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City property values to fall 10pc

Discussion in 'Real Estate' started by Young Gun, 31st Jul, 2008.

  1. Young Gun

    Young Gun Guest

    City property values to fall 10pc: APM - ABC News (Australian Broadcasting Corporation)

    Australian Property Monitors (APM) says the the value of houses and units will fall by 10 per cent across all major capital cities over the next year.

    The organisation says house values in the June quarter dropped to their lowest level since 2004, as rapidly rising interest rates gripped the market.

    APM general manager Michael McNamara says there has been a dramatic turnaround in sentiment after recent booming house prices.

    "The implication of falling property prices is that those borrowers that took out 100 per cent loans, or those borrowers that flew too close to the sun by taking out loans with very small deposits, may find themselves in a situation very soon where they're sitting on negative equity," he said.

    "There is no doubt that the Australian market will see more foreclosures, repossessions and bankruptcies over the coming years.

    "But it's unlikely that we're going to see the same sort of widespread abandoning of the family home as what is happening in some of the rust-belt cities of the United States."
     
  2. crc_error

    crc_error The Rule of 72

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    interesting, cause I read another 'expert' report done by the ANZ which said prices will sky rocket over the next couple years..

    two so called experts saying the complete opposite thing!
     
  3. wanelad

    wanelad New Member

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    ANZ along with the other lenders will always try to promote a positive picture to boost turnover.
     
  4. Jacque

    Jacque Team InvestEd

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    Nothing new here- opposing views aren't uncommon in this day and age of media hype and news designed to sell newspapers :D

    I think the only thing all the "experts" agree on is that it's not a sellers market!
     
  5. Chris C

    Chris C Well-Known Member

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    Judging by all the auctions I have been to over the last month or so, despite it not being a sellers market, you could argue it ain't exactly a "buyers market" when there aren't any buyers to speak of...

    :rolleyes:

    I'm getting the feeling that if prices were to drop they won't drop far if the RBA is talking about IR cuts in the near future in combination with the general housing shortage.
     
  6. Jacque

    Jacque Team InvestEd

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    That's exactly when it IS a buyers market- when they're thin on the ground and vendors have no choice but to be more negotiable to obtain a sale.
     
  7. Chris C

    Chris C Well-Known Member

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    I was more implying that rather than it being a buyers market it is presently a dead market, with most of the buyers sitting on the fences while the sellers are screaming out for investors.
     
  8. D&K

    D&K Well-Known Member

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    News reports are always average across a city, state, or the whole country (unless they find some really bad news), so the market might sound 'dead' but at a local level it often isn't. The following article seems to sum this up.

    Look beyond the headlines for full market story | The Australian

    Part of the problem at the moment is financing rather than the market itself, which is forcing some fence sitting.

    Dave
     
  9. 02bsure

    02bsure Well-Known Member

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    Part of the problem at the moment is financing rather than the market itself, which is forcing some fence sitting.

    Dave[/QUOTE]


    Dave, market prices have become a function of finance and little else.

    For example, if all mortgage finance disappeared from one day to the next and houses could only be bought with cash, what do you think the price of an average house would be? Extrapolating from that and with the on going global credit contraction it becomes clear that house prices levels are soley in the hands of lending agencies and little else.

    If they for instance toughen lending criteria to 30% deposit and maximum 4 times provable salary then prices will reduce in dramatic fashion.
     
    Last edited by a moderator: 18th Aug, 2008
  10. D&K

    D&K Well-Known Member

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    True in part, but do you really expect a dramatic change in the way lending is offered in this country to the average home buyer?

    Since there's more home buyers than investors, I don't see a massive change in financing and resulting price falls for most of the market, just a slowing and some opportunities. IMHO it's just a cooling off period. The most dramatic thing on the horizon is shared equity, which will probably boost prices at the lower end.

    The reference was more to the reduced availability of low docs, pressure (real or perceived) for lower valuations, and some lenders deciding not to deal with trusts. Not a complete fallout for lending.

    So the point is that the news might say prices are going down on average, shock-horror, but it doesn't mean that prices will fall everywhere.

    Dave
     
  11. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    I agree - lending will be (already is) much tighter in the "fringe" markets - those pushing the envelope a little for serviceability or credit rating.

    I do expect that regular owner-occupiers will face greater scrutiny in their applications (as they should), but for the most part, anyone who is comfortably within the normal serviceability ranges I wouldn't think will face any issues.
     
  12. Bundy

    Bundy Active Member

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    Typical media hype for the "sheep" to follow.

    Have to love the media, they fuel the BOOM and the GLOOM.... particularly the gloom! They love to report on the negative and rarely on the positive.

    Creates the hysteria and panic for all to follow. Blatant broad statements without facts. Everyone has and opinion, and most are different.

    I prefer to ignore the media rubbish and do my own research and form my own opinion.

    Australia is definitely doing it tough, you can clearly tell by JB Hi Fi's end of year profit up 61% on the previous year.... Must have those LCD's, Plasma's, DVD's etc etc. :eek:The good old champagne taste's on beer budgets. You won't see these statistics on the front page of a newspaper.

    People that are struggling need to get back to the basics and start saving instead of just whinging about times being tough.

    Bundy
     
  13. crc_error

    crc_error The Rule of 72

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    lol.. yes JB is a good gauge!

    My house continues to go up, last month went up 3%, and has been growing each month since I bought it since the beginning of the year.. so I don't see a slow down..

    Maybe Melton and Caroline Springs prices are falling, so lets paint a doom and gloom for all property Australia wide! I suspect these jurnos are from these suburbs judging by their editorials!