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Supply and demand. Sorry to repeat myself.
Topic Started: 4 Aug 2013, 11:13 AM (17,685 Views)
Foxy
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Zero is coming...

Guys,
Supply and demand.
Prices of house do go up and yes they do go down.
I am sorry what is this bulls and bears crap??? :bl:
Here is a true story and i have been to the places mentioned.
My mom came from Thunder Bay Canada.
One grandpa came from Thurso Scotland.
They both settled in Perth Western Australia.
Now in brief.
My cousin Derrick built a house of probably 350m2 in Thunder Bay brand new with all mod cons on 2 acres.
At the same time i bought a house in Mount Lawley Western Australia for about the same cost, ($200,000 for 200m2 of house on 1012m2 of land) as my cousin Derrick.
Ok so same base price. Same time 20 years ago.
Now fast forward to 2013.
House in Thunder Bay value is approximately $230,000. I checked with my uncle Beritel.
House in Mount Lawley value approximately $2,000,000.
Now lets go to Thurso i was there 1 year ago, houses are abandoned.
Value $0.
Repeat $0.
So while the demand is high and supply is limited prices move up.
All we need to know is, is there more demand than supply.
Thats it.
We need to work together to work that one fundamental point out the best we can.
I say places like Port Hedland and Karratha could have downward pressure on house prices.
Perth as someone said has people moving to it so unlike Thurso we should not see abandoned houses.
Now if some crazy out of left field event happens and people get spooked we could see house prices in Perth drop.
It is possible, though.
Australia is a growing country, it has always and will always have its up's and down's.
And it keeps growing.
The only thing i say is slow and steady wins the race.
A coral reef is built one tiny skeleton at a time.
Good luck guys and keep up the fight.
Peter from Perth
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Foxy
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Zero is coming...

No debate???
Peter
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skamy
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You are on the mark Peter and by the way congrats on your purchase in the Margaret River, it is a fabulous place and I am sure it will return to its former glory as Perths's favorite holiday destination. Good buying I think :)
Definition of a doom and gloomer from 1993
The last camp is made up of the doom-and-gloomers. Their slogan is "it's the end of the world as we know it". Right now they are convinced that debt is the evil responsible for all our economic woes and must be eliminated at all cost. Many doom-and-gloomers believe that unprecedented debt levels mean that we are on the precipice of a worse crisis than the Great Depression. The doom-and-gloomers hang on the latest series of negative economic data.
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Veritas
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foxbat101
7 Aug 2013, 08:57 PM
No debate???
Peter
Peter,

Market 1: apples
Market 2: houses.

In both cases, supply and demand will determine price.

The difference is that to buy an apple I reach into my pocket and take out a dollar.

To buy a house, I must find someone who will lend me the money.

And that someone determines the level of demand based on how many loans they are going to make and at what value.

See the difference?
Property acquisition as a topic was almost a national obsession. You couldn't even call it speculation as the buyers all presumed the price of property could only go up. That’s why we use the word obsession. Ordinary people were buying properties for their young children who had not even left school assuming they would not be able to afford property of their own when they left college- Klaus Regling on Ireland. Sound familiar?

The evidence of nearly 40 cycles in house prices for 17 OECD economies since 1970 shows that real house prices typically give up about 70 per cent of their rise in the subsequent fall, and that these falls occur slowly.
Morgan Kelly:On the Likely Extent of Falls in Irish House Prices, 2007
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barns
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Veritas
8 Aug 2013, 03:23 AM
Peter,

Market 1: apples
Market 2: houses.

In both cases, supply and demand will determine price.

The difference is that to buy an apple I reach into my pocket and take out a dollar.

To buy a house, I must find someone who will lend me the money.

And that someone determines the level of demand based on how many loans they are going to make and at what value.

See the difference?
I'm pretty sure they have banks in Canada.
“You Keep Using That Word, I Do Not Think It Means What You Think It Means” - Inigo Montoya
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Wisebear
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foxbat101
4 Aug 2013, 11:13 AM
So while the demand is high and supply is limited prices move up.
All we need to know is, is there more demand than supply.
Thats it.
You also need to understand where demand comes from.

Demand for property is not just a function of people numbers, location and jobs.

The primary driver since the great Australian housing bubble began has been easy credit and excessively low interest rates. So if you want to understand demand then understand why credit is easy and cheap and understand under what circumstances this could change.

You should also learn this very important lesson from history; things do change.
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mel
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Wisebear
8 Aug 2013, 10:36 AM
You also need to understand where demand comes from.

Demand for property is not just a function of people numbers, location and jobs.

The primary driver since the great Australian housing bubble began has been easy credit and excessively low interest rates. So if you want to understand demand then understand why credit is easy and cheap and understand under what circumstances this could change.

You should also learn this very important lesson from history; things do change.
If that were true we would have a huge pile of empty home sitting around. I agree cheap credit has the effect of inflating prices of existing stock though.
APF - a place where serious people don't take themselves too seriously. There's nothing else like it.
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Guest
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Peter, no talk of the factors that can manipulate supply and demand or skew them to particular groups interests. What people take exception to is all the vested interests that manipulate supply and demand for their own interests at the expense of others. This is often at the expense of first home buyers who just want to provide for their family.
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Trojan
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mel
8 Aug 2013, 10:40 AM
If that were true we would have a huge pile of empty home sitting around. I agree cheap credit has the effect of inflating prices of existing stock though.
And all the houses around Australia would be uniformly high
I put trolls and time wasters on my ignore list so if I don't respond to you, you are probably on it ....
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Foxy
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Zero is coming...

Veritas
8 Aug 2013, 03:23 AM
Peter,

Market 1: apples
Market 2: houses.

In both cases, supply and demand will determine price.

The difference is that to buy an apple I reach into my pocket and take out a dollar.

To buy a house, I must find someone who will lend me the money.

And that someone determines the level of demand based on how many loans they are going to make and at what value.

See the difference?
Totally agree.
The people lending the (banks) money are anticipating demand.
In other words the banks see Western Australia is entering a time of prosperity.
They then agree that they will lend into that market, in this case the Perth real estate market.
So People start buying houses and paying more than the last person.
Prices start to rise.
More money is injected into the Perth market, prices rise and so the cycle continues.
As more people feed into the market, prices continue to rise and the banks keep lending.
Supply and demand all the way up and all the way down.
But as i say remember we live in one of the most sparsely populated counties on earth, and building cost in real terms are lower than ever.
Peter from Perth

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