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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.
Classic Mc Taylor – you are an oxygen thief!
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
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.
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?
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?
@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.
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
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
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 ..
ik begrijp de frustratie denk ik maar hoe zit het met de ongelofelijk daling in het huizenkopen ????
Do you think you’re going to online business a home based job is really a desire many would-be “freedom mma fighters “. These kinds of “independence mma fighters ” desire independence ; freedom from other day job, via …
“imminent”….. As written just over 5 years ago… LOL
This is what makes property spruikers laugh.
Although, truth be told, the level of spruiking and hype about property has fallen considerably, with people once very keen to proudly boast on the topic of property investment now much quieter than before.
I can’t buy because I can’t justify putting myself in debt and assuming that I’ll always have my job. However, it’s amazing how long this has gone on for. I’m still waiting and I’m growing cobwebs…..