Tide of opinion turns in 2013. Who will be caught swimming naked?

It is barely 11 days into the new year and mainstream media is being dominated by more subdued property forecasts this year.

Over at Fairfax, Chris Vedelago is writing about the The slump we have to have which according to Chris is definitely overdue after Melbourne’s house prices surged nearly 37 percent in two years, “super-charged” off the back of Rudd’s “big fat” First Home Buyers’ Boost suggesting it was “not only unsustainable but downright dangerous.”

News Limited’s Jessica Irvine is reporting why Property prices are going nowhere suggesting “The golden goose of property is well and truly plucked” based on a report from the Reserve Bank of Australia.

And the ABC is not about to be left out of the party with Michael Janda warning “The likely outcome if prices do surge will be a bigger housing bubble and a more painful crash when it does inevitably burst” in his article today under the headline Beware the comedown if house prices surge about Stephen Koukoulas’s report yesterday in Business Spectator forecasting prices to rise 10 per cent this year.

» The slump we have to have – The Age, 3rd January 2013.
» Property prices are going nowhere, RBA paper explains why – News Limited, 8th January 2013.
» Beware the comedown if house prices surge – The ABC, 11th January 2013.




15 Comments

  1. Yup… Nowhere to go but down from here. As much as it will unfortunately hurt the economy it will be far better off for Australians in the long run.

    Hopefully everyone wises up and starts deleveraging as much as they can in the mean time. The last thing you want is to live in a house with a $400,000 mortgage that’s only worth $300,000.

  2. I hadn’t seen any of these negative stories about property price declines on TV as I through a brick through my telly ages ago, sick and tired of the constant barrage of statistics and data by Kohler and Co. that our economy is just fine on its way to its next boom.

  3. @Michael, with no TV you missed Sunrise today!

    I say two years of falling prices and the worst sales turnover in 18 years must be having an impact on the likes of SQM research.

    They can’t be selling too many reports to first home buyers who are quite happy renting with no exposure to the bubble. SQM research was saying rents are rising rapidly above inflation – in fact in another sentence there was “phenomenal growth in rents”. SQM believe renters are sick of ongoing rental rises and are moving into housing this year.

    http://au.tv.yahoo.com/sunrise/video/-/watch/bcccaacb-fc4a-3cb1-8dee-6cbfed3a19a5/super-saver-series-real-estate/
    It starts at about 2:20.

    I had to laugh at the despite spruik. I have had no rent increase in three years, and I’m very grateful for my landlord to subsidise my living costs. Why would I want to buy when I can rent sub 5% gross with minimal outgoings. It just doesn’t make sense.

    They finish the segment with Koche saying you can buy a research report for just $50!!!

  4. @Tom

    we have had no rent increase in five years(i only have lived three of them though). at the third quarter of last year, our land lord was trying to rise the rent. and i told my roommate(friend) who signed the contract five years ago: “you tell the land lord, if he rise ONE cent, we move.” guess what. we still have the same rent 2013.

    i have 100k in my bank, with a 60k salary + 10k investment gain yearly, and am not planning to buy the next couple of years.

  5. Louis bared his soul on this one as Vacancy Rates are going up as we speak. We only need to look back at his own stats after the GFC to see what can happen to listings and Vacancy Rates!

  6. Spruik me this and spruik me that.

    When there’s something strange, going on in your neighbourhood…………

    Who you gunna call…… SPRUIKER BUSTER.

    Thats right folks, Louis, you’ve been BUSTED.

  7. ‘Rents rising rapidly’?

    Out and out lie. Rents are falling. Vacancy increasing.

    Distressed sellers are renting out at any price as they can’t sell.

    While the public perception of residential property hasn’t collapsed, people are now beginning to see it as a risk. I can’t remember the last time I was told property only goes up, which is a significant change from hearing it daily.

    What I do hear though is that it will take unemployment to rise to collapse the market. This is not so. Asset price falls precede unemployment rising. What will do it is the banks foreclosing on distressed sellers.

    This talk of banks lowering rates on their own is purely to save their own skin, it’s too reduce the risk of those falling behind on mortgages and needing to foreclose, which will bring the massive prices falls that we expect.

    There is nothing healthy about the Australian economy. Unless you’re on the government contact list. If you’re a pleb at any business, big or small, I’d be very nervous about you’re future.

    Rising rents……. These guys should be locked up forever as they are misleading people into a future of economic slavery.

  8. C’mon, it’s still not as good as RPData’s “it is cheaper to buy than rent” reports.

    According to RPdata there are something like 388 suburbs where it is cheaper to buy than rent, so you guys should all be making the jump now (don’t forget to purchase a RPData report before you commit).

    Not only is there a whopping 388 suburbs cheaper to buy when interest rates are at all time lows (I assume they will stay at this level for the next 30 years, while you pay down your mortgage!!) there are something like 5386 suburbs surveyed. Sorry, we forgot to mention this – is it relevant?

    So cheaper to buy than rent actually means it is only cheaper to buy than rent in 7% of suburbs provided interest rates stay at all time lows. . . . .

    http://www.macrobusiness.com.au/2012/11/cheaper-to-rent-than-buy-in-at-least-93-of-locations/

    I suspect the property research houses will follow the path of the credit rating agencies. No one will be able to trust them.

  9. Remember when they talk about mortgage payments they only talk about the interest repayment and not the principal. Returning the principal to panicking investors who want their money back in the next credit crunch or stock market collapse will destroy this country. (That’s assuming investors don’t up the interest rate in which case we are screwed just as bad.)

  10. Meanwhile in Adelaide, we seem apparently immune to any truth in these articles, with the SA REI (and Adelaide Now Major account holder) President Greg Moulton putting in a nice spruik. Have just re-checked my realestate.com saved properties after a 2 month break, and the amount of flats/appartments with ‘price reduced’, ‘vendor says sell’, and ‘submit all offers’, goes against this article. One investor had 2 inits for sale in a complex, with a whopping $50K off each !

    http://www.adelaidenow.com.au/south-australian-house-prices-are-on-the-up/story-e6frea6u-1226552343059

  11. Kochie and his mate are full of it and people who preach utter rubbish like this should be held accountable.
    Especially where Louis makes mention of ever increasing rent prices and buying would be practically the same cost.
    Um, sorry mate any one who can do basic maths would soon discover the difference between paying a mortgage instead of rent would be at least double + all the other associated costs of home ownership.
    The market is clearly unaffordable for many average income earners, that is if you are lucky enough to have secure, stable employment, that’s an important factor they failed to mention.
    So tired of these know-it-all types that have vested interests.

  12. Well, I’ve heard over and over about rents rising and I told my landlord (lady) no or I move and it stopped rising.

    On my 12 minute drive to work I see 16 flats and 6 houses up for rent. 7 have been up for rent for over 5 months, 4 of those for over half a year. There were three before Dandenong road Murrumbeena on the right hand side and finally one went (I guess they dropped the asking rent). Three still on the left are to go and they’ve been there for four to five months.

    I even saw some houses in East Hawthorn for rent (old money) and I’ve never seen that in 10 years of working around there.

    The rental market is going down along with everything.

    The BS about pockets of suburbs going up blah blah is just that. All these mortgages are loaned by banks and banks are national entities. When they pull back every suburb suffers!

  13. http://www.adelaidenow.com.au/news/south-australia/more-luxury-apartments-up-for-grabs-at-west-lakes/story-e6frea83-1226552123212

    And now a completely contradictory article to the one posted earlier from Adelaide Now, with desperation from the REI spokes people hard to not observe. Mr Hosking admitting just how bad the market is at the moment, and also a developer in recievership, give some proof just how slow the SA real estate market is at the moment. And what is the real reason all the investment properties are being off loaded as quoted in the article ?? Not getting the capital gains expected/hoped for ?

  14. Boral makes building products for homes such as bricks, roof tiles and doors, as well as materials for larger construction projects, such as concrete and stone.It has been under financial pressure due to a prolonged slump in housing construction and delays to major construction projects.

    Boral’s earnings in its Australian operations in the 2011-12 financial year were down 29 per cent from the previous year.

    Read more: http://www.theage.com.au/business/boral-axes-700-jobs-in-restructure-20130116-2csas.html#ixzz2I5l4xHXn

    Boral is axing 700 jobs. With news like this, people will start to panic-sell in 6-12 months, as negatively-geared-interest-only-mortgage-investments start haemorrhaging money.

  15. Apologies to Admin and fellow posters for my third submission to this article, but I becoming numb with Adelaide Nows third article and clear over the top spruiking in 6 days, re-hashing the RE market here in SA. I do suspect also many crow eaters are becoming numb as well, and realising it is an industry struggling for business and margins.

    http://www.adelaidenow.com.au/realestate/real-estate-market-on-the-up-real-estate-institute-of-sa-president-greg-moulton-says/story-fnczhk65-1226555700309

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