澳洲Australia property What to expect from the Australian proper


在澳大利亚 I need some advice regarding a property purchase. Property - semi-detached house Bedrooms - 2 Condition - average needs internal reno to modernise Street - one of the best in suburb Location - excellent Close to schools - yes Transport - 50m The pool at of an IP needs to be resurfaced (or so the pool doctor says), the cost was estimated to be $10K ($10,000), after recoverying from my impresssion of a cat coughing up a fur ball, it just seems far too much. Its just a standard poo


Hi I am a newbie and hope this is the sort of information that you are looking for? As I am on a learning curve I welcome your feedback or advice.

The question of what to expect from the Australian housing market is often asked. No one company or individual can accurately predict property industry trends unless they have a vested interest and this is part of their core business or part of their key marketing strategy to generate business leads.

How many times have you heard real estate agents promote their own suburb or territory? Well because it is in their best interest as their income depends on sales in their territory.

How many companies and individuals have come before us and predicted run away growth in Australia and the USA? The catch cry is ‘buy now as the market is only heading one way and that is up’.


Without a doubt at this point in time Australia is a strong economy.


However how sustainable is this growth over the medium to long term?

What can our children and grandchildren expect to pay for residential property in the future?
What could they afford?
Is this an important question?


Conflicts of interest in the provision of accurate information.

Whether it is real estate agents, buyer’s agents, property developers, finance brokers, finance providers, banks, builders and other property professionals, they all depend on writing business and sales to generate commissions and income. No business and no sale = no income. That’s pretty strong motivation to bias information towards their best interests. What do you think?

When it comes to future growth predictions history has proved these property spruikers wrong.

The property market can go up, go side ways and go down. Stock market investors can tell you this. Historically the Australian real estate market has demonstrated lower price volatility compared to the Australian stock market.


What if property price growth is flat or negative?

Is property investment debt good debt if property price growth is flat or negative? Of course not. It can become a loss if the investor needs to sell up. In Australia price drops had been modest at around 5% to 15% in specific suburbs whereas in the USA price drops were 10% to 40%. Ouch.

Of course if property price growth is flat or negative this can spell disaster for new owner occupiers and new first home owners. They may not be able to refinance (negative growth has resulted in loss of equity) or sell up otherwise they may sustain a loss. This becomes toxic debt. What options do owner occupiers have in this situation? Hang in there paying a mortgage until prices go up in 1 year, 5 years or 10 years? Or sell up and take a loss?

The Global Financial Crisis (GFC) created flat property growth, negative property growth, premature forced sales and bank fire sales in developed nations across the globe.



So what can you expect from the Australian housing market in the future? What can you monitor and measure so you can keep an eye on the ball?

Generally speaking it is the drivers of property growth.


Housing and land demand is high in Australia

Housing and land demand is driven by population growth and can be measured Australia wide, state by state and within each Local Government Authority. Demographics in Australia & migration between Australian states affect housing demand. Many other factors affect housing demand and can be measured statistically.


Housing and land supply is improving

Private dwelling supply of established housing is influenced by normal market forces. Home owners and investors decide when to sell and at what price to list the property.

New home supply is influenced by the speed and efficiency of development approval processes in that state and Local Government Area. The Australian Federal Government and State Governments are funding and making efforts to improve the land and building development processes, which is promising.

The cost of housing development and the availability and cost of trade’s people effects new home supply. States like Queensland and Western Australia have experienced migration of trade’s people to the resource sector and this creates reduced supply of labour and increasing housing costs and delays. So be aware of this factor.

Government dwelling new home supply is influenced by the speed and efficiency of development approval processes in that state and Local Government Areas. And the costs of housing development at that point in time.


Drivers of property growth are strong in Australia

What influences and drives growth in the Australian property market?
Consider general economic conditions that would influence buyer activity, buyer behavior and real estate growth rates.

Particularly focus on economic factors that affect investor landlord and owner occupier affordability and mortgage stress.



Mortgage stress and affordability is the X factor

Mortgage stress in Australia and housing affordability are two of the major factors that may affect future housing demand and growth.

Developed countries like the USA and the United Kingdom have had significant property price corrections resulting in improved affordability for new property buyers. The prices are simply now much lower.

Australia has managed to avoid major property median price drops with a national stimulus package and stabilisation of the economy. Which is good. This is riding on the back of the power of the Australian resource industry.


The key factors to monitor and measure over time are:

•Housing Affordability
•Mortgage Stress In Australia
•Negative Equity
•Civil Property Possessions
•Bank Fire Sales.


These factors are indicators of the financial health of borrowers. We want optimal housing affordability and less mortgage stress in Australia. Would you agree?

If we have healthy, financially stable borrowers and property owners this should create greater market stability for the future. A better future for our children and grandchildren.

So if you want to keep your eye on the ball monitor these factors particularly ‘housing affordability’ & ‘mortgage stress in Australia’



Thank you

Regards

John  

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johntaps said: ↑
In Australia price drops had been modest at around 5% to 15% in specific suburbs whereas in the USA price drops were 10% to 40%. Ouch.Click to expand...
Hi John when I first read your post I assumed you must have been from Melbourne, as the price drops in Perth in the $1m+ bracket and outer areas such as mandurah/australind/buselton/yanchep have been equal to the US experience of 10-40%, in fact I saw one place go nearly 50%....how would you like to be the owner of this blue chip real estate:

22/07/09 1,300,000
09/12/06 2,400,000

ouch with a captal $!  

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There are many locations in Australia that have had a considerable correction and remain at subdued values. The majority of the country saw huge growth around 2001 which on face value appeared unsustainable. But many of these locations were really catching up after many years of flat growth before hand and many have had flat growth since. I guess what im saying is if you are starting out you have to limit your risk. Some markets have had a good run lately and may have limited up potential in the short term. Answer is look elswhere for a more stable/steady market. Some places are not as far up the ladder and therefore dont have as much to loose if Australian property as a bit of a slip.  

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