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Bullish Sydney Market 08-09

Discussion in 'Real Estate' started by Jacque, 22nd Dec, 2007.

  1. Jacque

    Jacque Team InvestEd

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    According to Westpac's chief economist guru, Bill Evans, he expects the Sydney housing market to pick up very soon, with house prices rising 15% over the next 2 years.

    In his speech to REINSW members at the Target On Property seminar Evans said that he believed that the strength of the current Australian economy would help to inoculate the local property market, and coupled with a lack of supply and rising rents, prices will pick up more strongly over the next couple of years.
     
  2. Glebe

    Glebe Well-Known Member

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    In the face of increasing interest rates.. hmm I'm sceptical, but won't say no. That would push my property value to $1m. I like the sound of that.
     
  3. tony

    tony Well-Known Member

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    As an Economist myself, I can say that the Banks economists (Evans, Caton, etc) are idiots.

    The consensus of Treasury and private research firms is that there will be at least two interest rates rises in early 2008. That is hardly supportive of a 15% increase in house prices.

    Tony
     
  4. AsxBroker

    AsxBroker Well-Known Member

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    Hi Tony,

    Surely anyone speaking to a specific group is going to be telling them good news? Your not going to tell them that they got it wrong are you? He might get kicked out...

    I agree with you, 15% is a bit optimistic with interest rates increases looming in early '08...

    Cheers,

    Dan
     
  5. Nigel Ward

    Nigel Ward Team InvestEd

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    Hi Tony

    That's a pretty big call. Perhaps their guesses are just a bit more informed than ours. Does that mean they're more accurate - sometimes ;) but sometimes too much info is a problem too.

    About 2 years ago Bill Evans I was there when he told a room full of private equity players the AUD would get to US$0.90 within 2 years. So he got something right at least!

    Cheers
    N.
     
  6. tony

    tony Well-Known Member

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    Hi

    I may have been harsh in my earlier comment. After all 15% over the next 2 years is only 7% pa, and inflation is expected to be about 4%, so real growth at 3% - I would go along with that.

    Also, as previously noted, Evans was speaking at a meeting of RE agents so naturally he was going to be bullish in his forecast.

    Tony
     
  7. 02bsure

    02bsure Well-Known Member

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    If you see 15% increase over the next decade I'd be surprised.

    By the way, when did you last get a 7% pay rise?
    Do you expect to see yoursalary increase by 7% annually?
    If not, then how on earth can you merrily accept that real estate would return annual increase of that magnitude?

    The last 10yrs have been a complete anomoly.
     
  8. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    I got a 100% payrise (doubled my income) back in 1998 when I changed jobs, and then a 50% payrise in 2000 when I changed jobs again.

    Since then I got only about 20% increase over the following 7 years, but I'm expecting to get another 10 - 20% increase if I get a new job sometime this year.

    If you stay with the same employer and do not increase your skills - then you are not likely to get much in the way of pay rises. You need to work hard to get increases in pay - and perhaps take risks by moving employers or industries.

    There are historical figures available for some property in Australia going back to at least the early 1900s ... these figures clearly show an average property growth of at least 7% ... pretty hard to ignore historical data that proves such sustained growth (over a long period) is possible.

    In the past couple of decades with the development of easy finance, longer term loans, higher LVRs, and even multi-generation loans - all makes property easier to afford and allows people to spend more than they would have at any time in the past. This isn't infinitely sustainable - and we are now seeing some of the fallout in the US of overly easy finance arrangements ... but this too shall pass and the long term trends will remain intact.
     
  9. samaka

    samaka Well-Known Member

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    The only problem is that if the longer trend will remain - then we need a significant amount of out of a boom to average everything back.
     
  10. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    Yup, booms don't last forever, and property doesn't always go up each year ... there are down years and corrections, just like in the sharemarket.
     
  11. Aimjoy

    Aimjoy Member

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    Since when has a salary been linked to the price of real estate? Its about supply and demand. Housing starts are much lower than demand. Immigration is increasing - looks like a lot of pent up demand coming the way I see it.

    The boom we had after 1987 (not the last boom but the one before that, that began after the stock market crash of 1987) was actually DURING the highest interest rates we've seen in this country. I distinctly remember my house price doubled in the space of less than 12 months as my interest rate moved from 14.5% > 18%.

    And Yes, I know that inflation was running at 9.4% in 86-87 ......and we are nowhere near that currently but we are hitting 3%+ which has the RBA concerned.

    Bollocks! (with respect)

    Aimjoy
     
  12. crc_error

    crc_error The Rule of 72

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    taking a economist view on anything is almost a waste of time.. cause non of them actually seem to agree on anything..

    I think he was just trying to pump to the realestate agents he was speaking to.. he is hardly going to give them a doom and gloom forcast now is he?

    just like trying to predict the sharemarket.. like predicting the direction of the wind..
     
  13. tony

    tony Well-Known Member

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    Hi

    I agree that Evans was merely feeding the RE agents what they wanted to hear - eg excellent prospects for Sydney RE.

    In fact, come to think it, I believe Evans made the same prediction for the Sydney market in 2003, 2004, 2005, 2006, 2007.

    The thing is, the Sydney market is so diverse that somewhere in Sydney there probably was a sector / district/ house, where prices rose by 7% in that year.

    Tony
     
  14. The Stig

    The Stig Well-Known Member

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    I saw the prices of 12 units all sold in the same block since September 2006.

    Just going off this, the price trend is still definitely down.

    The block was in Annandale. Hardly a poor mans suburb.