US property prices vs Australia

[botanika]

I know America has been hit hard by the recession but still...cripes you can get some cracker properties cheap over there. It just hits home even more how stupid the property bubble is in australia - and not just inner city Syd/Melb but EVRYWHERE. For the average house price in Sydney I could get a Gothic historic mansion in Boston AND have cash left over to go to Harvard. Or a sprawling 6 bedroom Californian Bungalow near Laguna Beach, with massive pool, workshop and proximitry to medicinal cannabis. If I owned a house in Mosman I could sell it and move to one of the better streets in Beverly Hills - probably Marlon Brando's old compound at that.

Is the bubble ever going to burst in australia or do you think it will just go flat and then keep on rising even higher?? I want to get into the property market - Ive saved up a healthy deposit while overseas and check the real estate guides regularly but man I dont like the idea of dropping 600k on a 2 bedroom red brick apartment locked away for life on a mortage that will still be going when Im dead. Can't get country acreage easily anymore either so the idea of dropping out to the 'good life' is cost prohibitive with no employment opportunities. How will I pay for a mortgage when half my salary's gone on tax and my wife needs to support the kids at home because child support costs more than a second salary. If I live further out Im hit with transport costs, long tiring journey's or living next to Meth-rape gangs and pedophile serial killers.

There used to be a time Id dream of winning the lotto to become filthy stinking rich, now I dream of winning the lotto just to be average!!

[dworx]

Yes it will crash, Our economy is just a little behind the states, but we will follow, retail figures show that the cash flow is down where I am and I am sure it is a national concern. If people dont want to spend then everything -not just retail - will crash.

[botanika]

Yes it will crash, Our economy is just a little behind the states, but we will follow, retail figures show that the cash flow is down where I am and I am sure it is a national concern. If people dont want to spend then everything -not just retail - will crash.

 

I hope you're right and I hope it does deflate. They've been saying its impossible to stay afloat for years...but then it keeps rising even more. Also we have less population than the States and a huge mining industry to keep us relatively bouyant. Maybe I'll just rent forever and pass on my parents house to my children haha!

[dr dognutz]

The way i see it the property bubble will only deflate if australia goes into a really bad/long recession... The problem is that we have just hung in there without it affecting property owners and people with mortgages. I realise some people have been affected but its one of those things that wont "burst" until it gets to a points where it is literally too expensive for blue collar workers to live in "average" family homes in our cities.

Foreign Investment is another thing that keeping it afloat, China alone has 100's of billions invested in our property .

[J Smith]

For a number of reasons I don't think it is sensible to compare the American housing market to the Australian one.

I do think the Australian Housing market will stall, prices are very high at the moment. I don't think this will mean prices will drop.

If you are paying $250/week ($13,000/year) on rent, would you prefer to buy a property now for $400,000 and pay that $13,000 per year off your mortgage, or would you prefer to pay $13,000+ on rent per year for the next 5 years (= $80,000+) then pay $400,000 for the same property?

Suggestions that prices will drop by more than 25% over then next 5 years seem unrealistic.

NOTE: I am not an economist and may be biased.

[botanika]

Foreign Investment is another thing that keeping it afloat, China alone has 100's of billions invested in our property .

 

Foreign investment and immgiration are definately important issues and there are big pro's and con's to it all. China would be screwed without investment from particularly Japan and Korea and australia would be screwed without investment from China. Need two hands to clap. I currently live in Shanghai - it's even worse than australia for property - totally bad ass inflation so I can't buy there either.

For a number of reasons I don't think it is sensible to compare the American housing market to the Australian one.

If you are paying $250/week ($13,000/year) on rent, would you prefer to buy a property now for $400,000 and pay that $13,000 per year off your mortgage, or would you prefer to pay $13,000+ on rent per year for the next 5 years (= $80,000+) then pay $400,000 for the same property?

 

I understand the markets are different and its more complex than face value but in general you can get some quite good houses cheap in the US just like you can get some great second hand cars cheap in the US. I guess it just suprised me when I was perusing some US realty sites to see what I could potentiually afford versus australia.

My choice is not so simple as your 2 options, living overseas, however I have do have a good deposit saved up and will return to australia in a couple of years. Hopefully the market will stay flat for a while and my savings will grow with compund interest. Living OS does get me some good investment opportunities.

Edited July 19, 2010 by botanika

[Chiral]

I wish I could find the article I read recently that showed people will soon be able to take out mortgages that exceed their actual life expectancy, meaning you pay the mortgage, die then either your family keep paying for it, your left over savings or super are used, or the property is sold hopefully at a profit and that is used to pay of any debt.

What this means is people who pay rent all their life can get into property, continue to pay a rent like amount but generally expect to give up the property once dead or old and cannot continue to pay any mortgage.

I believe this has already been in action in parts of the UK and Europe.

So one can be in the grave and be still paying the banks money...I dunno but that's really milking people over the line IMO.

Prices in Australia will never go down, the markets and economy cannot ever work backwards against inflation, banks cannot take losses even if all those losses really mean less profit than the year before.

[Magicdirt]

Ever since shows like hot property came on people have been seeing dingy little shitholes in capitol cities going for 1/2 million plus and thinking my house is better than that it must be worth more.

Then some stupid twat comes along with 600 k and hands it over for something worth 300 k and the standard is set.

I agree with what Chiral said, the prices are not going to drop anytime in the near future, not without some sort of calamity anyway.

The banks don't advertise the fact that interest rates are negotiable and can be locked in at 3% or less for the life of the loan.

If you hold a large account the banks are whores like the banker from Beverly Hill Billies, but if you don't, expect to pay through the nose for more than 1 honest lifetime.

[Slybacon]

Why not buy land in Sumatra. You can buy waterfront lots of land there for as little as 10 000. I think it will be the next Bali for sure, lots of potential for tourism. you could live there comfortably for about 20 000 a year

[botanika]

Ever since shows like hot property came on people have been seeing dingy little shitholes in capitol cities going for 1/2 million plus and thinking my house is better than that it must be worth more.

Then some stupid twat comes along with 600 k and hands it over for something worth 300 k and the standard is set.

 

This is what is frustrating...there are many places that are clearly overpriced yet so many out there that snap it up in the craziness and everything else shuffles forward in tow. The market is also lubed up with 'faux sophistication' for a gullible australian market, led by too many episodes of McReal estate/home makeover shows starring redundant lobotomized TV stars or too many hours lounging around with the sunday paper slide out magazines. With some clever Hey Hey its Saturday gimmicks and a few Ikea gallery lights that weatherboard property is now multi-million dollar chic. If it's not up for Auction there must be something wrong with it and if it is up for Auction you have to jump in that whole underhanded and time consuming caper.

[botanika]

Why not buy land in Sumatra. You can buy waterfront lots of land there for as little as 10 000. I think it will be the next Bali for sure, lots of potential for tourism. you could live there comfortably for about 20 000 a year

 

Haha I saw a cool island in Phillipines for sale once for about 500k. Had palms, a beach, jungle, waterfall...pirates...

[nabraxas]

For those who follow the stock exchange, building materials share values are the key to the boom and bust cycle of Australian (and similar systems) property, infrastructure and construction booms. When building materials values go down we know that overall market demand decline has settled in. It means that the developers and engineers have reduced their forward orders for bricks and mortar. At the same time Australian state governments have been told to reduce their own little-known immigrant-sponsorship programs.

ALP Investments

Are business forecasts another key to Julia Gillard's apparent sea-change in population policy and Rudd's disappearance?

The ALP doesn't rely on mere donations from developers; it has its own huge investments in finance, insurance, mining, development and property, which act as a barometer for the benefits of growth. Could ALP investments and other big business now be warning the Labor Government that construction will no longer be able to soak up immigrants? Sure, pumping up population pumps up demand, but only if there is money to invest. Problem is that the money seems to be drying up.

Boral pulling up sticks

Building materials giant, Boral, long a veteran investor in Australian population growth and an early vocal member of the 20th century Australian population growth lobby, is downsizing some of its Australian and US operations and heading north, presumably scavenging the last inertias of scale in the post-colonial malignant growth of China, India and South East Asian regions.[1]

The Australian Financial Review reported that Boral made a $49 million loss before interest and taxation in the first half of 2010.[1]

The most tasteless era of ostentatious spending on multi-management layers wining and dining big projects and buyers since the one preceding the Great Depression may be on its last legs. The US housing market has gone phutt. The Australian market will follow.

And Boral shares, running at around $10 in 2006, are now about half that.

"Deutsche Bank believes that although Boral's Australian construction materials arm has been one of its strongest-performing divisions, with earnings before interest and taxation up 12 per cent to $107 million in the first half, it could easily cut some $14 million in costs by eliminating several layers of management." [1]

This will be a relief for less exalted workers and managers in the sector. Survival is possible in such industries if they follow the post 1970s oil-shock European model of maintaining infrastructure and housing stock instead of investing in population and construction growth. However, there won't be room for wedding-cake management tiers.

States told to cut their 'secret' immigration programs

Another sign of terminal decline in bricks and mortar bubbles is the new Federal Government's request to the states to cut back their semi-secret immigration programs, including the 176 visas.[2] The states control land and derive income from its sale, notably through stamp duty. To generate land and housing sales they have been engineering population growth, in tandem with property developers and financiers. The associated state-sponsored immigration programs seem to have started in Victoria and are the most excessive there. Introduced by the Kennett government, one of their ploys was to make a low profile category of 'regional immigration' (once designed to assist low-population rural areas by facilitating skilled immigration and loosening definitions of family reunion) into one that applied everywhere, designating dense urban areas as in need of immigration. Long and short-term immigration in numbers previously unimagined has generated a demand for housing and jobs in construction. The same immigration probably supplies many of those non-English speaking construction-workers one sees moving like ants on roadways and tragically moon-scaped once green patches in Australian suburbs, carrying out orders at which most locals would bawk, if in control of the process.

State government spokespeople, including growth-corridor spruikers, have repeatedly claimed that immigration numbers were outside of their control, yet the states advertised aggressively for immigrants. See these articles, for instance: "Premier Bligh pretends Queenslanders cannot cap population growth although 60% want to" and "Melbourne 2008, Life in a destruction zone" and "Julianne Bell delivers resolutions to Planning Minister Madden in late impromptu meeting."

Yet the State Premiers continue to try to mislead the public on this, even subsequent to Gillard's new policies:

"We can't control who comes over our state borders, but the federal government can control who comes into Australia," (Anna Bligh) [3]

Tragically and wastefully the tendency of state governments to deny reality may see green wedges rezoned and destroyed even at this stage of construction detumescence by parliamentary rogues. See for instance, http://candobetter.org/node/2058 and http://candobetter.org/node/2067 Yet it may all be for nothing; those wedges might be sold at a financial loss in the end.

Women in power

We may gauge the panic of big business to the idea of a real debate on population through its mainstream media mouthpieces' hopeful perseveration with tying that rusty and irrelevant old racist can to the idea of sustainable population and Julia Gillard, reflected for instance, in this glowing chestnut where Gillard's red hair provides a cliched motif:

"Who can forget the last redhead to talk tough on immigration and protecting Australian values?

and "This isn't just about talking to voters in western Sydney but also in Queensland, which gave rise to Hansonism. Maintaining seats there is shaping as a major challenge in the federal election."[4]

The comments above evoke the medieval European stigmatisation of red-heads, not to mention witch-hunting. Starting with the new Primeminister, women in Australia may be in for an interesting time as the boys start fighting over the scraps, in the property sector and government.

Notes

[1] Jeremy Wiggins, "Boral set to offload dead wood," Australian Financial Review, 28 June, 2010, page 1.

[2] Sophie Morris, "States' visas blunt skills thrust: Migration," Australian Financial Review, 28 June, 2010, page 8.

[3] Marcus Priest, "Values, being sustainable are the keys: Population,"Australian Financial Review, 28 June, 2010, page 8.

[4]Marcus Priest, "Lurching to the right on boat people: Comment," Australian Financial Review, page 8.

http://candobetter.org/node/2074

[Chiral]

If you think you can property in south east Asia...think again, Only if you marry an Asian woman, then you can give her the money to buy land and a house and live there with her, you will never ever own that property outright, if she dies then the property goes either to any children you have or to her family only, never to you...places like Thailand and Indo have had this set up for a very long time to prevent foreign investment and the filthy westerners coming over and trashing their beautiful paradise.

Can't say as I blame them either, look what we do to own markets...it's disgusting.

[botanika]

If you think you can property in south east Asia...think again, Only if you marry an Asian woman, then you can give her the money to buy land and a house and live there with her, you will never ever own that property outright, if she dies then the property goes either to any children you have or to her family only, never to you...places like Thailand and Indo have had this set up for a very long time to prevent foreign investment and the filthy westerners coming over and trashing their beautiful paradise.

Can't say as I blame them either, look what we do to own markets...it's disgusting.

 

You can buy in china easily enough, with or without a Chinese partner, but I really missed the boom here and china is not a 'beautiful paradise' hehe. When I first came out I had little money and little idea how long I'd stay. In hindsight I could have bought property cheaply 7 years ago and watched it grow out of sight. I've spent my time investing in life experiences but I should start saving more.

[Moses]

in adelaide the gov has intentionally driven prices through the roof. the houses in our street ranged from 70,000 to 100,000 5 yrs ago now half of one of the backyards with a house on goes for 275,000.

Rann and his cronies allowed/protected false bidding by the real-estate industry to help them pocket a nice pocketful.

Now we get the mindgame propaganda of weekly articles in the paper about how affordable housing is which is a LIE!.

7 out of 10 houses in adelaide are bought by investors so to own your own home you must become someones slave and pay for their lifestyle

the banks in adelaide are now asking around 70,000 for a home deposit which is twice the avg yearly wage and yet b4 the crisis they would accept the first home owners loan of 7,000

we are being screwed.

[FancyPants]

Holy shit, if I sold my house (own it outright) and bought a place in LA area, I could get a three story (slimline) posh-arse house with an ELEVATOR in a suburb called San Pedro (LOL) in hills overlooking the Pacific Ocean! Incredible...

Thank F* I got my house near the beginning of the first boom around 9 years ago, when it was worth around half as much.

Edited July 20, 2010 by FancyPants

[Chiral]

How important is it to own land...you never really ever own it anyways in the grand scheme, is it just chasing the dream to fill the coffers of banks and the mega-corps.

Be nice to actually say you own some land when you are 16, then you have a life in front of you to do with it as you please.

watch the film CROSSING OVER and you really do begin to see that carrot chasing and they great american/ozzie dream is indeed quite the farce, particularly by the time you are free from the stress of actually paying for it you are too fucking old and half dead to do with it what you dreamed some 30 years earlier.

A family once bought some land from a family who's father once owned it, he had died and left it to them, He originally bought it from another man who used to farm potatoes and suede on it, he sold it to pay debts to the bank and medical bills before death, he originally bought it from a woman who's family were all killed in the great war, she sold it to him for loss to try pay for food for her children and survive the great plague, her husband originally bought it from the land investment bureau for 160 shillings and cow.

[Slybacon]

If you think you can property in south east Asia...think again, Only if you marry an Asian woman, then you can give her the money to buy land and a house and live there with her, you will never ever own that property outright, if she dies then the property goes either to any children you have or to her family only, never to you...places like Thailand and Indo have had this set up for a very long time to prevent foreign investment and the filthy westerners coming over and trashing their beautiful paradise.

Can't say as I blame them either, look what we do to own markets...it's disgusting.

 

I know quite alot of investors who have bought in Indonesia without marrying into the country. It seems that these govt when delt with on their terms anything is possible. Outside of paying of the right people alot of muslim countries allow you to take multible wives, so a paper wife in the country of your choice should be enough to get in and out of a property and make a reasonable gain. Long term leasing is another option if you are looking more at a holiday style villa you can sub lease. Options are plentyful for the right investor.

[Slybacon]

How important is it to own land...you never really ever own it anyways in the grand scheme, is it just chasing the dream to fill the coffers of banks and the mega-corps.

 

Weather you actually own it or not is irrelevant unless you plan to live there. Owning land is owning the right to any price rise. If you own the deeds you own the profit when the price rises. Alot of investors only set there mortgages to pay off the interest giving them the right to use the equity to acquire more land in a ongoing process.

[PD.]

If I live further out Im hit with transport costs, long tiring journey's or living next to Meth-rape gangs and pedophile serial killers.

LOL, why would you even consider moving to murray bridge

[Quill]

this shit depresses the fuck out of me. I cannot picture ever owning land that i can happily raise a family and garden on. My circle of friends all are in the same position. House prices go up while filthy bankers buy land for investment so they can make a killing. Are land prices ever going to fall? shit I'd be happy if they just stalled for a bit. Meanwhile urban sprawl spreads across the land like creeping mould.

Murray bridge it is then

[Slybacon]

I really think it will only get more expensive here as Australia becomes more and more desirable place to live.

[botanika]

shit I'd be happy if they just stalled for a bit. Meanwhile urban sprawl spreads across the land like creeping mould.

Murray bridge it is then

 

Yeah all I can hope for is it plateau's off for a while. The urban sprawl is another interesting part of the whole equation and different to the US and Asia in dynamic. We have a high level of urbanisation in australia yet its still very spread out. We can't let go of the Jolly Swagman and Neighbours dream. Naturally a lot of australians don't like high rise towers yet it could solve a lot of problems for young people wanting property, fuel commercial growth, reduce long commutes and clogged roads AND make developers rich at the same time. Currently if you want to be close in to the CBD you have to be rich or settle for something punishingly small. Any older large dwellings left are quickly divided up into 2 bedroom shoebox apartments or dual occ's and sold off to the skim milk latte crew at a premium because they installed Ikea gallery lights and a dishdrawer.

I understand the australian dream of owning a house in the suburbs with a garden, pool and a granny flat but I think a lot of australian's have not quite understood how to embrace higher density urban living. Its the 'not in my backyard' defense. When Seidler built blues pt road apartments it was supposed to be part of a bigger cluster of mixed use high rise. Sydneysiders conked it all on the head and only one 'contentious' tower ever got built. I think he was right in trying to plan a new urbanism for Sydney that would make inner city living affordable and practical.

We have this uber vast landscape, a feather dusting of population yet a lot of us struggle for space on top of the high price.

So I'll see you guys at the Murray Ridge pub tonight? My shout

[dworx]

The way i see it the property bubble will only deflate if australia goes into a really bad/long recession...

That is what I was saying I think Australia has not seen teh worst of it yet!

[botanika]

That is what I was saying I think Australia has not seen teh worst of it yet!

 

Maybe not but our mining industry is strong and keeping us bouyant.