[Redwood]

I'm beginning to get concerned about the sort of house we'll be able to afford in Australia. House prices where we live are still falling but Australian prices seem to be holding up or even rising. Today I read,

Prospects for the housing and retail sectors - two key engines of the economy - continue to improve, adding to confidence that Australia may ride out the worst global downturn in generations.

Confidence in the real estate market prompted buyers to take out 2.2 per cent more home loans in May, marking the eighth month in a row of increases, according to the Australian Bureau of Statistics.

''The policy stimulus from the Federal Government and the central bank has helped boost the housing market, offsetting the deterioration in the labour market conditions that would otherwise subdue the willingness of people to purchase houses,'' said economist Matt Robinson of Moody's Economy.com.

Separately, the government's $20 billion cash handouts have helped consumer confidence jump in July for a second straight month, sending the monthly Westpac-Melbourne Institute survey to its highest in 19 months.

According to the survey, consumer confidence soared 9.3 per cent in July to 109.4. The surge in June had been a healthy 12.7 per cent.

http://business.smh.com.au/business/housing-consumers-perk-up-20090708-dcls.html

When we first started thinking about emigrating in 2007, we had a nice chunk of equity in our current house - worth about $200,000 Ozzy Dollars to help us buy in Australia. After the past 18 months or so we've seen that equity whittled away month by month until now it's only worth about $50,000. It's depressing and takes the shine off the sort of lifestyle we thought we could be able to afford in Australia. With house prices still falling where we are, I'm worried that we'll be starting with nothing by the time we get to Australia and we'll be absolutely priced out of the sort of place we'd hoped to live. I know all this sound like I'm a bit of a spoiled brat, because a lot of people from a lot of countries would be deliriously happy to be let into Australia, even if it meant kicking off with nothing. Can't help wondering though if we should call the whole thing off and wait for better times in a few years. What do you think?

[quincy]

I don't think house prices in the UK are going to spiral ahead the way they did between 2000 and 2007, so it’s probably best if you plan your move with that in mind.

You can always rent in Australia when you first arrive and to be honest, it could save you from making a mistake and purchasing a property that you regret later. Once you have settled in for a year you will have a far better idea of where exactly you want to live.

Even if the Australian property market is strong, there are always bargains to be had. It may mean a longer travel to work time or one less bedroom that's ideal, but you will get there.

The main issue is to get that visa, find work and the rest will sort itself out.

Here's average house prices in each capital city (March 2009):

Sydney, NSW $530,000
Melbourne, Vic $445,000
Brisbane, Qld $415,000
Adelaide, SA $405,000
Perth, WA $473,000

[FamousFive]

Compared with salaries, Australian houses are among the most expensive in the world. I dearly wish prices would fall. This is something I talk about with people at work. What people think is keeping the market afloat just now is the increased First Home Owner Grant. It pays first time buyers $21K when they buy a new-build or $14K when they buy an older house. It was boosted from $7K as part of the stimulus package when the credit crunch began to bite. In October it drops to $10.5K and in January 2010 it drops back to $7K. First timers are making sure they buy now to get the full grant and are buying in record numbers, helping the market stay strong. That support won't last much longer. I hope that prices will then weaken.

The house rental market is stronger here just now than buying. Prices have been rising and it can be hard to find a place to rent.

I agree with quincy. I can't see the housing market in the UK powering ahead again for a long time. I hope for your sake that it stabilises but I think it'll take years for you to recover the equity you've lost. The question is, where would you rather live and work while you go about rebuilding and saving? The answer isn't necessarily Australia. It may be that you're living in a nice house just now and if you moved out, you wouldn't be able to afford to buy such a nice house again because of the way mortgages and lending ratios have changed.

[jimjams]

This report from the BBC is either good news or bad news depending on your point of view. It might stop house prices rising.

Australian unemployment increases

Australia's unemployment rate hit a six-year high of 5.8% in June, up from 5.7% in May, but the increase was less than had been feared.

Analysts had expected the jobless rate to hit 5.9%. Figures showed the number of people in work fell by 21,400.

The government is continuing to spend a 42bn Australian dollar ($33bn; £20bn) stimulus package, which aims to support 90,000 jobs over the next two years.

So far this has enabled Australia to avoid slipping into recession.

The stimulus package includes cash rebates for most Australians, tax breaks for small firms, and building thousands of new houses and schools.

'Rocky road'

The number of Australians unemployed in June rose to 668,400.

Deputy Prime Minister Julia Gillard said the focus was "to keep Australians working".

"We still have a long and rocky road ahead of us as a result of the global recession," she said.

"Many employers are doing all they can during the difficult days of the global recession to hold onto their work force."

Despite the government's efforts, it has already warned that the unemployment rate could hit 8.5% by mid-2011.

The Australian economy grew by 0.4% in the first three months of 2009, following a contraction of 0.5% between October and December of last year.

An economy is generally considered to be in recession following two consecutive quarters of falling output.

http://news.bbc.co.uk/1/hi/business/8141649.stm

[Thongs of Praise]

RBA warns of housing price bubble risk

The Reserve Bank has flagged the possibility of a housing price bubble forming, triggered by cheap credit and not enough new dwellings.

RBA governor Glenn Stevens said the need for home loans to translate "into more dwellings, not just higher prices'' was a "very real challenge in the near term.''

The current period, "ought to be the time when we can add to the dwelling stock without a major run-up in prices,'' Mr Stevens, pointing to lower employment levels, falling inflation and fewer labour shortages.

"If we fail to do that, if all we end up with is higher prices and not many more dwellings then it will be very disappointing, indeed quite disturbing,'' Mr Stevens said in a speech to the Anika Foundation in Sydney today.

"Not only would it confirm that there are serious supply-side impediments to producing one of the things that previous generations of Australians have taken for granted, namely affordable shelter, it would also pose elevated risks of problems of over-leverage and asset price deflation down the track.''

The dollar jumped more than half a US cent on the comments - closing in on a 10-month high - as traders bet Stevens' speech signaled higher interest rates in Australia.................


http://business.smh.com.au/business/rba-warns-of-housing-price-bubble-risk-20090728-dzjy.html

[Thongs of Praise]

Housing speculators take note

The RBA, flushed with the success of being the decade's best-performed central bank, is looking to lead the way in taking on asset bubbles as well as common-or-garden variety inflation.

The second was a sly shot at the gross incompetence of various Australian governments over housing. The RBA boss didn't single out any particular government, but if you guessed the buffoons disguised as the NSW administration were at the front of the queue, you wouldn't be wrong.

Said Stevens:

''This ought to be the time when we can add to the dwelling stock without a major run-up in prices. If we fail to do that - if all we end up with is higher prices and not many more dwellings - then it will be very disappointing, indeed quite disturbing.

''Not only would it confirm that there are serious impediments to producing one of the things that previous generations of Australians have taken for granted, namely affordable shelter, it would also pose elevated risks of problems of over-leverage and asset price deflation.''

Here's the RBA saying it's sick of our housing boom-and-bust cycle and wants to see more housing built and the price of existing housing not rise much. And the Governor is prepared to use his big interest rate stick to clobber those who disagree with him.............

http://business.smh.com.au/business/housing-speculators-take-note-20090729-e0s7.html

[austin]

According to the courirmail (http://www.news.com.au/couriermail/story/0,27574,25837926-3102,00.html), many key workers ( nurses, police, teachers) are still struggling to afford houses in the main cities:

The study, released today, shows Brisbane is one of seven Australian capital cities where the median house price is so high many workers cannot get a foothold on the property ladder. Over the past five years the situation in Brisbane has become worse.

The research shows the median house price in Brisbane was unaffordable in 78 per cent of local government areas in March 2009, compared with one-third of the same areas in March 2004.

It classified unaffordable homes as those that are five times the annual earnings of a key worker, which includes emergency service personnel, teachers and nurses.

"Our research shows that key workers are still doing it tough in Brisbane, with most being locked out of the property market in the areas they serve," Bankwest retail chief executive Ian Corfield said.

These are the essential workers Queenslanders rely on every day to provide important services and most continue to be priced out of the communities in which they serve.

"Many are locked permanently in the rental market and are unlikely to get the keys to their own home, while others have to commute for long distances," he said.

[Thongs of Praise]

There's a nice graphic on this site (http://www.livingin-australia.com/news/property-prices-rising-again-in-australia/) showing how house prices have tracked in Australia's major cities for the last five years. (Prices in thousands of $)

http://www.livingin-australia.com/images/city-house-prices-june-2009.gif

[Sam66]

Wow! An amazing graph. Thanks, Thongs :D. You can see that Sydney is the only city where house prices have remained fairly flat over the 5-year period.

[Thongs of Praise]

Thanks Sam. Sydney had its boom long before the other cities.

There's a sad article in today's SMH about older renters living on the breadline. Prices in Eastern Sydney are a lot higher than the graph shows. Renting is a lot more affordable than buying in the east. Some people end up in a trap and never own their own home.

Sad plight of older renters

BETH, 70, survives on eggs and packet soup for days at a time.
Beverley, 65, cannot afford to replace her iron and is struggling through winter without a heater.

Simon, 67, stays at home because buying a $2.50 pensioner’s travel ticket would mean going without bread.

A new study has shed light on the desperate situation faced by a growing number of pensioners who cannot gain access to public housing and devote a huge portion of their income to the cost of renting in Sydney. University of NSW academic Alan Morris says at least 7500 Sydney pensioners are paying more than half of their income on rent and do not have enough left over for basic living costs.......


http://www.smh.com.au/national/sad-plight-of-older-renters-20090801-e53y.html

[fran]

New article today in The Age (http://business.smh.com.au/business/house-price-jump-stokes-bubble-fears-20090804-e7zu.html). House price rises create bubble fears. Sydney and Melbourne house prices have risen by 5% in 3 months. Famous Five said:

Compared with salaries, Australian houses are among the most expensive in the world. I dearly wish prices would fall. This is something I talk about with people at work. What people think is keeping the market afloat just now is the increased First Home Owner Grant. It pays first time buyers $21K when they buy a new-build or $14K when they buy an older house.

I agree with Famous Five. You have to wonder if the increase in the first time buyers grant was a good idea given the effect it seems to have had on house prices. A bit self–defeating to say the least. A 5% gain on an average house in Sydney is approx. $25,000 – more than the first time grant of $21,000.

And I love the graph too Thongs!!

[quincy]

From the Age (http://business.theage.com.au/business/job-gains-put-heat-on-rates-20090806-ebhp.html)

ANZ economist Riki Polygenis said the Reserve Bank would now be "increasingly uncomfortable with its current cash rate, which is set for severe economic recession".

The Reserve Bank will update its quarterly economic forecasts this morning.

Maybe interest rate rises will dampen the housing market later in the year.

[Redwood]

The IMF's saying that Australian house prices were overvalued by between 5 and 15 per cent even before prices surged another 4 to 5 per cent in the June quarter.

http://www.theage.com.au/national/debt-a-threat-to-growth-says-imf-20090809-ee9x.html

[dusty]

A rates rise by the end of the year is looking increasingly likely.

HOME buyers should be prepared for interest rates to rise as much as 2 to 3 percentage points from current levels as economic conditions return to normal, Reserve Bank governor Glenn Stevens has warned.

http://business.theage.com.au/business/rate-rises-coming-home-buyers-warned-20090814-el8k.html

[Cliff]

House prices have steadied recently but they are still far too high.