Comments on: American House Prices Continue to Fall While the Same Can’t Be Said About Australian House Prices

By: Biker Pete

Biker Pete — Thu, 21 May 2009 11:29:11 +0000

Apologies, Dan. Rereading, I see it was Pete who bestowed rodentship on me! Thought you were far too courteous for that!

By: Ratbiker

Ratbiker — Thu, 21 May 2009 08:47:32 +0000

Ha,ha, Dan! Doubted you'd let _THAT_ one through... . Too close to home, I guess. (Funnily enough, the term 'ratbike' is in use quite widely (google it, sometime) so your portrayal of me as a scurrying rodent isn't entirely inappropriate!!!

By: GoldiLux

GoldiLux — Thu, 21 May 2009 08:13:16 +0000

Well, I prefer the Great Mogumbu's analogy of lemmings blindly following (LBF) the herd over the cliff. It pays to be contrarian, or counter-cyclical. Whenever you see a herd of groupthink rodents scurrying by, squeaking 'Safety in numbers, safety in numbers!' watch out. The smart money is to be made by buying when no-one else is, not when there's heated competition. (What's this new'renter' term? Has 'tenant' become politically-incorrect? Is it demeaning, Lachie?!)

By: Lachlan

Lachlan — Thu, 21 May 2009 07:10:52 +0000

Vote two for tsunami analogy! I gotta say though I really do feel sorry for them.
I made good money on the real estate boom purely through good luck rather than good managment. I'm a renter now though. I suppose you have to remember that real estate performance is greatly affected by participants who dont have much investor discipline.

By: Biker Pete

Biker Pete — Thu, 21 May 2009 02:16:21 +0000

Ha, ha, Pete. Your last words to me were: "Enjoy your comfortable retirement at the expense of future generations!" Laughed at your feeble attempt to lay the guilt on thick... . Rentals are still making us _much better money_ than any other asset class. (But I must acknowledge that Bill Bonner's prediction of an Obama Bounce helped us get in and out of the ASX, FAST, again... making tax-free megabux in Super! Thanks again, Bill!!)

By: Pete

Pete — Thu, 21 May 2009 01:44:32 +0000

Great tsunami analogy, I love it!

It will definitely take some time for the "doubling every 7 to 10 years" idea to go away. But house prices will be falling severely well before that idea has gone.

Hindsight won't be very helpful for todays property speculators. But they can't say there wasn't any way they could know the market would fall - there are a few sites like this that have been suggesting it for quite a while.

By: Paul

Paul — Thu, 21 May 2009 01:43:31 +0000

Can someone tell me what the HIA "Average annual household income" is for this quarter; total and disposable income
I would like a graph of that going back to 2000

By: Dan

Dan — Wed, 20 May 2009 16:53:15 +0000

Pete: You're right of course (my point being though that quantifying the likely shift is a bit difficult). Everything is looking pretty ugly at the moment in real estate - that people are even contemplating 'investing' in real estate, especially on debt, is beyond crazy in this climate - yet those people are around - almost like the people who walked _towards_ the sea when the tide withdrew just before the Tsunami.

By: Pete

Pete — Wed, 20 May 2009 13:33:35 +0000

Dan: (re: Luke)
It'll change pretty soon. You still have people who are in the RE market SOLELY for capital gains and tax purposes. Yes, SOLELY.

You might wonder why people would be crazy enough to own a house and not rent it! Hell, i'm not rich enough to do that. Reasons include:

- holiday homes
- houses that are not currently rented (and can't get tennants at $2000 a week)
- houses belonging to people who are overseas
- houses belonging to flippers (flippers buy, renovate and sell, but most don't occupy)
- houses belonging to rich people
- houses in rural areas that are just too expensive for people to buy, or perhaps the town is just not expanding its population (some might be contracting)
- houses belonging to deceased person(s)
- houses caught up in a legal issue
...i'm sure there's more, and perhaps some I listed above are not that significant

So, some people buy and hold, hoping for higher prices. In a falling market, just watch the rats scurry. For all those "yes, it's a small 8% correction, but it'll be even higher soon because house prices always double every 7 to 10 years" types - they are in for a nice surprise when their 'investment'(?) gets into negative equity.

Now of course there are some who own property outright, and still play this game. However it wouldn't surprise me one little bit if councils and states ramp up property taxes (inc. rates) to cover shortfalls from RE market stamp duty and taxes.

That is just one more thing that makes holding an empty just that much harder, even if you don't owe anything on it.

All the signs are down, down, down. The only potential 'up' (albeit temporary) is potential Gov. intervention. The market will always win.

By: guy buters

guy buters — Wed, 20 May 2009 08:11:03 +0000

The average house in Perth has 4 bedrooms and holds ?3 people. My parents fitted 8 people into a 4 bedroom house, my inlaws had 8 in a 3 bedroom house.If we were in Asia the occupancies would even be higher. It's obvious that we have a potentially massive oversupply of housing. If push came to shove there would be many empty houses or landlords being forced to either drop their rent or accept higher occupancy rates