Society/Culture Australian Property Prices to Crash?

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Kwality

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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.
Not policy, its the legislation & the regulatory bodies:

'.... the RBA’s mission to stimulate employment means it is holding rates lower. This is the opposite of what an overheating residential market needs.

We do have a bank regulator – the Australian Prudential Regulatory Authority – and it is there to make sure the banks are operating well and there is no deterioration in lending standards.

The problem is that on paper the banking industry is humming away nicely – after all, interest rates have never been so low so bad debts are within a normal range.

But they are looking the wrong way – the banks are fine, it’s the customers that are facing trouble.

When something finally triggers government action, it may be much too late.'

 

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No it's not. The RBA has three objectives:

A) the stability of the currency of Australia;

B)the maintenance of full employment in Australia; and

C) the economic prosperity and welfare of the people of Australia.

Long ago the RBA got on board with the view that economic stability is the best way to achieve these goals, and low inflation is a key to that. Wage growth is only good if it isn't inflationary (above acceptable levels)

Most of our wage growth in the 90s was due to productivity gains - awesome because that isn't inflationary. The issue is productivity gains have plateaued, which is why wage growth has stagnated.
incorrect. Wage growth is a key element in the inflation mandate of the RBA. It may not be a key callout in the 3 dot points but wage growth is definitely on their agenda, just like inflation is without specially calling it out.


Both of these fall under the economic prosperity and welfare of the people of Australia. in their corporate plan. The RBA are targeting wage growth by keeping interest rates low so businesses essentially excel and need to pay staff more to keep them due to a low unemployment %

Call me crazy but allowing the average mortgage rise by 30% in a single calendar year without achieving a single wage increase in 5 years does not seem in the best interest of the economic prosperity and welfare of the people of Australia.
 
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Ned_Flanders

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incorrect. Wage growth is a key element in the inflation mandate of the RBA. It may not be a key callout in the 3 dot points but wage growth is definitely on their agenda, just like inflation is without specially calling it out.


Both of these fall under the economic prosperity and welfare of the people of Australia. in their corporate plan. The RBA are targeting wage growth by keeping interest rates low so businesses essentially excel and need to pay staff more to keep them due to a low unemployment %

Call me crazy but allowing the average mortgage rise by 30% in a single calendar year without achieving a single wage increase in 5 years does not seem in the best interest of the economic prosperity and welfare of the people of Australia.
this is why i hate discussing economics with youtubers

wage growth IS INFLATIONARY UNLESS its tied to productivity gains

Inflation is the criteria the RBA have a bracket that they target - not wage growth

It has been this way since the reforms of the 80's thanks to our mate across the ditch
 

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Kwality

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this is why i hate discussing economics with youtubers

wage growth IS INFLATIONARY UNLESS its tied to productivity gains

Inflation is the criteria the RBA have a bracket that they target - not wage growth

It has been this way since the reforms of the 80's thanks to our mate across the ditch
The OP is trying hard to justify his claims & has simply lost the place. Its a shame as they are invested in the property issue but unfortunately are looking back, not forwards.
 

Seeds

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So are all the racists finally ready to admit that australias high migration rate was not a major cause of rising house prices? If a cause at all.

its always been interest rate changes combined with any other policy changes that drive up incentives to invest in existing housing stock or reduce incentives to build.
 

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So are all the racists finally ready to admit that australias high migration rate was not a major cause of rising house prices? If a cause at all.

its always been interest rate changes combined with any other policy changes that drive up incentives to invest in existing housing stock or reduce incentives to build.
Victoria has lost 50k people and house prices are booming still. Investors have been getting back in the the market in droves this year. Nothing to do with negative gearing I'm sure. πŸ™„
 

Kwality

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So are all the racists finally ready to admit that australias high migration rate was not a major cause of rising house prices? If a cause at all.

its always been interest rate changes combined with any other policy changes that drive up incentives to invest in existing housing stock or reduce incentives to build.
Why is it racist to to regard immigration as a force in housing prices ?
Are there any stats on immigration & house purchases, or is it a driver in the rental market?
 
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Kwality

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A relevant article by Robert Gottliebsen in The Aus:


But if students do not return in something like the numbers of previous years and our migration remains restricted then we will need to adopt a new series of economic assumptions.

House prices will not keep rising because we will have built too much accommodation. The massive infrastructure projects we are now building assume a continuation of strong population growth.

The debt the states and the Commonwealth are building up as part of this investment will not be easily covered if the population stagnates and interest rates rise.

One of Australia’s problems will be that whereas the British are welcoming migrants, particularly those from Hong Kong, Australians are divided on this issue and have very little understanding of the impacts they face if migration does not resume.
 

Kwality

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Key points:
  • Treasurer Josh Frydenberg says the Council of Financial Regulators discussed the recent surge in home prices last week
  • Analysts expect the council to announce new home lending restrictions before the end of this year
  • The last time home lending rules were tightened property prices fell, especially in Sydney and Melbourne
..... the architects of the latest housing boom β€” the Reserve Bank, through record-low interest rates; the banking regulator APRA, through looser lending standards; and the federal government, through its HomeBuilder stimulus scheme β€” have met to discuss what to do about it.

"Last Friday, I joined the Council of Financial Regulators to discuss a range of issues including the state of the housing market which is a particular focus for both APRA and the RBA," Treasurer Josh Frydenberg told the ABC in a statement.

"Carefully targeted and timely adjustments are sometimes necessary. There are a range of tools available to APRA to deliver this outcome."
 

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Key points:
  • Treasurer Josh Frydenberg says the Council of Financial Regulators discussed the recent surge in home prices last week
  • Analysts expect the council to announce new home lending restrictions before the end of this year
  • The last time home lending rules were tightened property prices fell, especially in Sydney and Melbourne
..... the architects of the latest housing boom β€” the Reserve Bank, through record-low interest rates; the banking regulator APRA, through looser lending standards; and the federal government, through its HomeBuilder stimulus scheme β€” have met to discuss what to do about it.

"Last Friday, I joined the Council of Financial Regulators to discuss a range of issues including the state of the housing market which is a particular focus for both APRA and the RBA," Treasurer Josh Frydenberg told the ABC in a statement.

"Carefully targeted and timely adjustments are sometimes necessary. There are a range of tools available to APRA to deliver this outcome."
too little too late imo. Government & Regulators should have acted within the first 3 months of 2021, not wait until the head of a fu**in Bank (the guy who actually is creaming profits from these massive mortgages) says something.

Those stats are damning. 1/5 people (20%) are taking out mortgages in excess of 6 times their household incomes. how ******* stupid can people be?. I have little sympathy for these people who will inevitably struggle when interest rates do creep up. Only takes a small increase in % to massively increase your repayments. Loan commitments DOUBLED within a year from 17 billion to 33 Billion. In Sane.

How are banks even allowed to loan people that kind of Money? I'm guessing they are not banks but rather 3rd party lenders.

What an absolute mismanaged sh*t show. There has been a significant lack of long term planning for sustainable house growth since 2010. Future generations are literally being forced to lock into these enormous loans whilst the government simply puts existing homeowners at the forefront every. single. time.

It wont be long until a 40 year mortgage product is released. Can guarantee it will be here within 10 years.
 
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HirdsTheWord

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this is why i hate discussing economics with youtubers

wage growth IS INFLATIONARY UNLESS its tied to productivity gains

Inflation is the criteria the RBA have a bracket that they target - not wage growth

It has been this way since the reforms of the 80's thanks to our mate across the ditch
who said there were not productivity gains?
 

Ned_Flanders

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who said there were not productivity gains?
Productivity is a stat that is closely monitored. It's flatlined for the last decade or so.

It's been a source for debate, because people assumed it improvements would equal productivity improvements, but that hasn't occured.

Main reason is due to the big increases happening in the 90s. A better version of salesforce saves someone 5 minutes generating a report. Excel killed bookkeeping as a profession
 

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Number37

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Productivity is a stat that is closely monitored. It's flatlined for the last decade or so.
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That's not flatlining.

As Paul Keating has constantly argued for the last few years. ALL of the recent productivity gains have gone to the holders of capital and NONE to the workers.
 

Kwality

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View attachment 1248464


That's not flatlining.

As Paul Keating has constantly argued for the last few years. ALL of the recent productivity gains have gone to the holders of capital and NONE to the workers.
Is there a similar graph for the cost of wages over the same time span.
The lack of wage growth has been a problem & our super levy has done nothing to help the workers in the now.
 

Number37

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The lack of wage growth has been a problem & our super levy has done nothing to help the workers in the now.
Real wage growth as opposed to nominal wage growth.

Super levy quite obviously isn't about helping workers in the now.

Nonetheless, it is a bullshit argument promulgated by dipsticks like Bragg.
Worse than it being a bullshit argument, its sole purpose is to attempt to dismantle the large industry super funds.
 

Ned_Flanders

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If you look at it sideways and squint it might kinda look flat-line-ish. Otherwise. NO!
Wages is tied to labour, not how efficient a robot or a machine that goes ping is

Reality is labour hasn't seen big productivity gains, so we shouldn't expect similar wage increases to the past (esp when we had low inflation)
 

HirdsTheWord

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How so?
What form of penalty should be applied retrospectively?
Penalty? No. That implies you have done something wrong which they haven’t. governments have allowe investors to pillage so it’s their fault, not the investor who’s working within a broken system.

Tbh the ship has sailed. So much damage has been done we will never recover from it but IMO ( and we have gone over this time and time again in this thread), investors as a minimum need to be severely restricted and or removed from the free standing home market as Well as home loan lending limited to 5 x household income maximum Across all lenders. Interest free loans also removed As well as investment tax breaks.

If investors can’t afford straight up to buy a property without tax breaks than fu** off So a first home buyer can buy it.

there Is zero need for household values to increase more than 1/2% per annum In-line with CPI increases. We are within 10 years of having a 2 million average house price in Sydney if we keep going the way we are. With zero wage increase.

these steps or similar should have been taken in 2010 then again in 2017, yet here we are in 2021 locking entire generations of first home buyers into risky mortgages Unless they were fortunate to have hand outs.

someone needs to start thinking how the next generation (in 30 years) is going to be able to afford a house on their own accord, without having to rely on inheritance And loans from mum and dad. That is an unsustainable and frankly unfair model.
 
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Ned_Flanders

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I don’t know about that in particular.
firms used to have whole teams of people who did nothing more than manage the books. I studied accounting in HS in the 80's, and we were taught all the processes for running a ledger. BUT, excel replaced much of the grunt work. The need to physically fill out a ledger book and manually reconcile the columns disappeared overnight

so now you only need a couple of people instead of a whole team

add to that secretaries - pretty much destroyed by MS Word and Outlook. Dont need someone to manage your calendar, write letters, and manage correspondence when it comes direct into your PC
 

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