somewhere around 35%. This is absolutely bubble stuff, anyone denying it is a looney. in 2006 and 2007 there were entire suburbs that appearred overnight and there were articles in the paper of 21 year old tradies with 6 houses and 5 cars. In that short time townsvilles housing stock ballooned like never before. It was a farily obvious overbuild to me, and always makes me untrusting of the "over supply" argument, I doubt we have even caught up to those glory days since the building has continued. In reponse to the $700K sales, this is not a surprise for Jan and Feb. People have been able to sell there lowend houses to FHBs late last year and then have taken the money and re-leveraged it to get a big/better house early this year. This is a absolute flow-on effect to the higher market from Krudds cheque writing. I say good luck to them, and bad luck to the poor fool who is leveraged over their head to join the ponzi pyramid at he bottom. The problem is now the banks are upping interest rates and LVRs and KRudd has stopped writing such big cheques. This will mean that the fools at the bottom cannot get their ponzi pyramid entry key, so they can't buy the house that the the upper markert wants to sell at a looney prie to climb the ladder. The only question is now is what that actually means. Does it mean a stagnation of prices or a collapse. I often check out a site www.sqmresearch.com.au, it tells you how many houses in your area have been on the market for more that 2 months. During the FHB craziness this usually hovered around 25 , it is currently at 109. This tells me there is too much supply and not enough demand in my area and the problem is getting worse. As I said if you can't get the keys to the pyramid you can't get in and push someone else up. Intersting times ahead. author message Davo  Re: Re: Sorry to rain on your parade on: Tue 09 of Feb, 2010 [02:10 UTC] > Not sure exactly the point of this post. So just a couple of comments and my personnel perspective. > > I bought my house in Townsville in 2002 for $221,000 I sold it in 2007 for $545,000. That is a 200% growth in 5 years. I don't know what that is annualised but it must be somewhere around 35%. This is absolutely bubble stuff, anyone denying it is a looney. in 2006 and 2007 there were entire suburbs that appearred overnight and there were articles in the paper of 21 year old tradies with 6 houses and 5 cars. In that short time townsvilles housing stock ballooned like never before. It was a farily obvious overbuild to me, and always makes me untrusting of the "over supply" argument, I doubt we have even caught up to those glory days since the building has continued. > > In reponse to the $700K sales, this is not a surprise for Jan and Feb. People have been able to sell there lowend houses to FHBs late last year and then have taken the money and re-leveraged it to get a big/better house early this year. This is a absolute flow-on effect to the higher market from Krudds cheque writing. I say good luck to them, and bad luck to the poor fool who is leveraged over their head to join the ponzi pyramid at he bottom. The point is, you couldv'e sold your house in Townsville in late 2003 for $545,000 and not waited the extra 4 years. Property prices doubled somewhere between 2001-2003, but since then have hardly moved. The boom in 2001-3 was a massive increase in property prices, I agree, but prices hadn't moved with inflation since 1989. The 2001-2003 period was a price catchup for over 11 years of less than inflation growth. > > The problem is now the banks are upping interest rates and LVRs and KRudd has stopped writing such big cheques. This will mean that the fools at the bottom cannot get their ponzi pyramid entry key, so they can't buy the house that the the upper markert wants to sell at a looney prie to climb the ladder. The only question is now is what that actually means. Does it mean a stagnation of prices or a collapse. > > I often check out a site www.sqmresearch.com.au, it tells you how many houses in your area have been on the market for more that 2 months. During the FHB craziness this usually hovered around 25 , it is currently at 109. This tells me there is too much supply and not enough demand in my area and the problem is getting worse. As I said if you can't get the keys to the pyramid you can't get in and push someone else up. > > Intersting times ahead. > > author message spurf  Re: Sorry to rain on your parade on: Tue 09 of Feb, 2010 [00:17 UTC] While we are quoting anecdotal evidence, I have had the opposite experience in Newcastle. I am renting a gorgeous place that was for sale for 18 months. My brother has had his house on the market for 4 months and has now reduced the asking price to 10% below what an identical house next door sold quickly for 3 years ago (his mother-in-laws house). I suspect people are able to hold out so long without selling is due to the low servicing costs associated with these record low interest rates. I will be impressed if housing prices start booming again any time soon in this context. author message Macster  Re: Sorry to rain on your parade on: Tue 09 of Feb, 2010 [00:29 UTC] Yes anecdotal evidence doesn't give you the greater picture. Look in hot areas like the inner-west or north shore in Sydney and you'll find loads of potential buyers looking for properties. Does it mean it's signs of a boom to come? No it doesn't. Likewise, I have come past plenty of properties on sites like realestate.com.au that have been there for 6+ months, some in pretty damn good locations. Does it mean that the market is on the verge of a downward swing? No I wouldn;t say so. author message bps  Lets parade its stopped raining. on: Tue 09 of Feb, 2010 [04:13 UTC] Being bombarded by all the positive property news in the popular press and talking with some property believer friends I start to doubt myself and the very few like minded people I have come across, like yourselves. Then I read something like this which gives me a boost “Our Investment property no-go Zone” http://www.smartcompany.com.au/the-intelligent-adviser/20100209-our-investment-property-no-go-zone.html Which is commenting on? 6th Annual Demographia International Housing Affordability Survey: 2010 http://www.demographia.com/dhi.pdf author message hojusaram  Re: Sorry to rain on your parade on: Tue 09 of Feb, 2010 [05:33 UTC] >The point is, you couldv'e sold your house in Townsville in late 2003 for $545,000 and not waited the extra 4 years. Property prices doubled somewhere between 2001-2003, but since then have hardly moved. The boom in 2001-3 was a massive increase in property prices, I agree, but prices hadn't moved with inflation since 1989. The 2001-2003 period was a price catchup for over 11 years of less than inflation growth. Davo, If I sold my house in 2003 I would have made not much at all, you obviously live in NSW, and what you are saying maybe true for there but you can see from the chart below there has been significant year on year growth in other areas of australia outside the years you mentioned. 2006-2007 in queensland was crazy. In fact the year before I sold my house I estimate it bubbled up $100,000 alone. author message Clawhammer  Re: Sorry to rain on your parade on: Tue 09 of Feb, 2010 [09:22 UTC] I've never seen the rise in price & availabiltiy of properties as the markers that'll signal the end of this bubble, rather it'll be rise in price and availability of CREDIT that will signal it's end! Our population hasn't surged that much since the housing boom began and there wasn't a housing shortage before, lets say the year 2000. Our wages didn't surge dramatically either. The housing boom began with easy credit... and that's where it'll end! The return to tighter mortage requirements (like we are seeing now) will be the dominant force (key variable) in ending the bubble. That's why I "called it" last week. Interest rates, FHOG, land releases and changes to stamp duty are all variables that came into play AFTER the housing bubble was already underway...and while they did their part in keeping the bubble inflating...they could not by themselves or even in unison, create this housing bubble. author message hojusaram  Re: Sorry to rain on your parade on: Tue 09 of Feb, 2010 [11:48 UTC] Claw, we must stop agreeing on things... Must be the Townsville water You are absolutely correct. It is all about credit availability, as I have said before here, and on other forums if you need $10,000 to borrow $500,000 then basically anyone with a job can "technically" afford it. ( You can argue that point obviously, but we have seen some fair evidence that the banks think like that ). However if you need $100,000 to borrow $500,000 then the field thins out quite alot. As I said in my previous response to Davo. "This will mean that the fools at the bottom cannot get their ponzi pyramid entry key, so they can't buy the house that the upper market wants to sell at a looney price to climb the ladder." If the fool at the bottom can't get his/her high leveraged loan to buy the house he/she wants at the ridiculously inflated price, then the seller of that house can't move on to buy their new home at an even more ridiculously inflated price. The market has to fall pretty much down to the level where the first fool can get the keys. And the banks absolutley control what the cost of the FHB keys are with credit availability. The question is how will the banks manage the supposed higher costs of managing their of their loan book against the risk of killing its value by lowering credit availability?? Firstly you have to ask if the "higher costs" really exist or are just and excuse to gouge out even more profit, and another question is do they actually care about the first home buyers. But I guess we can leave those 2 points for another thread. As I said earlier... Interesting times ahead. author message bps  Re: Sorry to rain on your parade on: Wed 10 of Feb, 2010 [00:04 UTC] Well it certainly looks like the correction is underway but depressingly not the way we were expecting. I live in a small NSW village about 1 hour from Sydney and the market has been vibrant throughout January and it seems that the higher end houses are the ones that are selling. One 7 bedroom house on the market for well over 1 year sold last week for 1.3m after dropping 150,000 during the year. A fix up three bedroom cottage went on the market for 860,000, I said they would never get that money, it sold in two weeks. Two different sets of friends are currently looking in Sydney after selling last year and report that inspections are crowded and still a frenzy of activity. author message Davo  Re: Re: Sorry to rain on your parade on: Wed 10 of Feb, 2010 [05:08 UTC] bps: I am confused too. After reading your post above and the links to housing affordability I thought hmmm... seems to have something there. So I looked at Newcastle (my home town)- the average house per report is $355,000 - yep would agree with that. I know such a house rents for around $380pw. So the interest at 6.5% would be $23000pa and rent $19760pa which means a shortfall of about $60pw - sounds about right. Average income - $49,000. That means 7 x average income as per the report. They say its supposed to be 3 x. But that would make the average price $147,000. At 6.5% interest would be $9,555pa meaning at current rents the house would be providing a surplus of $10,000pa. At that point wouldn't everyone buy a house. I guess only if they could get credit as clawhammer suggests above, and maybe rents would drop by half? I could be wrong but I just cant see this happening, and if it did with the rush into houses (each one you buy provides you with $10000 surplus) how long would the situation last? There seems to be something wrong with the average income figure. Is it that average "household" incomes are more than average "single persons" income? ie 2 income earners, people pooling to buy, using parents money to help pay??? Anyway I originally posted my comments about the recent market activity I witnessed, and now you have just pointed out the same above. I used to go to open houses in the 1990s and be the only one there with the agent. Now there are 50+ people at some. My original comment was simply I hadnt seen this situation since 2001-3. I'm watching from the sidelines like many here trying to decide what to do. I dont know if I'm any the wiser after this, but thanks for everyones comments and feedback. author message bps  Re: Sorry to rain on your parade on: Wed 10 of Feb, 2010 [06:08 UTC] Yes Davo: All getting very confusing, difficult to know. One of the parties I was referring to above told me he and his wife went to an inspection on a busy road in Huntershills, Sydney ($850,000+ sale price) two weekends ago and there was a traffic jam of people trying to go to the same inspection, they gave up and went home. I would like to buy and have a very good deposit and could afford a high mortgage but would also like to feed and cloth my family and other necessary things, would also like to be able to buy a Pizza the odd Friday night. Don’t want to be mortgage poor. Here’s hoping. Sometimes wonder if we are increasingly treating our housing stock as an investment market, why don’t we just list our houses on the Stock Market or better still the China stock market. author message hojusaram  Re: Sorry to rain on your parade on: Wed 10 of Feb, 2010 [08:36 UTC] Guys ... Guys... In Aug-> Nov the FHB was crazy , all of these people bought houses of people who after a period of settlement ( say 4-6 weeks ) got given their pot of ponzi cash. They are now looking for houses.. All the houses you are referring to are $700,000+ range. These are secondary buyers who have got their bubble prices from the the FHBs for their houses to afford the move up. This is exactly what I would suspect to see from this. But and it is a big BUT you can now see from the latest ABS figures that FHBs have dried up, and lending has been falling as median house prices rise. This is exactly the pattern you would expect to see from a surge in secondary buyers and a fall in FHBs It is what happens next that is important. As I said above without a new wave of fools at the bottom the process stops. And the ABS lending data suggests that it has started. We may be wrong, there is no way to tell, but history is a good teacher. author message Davo  Re: Sorry to rain on your parade on: Fri 12 of Feb, 2010 [02:31 UTC] hojusaram: sounds good in theory, except my brother in-laws unit was $420,000, not that much in Sydney; in the same Newcastle Herald article a house sold at auction "under the hammer" for $403,000 "well above the low to mid $300s they expected"... and a friend of mine just offloaded a unit in a horrible block on a busy road, that I thought he was mad to buy in first place, within 2 weeks for mid $300s... and the FHBG is gone... author message bps  Re: Sorry to rain on your parade on: Fri 12 of Feb, 2010 [02:45 UTC] Davo, could these be the last fools?

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