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Australian House Prices Could Be About To Explode - NAB; Prices are currently way below household borrowing capacity, so no stretched conditions or bubble here
Topic Started: 3 Dec 2013, 08:36 AM (4,810 Views)
peter fraser
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newjez
3 Dec 2013, 05:18 PM
peter fraser
3 Dec 2013, 05:06 PM
I doubt that the world will duplicate the gains in house prices that we saw over the last 20 years. It's a different scenario now. We don't have a sudden loosening of credit rationing, a drop in interest rates from around 16%, and a mining boom to push it to the limit anymore.

That all came together to make a pefect housing storm - do you see that happening again in our lifetimes?
I don't think it is inconceivable that house prices could double between 2017 and 2020. Prices have been subdued for many years. The US will have raised rates and may be lowering them, and we will see that the world hasn't ended. The gfc will be ten years behind us. The new FHB's will be learning it in their economic history classes. If there is to be another boom, and I would be surprised if there isn't, I don't see why it wouldn't be here. You would be foolish if you weren't at least thinking about buying a house by 2015 - 2016. Long range I know, but it is likely.
Fair enough, but doubling in 13 years is an annual gain of 5.4% which is more realistic long term than the 7% to 10% that we saw during the last 20 years - although perhaps not in Sydney. I tend to think long term it will be closer to 3% to 5% p.a.
Any expressed market opinion is my own and is not to be taken as financial advice
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Elastic
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The changes to the infrastructure costs to developers around the turn of the century changed the prices of land from $50000 to $200000 as a rough example. With the increasing population that was basically equity in the pocket for all existing homeowners and was the cause in the big price jump up til 2003. That will also not be repeated.
Only a rat can win a rat race.

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Pig Iron
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Bogan scum

Count du Monet
3 Dec 2013, 02:04 PM
Fools! The Count has told you, flat until the end of the decade. Credit booms like that of the first decade are rare events, not cyclic.
you have already failed on that prediction. houses prices have risen over 8% this year.
repeating it wont make you anyless incorrect.
I am the love child of Tony Abbott and Pauline Hanson
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Perthite
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Like your CAPEX fail.
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Pig Iron
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Bogan scum

Perthite
3 Dec 2013, 09:35 PM
Like your CAPEX fail.
huh? i'm glad you care so much to keep repeating it on every thread, but the fact is i haven't failed.

rio announced an estimated 5 billion to deliver the 360 project, they are spending 400 million as the first part of that project to bring their mining capacity to 330.

this is all information in your own post if you take 5 minutes out of your angst to read it.
I am the love child of Tony Abbott and Pauline Hanson
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goldbug
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Quote:
 
We can add that to the ABS report which found that average house prices, relative to average incomes, are today at the same level as they were in 1995


NAB chief says
Quote:
 
Prices are currently way below household borrowing capacity, so no stretched conditions or bubble here


What was the interest rate in 1995? It was Over 10%. Nearly double. A typical example of cherry picking to make what people can afford to repay today equal to what they could afford in 1995

Posted Image


And more importantly.

Posted Image

This chart reflects the fact that rising costs of food and energy have stripped away a lot of the disposable income that used to be available to repay a mortgage. Hence the deregulated banks invented the IO mortgage so a percentage could still afford a home but never actually own it unless wages doubled or home prices went to the moon. The speculator community took full advantage of this product.

It's why all the IO speculators insist house prices must rise rise rise. If they don't, they will be wiped out.

Charts: http://seekingalpha.com/article/227083-the-great-australian-housing-bubble

Shadow was hopelessly wrong about the Gold Bull Market.
What else is he wrong about?
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Steve99
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Mike
3 Dec 2013, 11:52 AM


So property is more affordable now then in 1990.

Veritas needs to read this. Another bear myth destroyed. This is something Bulls have been trying to explain for sometime to bears.

Perhaps this few year window is the best time to buy a property in a 40-50 year cycle. The most affordable since 1990 (23 years) with prices rising and interest rates certain to rise some time in the next few years. Property may not be this affordable again for decades to come. Is that a risk worth taking, missing the most affordable period to buy a home in decades and perhaps for decades to come.
from around 1990 on interest rates started to drop. You are saying that with the potential for interest rates to rise that this is the same part of the graph as 1990?. The only thing we have in common with 1990 is that we are going into a recession. Back then house prices were around 3.5x the local median wage for an area, not the real 8x it is now (never mind the conjured up spruik that puts it at 4x) My brother working in a factory bought then for deposit and 3x wage but as he says now, there is no way he could ever buy now if in the same position. Only a complete destruction of the rest of the economy created by the dickhead government(s) would let prices rise higher.
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peter fraser
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Steve99
4 Dec 2013, 09:58 AM
Mike
3 Dec 2013, 11:52 AM


So property is more affordable now then in 1990.

Veritas needs to read this. Another bear myth destroyed. This is something Bulls have been trying to explain for sometime to bears.

Perhaps this few year window is the best time to buy a property in a 40-50 year cycle. The most affordable since 1990 (23 years) with prices rising and interest rates certain to rise some time in the next few years. Property may not be this affordable again for decades to come. Is that a risk worth taking, missing the most affordable period to buy a home in decades and perhaps for decades to come.
from around 1990 on interest rates started to drop. You are saying that with the potential for interest rates to rise that this is the same part of the graph as 1990?. The only thing we have in common with 1990 is that we are going into a recession. Back then house prices were around 3.5x the local median wage for an area, not the real 8x it is now (never mind the conjured up spruik that puts it at 4x) My brother working in a factory bought then for deposit and 3x wage but as he says now, there is no way he could ever buy now if in the same position. Only a complete destruction of the rest of the economy created by the dickhead government(s) would let prices rise higher.
There are thousands of houses at 2 or 3 times household income. It's just that they aren't in inner city locations in Sydney and Melbourne. Prices aren't coming down Steve.
Any expressed market opinion is my own and is not to be taken as financial advice
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CSI
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So loan affordability is now factored on "household income". So unless one spouse earns above average wages, you need both husband and wife working fulltime to afford even a modest house?
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stinkbug
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CSI
4 Dec 2013, 03:49 PM
So loan affordability is now factored on "household income". So unless one spouse earns above average wages, you need both husband and wife working fulltime to afford even a modest house?
Undesirable as it may sound, yes. And this is one of the key reasons for property prices growing in real terms over the past 20 years.
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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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