House prices to keep falling for years

robots · 7 October 2008

hello,

here we go , here we go:

http://www.news.com.au/heraldsun/story/0,21985,24459893-661,00.html

westpac already out there with 80 basis point cut, man what a day

automatic rent reduction just for getting up and enjoying the day

aussie to move 75 pts as well,

what a day, nirvana

thankyou
robots

Go Nuke · 7 October 2008

Yay 1% drop in rates from the Reserve Bank!

Shame those greedy bastards at the banks wont pass the full rate on.

Though no matter what the interest rate is, housing prices still need to fall to a more affordable level for first home buyers and those on a "average" income.
Ah well,using the tight labour market will help lower income earners negotiate for better pay in order to get into their own home...or the employer can risk losing an experienced worker for failing to negotiate.

Its simple maths really, just take the average income to look at what people can safely afford and i beleive house prices are still well out of reach.

pepperoni · 7 October 2008

robots said:
automatic rent reduction just for getting up and enjoying the day

ok that was pretty funny I guess.

MrBurns · 7 October 2008

Interest rates may be down but you'd have to be an idiot to buy into this market.

singlefished · 8 October 2008

gfresh said:
For some I'm peeved I'm about to earn a big whack on the interest I earn each week, hassle free.

Yup - I'm none too impressed at the income I'll be missing out on too....

However, might not be so bad - Lateline Business had some guy from Westpac on talking about how the deposit market is very competitive at this time so it's unlikely they will be slashing deposit rates by the same amount as mortgage rates.

I'm guessing they'll drop deposit rates by 0.5%.

Guvmnt should be taxing savers less to encourage more into saving. This would benefit the banks 3 fold - initially, by current savers retaining more in the saving account by paying less tax, secondly, by the subsequent flow of new funds/depositors swelling their coffers, and thirdly, more deposits at home means less borrowing from the international markets (30% of banking funds are sourced from the global market)

Todays rate cut is slightly worrying though - certainly paints a grim picture of the future by highlighting the RBA's lack of confidence in avoiding recession. Certainly not good for house prices when things do turn down....

gfresh · 8 October 2008

I think the RBA would have definitely been looking at advanced figures for the latest ABS housing finance, as one of the justifications for a full 1% cut... They are out today.

http://www.abs.gov.au/ausstats/abs@.nsf/mf/5609.0?OpenDocument

NUMBER OF DWELLING COMMITMENTS

August 2008 compared with July 2008:

* In trend terms, the number of commitments for owner occupied housing finance decreased 2.3%. The number of commitments for owner occupied housing finance excluding refinancing also fell 2.3%.

* In trend terms, the total number of commitments for the purchase of established dwellings fell 2.2% and the seasonally adjusted series decreased 1.9%.

* In original terms, the number of first home buyer commitments as a percentage of total owner occupied housing finance commitments remained unchanged at 18.6%.

* In original terms, the number of fixed rate loan commitments as a percentage of total owner occupied housing finance commitments decreased from 8.8% in July 2008 to 4.6% in August 2008.

If people aren't borrowing to fund the banks largest sources of revenue, then we're going to see problems. I don't think anybody will be whining about "record bank profits" when they see the profit figures next year. They're likely to be cut quite significantly.

I've whipped up a quick and dirty chart below based on the data. Each of the heavy falls in finance commitments has been accompanied soon after by periods of falling, or otherwise very flat housing markets (on average) - early 80's, early 90's, mid 90's, and smaller periods in late 1999 and in 2004.

I mentioned this last month, but this is the first time we've actually seen a lower-low, this is quite significant. Even in the worst periods, we've seen a higher-low.

It may even be possible to overlay a bank's share price on top, I can bet you they will correspond to bank profitability as well.

pepperoni · 8 October 2008

gfresh said:
I think the RBA would have definitely been looking at advanced figures for the latest ABS housing finance, as one of the justifications for a full 1% cut... They are out today.

If people aren't borrowing to fund the banks largest sources of revenue, then we're going to see problems. I don't think anybody will be whining about "record bank profits" when they see the profit figures next year. They're likely to be cut quite significantly.

I've whipped up a quick and dirty chart below based on the data. Each of the heavy falls in finance commitments has been accompanied soon after by periods of falling, or otherwise very flat housing markets (on average) - early 80's, early 90's, mid 90's, and smaller periods in late 1999 and in 2004.

I mentioned this last month, but this is the first time we've actually seen a lower-low, this is quite significant. Even in the worst periods, we've seen a higher-low.

It may even be possible to overlay a bank's share price on top, I can bet you they will correspond to bank profitability as well.

Interesting stuff!

xoa · 8 October 2008

More bad news for permabulls - commodity prices are plummeting. The spot iron ore price has fallen 38% in a single month. Coal, zinc, copper and nickel have taken a hammering too.

"China will save us!"

robots · 8 October 2008

hello,

thanks for reminding us of those stats XAO, so the prop data is looking even more fantastic,

is there anything else that can be brought up as to support the ridiculous claims you get on the RE threads,

the shock exchange, commodities falling to pieces, and RE all the way to the top,

the rich vs. the poor on and on, now its on against the banks, keep it coming

thankyou
robots

Knobby22 · 8 October 2008

gfresh said:
I think the RBA would have definitely been looking at advanced figures for the latest ABS housing finance, as one of the justifications for a full 1% cut... They are out today.

If people aren't borrowing to fund the banks largest sources of revenue, then we're going to see problems. I don't think anybody will be whining about "record bank profits" when they see the profit figures next year. They're likely to be cut quite significantly.

I've whipped up a quick and dirty chart below based on the data. Each of the heavy falls in finance commitments has been accompanied soon after by periods of falling, or otherwise very flat housing markets (on average) - early 80's, early 90's, mid 90's, and smaller periods in late 1999 and in 2004.

I mentioned this last month, but this is the first time we've actually seen a lower-low, this is quite significant. Even in the worst periods, we've seen a higher-low.

It may even be possible to overlay a bank's share price on top, I can bet you they will correspond to bank profitability as well.

Amazing chart gfresh.
You should sell it to Alan Kohler.

robots · 8 October 2008

hello,

this is the great thing,

no loans being taken up, new construction is being smashed

i hope it stays low as, wonderful times ahead in this country with those holding real assets that have real returns going to kill it,

with a IR drop of say 1% over the past 2-months and MASSIVE RENT INCREAES all of a sudden those holding have had a huge bonus,

any questions fire away

another day in utopia

thankyou
robots

chops_a_must · 8 October 2008

robots said:
i hope it stays low as, wonderful times ahead in this country with those holding real assets that have real returns going to kill it,

with a IR drop of say 1% over the past 2-months and MASSIVE RENT INCREAES all of a sudden those holding have had a huge bonus,

Lol, and yeah, go ahead and raise rents on the increasingly unemployed and those with lowering wages and see how you go.

What a crack up.

xoa · 8 October 2008

robots said:
hello,

this is the great thing,

no loans being taken up, new construction is being smashed

i hope it stays low as, wonderful times ahead in this country with those holding real assets that have real returns going to kill it,

You think a collapse in loan approvals is good for specuvestors? Your robot relatives in the UK and USA would beg to differ.

We've got 840,000 vacant homes in this country. Now the fabled mining boom is falling to pieces, credit is drying up, and record numbers of Aussies are leaving. Me thinks construction (and prices) could be smashed for a long time to come. All great stuff for ordinary hard working Aussies.

MrBurns · 8 October 2008

I just saw some absolute brainless tosser from the REINSW (real estate institute) saying that house prices would start their revival this weekend.

The main stream media are useless as well , thank goodness for the ABC.

Mofra · 8 October 2008

MrBurns said:
I just saw some absolute brainless tosser from the REINSW (real estate institute) saying that house prices would start their revival this weekend.

I assume he/she has the moral uprightness of our friend Enzo at REIV?

Glen48 · 8 October 2008

Rents like IR will come down as home owner suckers move in with their parents and rent their houses out or decode to sell before forecloser and putting more homes on the market which will depress the RE prices which put more people under stress who will move in with others and rent a room or like the 80's live in a Caravan in the back yard.
Then the CDS will have an impact which will put house prices 1970 's level as long as the houses have not been gutted over night for the contents. Home owners will start suing the council over rub down building. the good news XMAS will be here soon

MrBurns · 8 October 2008

Mofra said:
I assume he/she has the moral uprightness of our friend Enzo at REIV?

A clone of same, it's a great time to buy real estate no matter whats going on.

Go Nuke · 8 October 2008

It could just be me but the way Robots posts read sometimes, I think he just gets his kicks out of sounding like some stuck up immigrant who loves rubbing it into hard working "average" people who are helping him on his way to wealth through his investments

Bring on changes to negative gearing to stop the rich investors getting richer I say!

While I think of it,what happened to house prices during the last recession?

Agree with u Must a Chops

+1 XOA

Thank you

robots · 8 October 2008

Go Nuke said:
It could just be me but the way Robots posts read sometimes, I think he just gets his kicks out of sounding like some stuck up immigrant who loves rubbing it into hard working "average" people who are helping him on his way to wealth through his investments

Bring on changes to negative gearing to stop the rich investors getting richer I say!

While I think of it,what happened to house prices during the last recession?

Agree with u Must a Chops

+1 XOA

Thank you

hello,

thanks for the kind words go nuke, just reality man

yes can people give us there personal experiences with RE through the last recession,

thankyou
robots

MrBurns · 8 October 2008

I hope the interest rate drop yesterday doesn't drag too many people back into the property market, this is the property equivalent of a sucker rally.

House prices to keep falling for years

robots

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