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House prices to keep falling for years

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hello,

yes number practises in ONE country, a country which is being exposed for the fraud it is,

but hang-on, how we doing in AUS? prices down like US,

no way man, not here in the greatest place in the world, the free world, the lucky country, utopia, heaven and all others

man the planes are still flying and you can always get a $1 house in detroit just make sure you have the $ for the arsenal required to exist

reality

only a debate, we all walk out as friends

thankyou
robots
 
This year some places at least are experiencing more severe falls than the US and UK according to some data.

Eg on top of the falls in poorer areas we have these large falls in pretty good middle class areas

"Killarney Heights, Turramurra, Forestville, East Lindfield .... were the worst performers in Sydney, recording drops of more than five per cent in the August quarter."

Its not surprising given avg aussie has more personal debt and avg aussie house is less affordable.

15% falls take a while to show in the numbers but I guarantee its now possible to negotiate the odd deal at 15% down on the peak prices.

Its a buyers market.
 
Well UK started falling a lot quicker than the US once the contagion caught on.. so it's always possible we'll even top that. After all, when one market falls, the fear is already out there that it could happen here.

House prices never go down.. do they.. sure? wait.. damn, ****.. oh no..

Australia is fine..resource boom will save us right? er, that's a breach of a 5 year trend. That means the shows over..

p.s. sorry for bringing a stock chart into this, but it is relevant to the broader economy :
 

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gfresh said:
Well UK started falling a lot quicker than the US once the contagion caught on.. so at least we have plenty of knowledge of what to expect.
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Ten months ago:

There is no subprime in the UK

The UK economy is sound, it won't affect us

There is a shortage of housing and high immigration, small island etc, prices therefore cannot fall

Prices to rise 50% by 2012

The gu'mint won't let price fall

Recession? LOL Gordo won't allow it.

Prices might plateau for a while but never fall

House prices only ever go up

If house prices go down BTLs will buy more with ears pinned back. This will prop up prices

 
hello,

oh yeah lads, residex just reported syd down 1.7% for the quarter

the shock exchange going to be slammed around a MASSIVE 6% today, taking the yearly work to around 40%, great result

yeah, lets rent and buy shares this is the road to prosperity

real asset real return.

even token multimillionaire is promoting RE as a safe haven

have a great day lads, dont look at those stock prices too much

thankyou
robots

ps. oh top effort united states of america
 
Don't forget gearing

For BTLers geared up to the gills 1.7% is not insignificant.

We've been hearing over here how one guy with £400,000 equity in his portfolio at the beginning of the year, with 13% drop in prices is now down to about £50k... with more drops to come and almost zero liquidity, this guy is in a schtook.

Do them numbers.

Meanwhile, true stock market guerrillas have been trading the downside in this market and coming out in front.

Have a great day... and tanking stock prices are a matter of great joy to me personally, so will have bo-beep every now and then.
 

hello,

what a classic reply, i'm a gun too

thankyou
robots
 

This is the point ... property investment is based around huge borrowing and negative gearing.

So its the double hit of the 8% annualised fall plus the increased interest rates causing larger repayments/dead interest money.
 
pepperoni said:
This is the point ... property investment is based around huge borrowing and negative gearing.

So its the double hit of the 8% annualised fall plus the increased interest rates causing larger repayments/dead interest money.
Click to expand...

It's called leveraging, and most RE players don't even understand it properly.

To put it in a simple context, a lot of people are setting up a margin lending at a LVR of 95% (equal 20 TIMES leverage) on their equity to invest in ONE SINGLE asset class. Where is the diversification???

This is similar to someone buying BHP shares for $200,000 but only have $10,000 in capital, and borrowing the rest. The dividends that come from the shares would be used to "cover" the interest on the margin loan, and any shortfall be regarded as "negative gearing". Exactly what's RE investors are doing except they never believe prices will ever fall and leveraged gain will make them millionares. If it rises by 5%, wooot, 100% in profit! RICH! If it falls by 5%, bye bye capital.

Perhaps a rule to make RE investors to make a margin call on their loan if their properties are now valued lower by an apprasial. That would wake them up. (of course, this would be a political suicide move..)

I shock a lot of friends who just recently purchased a home with this cold hard fact. They have never thought of it.
 
When stocks are high, there is quite a bit of risk, but when stocks are down a massive amount, this is actually the lowest risk period, where you can double your money in the next 10 years.

Whereas house prices at a record high (relative to income), then there just isn't that scope. And there is always the risk they could fall, on leverage, as temjin points out above.

Anyhow, credit tap just turned off to a trickle... This will get nasty, for borrowers as well.
 
Temjin said:
To put it in a simple context, a lot of people are setting up a margin lending at a LVR of 95% (equal 20 TIMES leverage) on their equity to invest in ONE SINGLE asset class. Where is the diversification???
Click to expand...
I don't think I've ever met anyone who has done this, nor have I seen the financial statements of anyone who meets this description except for owner occupiers whom, if they have no other assets, are likely to be buying on emotion rather than by any form of numerical analysis anyway.

Except equities are more liquid, have lower holding costs, lower acquisition costs and the value is clear for all to see at any time of day - less not forget dividend imputation as well. There have been plenty of people who bought stock on margin who have already blown up their accounts - January was a particularly difficult month, with the 11 day stretch of falls destroying many more margin account than mortgage loans (by percentage of market share)

In any case, professional property valuations are as much art as they are a science which is fantastic when it comes to negotiation

Temjin said:
Perhaps a rule to make RE investors to make a margin call on their loan if their properties are now valued lower by an apprasial. That would wake them up. (of course, this would be a political suicide move..)
Click to expand...
Unlike the US, mortagors are responsible for any shortfall in funds if a repossession sale does not clear debt, so we'd have some form of growth in the debt recovery business. Would add some healthy liquidity into the property market, provided state governments were willing to slightly release their grip on the stamp duty rort.

Temjin said:
I shock a lot of friends who just recently purchased a home with this cold hard fact. They have never thought of it.
Click to expand...
Not very bright then are they
 
Temjin said:
Perhaps a rule to make RE investors to make a margin call on their loan if their properties are now valued lower by an apprasial. That would wake them up. (of course, this would be a political suicide move..)
Click to expand...

Never mind the politics, it's just not very intelligent.

Whilst property can be a challenge to "value", because when we're talking about houses we're talking about largely heterogeneous assets whose valuations are imprecise at best. It is possible eliminate this issue by saying that we're comparing homogeneous apartments, flats or town houses.

Now imagine this...during a situation of forced-selling not related to market forces (moving for work, got a better opportunity somewhere else, family crisis, whatever) a couple of your neighbours sell their properties at fire sale prices.

You and your neighbours would not sell for anything less than $400,000, yet two neighbours just accepted offers for $340,000 on near enough identical properties.

In the eyes of an appraiser your property is now worth less. But you are not selling. Your other neighbours are not selling either. The reality is that the market will not support these lower prices.

It could be represented on a bar chart as a long tail. On the day that those two properties transacted you would see a long ranging bar, with a tail protruding down to the low sale price level of $360,000, but open and close for these days would still be $400,000.

This is the problem with marking property to market and it's a key element in this financial crisis because this is what the investment banks have been forced to do. Some say it has caused the crisis.
 
You and your neighbours would not sell for anything less than $400,000, yet two neighbours just accepted offers for $340,000 on near enough identical properties.
Click to expand...

Stiff cheese, your property is now worth $340,000 also.

Who would pay $400,000 ? no one.

If the bank decided to value youyr property it would come in at $340,000 because that's what similar peoperties in your street sold for and if you happen to owe $350,000 the bank are within their rights to ask you to tip in $50,000 or so otherwise they may sell you up as you are in breach of your mortgage conditions.

The reality is that the market will not support these lower prices.
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The market has already supported the lower prices what it wont support is $400,000 for a house thats worth $340,000.
 
I have made money out of real estate by using other people greed and have sold knowing it will never be like this again , this is just another Dot com bubble which will burst just like the rest did and then next ones will.
Picked up 1.3% return on my house profits today on a market which has had the biggest fall in History. Just annoyed I got sucked in to owning property all these years now I reaslise the World need suckers to get in to debt and stay there all their lives to keep the money going around. So if you own a house please don't sell so I can rent of you and let you help support my life style.
Houses don't go up in value only by replacement cost until the fall down and then get back to land value.
 

hello,

to your income most likely but not others,

no worries glen48 great work,

another fantastic day

thankyou
robots
 
hello,

if anybody is looking for a laugh tonite check Today Tonight at 6.30pm,

that guy Jenman is running around trying to "confront" a legendary landlord,

no rental crisis hey lads, great use of property by landlord which shows the free market working well

thankyou
robots
 
Beej said:
in many cases near records for the area's. Last weekend in Sydney 60% clearance on volume up ~75% from the previous weekend.

Beej
Click to expand...

I have to agree with Beej, we have been to auctions in the inner west now for the last 5 months and all the houses have gone anywhere from 80k-180k over the reserve or what we thought was a top $$ price for the place. We have been at auctions lately where 6-12 bidders have been bidding.

The market has turned and is turning and with the shortage of homes on the market in the inner west placing are being snapped up at crazy prices..

If you need proof spend every sat with me and my wife and you will see how tight the market is and how much confidence people have...

Out west is a difference story... But inner west or 10km within the city is going strong...

I say - if people are telling you the housing market is booming you have missed the boat...
 

The "market has turned and is turning"? Turning up from falls? Not sure I get this.

Inner west has always been undervalued and I dont think it has recently fallen much.

If you are thinking places are going for too much now you *could* have a chronic low balling problem. Inner west has top notch amenity and has always been cheap as chips for what you get.

Ask the agent for a price guide ... they are obliged to be accurate and nowadays its almost always + or - 5%. If you are hoping it will go lower you are wasting your weekends.

Id tell you to look elsewhere if you think its running hot but you wont get any other central suburban area for anywhere near the money.

North shore is dead sales wise but you wont get anything for 6 figures.
 
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