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Max Carnage

Q: What's going on?

17 posts in this topic

Hi SSers,

You seem to have your fingers on the pulse. I don't.

So, what's going on now with house/property prices in your part of the world, or at the national level? What can we expect of the next six months, or 3 years? Or thirty?

Assume you are talking to someone who has a new interest but no idea. What websites would you recommend to a person who had just arrived in Australia and wanted to quickly get a grip on the current state of the housing market?

All replies appreciated.

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Hi SSers,

You seem to have your fingers on the pulse. I don't.

So, what's going on now with house/property prices in your part of the world, or at the national level? What can we expect of the next six months, or 3 years? Or thirty?

Assume you are talking to someone who has a new interest but no idea. What websites would you recommend to a person who had just arrived in Australia and wanted to quickly get a grip on the current state of the housing market?

All replies appreciated.

Hi Max. Long time no see. :)

Canberra prices steady to down at the moment. If Abbott gets in then down in the short to medium term.

Nationally, I suspect price rises above inflation in the short term.

My reasons for thinking this are record low interest rates will at this level (finally) provide stimulus. The RBA will continue to cut even if inflation rises above the targeted 3% range. They have openly stated that they will do so in the hope of stimulating construction. The feedback effect of rising prices will draw more investment in property even at the current high prices. Post election if Abbott wins confidence will be boosted further.

However, these expectations need to be balanced against a slowing economy spending cuts/tax rises by government (of either persuasion) and rising unemployment and therefore price rises will be muted when compared with the rises in 2009. And indeed the decade previous.

In the longer term wages will not keep pace with rising property prices and thus prices will be unsustainable. We will have periods of growth/falls as private debt bumps along at its limit. That's the optimistic scenario. If/when we hit real economic headwinds like commodities prices slowing, rising inflation/rates, ageing population (longer term) we could see more substantial falls.

Governments don't want to know evidenced by the lack of any policies or even mention of housing affordability as an issue. There is tacit agreement not to make it an issue as neither side has any answers that would be palatable to the electorate in spite of the "concerns".

Websites: This one of course. :) Also Macrobusiness, CanberraHousePrices, PropertyObserver, theconversation, theguardian, ABS have a good alerts service and always a good thing to set up a google alert for "Australian Property" and "Australian Housing" as these act as a catchall for any articles (including the spruiky ones) published across a wide range of sites.

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Sell prices - no idea really. Seem to be flat or rising, I don't get the feeling they are dropping.

Rent prices - flat in general, though I've seen a couple of places in my neck of the woods that are less than my current place. That wasn't the case at the beginning of the year. Not enough to say there is a general trend.

Expectations? A real (not nominal) fall of 50-70% as a minimum from peak to trough over the cycle. I previously predicted a bottoming between 2018 and 2022 - I think it will now be closer to 2022 but may not be the case, it may be earlier than that. Given our reliance on exporting to China, when their credit bubble bursts it ain't going to be pretty.

I also get the feeling that capital may be fleeing to Australia, and real estate is a beneficiary. If that trend continues then prices may continue to rise (before falling sharply).

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Thanks Mr Clown,

I've been reading macrobusiness for the last couple of weeks. They've grown into something great, both in editorial/analysis and in quality of comments. Bookmarked. I'll have a look at the others, providing they're not creep-infested.

Canberra looks like an interesting market, with the public service copping a flogging (if I'm not mistaken) at all levels in most states over the last couple of years, and the fall of Labor gov'ts either worsening that or (perhaps) looming.

Any suggestions for macro indicators? Should we be looking at housing finance (my favourite) or unemployment or interest rates as the primary driver of prices?

Here in semi-rural East Victoria, the situation could best be described as boring. Existing house prices have gone nowhere for a few years. Stock levels remain high (though it's amazing how they move in spurts of several months activity followed by nothing - perhaps due to a shallow buyer pool?).

Existing (last century average) houses are still $240k to $300k. New building continues apace, on $100k new lots, and is mostly big. So $360k to $400k for a bog-standard new build on 700m. Looking at the footprints of these towns (as I do for work), many have increased by 20% to 30% in size over the last ten years. Rather more than population.

Talking to people at work and in the community, there is a common theme of financial squeeze, mainly from rising bills (rates, power, water, gas and car rego are all rising much faster than incomes). I know a lot of potential FHBs who are either priced out or beyond caring, though the occasional first purchase is still a cause célèbre. I know (and am related to) quite a few potential sellers who are at the point where they need to realise some gains (real or imagined), who still 'don't want to give it away'. Two (relatives) have had their nest eggs on the market for almost two years.

To agents... A friend at work has had her property on the market for 7 months. The agent tells her it usually takes a year to eighteen months to sell a house (!), so they've been battling to keep their house tidy since Christmas. Twelve inspections, no offers. They're not dropping the price.

My wife and I are pretty happy with where we live, except it could be bigger, and we could do without the bogan neighbours. We stumbled across a lovely plot of land, just under 10,000m, all services, ten minutes from work, for $160k ONO. Nice. Overpriced. Made a cheeky offer of $120k, and the agent has been all over it. The subdivision (9 lots off an old farm) was first planned in 2007, finished in 2009, and no lots sold until a month ago, when a larger one was picked-up. The agent - considering the amount of time I've spent dealing with him - has clearly spent a large chunk of his working week trying to talk the vendors down. The vendors are elderly and cantankerous, so I guess it just shows that he's looking for any commission, even a few percent on a cheap property. If the vendors hold fast they can keep it. We'll renovate, add a few rooms and put a big brick wall between the neighbours and us.

I guess a combination of our current personal experience and the recent hype about a new boom has me interested. I suspect the slow bleed of the last few years is due for a shake-up one way or the other. Or more likely, sharply one way, then sharply the other.

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Sell prices - no idea really. Seem to be flat or rising, I don't get the feeling they are dropping.

Sorry, it's been a while... Perth? Or Australia?

I also get the feeling that capital may be fleeing to Australia, and real estate is a beneficiary. If that trend continues then prices may continue to rise (before falling sharply).

Ta. Need to watch FX then, maybe.

Given our reliance on exporting to China, when their credit bubble bursts it ain't going to be pretty.

Did you see the recent story on (hmm, I want to say Sunday?) TV where they showed, as just one example, a new city that was ~ 80% complete that was supposed to rival Manhattan or something? And work had just stopped. It's pretty scary. Impossible to know the facts and figures, but I'm sure it's bigger than the last global housing bubble. There's just nothing ever in the history of the world to rival the scale of the China project.

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Thanks Mr Clown,

I've been reading macrobusiness for the last couple of weeks. They've grown into something great, both in editorial/analysis and in quality of comments. Bookmarked. I'll have a look at the others, providing they're not creep-infested.

Canberra looks like an interesting market, with the public service copping a flogging (if I'm not mistaken) at all levels in most states over the last couple of years, and the fall of Labor gov'ts either worsening that or (perhaps) looming.

Any suggestions for macro indicators? Should we be looking at housing finance (my favourite) or unemployment or interest rates as the primary driver of prices?

Here in semi-rural East Victoria, the situation could best be described as boring. Existing house prices have gone nowhere for a few years. Stock levels remain high (though it's amazing how they move in spurts of several months activity followed by nothing - perhaps due to a shallow buyer pool?).

Existing (last century average) houses are still $240k to $300k. New building continues apace, on $100k new lots, and is mostly big. So $360k to $400k for a bog-standard new build on 700m. Looking at the footprints of these towns (as I do for work), many have increased by 20% to 30% in size over the last ten years. Rather more than population.

Talking to people at work and in the community, there is a common theme of financial squeeze, mainly from rising bills (rates, power, water, gas and car rego are all rising much faster than incomes). I know a lot of potential FHBs who are either priced out or beyond caring, though the occasional first purchase is still a cause célèbre. I know (and am related to) quite a few potential sellers who are at the point where they need to realise some gains (real or imagined), who still 'don't want to give it away'. Two (relatives) have had their nest eggs on the market for almost two years.

To agents... A friend at work has had her property on the market for 7 months. The agent tells her it usually takes a year to eighteen months to sell a house (!), so they've been battling to keep their house tidy since Christmas. Twelve inspections, no offers. They're not dropping the price.

My wife and I are pretty happy with where we live, except it could be bigger, and we could do without the bogan neighbours. We stumbled across a lovely plot of land, just under 10,000m, all services, ten minutes from work, for $160k ONO. Nice. Overpriced. Made a cheeky offer of $120k, and the agent has been all over it. The subdivision (9 lots off an old farm) was first planned in 2007, finished in 2009, and no lots sold until a month ago, when a larger one was picked-up. The agent - considering the amount of time I've spent dealing with him - has clearly spent a large chunk of his working week trying to talk the vendors down. The vendors are elderly and cantankerous, so I guess it just shows that he's looking for any commission, even a few percent on a cheap property. If the vendors hold fast they can keep it. We'll renovate, add a few rooms and put a big brick wall between the neighbours and us.

I guess a combination of our current personal experience and the recent hype about a new boom has me interested. I suspect the slow bleed of the last few years is due for a shake-up one way or the other. Or more likely, sharply one way, then sharply the other.

You're welcome. :)/>

Canberra is an interesting market at the moment. We have the spruikers resorting to their own staff to big up property.

Jacqui Day with the help of her parents wealth has bought her first home in Canberra

Good on her I say. :)/>

I would stick with housing finance as a current indicator. Unemployment as a forward indicator. (unemployment has some elasticity as according to the RBA everyone is 9 months ahead in their mortgage payments) and the FILO nature of employment means that those with a mortgage are more likely to be the last ones layed off. CPI, Building approvals, 8 city index, Overseas Arrivals and Departures, Wages are all useful. The ABS alert is important as I see it as the most reliable source of data. You can also play around with it as they provide the data cubes. You know this max - I've seen your charts. :P/>

It seems to me that wage growth is lower in regions. I had a cunning plan to shift to a region with my (and Ms Clowns) APS wage and work remotely but that dream is receding with the promise of a copper wire NBN and user pays under the Liberals. Assuming that I keep my employment that is.

What's the reality of living in a rural area max? I have friends who are "retiring" to the Bindi Valley (south of Omeo) and building a straw bale house. They've bought 120 acres. Mostly bush. It sounds idyllic. But they will need some supplementary income.

Truth be told I won't be too sad if they outsource the entire APS IT as I'm a little bit over Canberra. I know the opportunity in remote sensing agricultural applications. Landline tells me there is a gap in the market. :)/>

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Sorry, it's been a while... Perth? Or Australia?

Melbourne metro. Also, watching the Melbourne clearance rates thread I look at the top/bottom ends to see if there is a trend. Lower end feels softer at the moment but may be a seasonal thing.

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I can only say what I've seen and heard for Brisbane / Pine Rivers

Recently my wife and I bought a house. It was our experience that anything near $300k that was in good nick / rental grade was being snapped up. Quite a few we looked at on the real estate sites and met our criteria we didn't even get a look in. Specufestors who knew exactly what they were after, how much those properties were worth and knew, well they knew exactly what they were after. Well the specufestors were grabbing everything in our price range. It was very disheartening. RE agents weren't chasing business either. Not returning calls was a common annoyance. We missed out on one property because the agent didn't return 3 of our calls. I was tempted to visit the address (withheld but I knew where) and say "I hope you got X because that's where I was willing to start bidding" (Where X was $25k over asking... and no, I wasn't willing to offer that. Just being Nasty Tiger)

The place we got we were lucky because there were three offers (including ours) on the day and two more offers forthcoming the following day (one poor lass had inspected the property 3 times and was keen just wanted Dad's approval, the other guy was keen but his missus was at work so booked in to show her the next day as well). My wife and I placed an offer $5k over what they wanted, the other FTB offered what they asked and the Specufestor offered $2.5k over and was fuming that we beat him saying he was willing to offer $15k but didn't think we were savvy enough (he inspected the property just after us so we did meet).

But yeah, rental grade just over $300k is vanishing.

A specufestor at work tells me that units/townhouses have very unrealistic body corp fees at the moment. It seems that some people are trying to cash in on real estate that way.

Another specufestor at work is getting frustrated because as I said, anything rental grade just over $300k is going awfully fast. Faster than he can act considering that he and his missus work full time they can't get there fast enough.

The property I bought would rent for a little less than my P&I mortgage so I'm guessing that's why specufestors are out in force. The RE Agent that I bought through said the same thing

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where have you been Max? My troll password hijack alert is screaming at me.

I've been out diversifying my hobbies, dodging stalkers and changing careers. I've bored of some of those hobbies, and the new career is settled. And the housing market looks interesting, so I thought I'd check in. You want me to make some charts to prove my provenance? :->

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The place we got we were lucky because there were three offers (including ours) on the day and two more offers forthcoming the following day (one poor lass had inspected the property 3 times and was keen just wanted Dad's approval, the other guy was keen but his missus was at work so booked in to show her the next day as well). My wife and I placed an offer $5k over what they wanted, the other FTB offered what they asked and the Specufestor offered $2.5k over and was fuming that we beat him saying he was willing to offer $15k but didn't think we were savvy enough (he inspected the property just after us so we did meet).

That sounds incredibly stressful. But well played. I hope the new place works out well.

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That sounds incredibly stressful. But well played. I hope the new place works out well.

Thank you

It's been a long time coming and I suspect we jagged it just right.

And you're right, it was darn stressful. Everyone let us down. The RE Agent (failed to tell us that we were responsible for insuring the property by 5pm the next business day), our Bank (numerous times, failing to return calls, didn't know anything about the FHSA, failed to return calls, failed to return calls, failed to return emails, left it to 5 minutes to meet finance obligations of my contract.... that was mega stressful), the sellers bank (failed to show for the first settlement booking), Building and Pest (emailed me 11pm the night before the inspection making demands and saying if we didn't meet them they'd charge us and not do it) and the conveyancer (whose side are you on buddy?). The icing on the cake though was picking up the keys, getting to the property to be greeted with a card from Energex saying they've disconnected my power..... here's the kicker, it was dusk censored.gif

You have to laugh though

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So, what's going on now with house/property prices in your part of the world, or at the national level?

These tables are a good summary -- up up and away!!

Australian_Property_Forum_Housing_Market_Snapshot.png

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If Sherlock's back, the market must be improving.

Was very quiet there for a while.

The new boom is here!!

Don't miss out, will be the cry now.

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