Quantcast
Welcome Guest [Log In] [Register]
RSS
Australia's premier real estate and economics discussion site. Register here or log in below.

Username:   Password:
Reply
  • Pages:
  • 1
  • 7
SQM Research Louis Christopher: House prices will be flat but bet on rent rises
Topic Started: 13 Dec 2010, 05:22 PM (5,850 Views)
Frank Castle
Member Avatar
Business As Usual

I just love rent rises :beer:

How about you?

Quote:
 
House prices will be flat but you can bet on rent rises
Louis Christopher
December 13, 2010 - 9:50AM

Comments 27


It's that time of year again where the old crystal ball comes out and we do some gazing for 2011.

The great thing about being an analyst is that the media rarely holds you to account regarding past predictions. So in the spirit of accountability, these predictions were made here last year for 2010:
Sydney's house prices would record about 8 per cent growth with the market slowing due to withdrawal of the First Home Owner Grant and higher interest rates.
Building approvals to surge, with a good year for developers.
Upper end of the market likely to outperform the lower end.
Affluent end of the market likely to record a rapid decline in vacancy rates, while lower end would remain very tight.
Interest rates must not go over 8 per cent otherwise it's curtains for the Sydney market.

The market has indeed slowed to a trickle. It is now safe to state real estate prices in Sydney have slightly fallen in the second half of the year.

However, due to the surge in the first half, the annual rate of growth for this year has been close to the 8 per cent mark.
Advertisement: Story continues below

Property developers have had a good year and there was a surge in building approvals in the first half of the year.

The jury is out on whether the upper end of the market has outperformed this year.

True, it has had a better year than 2009; however we are still recording patchy performance for properties over $2 million.

New predictions:

Vacancy rates to remain tight for most of the market and that means at least 7-9 per cent plus rises in rents for 2011.

Building approvals to soften as investors largely stay on the sidelines following very high interest rates.

Outer ring in Sydney, particularly the south-west and west, will outperform in rents and capital growth. The affluent end of the market is going to underperform once again. And watch out for properties around the $1 million mark - they are likely to be discounted most.

We remain with the firm conviction that the average home loan lending rate must not go over 8 per cent. If it does, that would hit the Sydney market hard, depending on how long it would stay at those levels.

Our overall forecast is that the Sydney market is likely to record flat to moderately falling house prices for 2011. We believe it is going to be somewhere between a 0-4 per cent decline.

It is clear now that the Reserve Bank is happy for the housing market to have a correction.

Early this year, I did not believe the RBA would risk a housing bust so early in the economic recovery. However that was one prediction I did get wrong.

After all, there was already a housing bust taking place outside Sydney which presumably the RBA was aware of, and yet it lifted rates

http://news.domain.com.au/domain/home-investor-centre/house-prices-will-be-flat-but-you-can-bet-on-rent-rises-20101213-18ufd.html
Edited by Frank Castle, 13 Dec 2010, 05:25 PM.
Moops shown, without doubt, to be a LIAR and proud of it.
The T.A.M.P.O.N effect - A NEW whinging bear acronym emerges
Proof that moops is a simple minded hypocritical turnip
Profile "REPLY WITH QUOTE" Go to top
 
SausageDog
Default APF Avatar

Frank Castle
13 Dec 2010, 05:22 PM
I just love rent rises :beer:

How about you?

I've got no issue with rent rises. The first few years of a mortgage are the years when it's actually cheaper to rent so the longer I can put off buying and the bigger a deposit I can build the better. Flat prices make that decision a no brainer. If the landlord gets too greedy buying becomes more attractive and I switch. You scratch my back I'll scratch yours.

On a side note, is this what bulls have finally come down to? Bragging about rental yields? I thought housing was all about capital gains and ending negative gearing would be a disaster because nobody would want to invest in property then. You're seriously happy about flat price growth? Weird.
Edited by SausageDog, 13 Dec 2010, 05:37 PM.
Profile "REPLY WITH QUOTE" Go to top
 
kennyjaiz
Default APF Avatar


SausageDog
13 Dec 2010, 05:35 PM
I thought housing was all about capital gains and ending negative gearing would be a disaster because nobody would want to invest in property then. You're seriously happy about flat price growth? Weird.
What gave you that impression?
Profile "REPLY WITH QUOTE" Go to top
 
mythbuster
Default APF Avatar

Frank Castle - why dont you drink to actual rent increases, not forecast ones. Similarly I dont think Australian's will alter their religious belief that property always rises until it consistently falls. 2011 should be a lot of fun.
Edited by mythbuster, 13 Dec 2010, 09:27 PM.
Profile "REPLY WITH QUOTE" Go to top
 
Frank Castle
Member Avatar
Business As Usual

mythbuster
13 Dec 2010, 09:27 PM
Frank Castle - why dont you drink to actual rent increases, not forecast ones. Similarly I dont think Australian's will alter their religious belief that property always rises until it consistently falls. 2011 should be a lot of fun.
Sure, why not :beer:



Quote:
 
Properties I have owned over the last 7 and 8 years have gone up by 7 to 8%
(started at $160 -$170/week now at now at $270-$300/week)

I am waiting on a new lease to be signed on a property now going from $270 to $300 (thats 11% in one hit)

http://s4.zetaboards.com/Australian_Property/single/?p=8078160&t=8213253


That one signed
Others to follow :beer:
Edited by Frank Castle, 13 Dec 2010, 09:37 PM.
Moops shown, without doubt, to be a LIAR and proud of it.
The T.A.M.P.O.N effect - A NEW whinging bear acronym emerges
Proof that moops is a simple minded hypocritical turnip
Profile "REPLY WITH QUOTE" Go to top
 
raveswei
Default APF Avatar


Quote:
 
House prices will be flat but you can bet on rent rises


Can you?

Look what happened in Ireland:
fall in rents in Ireland, mid-2007 to mid-2010, by county Dublin: -29%

Or USA:
Rents fall almost everwhere - even Manhattan more than 10% down
http://popping-bubble.blogspot.com/

Thinking of an Australian property speculator (PI):
Inaction = missing opportunities.
Missing opportunities = losing.
Too much thinking = inaction.
Thinking = missing opportunities.
Therefore thinking = losing.

disgraceful little man Frank Castle owes a house to Salvation Army

Profile "REPLY WITH QUOTE" Go to top
 
SausageDog
Default APF Avatar

kennyjaiz
13 Dec 2010, 09:18 PM
What gave you that impression?
Endless rhtetoric to that effect whenever the subject of the government changing negative gearing laws is brought up.
Profile "REPLY WITH QUOTE" Go to top
 
plugmeister
Default APF Avatar

Locally North of Brisbane, there is a glut of rentals and they have dropped rents at least 10%. One house on the market for $1.4M, with sea views, two years ago is available for $400pw. Rent or buy?
Profile "REPLY WITH QUOTE" Go to top
 
kennyjaiz
Default APF Avatar


SausageDog
13 Dec 2010, 10:21 PM
Endless rhtetoric to that effect whenever the subject of the government changing negative gearing laws is brought up.
I can't say I understand where you are coming from. I am not sure who and what rhetoric you are referring to. The arguments I have heard to date with regard to negative gearing is that it would have implications on rent as well as property price. Mind sharing some of the "endless rhetoric" that would lead to the conclusion that "housing was all about capital gains"?

If property investment is all about capital gain as you claimed, people would be buying land instead. Your perception of the motivation to buy properties in Australia may be incorrect.
Edited by kennyjaiz, 13 Dec 2010, 10:45 PM.
Profile "REPLY WITH QUOTE" Go to top
 
SausageDog
Default APF Avatar

kennyjaiz
13 Dec 2010, 10:43 PM
I can't say I understand where you are coming from. I am not sure who and what rhetoric you are referring to. The arguments I have heard to date with regard to negative gearing is that it would have implications on rent as well as property price. Mind sharing some of the "endless rhetoric" that would lead to the conclusion that "housing was all about capital gains"?

If property investment is all about capital gain as you claimed, people would be buying land instead. Your perception of the motivation to buy properties in Australia may be incorrect.
Read a Sydney Morning Herald property blog some time. Pretty sure I've seen similar comments on this site from people who can't seem to handle the idea that rents don't have to go up for yields to adequately justify prices without negative gearing -- prices could fall to the same effect -- but I'm not about to trawl through topics looking for them. Sorry.
Profile "REPLY WITH QUOTE" Go to top
 
1 user reading this topic (1 Guest and 0 Anonymous)
Go to Next Page
« Previous Topic · Australian Property Forum · Next Topic »
Reply
  • Pages:
  • 1
  • 7




Find us on Google+

Follow OzPropertyForum on Twitter


Australian Property Forum Housing Market Snapshot


Australian Property Forum focuses on Australian and global real estate markets, economics, and finance, including house prices, housing affordability, macroeconomics, and the likelihood of an Australian property crash. Does Australia have a housing bubble? Will house prices crash, boom or stagnate? Is it a good time to buy property using a home loan, or better to rent and save the difference? Is rent money dead money? Is the Australian property market a pyramid scheme or Ponzi scheme? Can property values rise keep rising forever? These are the types of question we address on Australia's premier real estate chat site for property bears, bulls, investors and speculators. Whether you're a property investor, first home buyer (FHB) or a happily renting tenant, this site has content for everyone. Additional topics debated on APF include politics, modern monetary theory (MMT), debt deflation, precious metals, generational divides, climate change, sustainability, alternative energy, environmental, human rights and social justice issues, whether or not Australia has a critical housing shortage, versus a glut (oversupply) of dwellings, negative gearing, capital gains tax, land tax, macro prudential regulation, reverse mortgages, debt consolidation, debt management, home insurance, landlord insurance, auction results, auction clearance rates, and all the latest house price news. Forum members also regularly review and and analyse the latest blogs and trending topics from sites like Business Spectator, Property Observer, Macrobusiness, Somersoft, Demographia, Steve Keen's Debtwatch, as well as MSM (mainstream media) articles from well known economists, reporters and commentators such as Ross Gittins, Neil Jenman, Michael Pascoe, Alan Kohler, Shane Oliver, Catherine Cashmore, Philip Soos, Louis Christopher (SQM Research), Mike (Mish) Shedlock, Leith van Onselen, Chris Becker, David Llewellyn-Smith, Chris Vedelago and more. APF is the first forum to report and debate the latest auction results and house price data releases from APM (Australian Property Monitors), Residex, RP Data Rismark, REIV (Real Estate Institute of Victoria), REINSW (Real Estate Institute of NSW), REIA (Real Estate Institute of Australia), HIA (Housing Industry Association), RBA (Reserve Bank of Australia), API (Australian Property Institute), and the ABS (Australian Bureau of Statistics).

Australian Property Forum complies with ASIC Regulatory Guide 162 regarding Internet Discussion Sites. Australian Property Forum is not a provider of financial advice. Australian Property Forum does not in any way endorse the views and opinions of its members, nor does it vouch for for the accuracy or authenticity of their posts. Posts on Australian Property Forum may contain links to other websites operated by third parties. These websites are not under the control of Australian Property Forum and APF management is not responsible for their content.

It is not permitted for any Australian Property Forum member to post in the role of a licensed financial advisor or to post as the representative of a financial advisor. Australian Property Forum members are solely responsible for the accuracy and authenticity of their posts, including any alterations made to posts. It is not permitted for Australian Property Forum members to ask for or offer specific buy, sell or hold recommendations on particular stocks, as a response to a request of this nature may be considered the provision of financial advice.

Views expressed on this forum are not representative of the forum owners. The forum owners are not liable or responsible for comments posted. Information posted does not constitute financial or legal advice. The forum owners accept no liability for information posted, nor for consequences of actions taken on the basis of that information. By visiting or using this forum, members and guests agree to be bound by the Zetaboards Terms of Use.

This site may contain copyright material the use of which has not always been specifically authorized by the copyright owner. Such content is posted to advance understanding of environmental, political, human rights, economic, democratic, scientific, and social justice issues. This constitutes 'fair use' of such copyright material as provided for in section 107 of US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit for research and educational purposes only. If you wish to use this material for purposes that go beyond 'fair use', you must obtain permission from the copyright owner. Such material is credited to the true owner or licensee. We will remove from the forum any such material upon the request of the owners of the copyright of said material, as we claim no credit for such material.

For more information go to Limitations on Exclusive Rights: Fair Use

Privacy Policy: Australian Property Forum uses third party advertising companies to serve ads when you visit our site. These third party advertising companies may collect and use information about your visits to Australian Property Forum as well as other web sites in order to provide advertisements about goods and services of interest to you. If you would like more information about this practice and to know your choices about not having this information used by these companies, click here: Google Advertising Privacy FAQ

Australian Property Forum is hosted by Zetaboards. Please refer also to the Zetaboards Privacy Policy