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Why the value of your house is already falling
Topic Started: 23 Sep 2015, 07:21 PM (2,004 Views)
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http://www.fool.com.au/2015/09/21/why-the-value-of-your-house-is-already-falling/

You can thank the financial regulators and the big four banks for that.

Especially if you live in Sydney, the property boom is over, with property investors discouraged from entering the market as interest-only mortgages attract higher interest rates and auction clearance rates fall.

Australia and New Zealand Banking Group (ASX: ANZ), Commonwealth Bank of Australia (ASX: CBA), National Australia Bank Ltd (ASX: NAB) and Westpac Banking Corp (ASX: WBC) have all instituted some form of restricted lending to investors, whether it be higher interest rates, higher loan-to-valuation ratios or both.

According to the Australian Financial Review (AFR), Sydney has recorded the lowest spring clearance rates in three years. The AFR reports that Sydney had a 73% clearance rate over the last weekend according to RP Data, and Domain Group senior economist Andrew Wilson expects rates to fall below 70%.

As the AFR reports,

“Sydney is plunging,” Dr Wilson said. “September has seen the lowest spring clearance rates in three years and it’s no spike, it’s consistent. We may be looking at a clearance rate below 70 per cent before year’s end. That could even happen at next weekend’s Super Saturday.“

Usually, spring is the best time to sell a house, but you might have to be very quick and realistic about your price expectations.

What you think you might have got last week or last month, you will probably have to lower that price. With investors discouraged from the market, first-home buyers lucky to afford to buy a bedroom, Sydney’s property market has begun to see the demand for properties fall.

Some agents suggest Sydney property prices have passed their peak. Many people forget that Sydney house prices fell by 14% in 2008/2009 and another 10% in 2011, as we wrote in July this year.

Melbourne is likely to follow, and the rest of Australia’s capital cities will no doubt fall into line as well, although outside our two major capital cities, housing price growth has been low.

Melbourne clearance rates are also 73% and higher than a year ago, but there is softening demand for apartments in the inner-city according to Wakelin Property Advisory director Richard Wakelin.

Mr Wakelin has told the AFR that attendance at auctions has thinned out considerably and bidding is lukewarm.

Despite the falling clearance rates, not all suburbs and houses are following the trend – as you might expect. Some properties are still selling well above reserve prices, and some suburbs will continue to experience strong price growth.

Foolish takeaway

If you only thought house prices went up and never fell, you could be in for a big shock. Property investors in mining towns in Western Australia and Queensland have already experienced massive falls in the values of their properties. As the ABC reports, a Port Hedland house bought for $1.3 million four years ago, was passed in at auction for $360,000 in February 2015.

While the price falls in Australia’s capital cities aren’t likely to be as dramatic, there’s no doubt that house prices are set to fall.
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Ex BP Golly
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You sold yet Shadow?

Looks like the top is in.
WHAT WOULD EDDIE DO? MAAAATE!
Share a cot with Milton?
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createdby
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A housing top is different from a stock market or bond market top or even PM top.

There are always buyers in the the very liquid world of equities and debt instruments from algorithmic traders who scoop up stocks by the billions and makes cents many times over out of the nanosecond trades to the myriad of index fund managers from hedge, pension, and sovereign funds who have different strategies in buying at different price points. Precious metals are always demanded for their industrial uses in commodity markets as well as investors who have different liquidity strategies to convert their fiat to PM and vice versa.

You will always find a buyer even if you exit a little late.

A house sold at the top of the market can languish in the market for months, if not years. It's a very illiquid market. You have to exit this market before it reaches its apex or run the risk of riding the underwater road to hell.
Edited by createdby, 23 Sep 2015, 11:02 PM.
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hoofarted
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You are saying all the things that I have been saying for 10 years. I have learned a little since then... or at least convinced myself I have learned.
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Foxy
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Zero is coming...

Guest
23 Sep 2015, 07:21 PM
http://www.fool.com.au/2015/09/21/why-the-value-of-your-house-is-already-falling/

You can thank the financial regulators and the big four banks for that.

Especially if you live in Sydney, the property boom is over, with property investors discouraged from entering the market as interest-only mortgages attract higher interest rates and auction clearance rates fall.

Australia and New Zealand Banking Group (ASX: ANZ), Commonwealth Bank of Australia (ASX: CBA), National Australia Bank Ltd (ASX: NAB) and Westpac Banking Corp (ASX: WBC) have all instituted some form of restricted lending to investors, whether it be higher interest rates, higher loan-to-valuation ratios or both.

According to the Australian Financial Review (AFR), Sydney has recorded the lowest spring clearance rates in three years. The AFR reports that Sydney had a 73% clearance rate over the last weekend according to RP Data, and Domain Group senior economist Andrew Wilson expects rates to fall below 70%.

As the AFR reports,

“Sydney is plunging,” Dr Wilson said. “September has seen the lowest spring clearance rates in three years and it’s no spike, it’s consistent. We may be looking at a clearance rate below 70 per cent before year’s end. That could even happen at next weekend’s Super Saturday.“

Usually, spring is the best time to sell a house, but you might have to be very quick and realistic about your price expectations.

What you think you might have got last week or last month, you will probably have to lower that price. With investors discouraged from the market, first-home buyers lucky to afford to buy a bedroom, Sydney’s property market has begun to see the demand for properties fall.

Some agents suggest Sydney property prices have passed their peak. Many people forget that Sydney house prices fell by 14% in 2008/2009 and another 10% in 2011, as we wrote in July this year.

Melbourne is likely to follow, and the rest of Australia’s capital cities will no doubt fall into line as well, although outside our two major capital cities, housing price growth has been low.

Melbourne clearance rates are also 73% and higher than a year ago, but there is softening demand for apartments in the inner-city according to Wakelin Property Advisory director Richard Wakelin.

Mr Wakelin has told the AFR that attendance at auctions has thinned out considerably and bidding is lukewarm.

Despite the falling clearance rates, not all suburbs and houses are following the trend – as you might expect. Some properties are still selling well above reserve prices, and some suburbs will continue to experience strong price growth.

Foolish takeaway

If you only thought house prices went up and never fell, you could be in for a big shock. Property investors in mining towns in Western Australia and Queensland have already experienced massive falls in the values of their properties. As the ABC reports, a Port Hedland house bought for $1.3 million four years ago, was passed in at auction for $360,000 in February 2015.

While the price falls in Australia’s capital cities aren’t likely to be as dramatic, there’s no doubt that house prices are set to fall.
Human nature, so predictable.

Return to the mean dear boys.

Peter
http://www.afr.com/content/dam/images/g/n/2/1/u/8/image.imgtype.afrArticleInline.620x0.png/1456285515560.png
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createdby
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The solution to this problem is easy.

Problem: How to keep the price levels of houses the same (or how to prevent a price crash).

Solution: KFPPAAPR in 6 easy steps

Step 1: Create money out of thin air
Step 2: Give the money to the banks
Step 3: Banks gives money to hedge fund guys
Step 4: Hedge fund guys buy stocks, many many stocks, from companies like ACME inc., who will be worth billions
Step 5*: And this is crucial, ACME inc pays big big wages to workers.
Step 6: Workers buy overpriced houses.

Guise, we're now in step 5* going on to step 6 of the Keynesian Full Proof Plan to Avoid Asset Prices Reset. Any day now.

*Disclaimer: step 5 is contingent on CEO's and shareholder's generous heart to give big, big wage rise to worker
Edited by createdby, 24 Sep 2015, 12:47 AM.
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Loki
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createdby
24 Sep 2015, 12:42 AM
The solution to this problem is easy.

Problem: How to keep the price levels of houses the same (or how to prevent a price crash).

Solution: KFPPAAPR in 6 easy steps

Step 1: Create money out of thin air
Step 2: Give the money to the banks
Step 3: Banks gives money to hedge fund guys
Step 4: Hedge fund guys buy stocks, many many stocks, from companies like ACME inc., who will be worth billions
Step 5*: And this is crucial, ACME inc pays big big wages to workers.
Step 6: Workers buy overpriced houses.

Guise, we're now in step 5* going on to step 6 of the Keynesian Full Proof Plan to Avoid Asset Prices Reset. Any day now.

*Disclaimer: step 5 is contingent on CEO's and shareholder's generous heart to give big, big wage rise to worker
Step 5: Buy robots to replace workers, pocket profits. Prices paid deflate, incomes deflate, go to Step 1.


“Talk sense to a fool and he calls you foolish.” - Euripides
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The Whole Truth
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Ex BP Golly
23 Sep 2015, 09:41 PM
You sold yet Shadow?

Looks like the top is in.
I doubt he'd have much equity left after all the agents fees and taxes. He hasn't improved them and they are on IO loans so nothing was paid off the principle. I think he'll wait for the dream of a 100% gain decade before he sells. Might even happen in his lifetime if he is young enough.
"Panics do not destroy capital; they merely reveal the extent to which it has been previously destroyed by its betrayal into hopelessly unproductive works." John Stuart Mill
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