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Will house prices be higher or lower in 2 years?
Topic Started: 30 Jan 2012, 12:11 AM (5,676 Views)
Damo79
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Hello all. A very nerve racking first post given the VERY strong opinions that seem to be held here. I've been reading through the various threads in this forum for about a month or so which is enough to give me the impression that you have to be classified as a "bull" or "bear" depending on which way you think house prices are playing.

I'll come right out and say I'd guess I'm leaning towards the "bear" camp, but am open to anyone's ideas and opinions. A lot of the discussion that goes on here seems to be about who has predicted whatever happening in a particular quarter of a paritcular year etc etc. So I'll come right out and lable myself as a NEWBIE who hasn't made any predictions in the past. HOWEVER - I have come up with the opinion over the last 6 months or so that house prices are going to decrease in the near future. Please note that I say decrease; I don't say crash, and I make no allusion to a bubble. That isn't to say I don't necessarily think that the Australian housing market entered a bubble, but rather that I'm being careful over using inflaming language that just seems to start arguments on every single thread on this forum. I also say "near future"; I don't say 1,2 or 5 years. Exact predictions seem to leave you open to attack by some posters.

So to get back to my comment/question. I think Aus house prices are heading one way at the moment, and that's down. Maybe not be a lot, but account for CPI and even flat-lining is quite negative. To me, this says that as a pure investment, property is not so good. That opinion is based on the fact that it seems unusual for an investment property to be cash flow positive, thus most investments are made on the expectation of capital gains. So in my view, if their are no capital gains to me made in the near future (excuse the lack of a specific time-frame), then property investment could become much less popular. Now I don't know the exact figures, but I think something like a quarter of sales are to investors. If negative capital gains become a norm (a headline? an expectation?) then I think a reasonable proportion of that quarter of buyers will dissappear from the market. That is the main reason I'm expecting further decreases from the current prices - vicious cycle and all that.

So, although this seems to be discussed at length on almost every thread on this forum, I pose the question, "will house prices be higher or lower in 2 years?". Obviously I have my own opinion given that I'm posting a first message on a very polarised forum, so I'll say I'm expecting them to be lower, and if I was forced to give a guess (dangerouse though it is), I would have to say about 10% below current prices, without taking into accoutn CPI (whihc I guess will make it 14% down). That's mostly based on my previously expressed view on investors leaving the market and what looks like an overhang of long-term unsold properties.

Be gentle, I'm new ;)
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Gossamer
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44th most prolific poster on APF

Depends who you ask. Indications are things will remain flat for the immediate future.
Edited by Gossamer, 30 Jan 2012, 12:44 AM.
Common sense is a curse - those who have it need to suffer dealing with those who don't have it.

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Nelson
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newjez
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I would hope that in two years time prices will be rising or at least have stopped falling - but it's a troubled world we live in at the moment, so it's anyone's guess.
Whenever you have an argument with someone, there comes a moment where you must ask yourself, whatever your political persuasion, 'am I the Nazi?'
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stinkbug
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In the next few years some property will be cheaper, some about the same, and some will be more expensive.

To get the most benefit, it's probably worth identifying location, approximate current cost, and property type.

I live in a suburb where stock priced $1M+ seems to be falling, but stock priced $500-650k seems to be rising.
---------------------------------------------------------------

While it's true that those who win never quit, and those who quit never win, those who never win and never quit are idiots.

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Rastus2
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Damo79
30 Jan 2012, 12:11 AM
Hello all. A very nerve racking first post given the VERY strong opinions that seem to be held here. I've been reading through the various threads in this forum for about a month or so which is enough to give me the impression that you have to be classified as a "bull" or "bear" depending on which way you think house prices are playing.

I'll come right out and say I'd guess I'm leaning towards the "bear" camp, but am open to anyone's ideas and opinions. A lot of the discussion that goes on here seems to be about who has predicted whatever happening in a particular quarter of a paritcular year etc etc. So I'll come right out and lable myself as a NEWBIE who hasn't made any predictions in the past. HOWEVER - I have come up with the opinion over the last 6 months or so that house prices are going to decrease in the near future. Please note that I say decrease; I don't say crash, and I make no allusion to a bubble. That isn't to say I don't necessarily think that the Australian housing market entered a bubble, but rather that I'm being careful over using inflaming language that just seems to start arguments on every single thread on this forum. I also say "near future"; I don't say 1,2 or 5 years. Exact predictions seem to leave you open to attack by some posters.

So to get back to my comment/question. I think Aus house prices are heading one way at the moment, and that's down. Maybe not be a lot, but account for CPI and even flat-lining is quite negative. To me, this says that as a pure investment, property is not so good. That opinion is based on the fact that it seems unusual for an investment property to be cash flow positive, thus most investments are made on the expectation of capital gains. So in my view, if their are no capital gains to me made in the near future (excuse the lack of a specific time-frame), then property investment could become much less popular. Now I don't know the exact figures, but I think something like a quarter of sales are to investors. If negative capital gains become a norm (a headline? an expectation?) then I think a reasonable proportion of that quarter of buyers will dissappear from the market. That is the main reason I'm expecting further decreases from the current prices - vicious cycle and all that.

So, although this seems to be discussed at length on almost every thread on this forum, I pose the question, "will house prices be higher or lower in 2 years?". Obviously I have my own opinion given that I'm posting a first message on a very polarised forum, so I'll say I'm expecting them to be lower, and if I was forced to give a guess (dangerouse though it is), I would have to say about 10% below current prices, without taking into accoutn CPI (whihc I guess will make it 14% down). That's mostly based on my previously expressed view on investors leaving the market and what looks like an overhang of long-term unsold properties.

Be gentle, I'm new ;)

you will not get an answer you can take to the bank I'm afraid.. no-one knows for certain.

Also, it depends where you are talking about...

some places may in fact boom, while others crash (or just trend downwards).

At the end of the day, DYOR and make your own decision.


If you had been on a forum like this one some 6-7 years ago and decided to not buy, then you might have missed out on some great capital gains... on the other hand if you had been on the forum only 4-5 years ago and bought in some areas of Australia, you might be in negative equity (owe more than your house is worth) today.

Either way there are a lot of 'experts' here who can only conjecture.
Shadow - Defrauded his Bank ? 2015 I have 9 different loans and my bank had no idea which ones were personal and which were investment. They had half of them classed incorrectly. When this change came in they asked me to tell them if any personal loans were incorrectly classed as investment, which I did, and they switched them to personal for the lower rate. They also had a couple of investment loans incorrectly classed as personal. They didn't ask me about those. So they stay on the lower rate too. Worked out pretty well. :)
Shadow - 2008 Sydney Median House Price 1.25M by 2014-2015

Shadow : I think this boom has already begun in several cities. My prediction :
Peak of boom: 2014-2015. Sydney Median Price: $1,250,000 Bottom of bust: 2017-2018. Sydney Median Price: $1,100,000

Shadow's Original 2010 House Boom and Crash prediction http://s836.photobucket.com/user/rastus22/media/shady-orig-2010-chart.png.html?sort=3&o=0

Shadow's attempt to edit his 2010 chart in 2015 and replace it with one that does not show a crash in 2013 http://s836.photobucket.com/user/rastus22/media/Screen%20Shot%202015-06-06%20at%207.12.52%20pm_1.png.html
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dave289
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Rastus2
30 Jan 2012, 08:10 AM

you will not get an answer you can take to the bank I'm afraid.. no-one knows for certain



You can take my answer to the bank. Good first post damo.The answer to your question in general is yes ,house prices will be cheaper in all capital cities in two years time,will also be cheaper in twelve months time and will probably be also cheaper in five years time.all the best , dave
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Shadow
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Evil Mouzealot Specufestor

The national median house price will be higher in two years time, however in one or two cities median prices will be lower.
1. Epic Fail! Steve Keen's Bad Calls and Predictions.
2. Residential property loans regulated by NCCP Act. Banks can't margin call unless borrower defaults.
3. Housing is second highest taxed sector of Australian Economy. Renters subsidised by highly taxed homeowners.
4. Ongoing improvement in housing affordability. Australian household formation faster than population growth since 1960s.
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Wisebear
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No one knows for sure but my guess is lower.

What I do know for sure is that globally there is a massive debt bubble and that it is impossible for all of this to be repaid at full value. Therefore at some point there will be a significant financial event(s) and Australia will feel the repercussions.

The risk of buying in Australia now is too great for me but everyone must make up their own minds.

Good luck
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Black Panther
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With unprecedented growth in rents during the 1st phase of the new up cycle in 2012, there will be a rush to buy or build properties for either investment or to live in.

This will definitely see prices moving up strongly.

Dont kid yourself that no one has the answer. Many DO get it and are already pouring money into Real Estate.

As each day passes, more and more suburbs in Aus are seeing prices stabilizing or going up.

Buy now if you can afford to.
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Piper
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Down

They will be off some 20 - 30 %

Main reason will be that China will stop buying our dirt

median will be < 350k..

.... and falling
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