Society/Culture Australian Property Prices to Crash?

[Scotland]

That’s my point
It happens in short burst booms because demand outstrips supply
But if it was standard everyday procedure after a while so much more housing would be created and more first homebuyers would be in their own homes , that there wouldn’t be such a demand for rentals hence cooling the speculation and investment markets

The issue of affordability comes down to repayments.

House costs $500k, 10% deposit $50k, loan for $450k. Give everyone $50k and houses soon cost $550k, your $50k deposit + free $50k makes your loan $450k.

 

[Madas]

The issue of affordability comes down to repayments.

House costs $500k, 10% deposit $50k, loan for $450k. Give everyone $50k and houses soon cost $550k, your $50k deposit + free $50k makes your loan $450k.

Yes and keep giving it to them and within 5 - 10 years the housing supply will be saturated , no need for rentals . Takes them out of the market .
We have only ever had incentives in short bursts where everyone clambers all over each other and things go nuts .
It will cost the government a lot at first but in the long run we will have a better economy as people will have their own homes with less demand for Welfare payments

 

[Deliverance]

Yes and keep giving it to them and within 5 - 10 years the housing supply will be saturated , no need for rentals . Takes them out of the market .
We have only ever had incentives in short bursts where everyone clambers all over each other and things go nuts .
It will cost the government a lot at first but in the long run we will have a better economy as people will have their own homes with less demand for Welfare payments

It won't fix the supply issue. While investors buy 2+ properties with tax advantages and OS migration going to kick off again, there's not enough to go around for 1st time buyers = higher costs.

 

[Simon_Nesbit]

Take a step back for a second - Think about why do we compare Rent to Repayments? Cost to the consumer (us).

Why don't we compare rent to "land tax" (all taxes/rates/fees for owning property)?

Rent - Paying for the privilege of having somewhere to live temporarily (months/years but not owning).
"Land Tax" - ALSO paying for the privilege of having somewhere to live permanently (in a property you own for as long as you like).
Loan Repayments - REPAYING money for borrowing what you did not already have (savings).

One of these things is not like the other.

Comparing Rent to Repayments is a large factor in why people choose to buy instead of rent because it the major cost (interest) of having somewhere to live and in many cases is far lower. This drives purchase demand higher, which inflates prices until an equilibrium is reached.

Essentially lender credit policies controls access to the market. Who the banks are willing to lend too determines who can own property.

IMO "Land Tax" that should be much higher. (Incredibly so). This would allow significant reduction in income taxes, whilst in turn able to release ample funds for major infrastructure works to be completed - improved traffic and transport flow, water and power generation and distribution, etc.

The risk is that people will be 'forced out of their homes'. Only because they were over-leveraged into an artificially inflated market.

We spend more of our basic living costs on our home than almost anywhere in the world.

 

[Nuggs Bunny]

mate no ones whining they cant buy a house for 600k near the city.

people are whining they cant buy a 1.5m house 30km from the city.

they are 2 totally different things.

you are trying to simplify something that is not simple. At all.

You have to wonder the logic behind intentionally dumbing down the issue of price growth vs. wage growth to something so inane it can't be articulated upon beyond random anecdotes about your mother's, friend's, daughter's gardener that constantly eats out and goes to Bali but whines about not being able to afford a house in Toorak. Used to believe it was purely a way to silence the conversation because there's obviously a lot of invested interests in the property market continuing its run. Starting to believe there's a few out there who want to believe they're somehow special or clever because they've bought a house, whether they managed to do it yesterday or they did it 20 years ago in what was a completely different market. There's definitely a few in this thread who are keen to tell people about their purchases.

The truth is that buying a house is not impossible and is something that most people in Gen Y and Gen Z will accomplish in their lifetime. The problem, however, is that buying a house is becoming more difficult, requiring more years of saving and more compromise on location and size of the property. This has flow on effects to other areas of the economy, like a lesser proportion of wages paid being circulated back into the economy while more wealth is shored up in property, and lower birth rates because people cannot afford to have children at the age that people used to. We're really only just starting to see the tip of these issues; usually they manifest as *ed articles about "millennials are killing X industry" or your parents/grandparents whining about why their child/grandchild won't have kids for them to play with.

Long term the issues will be more profound, as Gen Alpha will likely find themselves as the first generation where the majority do not own their own home which is something that will increase reliance on social security enormously. It will also mean that expensive suburbs will struggle to attract medium and low income roles from everything to teachers, nurses to supermarket workers and administrative roles because people cannot afford to live in the area; you can see this already happening in surf coast towns. And it means we'll be be stuck with an ageing population where there are simply not enough young, working age people to take care of the elderly like is evident in some Asian nations. We're absolutely heading for a bust, it's totally mystifying why more people cannot see the systemic issues that are tied to the paradigm shift in how housing is bought and used in this country, and these issues will affect everybody, whether they own a house already or not.

If there was anything funny about this situation though, it's the nuffies in this thread justifying the rent-seeking behaviour of millionaire boomers claiming the pension because other pensioners who don't own their own house would get it anyway. Makes me want to hold out my hand for the dole since I'm missing out on it by choosing to work. Literally zero concept of how social security should work.

 

[Evolved1]

Why should the least fortunate get looked after without contributing to society, why should a boomer whos house rose in value and worked his whole life, paid tax not receive anything because he made wise choices. All my mates blew money on gear, shitty bali holidays, takeaway coffee and smashed avos, if they end up with nothing to show for it once they retire why should I be penalise from their bad choices if I chose to invest?

There is plenty of work and good money to make atm, people are so so lazy it's astounding. A guy I work with his wife wanted part time work and on hours that suit her (between school drop off and pick up) no one would hire her (has an accounting degree). She decided to set up a cleaning business, works the hours she wants and has started knocking back hours for work life balance, she is looking at making 60-65k in the first year.

If these less fortunate actually have a crack there can be good money to make on the back of our lazy society.
I personally couldn't fathom not cleaning my own home.

I can't fathom cleaning my own house when some poor person who wants to 'have a crack' will do it for $30/hr.

 

[HirdyLannister]

I can't fathom cleaning my own house when some poor person who wants to 'have a crack' will do it for $30/hr.

Earning alot more then $30 an hour.

Quotes a job, not a flat rate.

 

[Evolved1]

Why don't we apply CGT to all home sales even if it's the PPR? I think that's fair if interest payments are tax deductible.

 

[Evolved1]

Earning alot more then $30 an hour.

Quotes a job, not a flat rate.

I pay my cleaner by the hour.

 

[Deliverance]

I pay my cleaner by the hour.

Are you one of those people who spends 2 hours preparing (sic cleaning) the house before the cleaner arrives?

 

[Evolved1]

Are you one of those people who spends 2 hours preparing (sic cleaning) the house before the cleaner arrives?

No. That's my wifes job.

 

[Bombermania]

Why should the least fortunate get looked after without contributing to society, why should a boomer whos house rose in value and worked his whole life, paid tax not receive anything because he made wise choices. All my mates blew money on gear, shitty bali holidays, takeaway coffee and smashed avos, if they end up with nothing to show for it once they retire why should I be penalise from their bad choices if I chose to invest?

There is plenty of work and good money to make atm, people are so so lazy it's astounding. A guy I work with his wife wanted part time work and on hours that suit her (between school drop off and pick up) no one would hire her (has an accounting degree). She decided to set up a cleaning business, works the hours she wants and has started knocking back hours for work life balance, she is looking at making 60-65k in the first year.

If these less fortunate actually have a crack there can be good money to make on the back of our lazy society.
I personally couldn't fathom not cleaning my own home.

I pretty much agree except there are some people that don't get ahead not because of laziness but by circumstances.

The people that really need help are rarely heard above people that are better off than they want to admit.

 

[Mofra]

Well interest rates (as they impact monetary supply) are a major factor in housing prices.
This suggests that talk of rate rises by the end of this year are premature:

Banks told to prep IT systems for possibility of negative rates

By the end of April 2022.

www.itnews.com.au

 

[HirdsTheWord]

You have to wonder the logic behind intentionally dumbing down the issue of price growth vs. wage growth to something so inane it can't be articulated upon beyond random anecdotes about your mother's, friend's, daughter's gardener that constantly eats out and goes to Bali but whines about not being able to afford a house in Toorak. Used to believe it was purely a way to silence the conversation because there's obviously a lot of invested interests in the property market continuing its run. Starting to believe there's a few out there who want to believe they're somehow special or clever because they've bought a house, whether they managed to do it yesterday or they did it 20 years ago in what was a completely different market. There's definitely a few in this thread who are keen to tell people about their purchases.

The truth is that buying a house is not impossible and is something that most people in Gen Y and Gen Z will accomplish in their lifetime. The problem, however, is that buying a house is becoming more difficult, requiring more years of saving and more compromise on location and size of the property. This has flow on effects to other areas of the economy, like a lesser proportion of wages paid being circulated back into the economy while more wealth is shored up in property, and lower birth rates because people cannot afford to have children at the age that people used to. We're really only just starting to see the tip of these issues; usually they manifest as ******ed articles about "millennials are killing X industry" or your parents/grandparents whining about why their child/grandchild won't have kids for them to play with.

Long term the issues will be more profound, as Gen Alpha will likely find themselves as the first generation where the majority do not own their own home which is something that will increase reliance on social security enormously. It will also mean that expensive suburbs will struggle to attract medium and low income roles from everything to teachers, nurses to supermarket workers and administrative roles because people cannot afford to live in the area; you can see this already happening in surf coast towns. And it means we'll be be stuck with an ageing population where there are simply not enough young, working age people to take care of the elderly like is evident in some Asian nations. We're absolutely heading for a bust, it's totally mystifying why more people cannot see the systemic issues that are tied to the paradigm shift in how housing is bought and used in this country, and these issues will affect everybody, whether they own a house already or not.

If there was anything funny about this situation though, it's the nuffies in this thread justifying the rent-seeking behaviour of millionaire boomers claiming the pension because other pensioners who don't own their own house would get it anyway. Makes me want to hold out my hand for the dole since I'm missing out on it by choosing to work. Literally zero concept of how social security should work.

Great post.

If the government was at all serious about preventing what you have said, which in all likelihood will happen than they need to do something about it now, yet all they seem to to is continue to prop up housing markets and continue to allow investors to purchase the majority of stock.

The statistics don't lie. Investors are the issue. Plain and simple.

Rich get richer due to them having advantage purely based on age. This is how the housing market works in Australia. Housing it not seen as an essential need but rather an investment opportunity, it is fundamentally wrong.

 

[Kwality]

Well interest rates (as they impact monetary supply) are a major factor in housing prices.
This suggests that talk of rate rises by the end of this year are premature:

Banks told to prep IT systems for possibility of negative rates

By the end of April 2022.

www.itnews.com.au

Not for the buyers over the last 20 years. Those of us who remember our home repayments increasing ahead of your take home pay will always look at interest rates, notso those who havent ever been bitten ..... a new learning curve for those so fortunate to be experiencing low rates.

 

[Kwality]

Rich get richer due to them having advantage purely based on age.

With getting older comes simply having done more work to accumulate, or as you call it 'get richer ':
These bastards worked for 40 years & are better off than me after 40 months.

Are you fair dinkum ? Lets see:
'Rich get richer due to them having advantage purely based on age. This is how the housing market works in Australia. Housing it not seen as an essential need but rather an investment opportunity, it is fundamentally wrong.'

Plenty of us cant buy a place when we leave home, we go out & rent & work, work & rent, & save enough to get a deposit.
No different to the 10% + interest rates, just more of your repayment went in interest.
Imagine 13%, 17% ..... bloody lucky to have a housing loan at the moment, more money for the kids, wining & dining, a new car !! Covid.

You arent dinkum !!

 

[Chief]

why should the boomer have to sell the house where they have been for the last 50 years?

We keep being told that houses are an investment. What’s the investment for?

 

[Sqotty from office works]

We keep being told that houses are an investment. What’s the investment for?

Who is "WE"?
And "who" is telling you this?

 

[Chief]

Who is "WE"?
And "who" is telling you this?

We: Australian human units.
Who: Government. Media. Both.

 

[Sqotty from office works]

We keep being told that houses are an investment. What’s the investment for?

Houses are actually a lifestyle investment more than a monetary investment.
People underestimate the value a house brings to family health.
It's quite extraordinary that people slag off at the government and don't listen to most things they say, but then feel entitled to you the old axiom that "the government tells us that's why"

 

[Chief]

It's quite extraordinary that people slag off at the government and don't listen to most things they say, but then feel entitled to you the old axiom that "the government tells us that's why"

There is an inconsistency in government policy.

A house is supposed to be a family's big chance to invest for the future.

But when the future comes, the oldies don't want to cash in that investment. That is where the younger generation could buy property: from retirees supporting themselves.

 

[Sqotty from office works]

There is an inconsistency in government policy.

A house is supposed to be a family's big chance to invest for the future.

But when the future comes, the oldies don't want to cash in that investment. That is where the younger generation could buy property: from retirees supporting themselves.

Hahahahaha you're funny.
Young people today want 14 bedrooms,16 bathrooms,19 car garage,jetski x2, white plastic 4 wd that's never seen a dirt road for the wife, and holidays in Airlie beach(shithole) three times a year and overseas once a year for a "proper" holiday.

Us "oldies" lived in a cheap shithole for a decade and worked day n night to make inroads to buy "up".

Your "younger," generation can't spell shithole and certainly don't know what suffering is.
Good luck with your house cleaner and the plastic BMW .

 

[Chief]

Young people today want

How did you get so in touch with teh youf?

My niece and her husband live 50 minutes out of Brisbane in an old but neat little house on a busy road, with one old sedan. They both work. They could not afford anything closer in based on bank lending rules, not on their income.

 

[Sqotty from office works]

How did you get so in touch with teh youf?

My niece and her husband live 50 minutes out of Brisbane in an old but neat little house on a busy road, with one old sedan. They both work. They could not afford anything closer in based on bank lending rules, not on their income.

Example size x 1.
Hahahahaha go and check out the new plastic suburbs and do some real research.

 

[Chief]

Do my own research, eh?