Society/Culture Australian Property Prices to Crash?

Mar 28, 2006
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Sounds like they just didn't have a clue about the market, if they were constantly outpriced with what they were looking at. "Something suitable" is a common qualifier. Freddy Mercury I want it all and I want it now.
That's just another reductive argument based on mere supposition. There are clear macroeconomic reasons for why they were/are being outpriced - as indicated in the graphs showing increasing house values as compared to returns on savings and flatlining real wages. Your willful choice not to acknowledge those statistics, and the impact they have on housing affordability, do not make those reasons any less relevant.

As a renter, your ideological support of property interests and skyrocketing house prices, makes you little more than a useful idiot at this point.
 
Oct 22, 2008
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That's just another reductive argument based on mere supposition. There are clear macroeconomic reasons for why they were/are being outpriced - as indicated in the graphs showing increasing house values as compared to returns on savings and flatlining real wages. Your willful choice not to acknowledge those statistics, and the impact they have on housing affordability, do not make those reasons any less relevant.

As a renter, you're little more than a useful idiot at this point.
Don't worry about me, I'm doing alright. And I'm glad to hear your friends are still struggling.
 
That is differently the issue and that why i don't think the problem can be fixed by charging new taxes. Reducing negative gearing would help but there needs to be more supply of affordable housing that can only be purchased by first home buyers.
Personally I think the problem is interest rates; the affordability issue isn't with mortgage repayments it's with getting your foot in the door. Like, by the virtue that houses are only worth what somebody is willing to pay for them house prices are essentially a function of the average monthly income that fluctuates with the interest rate because that is how banks determine the size of the loan they're willing to grant people to buy property. When interest rates get to rock bottom level like they are at the moment, banks are willing to loan people far greater sums of money than what they would have ten years ago, but still at the same (CPI adjusted) monthly repayment. As is shown with houses, when people have more to spend they will spend it which has driven up the house prices in the most desirable suburbs with the effect flowing on to the rest of the market.

The issue for FHBs is that when the house price goes up, the requisite deposit does to. And when interest rates go to zero, it actually gets harder to save.
 

Evolved1

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At least you're open about this, unlike others in this thread. I'm the same, but currently doing this via 2 means. The stock market and teaching my kids to avoid avocados.
LMAO. I sold my investment properties 18 months ago to buy magic internet beans, against the advice of almost every intelligent person I know.
 
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How many low or middle income earners live in Camberwell in a house on a significant piece of land? I would be able to count them on a close fist. If there was someone who would be affected, they would be in a great position - being able to sell at a great price and live where they can afford to pay.

Your position also kinda smacks of hypocrisy - young people born in the wrong generation need to find somewhere where they can afford in some outer suburb, whilst a poorer person who was born first gets to stay in an area they cant afford. Why is the older person treated differently? Feels like its the typical Australia - i've got mine - screw everyone else.

Again your position is that people want to live in Hawthorn and Camberwell and are sulking cause they need to live in Surrey Hills or Burwood East. The reality is that these people cant afford a house in Clyde North. I think you need to wake up to reality.

You are pushing the idea that a tax will lower prices but the seller might want to recoup that tax so property prices will probably rise not fall as you image they might, and the new owner will then have to pay a yearly land tax or did you think it was only going to apply to the previous owner. The bank will consider the first home buyers ability to pay that land tax when considering the loan application so a land tax will become another barrier for first home buyers.

There is nothing sulky about looking at surrounding suburbs because there can be similar properties selling for less in neighboring suburbs.

I'm taking it that Clyde North is just an example but looking at the current market it looks expensive compared to other newer suburbs and flats in Hawthorn and Camberwell sell for less than a house in Clyde North. The only way to make Hawthorn and Camberwell more affordable is for buyers to look at flats instead of houses and for there is be more affordable housing constructed.
 
My grand parents lived in Preston and Thornbury, when my folks bought a house they got one another 25m from the city, when we bought out house it was another 20m from the city. It's the way it's always been. First house isn't going to be where you grew up, the prices are always alot higher than when your folks brought them.

People expect to buy 20m from the city and be able to afford it easily ....it's not going to happen.

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I'm not talking about moving 20 minutes away...

I'm talking about living 1 + hour away....

I'm not across the Melbourne market but in Sydney houses 35+km away from the CBD are selling 1.4million +, townhouses 1.1 - 1.2m +....combine this with traffic and it can easily be a 1.5 hour commute each way. This is not a sustainable lifestyle for people to live just so they can get a house.

Like I said before my personal situation is fine, me and my wife are on considerable incomes we own our house at 33 with very little mortgage, a good position to be in. I guess i'm mainly concerned for my kids who will buy in 20 years. WTF is a house going to cost then? Just set up a trust find? That cant be the right answer........

I understand sacrifices need to made to get ahead in life, but what first home buyers are facing in 2021 is a step beyond sustainable, that's my point hence why i think some sort of regulation needs to be implemented to stem the increases otherwise soon the average price for a house in Sydney will be 2million!
 
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I'm not talking about moving 20 minutes away...

I'm talking about living 1 + hour away....

I'm not across the Melbourne market but in Sydney houses 35+km away from the CBD are selling 1.4million +, townhouses 1.1 - 1.2m +....combine this with traffic and it can easily be a 1.5 hour commute each way. This is not a sustainable lifestyle for people to live just so they can get a house.

I understand sacrifices need to made to get ahead in life, but what first home buyers are facing in 2021 is a step beyond sustainable, that's my point hence why i think some sort of regulation needs to be implemented to stem the increases.

20 minutes outside the city is a very tight band - with congestion thats pretty much inner city only

more stock is being added to this area, but for obvious reasons its all apartments (or in the inner fringe units/townhouses)

if you want to ringfence the size of melbourne, that means all population growth has one place to go, up.

anyone wanting a quarter acre block these days needs a time machine, you dont even get them out at tarniet and trugannina
 
20 minutes outside the city is a very tight band - with congestion thats pretty much inner city only

more stock is being added to this area, but for obvious reasons its all apartments (or in the inner fringe units/townhouses)

if you want to ringfence the size of melbourne, that means all population growth has one place to go, up.

anyone wanting a quarter acre block these days needs a time machine, you dont even get them out at tarniet and trugannina

so what's the answer? Just keep going down the current path and in 20 years our kids just live in concrete boxes?

This is why i'm saying limiting investors to 1 extra property is a good thing. It free's up current stock and allows future stock to be mainly available for first home buyers, as opposed to investors.

Is this this only solution? No. But it certainly one that will help people access the market.
 
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CatFan79

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in Sydney houses 35+km away from the CBD are selling 1.4million +, townhouses 1.1 - 1.2m +....combine this with traffic and it can easily be a 1.5 hour commute each way.

Lot of money to pay for a s**t life.

What's 3 hours a day wasted fighting traffic worth in $$?

Not hard to understand why jobs that offer working from home, living far away from filthy CBDs and overcrowded suburbs are attractive.
 
Lot of money to pay for a sh*t life.

What's 3 hours a day wasted fighting traffic worth in $$?

Not hard to understand why jobs that offer working from home, living far away from filthy CBDs and overcrowded suburbs are attractive.

your not wrong, but a lot of people are being forced to move further and further away from cities, the problem is its still super *in expensive!
 
Yeah I probably could of got a 3-4 bedroom new home and land package for the same price as my 2 bed unit but its 10 mins from work and close to friends and family whereas all the house and land packages were min. 45 mins drive away.

45 minutes drive isn't that bad.

pending the KM's that distance in Sydney is probably 1.5 hours....
 
so what's the answer? Just keep going down the current path and in 20 years our kids just live in concrete boxes?

This is why i'm saying limiting investors to 1 extra property is a good thing. It free's up current stock and allows future stock to be mainly available for first home buyers, as opposed to investors.

Is this this only solution? No. But it certainly one that will help people access the market.

you literally have three options only:

1) ban people from moving to melbourne and impose birth controls (not going to happen in a liberal democracy)

2) move towards smaller higher density housing. Units/townhouses on 300-350sqm or apartments. This would have to be enforced with a development ban on extending the outer melbourne perimeter (there was massive opposition to this when this was pushed during the Bracks (?) Govt

3) keep pushing out


right now we have a blend of 2 and 3. if you drive around suburbs on the 15-20km hub (likes of Mentone, Bentleigh, Oakleigh, Chadstone, Mount Waverley, Burwood, Blackburn, Box Hill, Doncaster) pre-copvid it was becoming common that every time a house was sold it would be bulldozed and replaced with 2-4 units or townhouses. Same SE/E corridor has seen Doncaster, Box Hill, Glen Waverly, Chadstone, and Oakleigh start constructing massive numbers of apartments (esp Box Hill and Glen Waverley, which have had a number of residential towers built.

For those who dont want the townhouse/apartment option, the alternative is move out. Either west in Tarneit, Truganina, and Werribee, or down south past Cranbourne and Langwarrin. Reality is these developments are not keeping pace (so prices are not bargain bin), so then you have the commuter corridors of Sunbury (50 mins), Wallan (50 mins), Officer (75 mins), Pakenham (80 mins), and Drouin (90 mins). While these times are longer than most Metro ones (Frankston is 65 mins, Lilydale 60, Dandenong 55), they are comparable to driving in (my drive precovid was 55-65 mins, and that was only 25km outside the city)
 
Sep 21, 2004
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45 minutes drive isn't that bad.

pending the KM's that distance in Sydney is probably 1.5 hours....
Yeah I know but I had the choice and chose a smaller place with less travel. But saying that it was just me by myself so if it happened now with a partner Id probably choose the bigger place lol plus a 45 min drive would be nice to get away from all the whining and nagging.... of a family of love... la la la la
 
you literally have three options only:

1) ban people from moving to melbourne and impose birth controls (not going to happen in a liberal democracy)

2) move towards smaller higher density housing. Units/townhouses on 300-350sqm or apartments. This would have to be enforced with a development ban on extending the outer melbourne perimeter (there was massive opposition to this when this was pushed during the Bracks (?) Govt

3) keep pushing out


right now we have a blend of 2 and 3. if you drive around suburbs on the 15-20km hub (likes of Mentone, Bentleigh, Oakleigh, Chadstone, Mount Waverley, Burwood, Blackburn, Box Hill, Doncaster) pre-copvid it was becoming common that every time a house was sold it would be bulldozed and replaced with 2-4 units or townhouses. Same SE/E corridor has seen Doncaster, Box Hill, Glen Waverly, Chadstone, and Oakleigh start constructing massive numbers of apartments (esp Box Hill and Glen Waverley, which have had a number of residential towers built.

For those who dont want the townhouse/apartment option, the alternative is move out. Either west in Tarneit, Truganina, and Werribee, or down south past Cranbourne and Langwarrin. Reality is these developments are not keeping pace (so prices are not bargain bin), so then you have the commuter corridors of Sunbury (50 mins), Wallan (50 mins), Officer (75 mins), Pakenham (80 mins), and Drouin (90 mins). While these times are longer than most Metro ones (Frankston is 65 mins, Lilydale 60, Dandenong 55), they are comparable to driving in (my drive precovid was 55-65 mins, and that was only 25km outside the city)

3 options? Simplistic view.


Option 4) State & Federal Government introduce legislation to Further Regulate Housing Industry By;

- Further Reducing Lending Capacity Based on Income.
- Increase Interest Rates.
- Reducing Investor Capacity to own Multiple Properties, either out rightly or by significant tax increase.
- Further Introduce Significant Tax Benefits to People moving further Away from Major Cities.
- Introduce Meaningful Public Transport Infrastructure to Areas further out of CBD's.
- Reduce Tax Benefits of Investors E.G Negative Gearing.
- Significant Removal/Reduction of Stamp Duty & Land Tax to new home buyers. Investors remain at full amount.
 

Rob R

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Remove the 50% discount on CGT.

Limit negative gearing to one property per adult citizen

Remove depreciation write off from NG

Ban non permanent residents owning residential property.

Limit permanent residents to a single property per household

Decentralise workplaces to regional areas starting with a target of say 25% of all Canberra based Federal public servants to be moved from Canberra

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Mar 28, 2006
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3 options? Simplistic view.

Option 4) State & Federal Government introduce legislation to Further Regulate Housing Industry By;

- Increase Interest Rates.
- Reducing Investor Capacity to own Multiple Properties, either out rightly or by significant tax increase.
- Further Introduce Significant Tax Benefits to People moving further Away from Major Cities.
- Introduce Meaningful Public Transport Infrastructure to Areas further out of CBD's.
- Reduce Tax Benefits of Investors E.G Negative Gearing.
- Significant Removal/Reduction of Stamp Duty & Land Tax to new home buyers. Investors remain at full amount.
- Increasing interest rates prematurely has a significant economic cost
- Multiple property investors already have a significant tax increase (LT) - the issue is that NG allows them to offset the effect of that tax
- Tax benefits for people living out of the city is interesting. We used to have the Zone Tax Offset - but that was really only for remote areas IIRC (not regional)
- Yes. See Victoria's Big Build
- Agreed. As tax distortions, abolishing NG and 50% CGT Concession are two easy fixes - save for the whining from entitled property investors
- We have FHO exemption/concession - the threshold values probably need adjusting at this point. FHO don't pay LT.

Ned is right - boosting housing density in inner/middle suburbs, along transport corridors and opening up growth areas for development has the most significant impact on house prices (apart from abolishing the main residence CGT exemption - which would be political seppuku on a grand scale)

gratt.PNG



The reason why the solution with the largest effect size (boost density in middle suburbs) is so politically unpopular is not due to the selfishness of investors - but the selfishness of NIMBYs living in those areas.
 
3 options? Simplistic view.


Option 4) State & Federal Government introduce legislation to Further Regulate Housing Industry By;

- Further Reducing Lending Capacity Based on Income.
- Increase Interest Rates.
- Reducing Investor Capacity to own Multiple Properties, either out rightly or by significant tax increase.
- Further Introduce Significant Tax Benefits to People moving further Away from Major Cities.
- Introduce Meaningful Public Transport Infrastructure to Areas further out of CBD's.
- Reduce Tax Benefits of Investors E.G Negative Gearing.
- Significant Removal/Reduction of Stamp Duty & Land Tax to new home buyers. Investors remain at full amount.

these all hit symptoms and not the cause (and I'll focus on houses, not apartments or townhouses):

- cant face banks to lend money, and you dont want to repeat the mistakes of the GFC
- RBA is independent of Govt, and their interest rates are based upon inflation targets. right now rates are low because even with govt spending going nuts, inflation is barely above 2%. rates will start going up soon, inflation is gradually rising and we are set for increases in 2021. not the massive ones you probably want however - inflation isnt out of control.
- do this and you stop developers adding to stock with house conversion to units. also will not increase stock and suppress prices. investors fled during covid, and prices barely budged
- This has been tried precovid with minimal success (vic had a treechange campaign for example). post covid with WFH I think this will happen in some form. but we are tinkering here. the majority of jobs are not viable for WFH
- already happening. Melbourne Metro is designed to replace tram networks which will be relocated to the middle summers. SRL will replace the outer loop bus lines. I have less of an idea on the improvements on the VLine routes as they keep facing multiple hurdles
- no issue, get rid of it now, but it wont change demand for stock
- Lets say we are talking a $1,000,000 unit in Chadstone. Stamp duty is just $42k. A $40k reduction isnt making that in the price discount range you want

the issue here is population. 3.3m in 2000. 5m today. thats more competition for houses full stop. not from developers. not from evil boomers. from interstate and international migration. if you want inner/mid city housing to become cheaper, you need to get the population down, and massively (we are talking 1-2 million)
 
- Increasing interest rates prematurely has a significant economic cost
- Multiple property investors already have a significant tax increase (LT) - the issue is that NG allows them to offset the effect of that tax
- Tax benefits for people living out of the city is interesting. We used to have the Zone Tax Offset - but that was really only for remote areas IIRC (not regional)
- Yes. See Victoria's Big Build
- Agreed. As tax distortions, abolishing NG and 50% CGT Concession are two easy fixes - save for the whining from entitled property investors
- We have FHO exemption/concession - the threshold values probably need adjusting at this point. FHO don't pay LT.

Ned is right - boosting housing density in inner/middle suburbs, along transport corridors and opening up growth areas for development has the most significant impact on house prices (apart from abolishing the main residence CGT exemption - which would be political seppuku on a grand scale)

View attachment 1095207


The reason why the solution with the largest effect size (boost density in middle suburbs) is so politically unpopular is not due to the selfishness of investors - but the selfishness of NIMBYs living in those areas.

its not completely a NIMBY issue. Monash Council basically say yes to any knockdown proposal in all but a few select areas. The consequence is streets designed for suburban houses are now accommodating 2-4 units each block. with most only have 1 car spot*, it means the second householder is parking on the street. Drive down streets in Chaddy for example, you are driving in a single lane and dodging parked cars the length of the road. for higher density to genuinely work, you need to get people to abandon their cars (as happens in HK, SIN, Tokyo, and NYC)


*yes you can have units with 2 car garages. these come at a price premium though. As an example, I can build 2-3 x 2 car/4 bed townhouses on block in Box Hill and sell for $1.1-1.2 each. If i reduce down to 1 car, tiny rooms, and 2-3 beds, im only getting $8/900k. if i dont care about the area, the pump and dump with the small units pays more at the end of the day

FWIW ive seen units where the third bedroom cant even fit a queen sized bed (yes you can use a double, but you wont be having furniture)

Also if you want to see where we are going, look at M-City at the corner of Blackburn and Princess Highway. 100% retail at the bottom and all apartments above is basically what you see common as mud in China
 
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Mar 28, 2006
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its not completely a NIMBY issue. Monash Council basically say yes to any knockdown proposal in all but a few select areas. The consequence is streets designed for suburban houses are now accommodating 2-4 units each block. with most only have 1 car spot*, it means the second householder is parking on the street. Drive down streets in Chaddy for example, you are driving in a single lane and dodging parked cars the length of the road. for higher density to genuinely work, you need to get people to abandon their cars (as happens in HK, SIN, Tokyo, and NYC)


*yes you can have units with 2 car garages. these come at a price premium though. As an example, I can build 2-3 x 2 car/4 bed townhouses on block in Box Hill and sell for $1.1-1.2 each. If i reduce down to 1 car, tiny rooms, and 2-3 beds, im only getting $8/900k. if i dont care about the area, the pump and dump with the small units pays more at the end of the day

FWIW ive seen units where the third bedroom cant even fit a queen sized bed (yes you can use a double, but you wont be having furniture)

Also if you want to see where we are going, look at M-City at the corner of Blackburn and Princess Highway. 100% retail at the bottom and all apartments above is basically what you see common as mud in China
Which is why medium/high density should be prioritized in areas already serviced by very good PT options.

I'm referring to the 'Protect Fitzroy North's Skyline' types. Those who oppose any form of redevelopment at Preston Market. The Greens-Dominated council opposing State Govt funded social and affordable housing last week etc.
 

Royal Flush

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Suppose all the suggestions in this thread occured (besides the absurd like limiting how many properties are allowed to be purchased by an individual)

Abolish NG and CGT discount. Urban planning and development (which already occurs) and any other workable suggestions

What do people think this will actually achieve in property prices?
Are we talking single figure retraction at most, or we thinking double digit.

Eitherway, what will the next plan be, because rest assured that won't make housing affordable to x income ratio.

Because globally, property prices grow all over the western world.

What's the solution?

To achieve a single income x to mortgage ratio you'd need the following to occur;

A decline in population growth.
A decline in economic growth.

I can not see any other way




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Rob R

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Suppose all the suggestions in this thread occured (besides the absurd like limiting how many properties are allowed to be purchased by an individual)

Abolish NG and CGT discount. Urban planning and development (which already occurs) and any other workable suggestions

What do people think this will actually achieve in property prices?
Are we talking single figure retraction at most, or we thinking double digit.

Eitherway, what will the next plan be, because rest assured that won't make housing affordable to x income ratio.

Because globally, property prices grow all over the western world.

What's the solution?

To achieve a single income x to mortgage ratio you'd need the following to occur;

A decline in population growth.
A decline in economic growth.

I can not see any other way




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Decline in population growth to sensible levels sounds great. Melbouren and Sydney were well on their way to being over populated unlivable dumps with only property investors (including most pollies) were benefiting from.

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Decline in population growth to sensible levels sounds great. Melbouren and Sydney were well on their way to being over populated unlivable dumps with only property investors (including most pollies) were benefiting from.

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How do you do that without going Cultural Revolution?

We would have to not only ban migration into Melbourne and Sydney, we would have to enforce bans on people moving into either city from the rest of the country AND we would have to force massive numbers to leave.

And guess what, they will be first homebuyers. The minute you make being a citizen in Melbourne or Sydney a scarce commodity, the value of those permits would go through the roof. Just like what happened in China and the USSR (who had these migration restrictions), the rich will bribe officials to get them, and the poor will be forced out for bogus reasons (ie late on rates)
 

Rob R

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How do you do that without going Cultural Revolution?

We would have to not only ban migration into Melbourne and Sydney, we would have to enforce bans on people moving into either city from the rest of the country AND we would have to force massive numbers to leave.

And guess what, they will be first homebuyers. The minute you make being a citizen in Melbourne or Sydney a scarce commodity, the value of those permits would go through the roof. Just like what happened in China and the USSR (who had these migration restrictions), the rich will bribe officials to get them, and the poor will be forced out for bogus reasons (ie late on rates)
I was focussing on cutting foreign migration to Australia so that our net population growth is near zero. I dont see any legal way to force people to move away from the cities just incentives that won't be effective unless we somehow get businesses to move high paying jobs to regional areas.

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