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Tax reform group Prosper Australia today called on first home buyers to delay buying real estate ahead of the flip into a falling market, which it described as ‘imminent’.
RP Data reports there are over 900 Melbourne auctions scheduled for the weekend and 2700 over the next three weeks. Prosper believes this enough to decisively tip the market into oversupply.
“When the Great Australian Land Bubble bursts – just as land bubbles all around the world have – the freshest buyers are totally exposed. They face financial ruin as house prices fall below their debt. The crippling mortgage repayments become pointless,” Prosper campaigner David Collyer said today.
“The bursting of the land bubble is signalled by simultaneous downturns in auction clearance rates, building approvals and housing finance. ABS data already shows the latter two elements in place (ABS 8731.0 Building Approvals; ABS 5609.0 Housing Finance).
“We cannot help those who have recently bought, but we can warn prospective buyers – particularly first-timers whose innocence and heavy borrowing leaves them uniquely exposed.
Australia’s housing market is widely regarded as being in a price bubble and ‘most severely unaffordable’. Warnings have been issued by a long list of agencies and experts, including the IMF, the OECD, The Economist newspaper, Jeremy Grantham and Steve Keen.
“Residential properties are trading at between six and nine times earnings – depending on assumptions. Historically, they have fluctuated between two and a half and three times earnings,” Collyer said.
The largest element buyers are paying for is the land, not the building.
“A buyers’ strike is the only rational response to current land prices. Frankly, prices are ridiculous. How anyone can pretend Australia has a land shortage beggars belief!
“Some argue prices have arrived at a new and permanently high plateau, but the historical record shows reversion to the long term average – in every case without exception.
The experience in the USA, Europe and the UK is for sudden, jagged falls in property prices. Sales volumes also shrink dramatically.
“I remind you there are 1.3 million Australians with negatively geared rental properties. They are diverting all rents and some personal income to meeting interest payment in the hope of capital gains. When only capital losses are expected, investors will flood the market and overwhelm demand. Buyers will step back, making it virtually impossible to sell at any price.
Do not underestimate the scale and significance of the transformation that is about to unfold. Price falls are imminent – protect yourself. Don’t Buy Now!” Collyer concluded.
March 15th, 2011 at 6:23 pm
Very good, but how can we get the word out there.
March 15th, 2011 at 7:07 pm
I have created a Get Up campaign to promote this idea and will be writing a blog on the suggestion very soon. Vote for the suggestion here:
http://suggest.getup.org.au/forums/60819-campaign-ideas/suggestions/1595687-first-home-buyers-property-buyers-strike
March 16th, 2011 at 12:17 am
Fantastic idea BB, the power of the people is there. We know they want this. This buyer strike and getup poll is already gaining significant traction and can be seen on quite a few forums I frequent. Help spread the word guys.
March 16th, 2011 at 9:12 am
hmm no mention of China? our economy and property has been doing so well because of the mining boom.
I dont think the property bubble will burst unless China crashes – and there is definitely a chance of that – China has been buying our materials to build buildings that no one wants to live in.
google/youtube Jim Chanos for some interesting insights – he predicted Enron and the GFC.
March 16th, 2011 at 11:50 am
How can we get the word out there.. simple.
Use your networks. Social media. Post links to this
article this on facebook, linkedin, twitter etc..
Support the GetUp campaign:
http://suggest.getup.org.au/forums/60819-campaign-ideas/suggestions/1595687-first-home-buyers-property-buyers-strike
Tell everybody who will listen and even those that won’t (baby boomers!). Send sms, email and encourage people to pass on the message. We have strength in numbers.
March 16th, 2011 at 12:55 pm
Join our Dont Buy Now Facebook page and share!
March 16th, 2011 at 12:55 pm
The state of the housing market is very depressing. I feel anxious and overwhelmed every time I look at it and we have decided that until we can get some small value for our money we will not be buying a house.
We will continue to be disciplined by saving what a standard mortgage in our area would cost but as for now, due to my anxiety, my husband has ‘banned’ me from looking at houses! : )
On a side note – I am torn about this issue because I don’t want the people who have already bought a house to be in stress if the market does decline but I also want an opportunity to buy something myself so it is really hard. I am prepared to pay good money for a good house, I just cannot bear to pay $650k+ for a crappy 3-bedroom house that will need to be extensively renovated just to be livable. It’s very overwhelming!
March 16th, 2011 at 3:18 pm
You will get no housing crash until unemployment goes up – simple as that. If you want a taste of what that means – compare Cairns property prices to Townsville. Unemployment rate between the two is quite different and consequently the rent and house prices reflect that.
March 16th, 2011 at 5:38 pm
The sentiment in this article is all good, and there is no denying that housing in this country is expensive.
I do feel that approach pursued however is somewhat opportunistic and naive and the reasons in support are limited and do not reflect the diversity of the national market.
The article seems to ignore the economic notion of ‘want’. If you take the Sydney Market as an example, there is great choice in location, dwelling and the lifestyle options that drive house prices. Property around the inner city and in the East is expensive when compared to the size of land reflecting location and lifestyle. The prices relfect that people understand this and choose this. This factor is substantiated by the fact that if you travel 30 minutes West or South West from the city, housing prices for an equivalent dwelling will drop dramatically.
Australian does not have one property market. If people want to live in a certain location and to enjoy the lifestyle that an area affords them, or to have a type house that ‘artifically’ increases the value of the property well above the underlying land value, then they should be able to, and thus pay the premium.
If you examine the economics involved, encouraging the supposed housing bubble to burst does the economy and ultimately no one no favours. Given the state of the domestic economy is and therefore average wage earnings is intrinsically linked to the housing market, you are only risking a crash and a recovery that only further sharpens the blade that separates those that can afford property and those that cannot.
March 16th, 2011 at 6:14 pm
@matt – a crash is required so that australia can move past its obsession with non productive housing. The sooner this happens, the better positioned our economy will be to deal with external shocks.
March 16th, 2011 at 7:37 pm
@Matt, Australia does have ‘one’ property market commonality, ie it is expensive at any and every level, there is no ‘value’ for home buyers, there is certianly zero value for first time buyers and there is bugger all value for investors, which in fact for the last 8 or so years have been only speculators chasing government and bank sponsored price increases. A home buying strike for FHBers is a great move and thats comming from me, a so called baby boomer (who didnt have it on a plate by the way). There are far to many people who got in at good prices, ie pre the last decade and take great pleasure in pulling up the rope on account of an ‘Im alright Jack’ attitude.
In fact the whole system around housing, from the government, the bankers, the RE agent, the RBA, etc etc is just a massive con to keep a handfull of people in clover and many of the rest believing that they are richer than they were last week, all for free and thus spending more money on frivoulous things with this newely aquired wealth.. Another perk for VI businesses (or are they now starting to pay the price with low sales in retail?)
Prices will fall enourmously and anything to speed the process can only be good, for everyone, very much including present home owners who will be able to trade up for less money and ultimately see their kids aford somewhere to live. And lets face it , who should give a damn about the ‘investors’ if they were actually investing as opposed to speculating they would only be interested in the return on capital, not price rises.
March 17th, 2011 at 10:22 am
Don: You have the cart before the horse. Usually the asset-price bubble bursts first, and the rise in unemployment follows; cf. http://groups.yahoo.com/group/ozgeo/message/213 and http://blog.lvrg.org.au/2010/10/40-years-of-housing-bubbles-and.html .
The one sure way to prevent present prices from crashing is to increase loan-servicing capacity by cutting taxes on current income or expenditure (e.g. by abolishing GST or payroll tax) and replacing the revenue by increasing taxes on “capital gains” (cf. http://blog.lvrg.org.au/2010/11/price-indices-say-housing-has-peaked.html and http://is.gd/pbaYR6). Buyers should go on strike until that happens.
March 17th, 2011 at 8:40 pm
I agree with all this sentiment.
BUT…
We must be careful what we wish for: a housing downturn will absolutely hammer the Australian economy…
March 17th, 2011 at 9:34 pm
What will bring this bubble undone is its very success: having successfully driven house prices skywards,
the cost of entry into the market is now prohibitive so that the flow of new entrants is drying up. Since
the Scheme depends on a constant flow of new entrants, this alone will bring it unstuck.
March 17th, 2011 at 10:35 pm
Note sure it was a good thing for you guys to call for this, as it is clearly already happening (the crash) but nevertheless, what we really do need is a Royal Commission into the crap that call themselves real estate agents, real estate market analysts and the like.
The real estate industry has more undesirable types than ever the tow truck driving industry, or the security industry ever had, and this scum is totally out of control.
March 18th, 2011 at 11:09 am
@Steve. I agree with you regarding the flawed system, that fills the pockets of parties propogating house ownership myths and spreading fear for those ‘not in the market’. It is crazy to think that these days the law surrounding purchases is still grounded in common law, making it risky for the unsavy not to use solicitors and agents.
Where I agree prices are high, they still reflect what people are willing to pay. I have heard the same story for 15 years from every would be property nostradamus that a burst of the housing bubble was imminent and that purchasing would lead to financial ruin. The point is that the property market doesn’t exist in isolation. When you look at the volatility of the share markets over the last 2 decades it’s understandable that people see value in the utility in a roof over their head which also serves as an investment. I’m not saying that it’s a great investment, but it’s one that makes sense to people.
I just don’t see the possibility of a crash in the fundamentals with the ever increasing population, steadily growing economy, the supposed mining boom, and the relatively low unemployment and increasing wages post GFC. If the bubble was going to burst it would have been in 2008. Australia at present has one of the highest interest rates in the developed world (resaon the dollar is increasing), the FHB benefits have been somewhat relaxed, and post GFC the share market has again risen some 50%. You would think that all these factors should result in a serious correction of the housing market, but really it hasn’t. What are people expecting the happen to make the bubble burst? Is this notion driven by something real, tangible, and previouly proven, or is just an emotional plight of those that are yet to purchase.
March 18th, 2011 at 6:38 pm
To get the word out there, you guys need to do some media releases. Or submit it to newspapers. (news releases)
March 18th, 2011 at 8:09 pm
Totally agree William – this needs some mainstream media attention to help take it to the next level.
March 18th, 2011 at 9:14 pm
@William @Jacon: Let me assure you this press release went to every media outlet in the country. The mainstream media will never give such a campaign oxygen. We rely on the internet and word of mouth. Vote at GetUp, Like the Facebook page. Tell your friends. I remind you this campaign is merely 4 days old. We have only just begun.
March 19th, 2011 at 5:49 pm
Maybe if First Home Buyers did what we all did and bought a humble first abode and drove an older car they would not have a problem finding cheaper properties in their price range. What makes First Home Buyers think they are entitled to a 4 bedroom brick home with 2 garages and a theater room + a shiny new Prado on the drive.
Get with reality folks, do what your parents did and buy, renovate, sell and upgrade….Sounds like too much work – well that may be another problem…
Bart Meuller
March 20th, 2011 at 2:20 pm
http://hungrybeast.abc.net.au/team
Suggest to try and get exposure on a program such as Hungry Beast on ABC 2. This is the kind of stuff they go for.
March 22nd, 2011 at 4:48 pm
[...] wonders whether maybe a youthful rebellion is at hand – it is not just establishment heavies such as Professor McKibbon and Mr Murray sounding the [...]
March 25th, 2011 at 7:53 am
[...] Australia recently suggested a First Home Property Buyers Strike (click here for the Prosper Australia press release), and after a week or so it is the 9th ranked campaign idea with 1700 [...]
March 25th, 2011 at 12:39 pm
This idea could really take off. It is the greedy banks and real estate industries worst nightmare. It may even force the government to do something about it instead of the first vendors home grant and capital gains deductions for existing property investors.
March 26th, 2011 at 4:11 am
Hello, I have just read through this blog, and I believe this is a an immensely important issue.
Simply I think that the present circumstances seem at times ominous.
I chose the word ominous as in my view a society that functions well, does so due to the level of empathy that its members feel for one another.
At a certain time in life we all need a place to call home. I believe Housing affordability has implications for the success or failure of our society, As at a community level whether we pay a bank it’s fee, or the land lord their rent, will very likely determine our right to become a more permanent of a community.
I deeply regret that a person who rents cannot usually say with certainty where they and their family will live in 2,3, or 4 yrs time. Equally a person with the burden of an onerous mortgage will face uncertainty in the face of the pressure to meet their repayments.
But what can I suggest as an answer to these issues?
Perhaps we need to again focus on a house as a place to live with in our community, rather than a vehicle to be traded.
March 26th, 2011 at 4:55 pm
Good luck with your call to arms, Prosper Australia. It might educate people to the BS and excesses of the property market.
March 28th, 2011 at 8:36 am
I just saw this thread supporting the campaign on one of the australian property forums, seems like the word is spreading!
http://australianpropertyforum.com/topic/8506527
Up to 4th position now. Nice one!
Jay.
March 28th, 2011 at 8:58 am
I got this link via MacroBusiness.com.au, and have relayed it to interest.co.nz. New Zealand and Australia are so inextricably linked with this problem. We, too, are headed for an inevitable property prices fall. After all, ‘your’ banks..are our banks..! If your market doesn’t drag ours down…ours will surely drag down yours!
March 28th, 2011 at 10:01 am
I just came across this link via Getup via a comment on this article in The Age:
http://www.theage.com.au/business/property/fringe-prices-out-of-reach-20110327-1cc1r.html
If you would like an investor’s point of view of why to avoid housing, I have been following Kris Sayce’s sage advice: http://www.moneymorning.com.au/
Also a well known international investment group visited Australia recently and here is what they had to say:
http://www.fool.com/investing/international/2011/02/08/one-last-giant-property-bubble.aspx
If you search both these site, there are many articles about the state of Australian property.
March 28th, 2011 at 10:14 am
I have been talking to a brick wall of deaf & ignorant (with a few listening & thinking, but seldom acting) now for months. The Australian RE crisis is self-made and would have been avoidable… but now no longer is! It is the result of blatantly obvious issues not being addressed in time!
A sustainable market is based on a sustainable functionality, preferably positive gearing (positive cash flow) as that would allow a traditional business model to replace speculation & artificial incentives driving a market into the abyss.
I am realistic enough that a positively geared market model is not something possible overnight… especially as Australian interest rates are about 3 times higher than the international average in developed countries.
But I would have at least expected that current imbalances would have been analysed properly and measures for correction taken. But, nil, nada! A hopeless disaster!
None of the major players (government, RBA, banks, RE industry, stats spruikers, media) has shown ANY leadership in addressing issues!
Re: Buyers strike campaign. Outright dumb! All that does is help to further destabilise the market with the intent to crash it! We need market reform not a market crash bringing down the system! Imagine the consequences! Why destroy something that has fundamentally great potential just because it is currently in a self-made state of disarray? All it needs is fixing!
March 28th, 2011 at 2:30 pm
[...] you want to know more, here’s the Prosper Australia page, here’s the Facebook page, and here’s an online forum kicking the idea [...]
March 28th, 2011 at 4:05 pm
90% of all negatively geared property is in existing dwellings so the idea of investors providing homes for renters is complete self serving rubbish. NG should be available only for NEW houses so that stock increases – but that would be bad news for the parasites.
BTW don’t worry about any sympathy re the speculators – do you think they give a damn about you?
March 28th, 2011 at 6:05 pm
I whole-heartedly endorse this buyers’ strike and encourage all prospective purchasers to boycott the market. Stick it to the speculators!
Well, until I’ve bought that is.
March 28th, 2011 at 10:03 pm
[...] it seems sentiment is really starting to change anyway.”If you want to know more, here’s the Prosper Australia page, here’s the Facebook page, and here’s an online forum kicking the idea around.As you [...]
March 29th, 2011 at 12:38 am
Strike Buying any home – The day of reckoning has arrived for the ‘smart’ Specvestors with a good eye for property !
Who will they sell to in order to make a profit apart from selling to them selves – let the Specvestors cannibalize themselves!
DONT part with your hard earned money to feed a greedy specvestor.
True value (based on returns) are what they were valued in 1999/2000 – don’t offer them any more than the 1999/2000 value – in fact don’t offer them anything!
Strike – Strike – Stike – Dont Buy – Dont Buy – Dont Buy
All governments in power since 1999 are to blame – something could have been done to curtail this house price absurdity & this legalized price gouging – housing, one of one of the most important necessities apart from food and clothing has been speculated at the behest of specvestors.
Let the housing Armageddon unwind – the young, the prudent and the patient will be rewarded with affordable prices (relative to average income)
Now it is time for the governments & the sepcvestors to reap what they sow!
March 29th, 2011 at 12:45 am
Can’t wait for it all to crash
March 29th, 2011 at 1:30 am
I’ll be selling popcorn and hot dogs on the side lines while its all happening as I watch the Specvestors cannibalize themselves
March 29th, 2011 at 8:56 am
I would strongly suggest extending this campaign to ‘reforming’ capital gains tax for first home buyers (FHBs).
I have been trying to boost my savings by investing in the stock market, exposing my hard-earned capital to risk and contributing to a pool of funding for Australian companies. It makes me sick to have to send a big [for me] cheque to the ATO just because I was lucky to make some gains before the GFC kicked in.
I read a comment on cutting payroll tax and increasing CGT – why not cut BOTH for people who can’t afford a mortgage yet? Increasing CGT only increases the obstacles for FHBs as they are PENALISED FOR SAVING their money.
March 29th, 2011 at 9:41 am
I’ll be right next to you Specvestors with the fairyfloss and balloons. Burst bubble .. burst!
March 29th, 2011 at 10:09 am
[...] is really starting to change anyway.”If you want to know more, here’s the Prosper Australia page, here’s the Facebook page, and here’s an online forum kicking the idea around.As you [...]
March 29th, 2011 at 3:43 pm
Too funny, I’m Canadian and we have our own version of the property bubble. The reasons the real estate agents give for our house prices being absurdly high are the same reasons I’ve heard here.
It’s crap here in Canada and it’s crap in Australia.
March 30th, 2011 at 2:47 pm
Support the idea, first home buyers are hanging themself by paying up fat agents and excessive housing price, this is a the biggest ripoff in your life time. The great aus housing dream is a nightmare for young generation. It is the ripe time for a reform to take place, cut negative gearing, limit agent commission, encourage people to save money. The housing price must come down, so keep good work, lets go strike and wake up policy makers, it is not fair that we have to pay more tax because we don’t have an investment property.
March 30th, 2011 at 3:52 pm
There is no reason in this world for housing ( land) prices to be so expensive. Its as ridiculous as saying the most expensive commodity the Eskimos have is ice. Prices are manufactured and totally artificial. When I am asked about my opinion on housing prices my reply is standard. “ depends on the lever of stupidity of investors” . If bloody housing is so great and stable how come institutional investors wont touch it?. When one comments ( usually Real estate agent )that its a good long term investment what are they comparing it to? Commercial property? Blue chip shares? What
March 30th, 2011 at 4:10 pm
I’ve had this attitude (avoid buying until the bubble bursts) since I saw an ABC doco in 2007 which predicted a financial crisis because of american sub prime mortgage rates resetting.
It’s good to see I haven’t been kidding myself as it’s been a few years and I’ve been starting to worry that maybe I got it wrong.
Additionally – property value (to a lesser extent than shares) depends on how people feel about the worth of property. If enough first time/home buyers like myself are wary and stay away, then the investor market will panic and prices will drop *sooner* rather than later. So come one and all and join up!!
In the meantime strikers should take a look at the First Home Saver Account – have that ready for the day when the bubble does eventually burst….
March 30th, 2011 at 4:13 pm
Another point in favor of not buying – did you know that being a home owner increases your likelihood of being unemployed? Because if you’re a home owner you’re less likely to be willing to move to get work…
March 30th, 2011 at 4:57 pm
I just need to buy a suitable property to live in. I have cash, but refuse to pay the inflated prices to feed the greedy!
March 30th, 2011 at 10:13 pm
just another woe added to my misery….
I bought my townhouse in Cairns in July 2008 – It cost 145k. I thought that was a decent price – you could not get a cheaper TH in cairns. So i bought it – i only had 11k deposit but i thought it will be ok.
i lost my job last year so i had it on the market. The best offer i got was 105k.
I dont know what to do. I thought i was doing the right thing by buying a cheaper place and using what money i had for a deposit but it seems i made the worst mistake of my life. Agents are telling me price will not rise for at least another 18 months. Along with this – the Body corporate fee went up by $1000 (just over actually) as a result of a 100% increase in insurance. And no doubt council rates will rise again this year.
I wish cyclone Yasi blew it away.
I have now rented it out but the rent is not covering costs! its fantastic…
Welcome to my nightmare. Property is a waste of time these days – it was ok 30 years ago when it was worth it – not now.
March 30th, 2011 at 10:16 pm
Real Estate agents have a lot to answer for too.
they charge these redicouous prices and for what ???
I was quoted: 2.5 first 18k, then 1.5% for remainder + advertising costs, listing costs, search costs and what ever else they can get away with.
I hate RE agents – it is very bad and cynical of me – but i cant wait to see these bujsiness go broke for being a complete rip off.
March 30th, 2011 at 10:18 pm
I will never buy proprty again – Id rather live in a small box and pay rent then have the overhanging axe just waiting to fall on my neck! Stress worry anxiety and i thought i was doing the right thing!
March 30th, 2011 at 10:21 pm
makes me sick
March 30th, 2011 at 10:39 pm
Easy to see there’s a bunch of losers here!. If you believe all this drivel then you probably live with the fairies at the bottom of the garden. I can imagine the wanker who started it all is an academic – an associate professor who lives out of reality. More people requiring more houses means competition for available stock means higher prices. If you are silly enough to not be in real estate then more fool you. Get into real estate and stay in it. They ain’t making any more land.
March 30th, 2011 at 10:39 pm
Didn’t Rene Rivkin do a similar thing a few years back with the share market.
Worked for him!
March 30th, 2011 at 11:06 pm
What about homeowners? I’m in my mid 20′s and have bought two houses. I own one of them outright and am paying of the other one. Homeownership is not easy, but we can’t blame those who have taken the risk and sacrificed to make it happen. Maybe the problem is that everyone wants everything these days (new house, car, holidays etc). People need to make a decision about where they put their money, without these kinds of campaigns to make their lives easier. How about homeowners refuse to sell their houses? Mr Collyer should hang his head in shame.
March 31st, 2011 at 12:05 am
We recently bought a block to subdivide to help a pensioner friend into an affordable home, by the time we paid the government charges, surveys, water, power, sewerage connection there went $22,000 in costs. Bring back government ownership of all these services and remove these costs and you could see drops the cost to bring land to market by up to 50% or more depending on what state your are in. Just look at the CEO salaries and bonuses from running water, power, gas, utilities. Also look at this effect on the current cost of living. It’s two fold….
March 31st, 2011 at 2:43 am
I live in IRL and, having friends in the US and Spain – have goten to understand what a property bubble looks like. No doubt about it – Australia IS IN A PROPERTY bubble.
The biggest danger with that these prices lure you in slowly and its a catchy fever. Everyone buys – nobody believes the prices will fall. But they will. People in IRL, Spain & US currently have morgages to pay which are way over the “real” price of what they own.
Thing is, there is no shortage of houses, there is no shortage of land. Wake up people! Prices will fall, and when they do, the whole economy comes down crashing. It surprises me that houses in Germany and Switzerland cost MUCH LESS than Sydney. Over there, there is real shortage – none of this speculative price hike.
This is sad in a way.
Who is guilty? Government. They should set up framework to control maximum raises for leases, they should control banks giving out morgages to people that own 2-3 houses (or have 2-3 morgages).
Modern society does through property bubble every 20 years, and never seems to learn.
Right now – rent. Dont spoil your life buying! The scale will only tip when house prices come down 30%. The problem is – it will wreck the entire economy with it.
And start saving money now. You will need the savings for the future to grab a good deal.
March 31st, 2011 at 8:24 am
Home ownership was easy in the early 1970′s. I used savings from Army service as a deposit – about $2,000 – and borrowed about $7,000. My job was paying about $80 to $100 per week with overtime. We had 3 kids and no assistance from the government until Whitlam increased the child endowment to something a bit real and Frazer improved that aspect a little too. Paid off a new Gemini car in the late 70′s after a loan from the bank financed that deal. Wife worked a bit on weekends between babies and there was no child care expense.
The kids have grown and gone now but we have a home and very thankful. The place is worth about $450,000 but they’ll have to wheel me away before I sell. Never looked on a house as anything but a place to come home to.
I blame the banks for some of the home debacle as they were too easy with lending criteria from about the mid 1980′s so it seemed. Suddenly wages couldn’t keep pace with the repayments as the interest rates increased dramatically – and a entirely different scenario to the early 70′s emerged.
March 31st, 2011 at 10:09 am
A strike is a great idea. The less buyers out there means less competition and more of a chance for me to buy.
March 31st, 2011 at 11:12 am
Though noble in cause, I think David Collyer is over simplistic in his thinking and lacks a fundamental understanding of what drives, or at least underpins, property markets. There are many misconceptions in the property game. Firstly, there’s no such thing as ‘the property market’ in Australia. The fact is that there are hundreds of property markets in Australia at operating at differing stages of their cycle at any one time regardless of what’s going on in the broader economy. Secondly, it’s a fallacy that you need to buy property in the inner ring around capital cities in order to achieve capital growth. Market research proves the contrary.
The fundamental problem lies in expectations of first home buyers. If you can’t afford to buy in the areas which you’d like to live initially, consider renting where you want to live and buying in an outer suburban or regional area which are entering their growth phases. These areas present opportunities to get into the market place with much cheaper annual holding costs due to lower purchase prices, higher rental yields and prognosis for better than average long term growth. This strategy may not be the desired initial result, but consider your first property a stepping stone. It’s an opportunity to get your foot in the door and ride the wave of property growth to enable you to purchase the property you’d prefer a little later.
Also, be careful absorbing commentary from Steve Keen. There’s nothing this guy loves more than publicity and he knows that the shortest path to free publicity is a negative finding on an emotive issue that screams crisis. Keen claims to be an economist which is a very different profession which requires very different skill sets to tha of a property analyst. It was only two and a half years ago that Steve Keen was all over the media making sensational claims that “the property market” in Australia was going to crash by 40% within months. We’re still waiting Steve. The US property market is fundamentally different to ours and it’d be a mistake to draw comparison.
Financial and property education is the key people. Scrutinize all commentary and take advice only from those qualified to be giving it.
Good luck
March 31st, 2011 at 11:15 am
Further to my last post, how many times have we tried to ‘rally against the fuel companies’ and boycott buying fuel on certain days in an attempt to drive down prices? Everybody is all for it in theory, but can’t even make the commitment to not purchase fuel on the nominated ‘protest day’.
Let me pose this question – How many of you are really going to stay ‘true to the cause’ when the opportunity to buy a property and secure your future presents itself?
March 31st, 2011 at 12:20 pm
@Richard Facey. That’s the problem, Richard. Right now there is no opportunity unless your rich, or have a stable 2 (high) income family, or are a fool thinking that you can actually get by with putting more than 90% of your day to day income into a house.
I’m none of those things. I’ve got my home saver account and I’m sitting on it until the day the bubble bursts. It will come. The majority of *investors* believe there is a bubble. However they also believe it will continue due to a number of assumptions – such as that the shortage of housing supply will continue.
You know what they say about assumptions …. the bubble will burst Richard. Bubbles always do.
March 31st, 2011 at 2:28 pm
[...] special thanks to Bullion Baron for putting our original press release on GetUp and all those who helped the Buyers Strike storm up the GetUp Suggestions forum from [...]
March 31st, 2011 at 3:23 pm
Hi Kate,
Historically speaking, housing price growth tracks closely to the income growth of its buying demographic. You can’t over simply the affordability problem by comparing the nations median house price to the nations median household income and determining that real estate prices are overblown. Remember, there are many property markets operating throughout the country. There are areas where housing is unaffordable for sure Kate. However, there are also areas where real estate is available at prices which local household incomes can service without too much trouble. Furthermore, the future prosperity of locals in certain areas is likely to increase as local industry diversifies providing further opportunity and wage increases for locals. Resulting increases in population, economic opportunity and infrastructure put upward pressure on real estate as locals compete for real estate upgrades they can afford due to increased means.
I’m fortunate to own allot of real estate, none of which are in areas I’d chose to live. Few properties I’ve bought have cost more than $300,000.00. I’ve even bought a houses below $180,000.00. Most of my properties are returning 6 – 7% return on investment so require little cash input by me to service the annual holding costs once tax breaks are considered. I don’t think that owning a property worth $200,000.00 would classify one as rich?
Sure you need to save the deposit but you can get your foot in the door Kate. The opportunities are out there, you just need to know ‘how’. You need a property and financial education. If you can determine ‘whom’ to listen to half the battle is won. Don’t listen to the broader media sensationalists or adopt mainstream assumptions like ‘real estate is unaffordable’, theories of ‘bubbles’ or ‘you have to be rich’
Take advice from those qualified to provide it
March 31st, 2011 at 4:59 pm
I love how everyone points to the house price crashes in the US as inevitable here – do some research for yourself people – I have a number of friends in the US whom advise the price of well located property have gone nowhere. The price crashes have been in towns that didn’t keep with the times (i.e. large industrial bases) or the sprawling new estates built out in the desert. I am sure there are locations like the latter we all know of in Australia. If prices of quality properties fall somewhat there are plenty of Asian buyers who can spot a bargain. As a related issue – have a look at comparable property prices in Singapore or Korea.
March 31st, 2011 at 5:11 pm
House prices will soon double. There cannot be a burst. Check out the history; prices hasn’t increased much since 2006 and it is about time. I suggest everyone try to buy soon. Otherwise, you will pay double next year.
March 31st, 2011 at 5:48 pm
A buyers’ strike is one component of a STAMP-DUTY STRIKE: http://is.gd/psd_strike .
March 31st, 2011 at 8:21 pm
This all sounds great in theory and I commend the intent. Unfortunately, it fails to address the prime cause of inflated real estate prices, land shortages and what I call too much investment.
Thanks to red tape it takes forever to get land onto the market and almost inevitably demand outstrips supply.
Economics 101.
This situation is further compounded by resistance of coastal residents in cities like Perth to any form of high rise residential developments.
That opposition feeds land prices and creates another problem which is acute in Perth, urban sprawl.
There are a few issues that need to be faced, especially if, with the exception of Queensland, Australia continues to hold the bulk of its population in the major capital cities. Land has to be released faster and density of living must increase.
Additionally, we have to question whether large scale investment in private real estate is good for the community as a whole. In Western Australia at the peak of the housing boom in 2006 70% of all real estate purchases were investors.
For example, in Perth, urban redevelopment has seen some less desirable suburbs public housing estates redeveloped and sold. Great idea. Especially as the housing was by any reckoning affordable. People who could not afford a house had the chance at semi reasonable prices.
Problem was investors snapped up most of them. A covenant could have been attached requiring purchasers to be owner/occupiers, therefore excluding investors and in turn financial drive for capital growth, rather than a chance to own your own home.
Failure to address these issues and land prices will continue to rise. It’s an economic certainty.
March 31st, 2011 at 11:35 pm
@ Richard – you seem to have a smart focus on buying for a return, not just with eye only on capital gain. I hope by ‘servicing’ the loan your not only simply paying the yearly mortgage interest but are paying off the mortgage(s) as well. It’s implied by your statements (I hope I’m not reading too much between the lines) that you’ve spread your exposure over a number of property markets (you stated ‘allot’). Again, seems smart. (To answer your earlier question, yes, if you own multiple properties then it makes you rich, at least in my book.) I just hope you haven’t squeezed your debt to asset ratio too tightly, and in the end I hope you survive the bubble’s burst when it comes. However just because you currently own multiple properties doesn’t necessarily make your advice more valuable than anyone else’s. It just means you’re standing a whole lot closer to the trees … but then maybe you are one of those rare people capable of seeing the whole forest no matter how close to the trees you stand.
However – just to be devil’s advocate I’ll throw a scenario or two your way. Since you seem to think of yourself as an investor, but don’t seem to consider yourself rich, I’m assuming the properties you have, have mortgages held against them. You mention getting a 6 to 7% return? Just 2 years ago in the latter half of 2008 the interest rate was 9.45%. Worst case scenario (which hopefully won’t happen again as monetary policy is dramatically different these days, supposedly, but still if it happened once before …) back in 1989/1990 the interest rate reached 17%.
So with your current return of 6-7%, would you be ok with a 9.45% interest rate? How about maybe round it up a notch or two – how about, say, 12%? Or, worst (albeit ridiculous) case, 17%? How would you fare?
Whatever your position, best wishes for your financial stability in the future.
@ Chris – what you’re saying suggests to me that the market at the moment is being buoyed up by investors, not home buyers. Investors buy out available property (coz they don’t see prices going down, so they can only ‘make’ money by buying further) -> lack of supply raises prices -> increased ‘value’ of property due to increased prices makes investor think they have more available leveredge to buy -> investors buy out more properties. At it’s core this scenario can best be described as a pyramid scheme. At some point the investors will realise how ridiculous the situation is and stop buying. The price rises will falter. Potential first home buyers will rent because it’s simply far more affordable compared to buying. Prices will not only stop rising, but will likely decline slightly. Interest rates will likely rise over the coming few years at least as the world gradually recovers from the GFC and their ‘spend to avoid collapse’ monetary policies bear fruit. Those gung-ho investors who maxed out their buying capacity at low interest rates to get a hold on property ‘before it goes even higher’ will start having to get rid of one property, or maybe two. Prices will start declining more sharply … you know where it goes from here.
The bigger the bubble, the greater the exposure, the harder the fall.
Some interesting articles for you on the decline in sales over the past 12 months:
http://www.australian-real-estate.net.au/investing/2011/03/22/australian-property-sales-show-21-decline-over-12-months/
…and on the myth of the “property shortage”:
http://www.australian-real-estate.net.au/investing/2011/02/11/dont-believe-real-estate-hype-on-property-shortages/
April 1st, 2011 at 12:05 am
I think that a lot of the inner city CBD prices are high due to the likes of SE Asian and Hong Kong/Chinese people coming here and buying in Sydney. Some of them have 2-3 two bedroom apartments in Sydney.The Chinese are buying our resources at very high prices, esp with the high A$. They are also buying apartments here in our major cities. Some of them are even empty, they don;’t even need to rent them out. The ones that are rented are rented by one person nd filled with bunk beds. Now that is creating demand for inner city housing too, imagine two bedroom apartments in the cbd with 6-8 people paying $150 each a week, there are hundreds of apartments liek that. the studend get rent money from their parents say $250-$300 a week, then they share at $150/week. They pocket the rent and use it to play internet games, entertain themselves and buy gadgets.
April 1st, 2011 at 1:32 am
Another interesting article from the same site:
http://www.australian-real-estate.net.au/investing/2011/03/20/australian-property-listings-at-all-time-high-this-means/
hmmm, so, increased listings, but less buying, hmmm…
Maybe it’s just a blip, and maybe prices will continue to rise for all you lucky investors out there. ^^
It has to be said, if there was any time for a buyer’s strike to have an impact and start off a panicked selling environment instead of continuing the previous bloated positive environment – now would be a good time for the ball to start rolling…
April 1st, 2011 at 8:00 am
[...] bron: Prosper [...]
April 1st, 2011 at 8:49 am
Like the idea of the strike, it might at least get the Real Estate Industry to listen up.
Why don’t more people use the option that is available in NSW with Fair Trading to challenge advertised prices.
“The Director General may now require real estate agents to substantiate that their selling price estimates provided to sellers or buyers, or prospective sellers or buyers, were reasonable. That is, the agent must be able to show that there was some objective basis on which their estimates were based.
“Section 74 of the Act provides that the Director General (or delegate) may issue Substantiation Notices. These Notices will require the agent to provide evidence of the reasonableness of any estimate of the selling price of residential property in a statement made by the agent; and specify a time for compliance with the notice.”
Asking every Real Estate Agent to legally justify the prices they are promoting may make a few of them reconsider the strategy of pushing the market up to create the wrong impression of a growing market.
April 1st, 2011 at 11:23 am
Your all to smart. id rather buy in a rising market than a falling one. Go on strike, and lets say prices tumble. Then cashed up overseas and local investors will snap up bargains and drive another boom, then you will be whimpering some more. Standard… I wish you all well. The smart first home buyers will look outside the circle.
April 1st, 2011 at 8:34 pm
Housing Affordability and Self Interest
I urge the government to take strong meaningful steps to make housing affordable for younger generation. Any move taken to make it affordable is NOT going to be popular with existing home owner but it has to be done in the interest of the nation.
I strongly urge government to encourage saving over negative gearing. If the government is not willing to abolish negative gearing, make saving as tax effective as negative gearing. Currently negative gearing is costing the community imbalances in living standards.
There is a strong perception in the community that the legislative body and the older generation are reluctant to make strong changes to negative gearing tax incentives due to self interest.
As a community we need decisive action with measurable and achievable targets to make housing affordability.
April 2nd, 2011 at 10:20 pm
Many of you need to harden the f*** up. As I said before:
What about homeowners? I’m in my mid 20′s and have bought two houses. I own one of them outright and am paying of the other one. Homeownership is not easy, but we can’t blame those who have taken the risk and sacrificed to make it happen. Maybe the problem is that everyone wants everything these days (new house, car, holidays etc). People need to make a decision about where they put their money, without these kinds of campaigns to make their lives easier. How about homeowners refuse to sell their houses? Mr Collyer should hang his head in shame.
Grow up you weak pri**s
April 3rd, 2011 at 6:02 am
Yeah, go on strike you lot.
It’ll make housing cheaper, but it’ll never be cheap enough for you, because you want it handed to you on a plate, for nothing.
Yeah, go on strike, it’s sure to reduce the value of houses, then I can snap up a whole lot more properties to add to my portfolio.
You’ll have done me a huge favour :) :) :)
April 3rd, 2011 at 1:29 pm
@Classic McTaylor – There was risk, you decided to go ahead anyway, therefore if your two properties drop in value you only have yourself to blame. I don’t personally, nor does any other person, have a responsibility for cushioning you from the impact of that risk when things go wrong. It was your decision. But then, who’s to say it would impact on you? (Unless your an RE agent troll). Mr Collyer himself says the petition of a ‘strike’ is more about recognising that many potential first home buyers are *already* staying out of the market. By signing the petition it only makes public their stance and lets other potential first home buyers know they’re not alone – those poor souls who think they ‘should’ buy into the current price ponzi scheme because all their home owning friends and the real estate agents are telling them ‘property always go up’ and ‘it’s all about the capital gain’. It’s nothing to do with you. It’s all about us. Get over yourself. The fact that you feel the need to come here and post such an emotive response says that you’re probably in over your head with your ‘investment’ property as it is. So ask yourself, if there is actually a price bubble, if it burst, and if your properties were to drop in value worst case of around 50% – could you sleep peacefully at night? Or would you be in deep shit?
I’m not interested in knowing your answer – I’m just saying you should review your financial position in case the worst should happen.
…And as to owners (I’m assuming you mean investor owners here) generally refusing to sell. Sure, like they’re going to hold if they see the market deflating and realise what will happen when the bank starts calling them regarding their investment mortgage vs values…. roflmao
It’ll be like rats jumping from a sinking ship.
@cuteyoungchic – go right ahead, you little narcissist. If you keep boosting values up then the drop will be greater and quicker when it comes. You’ll have done us a huge favour :):):)
@Lui – people who tend to buy based on whether the asset market is rising tend to not be good long-term investors. They’re always looking out for the next quick buck, the next big thing. They the jump on the wagon and hope the wagon driver knows what he’s doing. Smart long-term investors consider how much worth a property really has based on the whole, long-term picture not just how the market *currently* considers it. I would strongly suggest to you that investing in an asset where you have no positive cash-flow, and the only thing your really hoping for is capital gain (hopefully) then it’s not a good investment. But if you’re set on buying in a rising market, you go right ahead. When its all boiled down to the essentials it’s all just a gamble anyway. Who really *knows* what way the market will go?
April 3rd, 2011 at 9:09 pm
[...] campaign was started by Tax Reform group Prosper Australia to prevent first home buyers being caught up in what could be one of the biggest real estate [...]
April 4th, 2011 at 11:58 am
@ Classic McTaylor – I want a house and am saving towards buying one, why else do you think I’m posting here? I’m saying that housing at these prices is a rip-off and only rewards greedy vulture scum investors who are waiting in the wings to make their profit off unsuspecting first home buyers who buy into the hype. People who take risk will always take risk, pat themselves on the back for being so intelligent and hard-working when things are going their way, then turn around and whinge at the government to do something to ‘support the market’ and the ‘hard-working homeowners’ when it all goes south. Big mouths with puffed chests when things are going right, whinging whiny little bitches when it all goes south. A group you certainly belong to. I understand how to spend wisely since I don’t go jumping on the housing wagon immediately when I have a sufficient deposit ready, but understand that the current house prices are far too high and unreasonable.
You’ve only got yourself to blame ‘Classic’.
April 4th, 2011 at 1:55 pm
Less then 20 years ago a morgage could be paid with one person’s salary, essentially. With current house prices two average worker’s salaries are required to pay off a morgage today. With an average 300,000 loan the morgage repayments are around $2200 per month, the average renter is paying around $1700 per month. Makes you wonder how to actually fix this giant mess.
The ironic thing is that while the first-home buyers grant was to help those, get a leg up on prices, the actual grant has been factored in to many real estates and builder developers mark-up on property, they actual state how much their property & land land will cost with and without the grant.
While I understand people want to get a good price for their property, I feel that a lot of it is geared by manipulation from both real estate agents and property developers.
I honestly just want to be able to afford a house, and it doesn’t look like its happening unless I win the the lotto anytime soon.
April 4th, 2011 at 5:19 pm
There is a great article by Steve at business insider (US business site) that highlights the overvalued housing market.
http://www.businessinsider.com/steve-keen-australian-housing-bubble-1-2011-4
April 6th, 2011 at 3:27 am
@ Kate : you are thinking clearly and correct. Ignore the sway and free advice of the greedy specvestors disguised as unbiased guidance such as Richard Facey. The only thing that can combat this strike is if the government steps in and props the market up as it did during late 2008. If the govt make such moves it will make the buyers strike a lot harder. The fear will shift from the specvestor back to the first home buyers.
Currently the fear is building onto the specvestors especially if they are heavily geared and their income source is at jeopardy. This decade of property inflation has rewarded the not so clever and not so creative and very greedy.
The tide is turning to favor the young, the patient and the creative.
The only threat is if the govt steps in an props it up again. This is where the young should protest and vote out any govt that allows the property inflation debacle to continue. The younger voter pool is growing each year and its starting to get larger so that it will have more influence than the boomer generation.
tick tock… tick tock
April 6th, 2011 at 12:33 pm
I detect some unfavourable attitudes from the strikers and slightly more intellect from the non strikers..pick up your argument strikers….haven’t we forgotten we are just 23 million, Japan for example has 130 million, i wonder how many Japanese are eyeing off australia to live ? let alone Indians, Chinese etc.SUPPLY AND DEMAND determine free market rates.
1) Supply is locked up by Environmental groups
2) Demand will never cease to decline whilst we have sex & allow immigration (try stopping either)
You may need more than 1st home buyers to strike to effectively crash the hundreds of different housing markets in Australia. Try a humble start strikers & compulsory save your money via a modest mortgage i.e one bedroom unit, not the Macmansion on the 1/4 acre we think is our entitlement.
April 6th, 2011 at 3:46 pm
I agree with the very well informed views of classic mctaylor and others on here.
I can’t belive some people (like Kate) really would have us believe she wants to buy a house but doesn’t want it to go up in value?
Hypocrisy at its worst.
April 7th, 2011 at 5:38 pm
A number of posts here suggested a collective be organised to purchase land within the UGB , obviously with the intention of developing same .
In my judgement this could easily be done with the support of a number of committed buyers and I believe enable the price to be reduced by some $100,000.00 per block.
Recently I enquired at a new subdivision in PLUMPTON
ans was aghast to learn that blocks of 600 square metres were being marketed for a whisker under $300,000.00.
THis is ludicrous when you do the sums and calculate the margin the developer makes JUST HORRENDOUS.
WE could do the same if we banded together and provide some competition into the market,
If interested show your response in these posts
JON SWIFT
April 7th, 2011 at 10:31 pm
This is very alarming prices will CRASH……..
http://www.smh.com.au/opinion/society-and-culture/house-prices-on-shaky-foundations-20110308-1bltu.html?comments=80
April 19th, 2011 at 2:50 am
Leading up to the GFC almost any fool could make a quid buying and selling an existing house over a few years time frame.
Just before the GFC, the potential capital gain on buying & selling an existing house diminished and what was left were individuals who had purchased a house/land a few years earlier and could subdivide and make a capital gain.
The builders chose to ‘eat’ into the subdivision market by increasing their margins on building a house.
This was soon quelled with the onset of the GFC in September 2008.
The housing market further diminished both in sales of existing homes and the construction of new homes.
By late 2008 the Govt propped the market with the First Home Owners Boost, giving life and surging the housing market once again.
These market dynamics are now returning to mid 2008 behavior.
Its is evident from the dropping sales of existing homes and from the builders making their large margins by making their last grab on the construction of new homes.
The housing market is on its way adjusting prices downwards.
Buckle up and hold on for the nasty ride.
My sympathies go out to all the first home buyers between 2009 and 2011 who payed a high price for their homes at the behest of developers/vendors profits.
The Government should now step in and reconcile the higher prices paid by the First Home Buyers of 2009-2011 offset by the profits made by the vendors/developers during this period.
It is merely an accounting exercise of re-balancing wealth between two groups via tax cuts to the First Home Owners and imposts to the vendors/developers
This re-balancing of wealth has been happening at a greater extent for the past decade from first home buyers to speculators through the negative gearing mechanism.
It is time for the tide turn and for the young to vote in a government which commits itself to social justice.
No sympathy for specvestors!
April 19th, 2011 at 11:11 pm
@ Specvestors Armageddon – while I have a great deal of sympathy for those FHBs who have fallen for the hype these past few years (there but for the grace of Name Your Deity go I…) I cannot agree that “the government should step in”.
The FHBs who are going to be hardest hit made their choice. They placed their bet. No one forced them to do so. While it is sad, taxpayers in general are not responsible for (what will likely turn out to be in hindsight) their poor financial decision to buy at or near at, the peak of the market. You wouldn’t expect the government to step in and ‘re-balance’ people who make a poor decision in the sharemarket. Why would you expect it to happen with the housing market?
However I will support any suggestion that government can step in and make policy that will henceforth make speculating in property less desirable compared to alternate types of investing. Such policy would have a flow on effect on the affordability of housing. With less demand from specvestors the house price hype/bubbles should be severely limited in the likelihood of re-occurance.
I don’t support: throwing taxpayers money at people who, in hindsight, make poor financial decisions.
I do support: government using recent experiences to make future policy decisions on what’s best to provide a _stable_ market environment, instead of decisions which promote propping up _inflated_ markets.
Governments aren’t there to make us rich or pay for our mistakes. Governments are there to set up the ground rules.
(1) Remove the FHB’s grant.
(2) Limit or remove altogether policy that effectively encourages speculative investing in the basic investments of life such as housing. (Read: remove negative gearing for residential property).
(3) Introduce or promote policy which encourages people to be more financially responsible, and less dependent on (or blaise towards the use of) debt.
(4) Ensure adequate, legally enforceable, financial industry regulations exist so as to protect the financial consumer from scams and predatory behaviour, but so as to also ensure consumers accept responsibility for their financial mistakes.
That’s what we need our government to do. We do not need them to simply throw taxpayer money around as a crisis reaction when things don’t go the way people expect.
April 20th, 2011 at 7:59 pm
@Kate
The re-balancing proposed is from the gains made by developers/specvestors between 2009 to 2011.
These developers/specvestors gains are as direct result from a direct stimulation (using taxpayers money) via the First Home Owners boost that was funnelled into the devlopers/specvestors pockets.
All Im saying is funnel it back from the developers/specvestors to the First Home Buyers.
With the $900 stimulus cheque most people received, a good proportion of it was spent at electronic retail outlets such as Harvey Norman – Geez I would have loved to have been Gerry Harvey during the stimulus period $$ funneled from govt coffers through the fingers of consumers straight into Gerry Harveys cash registers – fantastic for Gerry Harvey and the likes of him! He should be encouraged to pay some of this extra revenue back to the govt thro’ a retrospective tax!
If the government had artificially propped up share market using liquid funds which sucked in people to buy shares in a falling marked I would expect the govt to re compensate the suckers for this propping up.
And to recompensate not from taxpayers funds again but from the gains made by the speculators – i.e. a punishment.
Im not fussed about the smart ass suckers who entered the market at the peak – I am concerned about the simple people on low incomes who dont know better and were conned and now enslaved to a huge mortgage.
Then again Live by the Greed you die by the Greed!!
April 21st, 2011 at 3:23 pm
@ I see your point re: government, by directly involving themselves/being complicit in the propping up of the housing market, leaving the public purse open to compensation claims from residential property buyers who get caught up in the hype. Given that it is government we’re talking about there is probably some legislation which prohibits this action. However if it is possible, you can bet your arse that its probable to a great degree the persons taking advantage of such a claim for compensation would likely be specvestors. Your ordinary, everyday, financially illiterate FHB would probably blame themselves and not think to blame the policy makers who effectively encouraged the FHBs to commit their lives in paying back such inflated prices. Government would probably end up arguing something like the bubble was an unintended and/or unforseeable consequence and no reasonable person could have forseen it coming…
It looks like you and I are largely in agreeance on the overal problem(s).
It’s a personal preference that I would like the focus of the debate to be less on compensating people who (in the end) made their own bad decisions, and to be more towards correcting the current government policy so that the situation as is (which is encouraging everyday aussies to take financially imprudent decisions, and a residential property market inflated by speculative property investors) ceases to be.
April 23rd, 2011 at 4:22 pm
[...] een eerdere blog heb ik een reactie gekregen van Jaap, die de lezers wees op een kopersstaking in Australie. Dit vind ik uiteraard interessant nieuws, vandaar dat ik mij er nader in ben gaan [...]
May 2nd, 2011 at 7:45 pm
[...] throwing my support behind the buyers stike over at Prosper Australia. Earlier in the week I posted on Facebook my 5-10 year plan (which was a [...]
May 4th, 2011 at 8:57 am
[...] throwing my support behind the buyers stike over at Prosper Australia. Earlier in the week I posted on Facebook my 5-10 year plan (which was a [...]
May 4th, 2011 at 7:01 pm
Kerry A (31 March) Thank you for describing how things were in the 1970s. So many people make it out to be tebbly tebbly hard back then, but I have always wondered. In 1994 I knew someone who could save $1000 a month with his partner. There was a small wooden house on a big, big block at Northgate, Brisbane, going for $92,000. Just think how easy that looks now. He was only earning about $18,000 (his partner would have had to be working too). Now it just seems so difficult.
May 4th, 2011 at 10:52 pm
Classic McTaylor, you say “People need to make a decision about where they put their money, without these kinds of campaigns to make their lives easier.” Yet you have gone all out for yourself to do what YOU want to do, but you don’t want anyone else doing anything that might make their lives easier.
I would be very interested in the details of your purchases, because you own a home of your own and you are in your mid-20s!! That is rather remarkable. And you are buying another property!! Once upon a time I would have assumed that you have bought in some tiny inland town but even houses in tiny inland towns are now expensive.
With your obvious business skills I cannot imagine why you would even waste time writing on a blog like this. You could be working out the details for your 3rd home instead of worry, worry, worrying about this campaign.
May 7th, 2011 at 4:34 pm
I fully support the notion of staying out of the housing market. Unfortunatley, the housing market is heavily spruiked by agents and other industry groups (REIWA, REIV, UDLA, HIA and mortgage brokers) All these groups play a part in talking up the market and driving a euphoria of “BUY NOW for TOMORROW IT WILL COST MORE..” Over the past 12 months RE Agents and REIV have conspired to fool the public on the truth of the housing market. They have lied about the auction clearance rates by failing to report on more than 20% of auctions that fail to sell. This gives a false perception that clearance rates are falling and home sales are rising. This among many other diceptfull practices must be stamped out. If I were in a business that was listed on the ASX and issued such statements about my product, I would be prosecuted for market manuiplation. Andrew Forrest CEO of FMG Mining suffered such fate a few months ago. The point is, the housing market is as big financially as the ASX, yet there are NO controls or laws to stop spruiking. This needs to change to protect Australians and the housing market
May 8th, 2011 at 9:27 am
Things could get much worse in Australia, and it won’t be caused by the buyer’s strike. It will take several unrelated things for the housing strike to have an impact, and I think that the real situation is so bad that it is too hard to guess what can go wrong. Some things are obvious such as the retail sector, which seems to have one sale after another, bonuses and discounts on all the time. So many people are having to put their money into THEIR MORTGAGE OR RENT that they cannot buy things they as they used to. I am currently saving a very large slice of my income, and that is what others should be doing to safeguard their own futures. Buying a house at these ridiculous prices just ensures that someone else will do well.
How well is tourism doing? If I had benefited as some people have from negative gearing then I would probably have holidays overseas every year. So many of my co-workers negatively gear and that is what they do.
Forest Gump (above): I am interested to know what line of business you are in. You are very well informed. I’m just curious.
May 8th, 2011 at 9:45 am
As you can probably tell from my comment above I am disenchanted with this country and the way it has been run over the last ten-twelve years. The government CANNOT do anything about the housing situation. If they suddenly withdraw negative gearing on existing properties, that will cause a great deal of hardship. They are waiting, hoping that their policy of large immigration intake helps to prop up the housing market.
I have read that the banking sector in Australia is horribly exposed because they have lent too much money to people who may not be able to meet the repayments. Is there a big bail out heading our way?
The La Nina effect is supposed to now last another few decades. Does that mean that the north of Australia will be subject to floods, hurricanes, etc? How will that impact the agriculture sector?
So if retail and tourism are not doing well and banking is vulnerable what does that leave? Mining?
In 1929 the New York Stock Exchange was aware that there would be a major fall on the stock exchange but they did not want to say anything because that would have precipitated a fall, because they would be blamed for making that happen.
It’s all about confidence and optimism, and Australians appear to be losing that. When young Australians lose that, what shape does the future look like?
May 12th, 2011 at 2:20 pm
@itsmeagaaain
In response to your query about my own financial situation – it’s not exactly rocket science. I bought a house when I was 21 in a regional area for $200k or thereabouts. I had a $50k deposit when I bought it. I worked full time while at university and saved (i.e. no holidays, no new cars, no lavish lifestyle). Within 3 years, I had paid it off with assistance from my partner. Then I was able to buy another house (repeat above process). Just like anyone who wants to own something, I paid for it. Everyone says property prices are so high. Well, I’m not sure if you’ve heard of supply and demand? It’s an economic term. Basically, in terms of this discussion, it means that if there is a lot of demand and limited supply prices go upwards. This example has been seen in our major cities. There are still affordable options in smaller regional areas (populations of around 50-100k), so maybe the yuppies on here who think they’re awesome because they want to live in Melbourne CBD need to save some cash or find a new place to live. I know plenty of people who are able to pay a mortgage on fairly low incomes (I’m talking $80k combined a year with children). Now that I earn a good income, I’ve been able to buy my second house in a major city. Everyone wants to blame the system and blame the government. You’re actually blaming human behaviour – a force you cannot change very easily. Once upon a time, houses were cheap. Why? Demand was lower relative to supply. Now, it’s changed. The government can only build so many hospitals and amenities. Eventually the market tightens in these areas to the point where it’s unaffordable. I’d love to see everyone in their own house. But then it wouldn’t be an investment would it? In that case, why doesn’t the government just give us all houses for free? Everyone can have the same house! Hey, I know, let’s get a Hitler/Gadaffi/Hussain situation going! Marx to the rescue! Unfortunately, while there is a limited quantity/supply and everyone wants a piece of the action, prices will go upwards. If prices crash, good on you for being so smart – I wish I had your carping ability. However, as time goes on, housing will become more and more unaffordable while a value can be attributed to them (look at other major cities in the world, no one can afford to buy). The comments on here speak of government intervention, changes to legislation etc. This language is similar to language used when there is a major crisis (i.e. starvation, water shortage etc). People get desperate when they realise the world does not have an unlimited ability to supply us with ‘stuff’. Housing, like any other commodity, is a limited resource. I’m more worried about Australia being invaded by Kazakstan than I am about my houses. Regardless of what happens to house prices, those of you on here having a whinge have already proven yourselves to be inept in terms of your mental strength, your moral fortitude and your ability to harden the f**k up. I wouldn’t be relying on you guys if there was an actual crisis, you’d all be waiting your tenancy agreements at the aliens as they blow your house up! CLASSIC McTAYLOR!!!!! PS: Thanks to all of you who have sent your private emails of support.
May 12th, 2011 at 4:22 pm
Some food for thought:
You people need to stop and think. If you don’t want houses to go up in value, why would you bother getting a loan and paying interest for something that is worthless? The reason? Because you want to make a profit like the rest of us! This discussion is rediculous. It’s like saying “you can open a business, but you can’t make more than a set amount of profit, even if your product is in demand”.
It’s like saying “I don’t want to own a bag of sand because it’s not a good investment and is essentially worthless.” Then in the next breath saying “Sand should be more affordable because it’s unfair that people speculate on sand.” But then saying “Sand is a poor investment, it’s over priced and you’re an idiot to buy sand”. Then finally you say “I want to own a bag of sand for myself.” That’s nearly a case of ‘triple-think’ in my view.
Classic McTaylor – you are 100% right.
May 17th, 2011 at 7:04 pm
I am so glad to hear market explanations of Classic McTaylor & Evian Water – it so summarises the “investors” of this past decade.
And I am glad to hear their thinking has not and will not change.
These people will be the carnage of the bubble bursting – and as the property ship sinks they will keep singing the same tune till they’re drowning..
This is where first home owners will take great pleasure in sinking the boots into the specvestors
Lets see them weather the negative equity in their “investments” and keep a smile on your face.
Because frankly I cant see the average yellow brick home fetching $2m in 2021 based on average incomes of around 55k (inflation adjusted) – anyone believing that should seek some help = financial, psychological, or marital help as they will all come in to play.
You want a free market lets see how you play in a market without negative gearing.
Tax receipts have to be collected from somewhere to bring the budget to surplus.
The govt targeted welfare – guess who is next….
Welcome to the world specvestors….. :)
May 23rd, 2011 at 12:39 am
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May 30th, 2011 at 1:08 pm
Classic Mc Taylor – you are an oxygen thief!
May 30th, 2011 at 9:10 pm
Is it governments politicians , bureaucrats , people in positions of control over land development releases ?. Is it these people that have been feathering there own investments for years , have they been forcing land and home prices to increase out of control .
Now the home is priced out of reach for people their will be a crash
July 15th, 2011 at 11:44 pm
Yes, I support a strike wholeheartedly. The wealthy investors need to get out of the market so normal Australians can afford to buy a roof over their heads. The only way for that to happen is if houseprices fall and their investments turn sour. The supposed shortage of housing will suddenly end when lots of propeties are dumped on the market by greedy investors.
August 3rd, 2011 at 3:20 pm
House price are slowly coming down. I would not have believed it earlier this year. Its slow but what will happen in six months time. Now they must be down about 10%. Does anyone know what they are at the moment?
August 8th, 2011 at 3:01 pm
A financial adviser neighbour of mine says that the market will improve by October 2012. That was before this latest dive. Is it just wishful thinking?
August 9th, 2011 at 1:05 am
@itsmeagaaain
IMHO – yes, very wishful. Considering the state of Europe (Greece was merely a warmup, watch Ireland, Spain and Italy), the credit rating downgrade of the USA and the fact the US will be again looking for a raise of their credit ceiling by the end of September (according to analysts) – China is likely to stop buying US bonds. The flow on effect of that will hit commodities here, following through to the general economy which includes jobs, housing etc.
2014 might be more realistic – providing they do more than just print money and throw that at it (raising the debt). Getting the USA back on the Gold Standard would be a step in the right direction.
August 31st, 2011 at 10:31 pm
i had a couple of houses in WA and bought em cheap and sold a couple of years back because of rate increases, rules on colour,fencing,residual current devices,etc etc and placed the small profit i made into the bank and bought a caravan. ive since travelled the world (backpackin on the cheap and oz a few times as well) and have many wonderful adventures and met hundreds of great people living on a couple of hundred a week interest.i have been watching the housing market in oz and worldwide and have had the fear if i waited too long i would miss out (or some such rubbish) and have come to the conclusion that being in debt is just a ridiculous concept.life is for living people ,so sell your place and get out and see some stuff. you will feel better for it when you get old ( im 42 by the way).
I think most aussies are afraid of getting old and not owning a house to die in but here is an interesting statistic for you all… 87% of Australians do not die in their own house,, so who gives a shit if you own one ..do yourselves a favour ,sell your house or save your cash and get out of debt(no more silly bigscreen tellies,which cost about ten bux to make by the way) and live life.. meet people ,see places coz thats what you will think about when you get old ,, not the size of your house or the quality of the shit in it ..thanks for listening to my rant . steve
August 31st, 2011 at 10:36 pm
ps a 5 bedroom house on a tropical island in maylasia or cambodia(beautiful places with great people by the way) is about 30000 grand american..check it out
August 31st, 2011 at 10:57 pm
just a quick message for cuteyoungchic. i do hope you get your dreams of wealth and a huge property porfolio,but do remember that everyone will fucking hate you and want to kill your greedy ass. thank you for listening . i do hope you grow a brain before someone knocks you on your greedy stupid little head ..
October 30th, 2011 at 2:14 am
ik begrijp de frustratie denk ik maar hoe zit het met de ongelofelijk daling in het huizenkopen ????
February 19th, 2012 at 4:09 pm
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