Buyers beware: RBA says housing market will cool off

Posted to The Age (26/3/2014) on 26/3/2014 at 5:18 PM
Commenting on "Buyers beware: RBA says housing market will cool off
http://www.theage.com.au/business/the-economy/buyers-beware-rba-says-housing-market-will-cool-off-20140326-35hsl.html

For months I have been alerting my clients and friends about the current real estate boom cycle that it is going to be a very short-live one. The cycle will cool as early as April / May 2014, unless another miraculous recovery in EU and US economies.

China cannot do it alone. Internal circulation of money or spending cannot and will not last for long. Debts need to be repaid and speculative investments will halt when reality checks set in. Goods produced must be sold to overseas buyers, which in turn generate income to buy raw materials such as coal and iron ore from Australia.

Current Chinese government policies targeting at corrupt officials or business operators really scare the pants off many who have lined their pockets with monies that cannot see daylight. Money has been channelled out quick and fast before their fortune turns into a puff of smoke. Obviously, there are many genuinely honest wealthy Chinese who choose to settle in Australia.

Not long ago Melbourne property buyers pay above the market value near "school zones" where the schools are recognised to "produce" top-mark students. They could have considered home schooling and hire a full time, most qualified or the best tutor to couch their children to score the top marks in all subjects.

It is frightening to witness how the Chinese bid at auctions. Once a Chinese enter bidding ring, who probably thinks as though there is no tomorrow, the game is almost certain to be over for non-Chinese bidders.

Owning a house is no longer a necessity for some; it is a status symbol, and it is represented by how much more one can offer for a property.

I do believe that the forthcoming bust cycle will hit the real estate market hard and swift.

More bleak times ahead for housing

Posted to The Age (10/1/2012) on 10/1/2012 at 11:32 AM (Not published by Newspaper)
Commenting on "More bleak times ahead for housing"
http://theage.domain.com.au/real-estate-news/more-bleak-times-ahead-for-housing-20120107-1ppiy.html

The unreasonable property price rise was a fault of the government policy by introducing FHOG, which indirectly put extra money in the developer's and vendor's pockets from its early introduction. The long term effect is propagated and felt until today.

In order to soften the impact of GFC, Rudd introduced policy in removing the FIRB approval on foreign investment, which unleashed a real estate monster. This policy is now being reversed.

One must not compare our real estate prices with Canada or USA. If so, why does not one compare ours with Hong Kong or Japan? Every country goes through different phases of development and the people value ownership of properties differently.

Investing in real estate is a business and requires business, financial and management skills. Decisions should not be made by looking through a crystal ball or throwing a dart on a special real estate dart board.

Rates and costs are published and well publicised, and buyers have no excuse in blaming anyone for making wrong decisions. The current fall is a painful lesson for investors who were impatient and followed the Joneses, committing to large loans that cause untold mental and financial stresses. For the live-in owners, you have not made any loss at all because you have not sold your properties; their values are just numbers on paper.

Home price falls accelerate

Posted to The Age (30/11/2011) on 6/12/2011 at 5:49 PM
Commenting on "Home price falls accelerate"
http://theage.domain.com.au/real-estate-news/home-price-falls-accelerate-20111202-1oa67.html

@sjncheng, I believe you can learn a thing or two from "William - Prices Catches you out - exclude it too" about ethics.

If you are working for a real estate agency, you are either blinded by your boss or reciting from your textbook. If you own an estate agency, it is time to come clean with your vendors or potential vendors how much of the advertised space, in newspaper, magazine and sign board, is for promoting your agency.

BTW, sjncheng, I am a qualified real estate trainer, adviser and mentor. I give my best honest opinion and assessment when writing my comments.

Home price falls accelerate 3

Posted to The Age (30/11/2011) on 4/12/2011 at 3:17 AM
Commenting on “Home price falls accelerate”
http://theage.domain.com.au/real-estate-news/home-price-falls-accelerate-20111202-1oa67.html

@FONZ OBE, there are neither whistle blowers nor real estate fortune tellers here. Some people are more perceptive than others. Writings are all over the walls, pavements, cafes, restaurants, television and newspapers; just that many people still think that commonsense is not worth a cent, and continue to search and attempt to expose the Da Vince Code, Nostradamus' quatrains, and hidden messages in a Bible.

Home price falls accelerate 2

Posted to The Age (30/11/2011) on 4/12/2011 at 2:12 AM
Commenting on "Home price falls accelerate"
http://theage.domain.com.au/real-estate-news/home-price-falls-accelerate-20111202-1oa67.html

@John Br, many listings are poor quality listings, and they will be sitting there "Waiting for Goddard". Let’s look at 3 cases.

Case 1 - There are 10 new listings for each week over 4 weeks. If 10 listings are sold each week, by the end of week 4, there is no listing in the book.

Case 2 - There are 10 new listings for each week over 4 weeks. 5 listings are sold each week. End of week 1, 5 properties are carried over to week 2, and 5 more again for week 3. By the end of week 4, there are 20 listings on the book, or 40 minus 5x4. Theoretically, both cases have 40 listings. However, by end of week 4, Case 2 gives a false impression that there are more listings than Case 1.

Case 3 - Vendors may withdraw unsold properties from the market, but return later as "new" listings on the book. Unsold listings are unlikely to be accounted for in the Research.

Just be careful, some statistical data may be taken with a grain of salt.

Home price falls accelerate

Posted to The Age (30/11/2011) on 30/11/2011 at 3:20 PM - 3:22 PM
Commenting on "Home price falls accelerate"
http://www.theage.com.au/business/home-price-falls-accelerate-20111130-1o5wx.html

The house prices fall is real, many people cannot afford to buy houses is real, many are waiting for the prices to come down further is real, and interest cut by RBA does not arouse buyers' excitement is real.

Student accommodation market is booming is false, there are not enough houses to sell is false, sellers are not prepared to negotiate is false, real estate agents are doing a good job is false, and the Australian's economy will continue at gang busting rate is false.

End of Part 1 of 3

Whew, now that these are off my chest, I shall say something about the current state of affairs. You probably have heard the saying "what goes up must come down". Why can so many things defy gravity and go up? Almost everyone in the real estate or other investment market understands the word "bubble". I prefer an alternative choice - balloon, or to be precise, a helium filled balloon.

If one fills a balloon with helium, the balloon will fly upwards against gravity. When most of the gas has escaped, the balloon will fall back to the ground. If one fills more helium than originally intended, the balloon will either fly further up, but still comes down eventually or burst before it has a chance to rise.

Many helium-like factors made the real estate balloon rise. In fact, before the real estate balloon started to descend after December 2008 (for Victoria), the State and Federal governments topped up the balloon with more helium-like incentive mid-air by extending the FHOG. The hype and craze lived on, pushing the houses prices and interest rate up. The door allowing more foreigners to buy real estate with less scrutiny from FIRB started to sideline a lot more genuine and hardworking home buyers, as distinct from house buyers.

End of Part 2 of 3

The flood gate for overseas investors is closed. The policies on international students coming to study have been revamped. The lending criteria have tightened. These major reasons have resulted in disastrous outcome. Those who did not understand the reasons for the uncontrolled rise of the over inflated balloon and joined in the wild party were hurt badly.

To many people, investment is business. Some business people cut their losses and walk away from it when prevailing conditions are not favourable. However, ill-advised and unwise business people may have to default, and assets are up for grabs.

If that is the case, there should be more properties in the market for sale. Why do not many real estate agents have enough listings? Many real estate representatives (only real estate licensed professionals can be called as agents) lack the human touch. Their technique is too aggressive, and they lack the apathy and sympathy in dealing with potential vendors who are in financial or marital trouble. These clients cannot afford expensive advertisements, and therefore you cannot find them in the real estate section of the newspapers or magazines. They also need every cent of the sale proceed, and cannot afford to pay thousands of dollars in commission.

With all these clues, what is your next move?

End Part 3 of 3