House prices to keep falling for years

Beej · 17 April 2009

UBIQUITOUS said:
Good point G.

The FHB rush is future demand brought forward. I expect FHB purchases to plummet.

I guess that's a point of differentiation. I think that the current FHB numbers are coming from existing, pent up demand. With no deposit loans and tightened lending criteria by the banks I can't see how demand can really be brought forward to any great extent as people have to have saved something already. Ie people who have been wanting to buy for some time but have been saving, waiting. Flat/falling prices, + low interest rates. + the grant have spurred them into action. This is also backed up by the figures which show FHB numbers have been very much below normal/average for the last 2 years prior to the current mini-boom.

Going forward I think FHB numbers will just return to the historical norm (or a little below allowing for some proportion of future demand having been "used" up). I'm expecting to see the proportion to fall beck to between 15 and 20%. Let's see what happens and who was right!

Cheers,

Beej

rryall · 17 April 2009

Beej said:
I guess that's a point of differentiation. I think that the current FHB numbers are coming from existing, pent up demand. With no deposit loans and tightened lending criteria by the banks I can't see how demand can really be brought forward to any great extent as people have to have saved something already. Ie people who have been wanting to buy for some time but have been saving, waiting. Flat/falling prices, + low interest rates. + the grant have spurred them into action. This is also backed up by the figures which show FHB numbers have been very much below normal/average for the last 2 years prior to the current mini-boom.

Going forward I think FHB numbers will just return to the historical norm (or a little below allowing for some proportion of future demand having been "used" up). I'm expecting to see the proportion to fall beck to between 15 and 20%. Let's see what happens and who was right!

Cheers,

Beej

The great uknown is whether the doubling (or in some cases tripling) of the FHBG will be extended past July (correct me if I am wrong). Since this is still uknown surely those looking at buying in the next 12 months will buy prior to this cut off date hence bringing FORWARD demand.

CamKawa · 17 April 2009

rryall said:
The great uknown is whether the doubling (or in some cases tripling) of the FHBG will be extended past July (correct me if I am wrong). Since this is still uknown surely those looking at buying in the next 12 months will buy prior to this cut off date hence bringing FORWARD demand.

Yes I agree the residential housing market is living on borrowed time and borrowed government money. The only way house prices will continue to rise is if Kevin doubles and trebles what has already doubled and trebled and that outcome post June 30 wouldn't surprise me. I think Kev may spend as many tax payer dollars as he sees fit in order to temporarily extend his popularity in the polls. If he runs out of money he'll just print more USA style.

On the other hand if we run out of first home buyer’s gullible enough to buy into Australia's residential housing ponzi scheme, then Kev can throw as much money as he likes at it and house prices won't rise. A bit like how about half of the stimulus money is being saved and not spent.

robots · 17 April 2009

hello,

see:

rpdata.com.au

residex.com.au

look up Melbourne, utopia

thankyou
associate professor robots

kincella · 17 April 2009

geez, and if he keeps part of the grant, and the house prices have already bottomed, except for QLD and WA, and the prices dont fall by 40% this year or ever....what will you do ???? do you have a plan B ? or plan C ?

spoke to 2 neighbours this week, both made offers to their landlords to buy...both landlords said no...not interested in selling....
oh and these people are out renting after a divorce....not FHB, they have the money and the means and are in the market to buy another home...

they may have been like others, waiting for the price to drop, thinking their landlords might have to panic and sell....
so now they will be looking elsewhere.....we have roughly over 50,000 divorces annually (figures to 2001 only)...so there is another market apart from fhb...

MACCA350 · 17 April 2009

One of my mates has decided to jump in due to the FHB boost ending...........and last I heard he had no intention of buying in the near future.

Sure he is just one, but I'm sure this boost and the end date and the low interest rates has made many jump into the market who had previously felt they couldn't afford to get in(which was his opinion only 18 months ago).........IMHO the governments boost has propped up the market with the bodies of many who couldn't previously afford to get in and who will most likely falter as interest rates rise. I believe this is the reason banks have recently tightened their lending criteria, to try and curb the influx due to irresponsible incentives.

cheers

kingbrown · 17 April 2009

As i first home buyer with money
iam quite reluctant to fall in and take this grant
as in my opinion iam only paying more in this loaded market

Most of my freinds however especially ones with very little cash
have been seduced by this FHBG to June 30

So from on the ground iam saying to you guys
that yes many FHB brought forward a home purchase
even if its not that affordable

To them its appears to be free money and yes the home builders are giving them more cash backs on top of the FHBG
Hang on isnt that called jacking the finance ?

Anyway what ever figures Kev or REIV pull out of the hat now
it wont be pretty figure this time next year
As its called a RECESSION !!

K.B

Temjin · 17 April 2009

kingbrown said:
As i first home buyer with money
iam quite reluctant to fall in and take this grant
as in my opinion iam only paying more in this loaded market

Most of my freinds however especially ones with very little cash
have been seduced by this FHBG to June 30

So from on the ground iam saying to you guys
that yes many FHB brought forward a home purchase
even if its not that affordable

To them its appears to be free money and yes the home builders are giving them more cash backs on top of the FHBG
Hang on isnt that called jacking the finance ?

Anyway what ever figures Kev or REIV pull out of the hat now
it wont be pretty figure this time next year
As its called a RECESSION !!

K.B

MACCA350 said:
One of my mates has decided to jump in due to the FHB boost ending...........and last I heard he had no intention of buying in the near future.

Sure he is just one, but I'm sure this boost and the end date and the low interest rates has made many jump into the market who had previously felt they couldn't afford to get in(which was his opinion only 18 months ago).........IMHO the governments boost has propped up the market with the bodies of many who couldn't previously afford to get in and who will most likely falter as interest rates rise. I believe this is the reason banks have recently tightened their lending criteria, to try and curb the influx due to irresponsible incentives.

cheers

Well done for kingbrown and MACCA350's mate. Both of you managed to see the reality on the FHG and the government's attempt to artificially boost the market. It's certainly extremely difficult for most people to resist the temptation and NOT follow the crowd. I have plenty of other friends who are so emotionally attached to the "hot market" right now that they refuse to listen to any reasonings and firmly believe that if they don't buy now, there wouldn't be any more houses to buy.

I'm still wondering how much more debt can these First Home Buyers take on to sustain the ponzi scheme. Those who sold them the houses are certainly making a killing off it.

gfresh · 18 April 2009

kingbrown said:
Anyway what ever figures Kev or REIV pull out of the hat now it wont be pretty figure this time next year. As its called a RECESSION !!

Well what I do know they will be pulling out is a $50bn deficit , which is going to take many years to pay off.. and also will mean taxes, levies, and "user pays" is going to be the catch cry for a long time to come. When they start to see petrol excise creeping up, alcohol excise, property taxes, GST and no doubt other sneaky charges slowly being put in place one by one (from both Federal and State level) to recapture these billions, they will realise the hell they have actually brought upon themselves.

Aussiejeff · 20 April 2009

Quick! Lock in a low rate NOW before they rocket up!!

Commonwealth Bank of Australia (CBA) will raise its interest rates on fixed rate mortgages just as the federal government and industry players voice concern over banks' failure to pass on the full amount of interest rate cuts to customers.

Australia's largest mortgage lender said it will raise its interest rates on fixed rate mortgages by between 20 basis points and 45 basis points from Tuesday, but one-year home loans will not be affected.

The bank cited recent increases in the wholesale market swap rates from which the bank funds fixed rate home loans as the reason for the rate hikes.

Rates on CBA's four-year fixed rate home loans will rise by 20 basis points to 6.59 per cent, while seven-year home loans will increase by 25 basis points to 7.24 per cent.

A rise of 40 basis points will apply to loans with two, 10 and 15-year terms, while three-year home loans will jump by 44 basis points, and five-year term loans by 45 basis points.

http://www.thebull.com.au/articles_detail.php?id=2164

kincella · 20 April 2009

think you will find the debt is 200 billion..check out andrew bolts blogs on the heraldsun site.....
it was a manufactored crisis....now a manufactored recovery....
please do not buy a house for the next 3 years

robots · 20 April 2009

hello,

people should really stop and look into the implications of fixing a loan considering the break-free costs popping up,

variable all the way for mine, go with the flow, happy with the 46 yr low's

you never know whats around the corner:

divorce, death, job re-location, bad neighbours, time-out, look after family member, out grown house etc etc

thankyou
robots

kingbrown · 20 April 2009

Temjin said:
Well done for kingbrown and MACCA350's mate. Both of you managed to see the reality on the FHG and the government's attempt to artificially boost the market. It's certainly extremely difficult for most people to resist the temptation and NOT follow the crowd. I have plenty of other friends who are so emotionally attached to the "hot market" right now that they refuse to listen to any reasonings and firmly believe that if they don't buy now, there wouldn't be any more houses to buy.

I'm still wondering how much more debt can these First Home Buyers take on to sustain the ponzi scheme. Those who sold them the houses are certainly making a killing off it.

Thats how you make money out of the Mc Hordes Temjin
Most think like Mc sheep

Aussiejeff · 21 April 2009

Will KRudd'nCo try to counter the banks pre-empting the RBA's rates policy (CBA raising fixed mortgage interest rates - others sure to follow) by extending the FHB grant "indefinitely"?

Stay tuned for another exciting episode of "SupaKRudd - Man Of Steel II".

helicart · 21 April 2009

yes an interesting question on whether to fix property loans at the moment.

suppose it comes down to whether, for instance,

the 5 year fixed will be less than the average 5 year variable.

CBA package comp variable 4.94
CBA package comp 5fixed 6.10

= 1.16 differential

Hence, breakeven would be the variable smoothly progressing up to 7.26 by 2014......that's 2.32%. A tough call to say whether it'll make it.

But variable breakeven would be higher if you discounted more distant future cash flows, which you should because rents and wages will most likely be higher then.

And don't forget most fixed deals don't allow a meaningful offset or redraw facility, which also screws with your ability to revalue and use the equity freely.

aleckara · 21 April 2009

Aussiejeff said:
Will KRudd'nCo try to counter the banks pre-empting the RBA's rates policy (CBA raising fixed mortgage interest rates - others sure to follow) by extending the FHB grant "indefinitely"?

Stay tuned for another exciting episode of "SupaKRudd - Man Of Steel II".

What a waste of taxpayers money - very expensive just to buy a few votes. Wish it went to government services instead.

MrBurns · 21 April 2009

Aussiejeff said:
Will KRudd'nCo try to counter the banks pre-empting the RBA's rates policy (CBA raising fixed mortgage interest rates - others sure to follow) by extending the FHB grant "indefinitely"?

Stay tuned for another exciting episode of "SupaKRudd - Man Of Steel II".

If he does he will create the new worst housing bubble in history, the present one is the worst to date.

I've got no faith in the little Arian, I dislike him more than any previous leader including Hawke, he's transparent, manipulative, sneaky and sly.

Reminds me of on of Hitlers chosen ones.. a very cruel streak in that man.

Trevor_S · 21 April 2009

Aussiejeff said:
by extending the FHB grant "indefinitely"?

I think it's inevitable, even though they know it leads to increased house prices, after all way back, before the current increase, the federal housing minister stated:

http://www.news.com.au/heraldsun/story/0,21985,25285409-664,00.html

Plibersek responded: "No there won't be. There won't be an increase in the First Home Buyers Grant, because we've seen from experience what happens when you provide a grant like that -- or increase it -- is that it goes straight into the pocket of the seller."

and then they promptly increased it

Aussiejeff · 21 April 2009

Trevor_S said:
I think it's inevitable, even though they know it leads to increased house prices, after all way back, before the current increase, the federal housing minister stated:

http://www.news.com.au/heraldsun/story/0,21985,25285409-664,00.html

and then they promptly increased it

LOL.

Being a political animal, I'm sure if you cornered Plibersek on that remark she would counter with some ridiculous defence like "I never said that - I was misquoted by the media"

Trevor_S · 21 April 2009

Aussiejeff said:
Being a political animal, I'm sure if you cornered Plibersek on that remark she would counter with some ridiculous defence like "I never said that - I was misquoted by the media"

Probably but you can easily counter that with:

During that interview (which was recorded and can be downloaded as a podcast on our website)

in the same link as above...

House prices to keep falling for years

hello

hello

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