Cities of dreams as value of homes begins to soar - Melbourne

axe168 · Oct 6, 2009

Yahooo !

Cities of dreams as value of homes begins to soar

Author: Tim Lawless
Date: October 6, 2009

Clearly Sydney and Melbourne are leading the property market recovery and now represent two of the nation's most popular markets.

RP Data's national home value indices published last week reveal that for the first eight months of the year Sydney home values rose 8.6 per cent, to reach a new median value of $546,867.

Melbourne also put in a stellar performance and has found its feet again to record a stunning 11.6 per cent price increase, bringing the median value up to $467,280.

These buoyant conditions are in stark contrast to the same period last year, when values were falling, sales volumes were at rock bottom and only 45 per cent of auctions were clearing.

Now we are seeing house values rising, market activity increasing, and almost three-quarters of auctions are recording a successful result.

While the sceptics have touted this as a potential market bubble waiting to burst, the figures confirm that the residential market is protected from a downturn in values by a broad range of factors.

Interest rates are at historic lows and — although rates will be lifted over the coming months — we will need to see a rise of 150 basis points before mortgage rates reach their 10-year average of 7.3 per cent.

Importantly, housing is in undersupply and the nation's population is growing at a faster rate than in any other country in the Western world.

Australian development is being underpinned by the fastest rate of population growth since the baby boomers.

Other factors such as the health of the financial sector and lower-than-expected unemployment figures are also likely to support the housing market.

Over the next six months capital growth is likely to moderate across the Australian market.

Interest rate rises, together with a winding back of the boost to the first-home owners' grant, are likely to dampen demand.

Tim Lawless is the national research director of rpdata.com.
Source: The Sun-Herald

IWC2006 · Oct 6, 2009

axe168 said:
Yahooo !

Cities of dreams as value of homes begins to soar

Author: Tim Lawless
Date: October 6, 2009

Clearly Sydney and Melbourne are leading the property market recovery and now represent two of the nation's most popular markets.

RP Data's national home value indices published last week reveal that for the first eight months of the year Sydney home values rose 8.6 per cent, to reach a new median value of $546,867.

Melbourne also put in a stellar performance and has found its feet again to record a stunning 11.6 per cent price increase, bringing the median value up to $467,280.

These buoyant conditions are in stark contrast to the same period last year, when values were falling, sales volumes were at rock bottom and only 45 per cent of auctions were clearing.

Now we are seeing house values rising, market activity increasing, and almost three-quarters of auctions are recording a successful result.

While the sceptics have touted this as a potential market bubble waiting to burst, the figures confirm that the residential market is protected from a downturn in values by a broad range of factors.

Interest rates are at historic lows and — although rates will be lifted over the coming months — we will need to see a rise of 150 basis points before mortgage rates reach their 10-year average of 7.3 per cent.

Importantly, housing is in undersupply and the nation's population is growing at a faster rate than in any other country in the Western world.

Australian development is being underpinned by the fastest rate of population growth since the baby boomers.

Other factors such as the health of the financial sector and lower-than-expected unemployment figures are also likely to support the housing market.

Over the next six months capital growth is likely to moderate across the Australian market.

Interest rate rises, together with a winding back of the boost to the first-home owners' grant, are likely to dampen demand.

Tim Lawless is the national research director of rpdata.com.
Source: The Sun-Herald

I'm not sure this is good news or bad news, but the fact is houses in Australia are getting very expensive. New migrants especially will find it hard to settle in, moreover with the rebound in Australian currency makes it even more expensive to move.

The excuse of 'demand more then supply' because of undersupply of dwellings and 'increase in populations' are just lame excuse to hide the fact a bubble will burst in no time to come, its just a matter of when.

scroobal · Oct 7, 2009

Though I agree that prices are relatively more expensive, the much talked about bubble over 2 decades does not stand to reason. Bubble forms when speculation in the property sector is rather high. That has not been the case with Australia especially in the landed property sector.

Its common knowledge that immigration and education have been driving up prices. There is actual demand. Immigration will be on-going and new found wealth in places like China has allowed purchases.

Migration from the UK is also strong and people who dispose of their property in the UK, can comnfortably buy into OZ and still have reserves.

I have been hearing about OZ "bubble" talk from ex-singaporeans and Malaysians for the last 10 years and the market has gone up by over 100%

You may want to explain why you think a bubble is forming or does exist.

IWC2006 said:
The excuse of 'demand more then supply' because of undersupply of dwellings and 'increase in populations' are just lame excuse to hide the fact a bubble will burst in no time to come, its just a matter of when.

ManBearPig62 · Oct 7, 2009

Now it's next to impossible to get any 1BR in a Melbourne inner city suburb for less than 300K.

I recently bought just above that and consider myself lucky, because now people are asking for 330K+ for apartments of lesser quality.

ManBearPig62 · Oct 7, 2009

IWC2006 said:
I'm not sure this is good news or bad news, but the fact is houses in Australia are getting very expensive. New migrants especially will find it hard to settle in, moreover with the rebound in Australian currency makes it even more expensive to move.

They get pushed to the outer ring suburbs. Might not be optimal if you are a professional and need to work in the city.

neddy · Oct 7, 2009

ManBearPig62 said:
Now it's next to impossible to get any 1BR in a Melbourne inner city suburb for less than 300K.

I recently bought just above that and consider myself lucky, because now people are asking for 330K+ for apartments of lesser quality.

Perhaps this is why Glenn Steven is so anxious to push up interest rates.
Income is not catching up with property prices!!! How are people going to afford housing?

At least in Germany, rental properties are indexed to inflation. This keep prices sustainable.

I consider 150sqm of internal living space as the minimum comfort level for a small family.
As for 1bed units. That is urban lifestyle!!! Maybe you can buy/share a holiday home somewhere to chill out.

neddy · Oct 7, 2009

scroobal said:
Though I agree that prices are relatively more expensive, the much talked about bubble over 2 decades does not stand to reason. Bubble forms when speculation in the property sector is rather high. That has not been the case with Australia especially in the landed property sector.

Its common knowledge that immigration and education have been driving up prices. There is actual demand. Immigration will be on-going and new found wealth in places like China has allowed purchases.

Migration from the UK is also strong and people who dispose of their property in the UK, can comnfortably buy into OZ and still have reserves.

I have been hearing about OZ "bubble" talk from ex-singaporeans and Malaysians for the last 10 years and the market has gone up by over 100%

You may want to explain why you think a bubble is forming or does exist.

Bubbles became obvious when resources are put into non-productive uses. That is when things became absurd

Urban planning restrictions
Migrants
Geographical/built-up (Australia lacks regional centres - think UK)
Not enough cities close by
Arid land/extreme weather
Poor transportation links

scroobal · Oct 7, 2009

Bubbles form when a trend cannot be sustained at a particular pace. A simple example would be building 500 homes when only 200 families live in a country or building 200 homes when the cash rate is hovering above 15% as it did in the 80s.

As long as net increase of potential home owners occur, there will be a steady increase in homes being built followed by capital appreciation which occurs in prime locations and permeates in an ever increasing circle.

The key is RBA cash rate, immigration, homeowners grant and the resource boom.

All the signs indicate, that things are normal but the prices are moving north too quickly. More land needs to be released and more homes have to be built.

Those waiting for the property to fall will have to wait for an unexpected event.

neddy said:
Bubbles became obvious when resources are put into non-productive uses. That is when things became absurd

Urban planning restrictions

Migrants

Geographical/built-up (Australia lacks regional centres - think UK)

Not enough cities close by

Arid land/extreme weather

Poor transportation links

axe168 · Oct 7, 2009

IWC2006 said:
I'm not sure this is good news or bad news, but the fact is houses in Australia are getting very expensive. New migrants especially will find it hard to settle in, moreover with the rebound in Australian currency makes it even more expensive to move.

The excuse of 'demand more then supply' because of undersupply of dwellings and 'increase in populations' are just lame excuse to hide the fact a bubble will burst in no time to come, its just a matter of when.

There are many reasons affecting the housing prices.. For an above avg investor, it is pretty easy to know the truth.. if he reads the news.

(a) Increase in migrants, (b) increase in birth rates, (c) discovery of GAS, (d) minning (e) Uranium & Gold....

if Middle East only depend on oil and gas (for the last 50-100yrs) for growth... so.. can we depend on underground resources for growth :smile:

Who call us a Lucky Country ??

Sadly, you will notice a prediction from layman often turns out to be negative.. If everyone can predict correctly, there will be no beggars around.. and everyone will be millionaires having their own Temasek funds.... you know it is not going to happen :smile:

axe168 · Oct 7, 2009

scroobal said:
Though I agree that prices are relatively more expensive, the much talked about bubble over 2 decades does not stand to reason. Bubble forms when speculation in the property sector is rather high. That has not been the case with Australia especially in the landed property sector.

Its common knowledge that immigration and education have been driving up prices. There is actual demand. Immigration will be on-going and new found wealth in places like China has allowed purchases.

Migration from the UK is also strong and people who dispose of their property in the UK, can comnfortably buy into OZ and still have reserves.

I have been hearing about OZ "bubble" talk from ex-singaporeans and Malaysians for the last 10 years and the market has gone up by over 100%

You may want to explain why you think a bubble is forming or does exist.

I dont think many could be like us... and act like us..... many bought a new expensive house but come with a cheap land.. we bought an expensive land with a crappy hse :(

My family live 9km East, in a 1/4 acre land with a crappy hse.... :( Our public tram (in Zone 1 only) took us 35mins to travel to the city during peak morning. Unlike many, we only drive 1 car...

neddy · Oct 7, 2009

scroobal said:
Bubbles form when a trend cannot be sustained at a particular pace. A simple example would be building 500 homes when only 200 families live in a country or building 200 homes when the cash rate is hovering above 15% as it did in the 80s.

As long as net increase of potential home owners occur, there will be a steady increase in homes being built followed by capital appreciation which occurs in prime locations and permeates in an ever increasing circle.

The key is RBA cash rate, immigration, homeowners grant and the resource boom.

All the signs indicate, that things are normal but the prices are moving north too quickly. More land needs to be released and more homes have to be built.

Those waiting for the property to fall will have to wait for an unexpected event.

I am expecting interest rates for homebuyers to stablise at 7 to 8 %
Read the lips of bankers - the cost of financing is going up.

As long as new land releases are 30kms away from CBD, it does not affect me. We have seen how the mortgage belt rusts.

The unexpected event will be Australian unemployment translating into loan defaults, China falters and/or even the British govt going bankrupt under its own massive debt.

scroobal · Oct 8, 2009

Agree. The cost of funding has certainly gone up as the commercial paper (money market) have evaporated.

You have nothing to worry about. WA is probably the richest state/province in the western world based on proven reserves.

As they say - build your career elsewhere but build your home in Perth.

neddy said:
I am expecting interest rates for homebuyers to stablise at 7 to 8 %
Read the lips of bankers - the cost of financing is going up.

As long as new land releases are 30kms away from CBD, it does not affect me. We have seen how the mortgage belt rusts.

The unexpected event will be Australian unemployment translating into loan defaults, China falters and/or even the British govt going bankrupt under its own massive debt.

scroobal · Oct 8, 2009

Singapore has a tendency to have bubbles in its property sector and this was seen on a number of occasions. The property speculative sector is very high driven by influential people. Its starting to build up again.

axe168 said:
There are many reasons affecting the housing prices.. For an above avg investor, it is pretty easy to know the truth.. if he reads the news.

axe168 · Oct 8, 2009

scroobal said:
Singapore has a tendency to have bubbles in its property sector and this was seen on a number of occasions. The property speculative sector is very high driven by influential people. Its starting to build up again.

Singapore is a diff market.. You can see SG is made up of approx 50% PR and foreign workers.. if economy does not create "jobs", the property market will crash likely crazy.. Ppl only treat it as transit area for making $$, residents need a "motel" instead of a "home".. However, it does not apply to rich ppl.. these rich millionaires enjoy min tax and estate duty... bla bla bla.. the gap will be huge .. poor will remain poor and the rich be richer..

Australia has more residents staying permanently due to favourable living conditions. Huge capital gain tax preventing speculation.. income generated are heavily taxed.. hence, under these circumstances, if the residential market shoots up, it is likely to be genuine..

Of course rise in property prices are backed by low housing productivity, inefficiency from local govt town planning, increased birth rate, high influx of migrants, boom in resource..

The property boom will last for a while..

axe168 · Oct 8, 2009

neddy said:
I am expecting interest rates for homebuyers to stablise at 7 to 8 %
Read the lips of bankers - the cost of financing is going up.

As long as new land releases are 30kms away from CBD, it does not affect me. We have seen how the mortgage belt rusts.

The unexpected event will be Australian unemployment translating into loan defaults, China falters and/or even the British govt going bankrupt under its own massive debt.

Yes, new development is always >30km away... buying cheap is not going to be beneficial if our future re-sale value suckz big time... Every investment or acquisition needs a key performance indicator.. in this instance, indicator is the "yield and capital gain". Some of my frz disagree with me.. they considered this a crazy and reckless move.. They said as long as you are happy, you do not need to have a good gain.. As for me, why can't I have good capital gains and be happy :smile:

:p

When the world crashed, those with adequate pay and stable jobs tend to remain risk adverse.. when economy picks up.. they'll blame that they should invest in shares and properties earlier.. This is a wealth exchange period.. if you missed the boat, you'll have to wait for the next 20yrs..:p :wink:

axe168 · Oct 8, 2009

Yahooo !

Melbourne records new record median house price - $520,000

4-Oct-2009

Melbourne records new record median house price - $520,000

The REIV September Property Update reveals that the median price of a house has increased by 6.4 per cent since August to $520,000.

REIV CEO Enzo Raimondo said that this was the highest increase the Institute had ever recorded and was a clear sign that the residential property market had recovered from the global financial crisis.

“The Melbourne market has been driven by stronger than usual demand from an increasing population, record low interest rates and financial assistance for first home buyers.

“There is no doubt that the most significant factor at the moment is the supply shortage.

“The significant increase in demand will be welcomed by vendors over the traditionally busy spring selling season between now and Christmas.

“Increases such as these are not sustainable and will only be moderated by increases in the supply of housing in the cities activity centres and new growth suburbs.

“This confirms what our members have been telling us, they have been witnessing higher than
usual attendances at auctions and very competitive bidding resulting in vendor’s expectations being regularly exceeded.

“The most significant increases have been recorded in the inner suburbs where the median increased by 4.8 per cent to $815,000 followed by the outer suburbs.

“At the start of this year the market was driven by demand in the affordable segments but now the upper end of the market has taken over with prices increasing significantly in Melbourne’s blue ribbon suburbs.

“A record has been reached in the unit and apartment market as well with the median price exceeding $400,000 for the first time with an increase of $3,000 over the month,” Mr Raimondo concluded.

IWC2006 · Oct 8, 2009

"

scroobal said:
Though I agree that prices are relatively more expensive, the much talked about bubble over 2 decades does not stand to reason. Bubble forms when speculation in the property sector is rather high. That has not been the case with Australia especially in the landed property sector."

History does not equate to the future anymore. Who would have predicted the subprime crisis in the US?

"Its common knowledge that immigration and education have been driving up prices. There is actual demand. Immigration will be on-going and new found wealth in places like China has allowed purchases. "

That will make Australia even more expensive to live in. Soon, wages cannot keep up with the inflation, that will drive people to move from city to regional suburbs, but are their jobs there? Eventually, some immigrants would have no choice but to move back to their country or migrate elsewhere.

"Migration from the UK is also strong and people who dispose of their property in the UK, can comnfortably buy into OZ and still have reserves. "

Australia has always been the top emigration destination for the britons, is nothing new. I met many britons here, at first it appears cheap to them as they brought in sterling pounds for exchange but once they start drawing Australia salary is no longer that much difference from the uk. Ok, London is still much more expensive (and worsen condition to live in) but they earn better salary there. The rising cost will affect their future plans, education for kids, property etc. If u compare the grocery cost for instance, it could be cheaper in the uk. Australia can't depend on british immigrants alone, the population doesn't hold up. In fact, i think is more worthy to invest in uk properties now (with value going down by 20-30% then a Australian one).

"
I have been hearing about OZ "bubble" talk from ex-singaporeans and Malaysians for the last 10 years and the market has gone up by over 100% "

Who cares about what Sporeans or Malaysians think? It is a fact the property market has gone up 100% but has the wages keep up? Its even more worrying if it has gone up so much and still going up. How far can it go?Survey shows average Australian mortgage is 7xtimes their wages. Work up the sum yourself. More mortgage, higher interest rates, rising cost, unemployment all will lead up to mortgage defaults. The banks will not go bust as consumers are accountable (unlike the US) but the consumers will.

"
You may want to explain why you think a bubble is forming or does exist"

Different people will look at things from different angles. Australia is riding on the resource boom in china, by itself is not a sophiscated market or a regional financial centre. It probably will not be burnt as bad as the uk or US, nevertheless only time will tell.

neddy · Oct 9, 2009

I am usu. quite weary of REI data, whether is it from REIV or REIWA.

As far as I am concerned, how the world works currently is ......... (drumroll)

USA is printing money like mad to prop up the US property market after the subprime. But the Americans are finding out that the excess money has not returned to the Us housing market but had gone into something rlse - esp commodity.

On top of that, those smart Americans are realising that their weath, if stored in the devaluing USD, is losing money. So, Americans are dumping USD and putting money in traditional safe haven like Gold, Silver, Platimum, etc

Who are the major producers of such commodities? I give you a clue, the country's name begins and ends with 'A' and I am not referring to other commodities producers like America or Argentina. :biggrin:

So, this is Neddy's Theory on why Aussie rocks!

BTW, trod the Perth property market carefully. Anything over $400k is a slow market.

axe168 said:
Yahooo !

Melbourne records new record median house price - $520,000

4-Oct-2009

Melbourne records new record median house price - $520,000

The REIV September Property Update reveals that the median price of a house has increased by 6.4 per cent since August to $520,000.

REIV CEO Enzo Raimondo said that this was the highest increase the Institute had ever recorded and was a clear sign that the residential property market had recovered from the global financial crisis.

“The Melbourne market has been driven by stronger than usual demand from an increasing population, record low interest rates and financial assistance for first home buyers.

“There is no doubt that the most significant factor at the moment is the supply shortage.

“The significant increase in demand will be welcomed by vendors over the traditionally busy spring selling season between now and Christmas.

“Increases such as these are not sustainable and will only be moderated by increases in the supply of housing in the cities activity centres and new growth suburbs.

“This confirms what our members have been telling us, they have been witnessing higher than
usual attendances at auctions and very competitive bidding resulting in vendor’s expectations being regularly exceeded.

“The most significant increases have been recorded in the inner suburbs where the median increased by 4.8 per cent to $815,000 followed by the outer suburbs.

“At the start of this year the market was driven by demand in the affordable segments but now the upper end of the market has taken over with prices increasing significantly in Melbourne’s blue ribbon suburbs.

“A record has been reached in the unit and apartment market as well with the median price exceeding $400,000 for the first time with an increase of $3,000 over the month,” Mr Raimondo concluded.

Ash007 · Oct 9, 2009

neddy said:
I am usu. quite weary of REI data, whether is it from REIV or REIWA.

As far as I am concerned, how the world works currently is ......... (drumroll)

USA is printing money like mad to prop up the US property market after the subprime. But the Americans are finding out that the excess money has not returned to the Us housing market but had gone into something rlse - esp commodity.

On top of that, those smart Americans are realising that their weath, if stored in the devaluing USD, is losing money. So, Americans are dumping USD and putting money in traditional safe haven like Gold, Silver, Platimum, etc

Who are the major producers of such commodities? I give you a clue, the country's name begins and ends with 'A' and I am not referring to other commodities producers like America or Argentina.

So, this is Neddy's Theory on why Aussie rocks!

BTW, trod the Perth property market carefully. Anything over $400k is a slow market.

All signs points to AUD reaching $0.95 USD in the next 6 months. Even on par, I know this is a thread for Aussie propety, but have you guys considered playing the money exchange game as well ?

axe168 · Oct 9, 2009

Ash007 said:
All signs points to AUD reaching $0.95 USD in the next 6 months. Even on par, I know this is a thread for Aussie propety, but have you guys considered playing the money exchange game as well ?

Just spoken to a private banker... she said it is going to be 98c.. 2010 lending will be very favourable, i cld borrow more :smile:

When it hits 1.50-1.60 exchange, there is no harm getting back some SGD..

Cities of dreams as value of homes begins to soar - Melbourne

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