Housing trade costs on the up

14 comments so far

• Before the swarm of sour grape naysayers who missed out on property purchase dismisses this news and starts to fantasise that housing shortage is inexistant - let me point out that things are going EXACTLY as expected. Land shortage combined with diversion of trades to huge infrastructure projects ensure that supply of new housing will be lagging demand even more. Add to this RBA's obssesion with interest rate hikes - and you will understand that housing crisis is here to stay. On the demand side we have got years od delayed demand when people were postponing their purchases for years, we have got crowds of expats fleeing crisis in other parts of the world, we have got influx of foreign investors and finally we see signs of frenzy among domestic investors and also signs of panic buying from First home buyers who were fooled by "sofa economics professors" into believing that there will be a slump early 2010 due to (mythical) first home buyers deserting the market. Well, last Saturday's clearance rate in Sydney as 71% (11% above official boom level) and median auction price was $713K, which is $226K up on mediamn price November 2008 when boom begun. Please note that those $226K is "after tax" money, so to catch up you need to earn in excess of $400K gross.

  Commenter

  Michael

  Location

  Sydney

  Date and time

  February 16, 2010, 11:30AM

• Good luck to the spruikers this year. It will be increasingly difficult to cover up the true situation as delinquencies increase and this is finally reflected into decreasing property prices. Do not buy the hype - do what I do and keep your LVR as low as possible. There will be some bargain 30% markdowns by the end of this year, time to invest!

  Commenter

  Harry

  Location

  Sydney

  Date and time

  February 16, 2010, 12:09PM

• We can thank China for keeping our economy relative strong in the short term. We can also thank Rudd & co for re-inflating the housing bubble and the state governments for not releasing enough land. However th fact of the IS we have structural problems in our economy, that far exceeded the US & UK at the height of their housing euphoria. Private Debt is now more than 90% of GDP (from 20% a decade ago), this is unsustainable long term. Unless an effort is made to deflate the bubble and get private debt to sustainable levels, we are heading for a crisis worse than our OECD partners. Action needs to be taken, in the form of higher interest rates and sensible pro-active deleveraging policies. The Resource Boom gives us the ability to offset some of the deleveraging "pain". Unfortuantely, government policy is currently counterproductive to any deleveraging, thus I believe our real "GFC" is yet to come. China and Rudd, have simply delayed the inevtiable for us and not avoided it as most commentators believe. Unless soemthing is done, it is case of not "if", but "when".

  Commenter

  Mark

  Location

  Sydney

  Date and time

  February 16, 2010, 12:24PM

• If Michael is around pls take note... you must be a real estate agent, the most disliked profession in this country! I own my home but i think asset prices are a joke in this country anyone who is supportive of this housing debacle has a vested interest in the market. Micheal i have watched you make stupid comments and anyone who believes the current house market is reflective of a wealthy economy is a @#$@

  Commenter

  bruce the truck driver

  Date and time

  February 16, 2010, 1:17PM

• bruce the truck driver - I suspect you are the RE agent. Real estate agents never promote property boom. They do not care for how much they sell the property - they make money on number of sales. That means that their welfare heavily depends on number of listings they can secure. Nobody in their right mind would sell if they know prices will grow further. You need to scare the vendor that market is about to plunge into abyss to force them to sell. This is exactly what you and other naysayers are doing here.

  Commenter

  Michael

  Location

  Sydney

  Date and time

  February 16, 2010, 1:59PM

• Michael, how can 8 or 9 times average wages for an average house not be a bubble?Rightly or wrongly, I have been in and out of the market for the last 10 years and its has been very easy to make money. But you only really do that when you actually sell and the smart ones already have taken their profits. Some tradies may be in short supply now but when this bubble bursts. a new equilibrium will be found. And I suggest Michael, you and your fellow cheerleaders may be on the new downside especially if you have big debts, hence your protestations.

  Commenter

  seen it coming

  Location

  brissy for now

  Date and time

  February 16, 2010, 2:46PM

• seen it coming - First, prices for 3 bed freestanding house in metropolitan Sydney, less than an hour commute from CBD strt from under $200K, which is less than 3 half decent yearly salaries, or 1.5 year worth of half decent income of double income family. Units are even cheaper. Second, it always has been that way. In 1970s when decent house was about $9,000 it was 4 times income. Trick is that almost all families were single income back then. Now house is 4 times income of double income family. So, according to you $9k for a house was too much back in 1970s?

  Commenter

  Michael

  Location

  Sydney

  Date and time

  February 16, 2010, 3:03PM

• People need to understand that Australia has a unique problem. A culture of owning there own piece of it.
  Not content with a small inner city apartments. This creates many transport and infrastructure problems.
  Housing prices are a simple supply and demand issue, our population is growing faster then we can provide housing for them.
  Prices will always fluctuate with the economy but overall there is only one direction up. The affordability gap will also increase in Established suburbs leaving the outer fringes for first home buyer, other than inner suburb units and apartments.
  One solution is to change our culture and built many high density apartments and units in established suburbs but until vast amount of Red tape is removed developer will be reluctant to do so.

  Commenter

  steve

  Date and time

  February 16, 2010, 3:24PM

• Thanks Steve, you are right. And I would say even more. In the cities we will be forced to move to high rises, despite there is desperate resistance from tree huggers and local Councils. This is why not to buy land NOW is some form of insanity.

  Commenter

  Michael

  Location

  Sydney

  Date and time

  February 16, 2010, 3:54PM

• Bubble or not, housing affordability is at a crisis point and governments don't appear to be doing anything about it... from high immigration to lax foreign investment laws to relaxed CGT to restrictive property development regulations - the perfect storm for housing prices to continue to rise. A bit of microeconomic reform, perhaps?

  Commenter

  Orac

  Location

  NSW

  Date and time

  February 16, 2010, 4:01PM

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