Society/Culture Australian Property Prices to Crash?

[Craven Morehead]

Daniel made it far worse for first home buyers by removing stamp duty. There is a reason why the lower end of the market hasnt fallen like the higher end.

How does removing stamp duty make it far worse for 1st home buyers?

 

[Seeds]

How does removing stamp duty make it far worse for 1st home buyers?

It pushes prices up by more than the stamp duty cut as the stamp duty cut gives people a deposit and a deposit is only a fraction of the cost. Its no different then the liberals policy in the 2000s to give first home buyers cash handouts which is universally agreed upon by economists as screwing first home buyers on price. Andrews policy suggests he recieves election money from the real estate industry.

 

[Hamingja]

Am I the only one who doesn't feel any sympathy for people who took out multi-million dollar loans on one income with no protection?

The one income thing is a complete load of crap. Tell us how much hubby was earning darl or does that not fit your narrative? He must have been on like $250k plus to be able to service these loans even factoring in rental income going towards servicing.

The banks don't automatically use HEM by itself. HEM is used if the customers declared expenses are below HEM. The customers sign the loan documents stating the information provided is correct. If they are now going back on that and claiming they provided false expenses they should be charged with mortgage fraud rather than being able to sue the bank after their high risk leveraged position failed ffs.

 

[Nuggs Bunny]

The one income thing is a complete load of crap. Tell us how much hubby was earning darl or does that not fit your narrative? He must have been on like $250k plus to be able to service these loans even factoring in rental income going towards servicing.

The banks don't automatically use HEM by itself. HEM is used if the customers declared expenses are below HEM. The customers sign the loan documents stating the information provided is correct. If they are now going back on that and claiming they provided false expenses they should be charged with mortgage fraud rather than being able to sue the bank after their high risk leveraged position failed ffs.

100%, anybody in this situation either willingly made the decision to play with fire through risky investments or they didn't bother to do any research or examination into what they were getting themselves into. No sympathy for these idiots when some back of the napkin math would have probably alerted them to the danger.

 

[Ah80]

Immigration hasn’t been capped.

The end of hot Chinese money and banks finally being reigned in is the cause of the downturn.

Immigration has slowed, as well as the foreign investment from those wealthy Asians

 

[The Warlord]

"Rapid increases in credit drive up property and asset prices, which in turn increase collateral values and thus the amount of credit the private sector can obtain until, at some point, the process goes into reverse," writes Mr Borio in his seminal work The Financial Cycle and Recession Risk.

From this article about the wider global situation, but sums up the Australian east coast property market perfectly.

https://www.afr.com/opinion/debtclo...Email_name=The+Brief+Feb+25&Day_Sent=25022019

 

[Espe]

Due to the capping of immigration!

Supply and demand!
Not what the labor and watermelons claim of negative gearing

Oh god if I hear someone say property is “supply and demand” I’m firstly going to vomit, then proceed to throw a first year economics book covered in the vomit at their face. You’ve all heard that ******* 19 year old real estate agent who’s been in the gig for 4 months stand their with his aviator sunglasses say during the boom, “supply and demand, my friend”.

Property prices are far more effected by the acceleration/de acceleration of credit.

You can have all the demand you want but if credit availability isn’t positive prices will fall.

 

[its free real estate]

Immigration has slowed, as well as the foreign investment from those wealthy Asians

Property prices are crashing in all expensive markets, Hong Kong, Vancouver, Sydney. It’s China turning off the spigot

 

[The Warlord]

Oh god if I hear someone say property is “supply and demand” I’m firstly going to vomit, then proceed to throw a first year economics book covered in the vomit at their face. You’ve all heard that ******* 19 year old real estate agent who’s been in the gig for 4 months stand their with his aviator sunglasses say during the boom, “supply and demand, my friend”.

Property prices are far more effected by the acceleration/de acceleration of credit.

You can have all the demand you want but if credit availability isn’t positive prices will fall.

This.

And with wages not growing and credit being limited compared to what it was for the last ten yearts, where does the money from to pay astronomical prices?

We are seeing prices find their level after a once in a generation credit boom, leading to, as it always does, an asset bubble.

The demand is there - to pay for houses with the money people can get together. It is just that they can't assemble the readies equivalent to what the inflated market expected, hence the market now adjusting down.

 

[The Warlord]

Property prices are crashing in all expensive markets, Hong Kong, Vancouver, Sydney. It’s China turning off the spigot

China and QE easing in the west.

 

[Bombermania]

Oh god if I hear someone say property is “supply and demand” I’m firstly going to vomit, then proceed to throw a first year economics book covered in the vomit at their face. You’ve all heard that ******* 19 year old real estate agent who’s been in the gig for 4 months stand their with his aviator sunglasses say during the boom, “supply and demand, my friend”.

Property prices are far more effected by the acceleration/de acceleration of credit.

You can have all the demand you want but if credit availability isn’t positive prices will fall.

I would say its both credit availability and supply & demand.

Supply and demand contribute to the the price whereas credit availability allows would be buyers to be able to purchase at that price.

 

[Scotland]

There are competing forces in play. Things eventually reach some sort of (un)happy medium.

I might be willing to pay $500k and able to service a $400k (80%) loan but if nobody will lend me the $400k then it doesn't mean much.

I might be willing to pay $500k and able to borrow $400k (80%) but if nobody is selling for $500k then that doesn't mean much.

The big factors in play are loan serviceability and turnover levels. My house might be worth $500k today and $400k tomorrow, but if the loan is only $200k and I am comfortably servicing it then who cares? There is a massive, massive amount of equity in the Australian housing market that was created out of thin air. I know people with million dollar houses that would be every day mortgage slaves if they had to buy a median priced place today. If you buy for $500k, you really don't wan to sell for less than that. If you bought in 1997 for $100k then you're already $400k up on the deal so it's not the same circumstance. Many 'losers' in the current market are already massive winners anyway.

 

[Royal Flush]

Oh god if I hear someone say property is “supply and demand” I’m firstly going to vomit, then proceed to throw a first year economics book covered in the vomit at their face. You’ve all heard that ******* 19 year old real estate agent who’s been in the gig for 4 months stand their with his aviator sunglasses say during the boom, “supply and demand, my friend”.

Property prices are far more effected by the acceleration/de acceleration of credit.

You can have all the demand you want but if credit availability isn’t positive prices will fall.

I don't mind the housing market slowing down, just means those with investment properties will benefit with hugely inflated rent. Typical cycle

The credit drip does effect housing prices to some degree but it won't effect investors. They will make good money from inflated rent and low interest rates.

Because demand for housing will always be there, whether it's to rent or borrow.

Believe you me it won't be for too long, because people will be paying high rents, higher then if they had a mortgage.

Then the next movement will be putting a cap on rent inflation.

How will they do that?

Force banks to give money out again.

It's a merry go round.



Sent from my Pixel 3 XL using Tapatalk

 

[The Warlord]

There are competing forces in play. Things eventually reach some sort of (un)happy medium.

I might be willing to pay $500k and able to service a $400k (80%) loan but if nobody will lend me the $400k then it doesn't mean much.

I might be willing to pay $500k and able to borrow $400k (80%) but if nobody is selling for $500k then that doesn't mean much.

The big factors in play are loan serviceability and turnover levels. My house might be worth $500k today and $400k tomorrow, but if the loan is only $200k and I am comfortably servicing it then who cares? There is a massive, massive amount of equity in the Australian housing market that was created out of thin air. I know people with million dollar houses that would be every day mortgage slaves if they had to buy a median priced place today. If you buy for $500k, you really don't wan to sell for less than that. If you bought in 1997 for $100k then you're already $400k up on the deal so it's not the same circumstance. Many 'losers' in the current market are already massive winners anyway.

That probably tells you how sustainable it is.

 

[its free real estate]

I don't mind the housing market slowing down, just means those with investment properties will benefit with hugely inflated rent. Typical cycle

The credit drip does effect housing prices to some degree but it won't effect investors. They will make good money from inflated rent and low interest rates.

Because demand for housing will always be there, whether it's to rent or borrow.

Believe you me it won't be for too long, because people will be paying high rents, higher then if they had a mortgage.

Then the next movement will be putting a cap on rent inflation.

How will they do that?

Force banks to give money out again.

It's a merry go round.



Sent from my Pixel 3 XL using Tapatalk

Where would these inflated rents be coming from?

 

[Royal Flush]

Where would these inflated rents be coming from?

Demand for rental property.
If people aren't buying or able to buy due to credit , they still need a dwelling to live in.
Going back 8 years demand for rent was so high, they were bidding offers above asking price of rent

Sent from my Pixel 3 XL using Tapatalk

 

[The Warlord]

Demand for rental property.
If people aren't buying or able to buy due to credit , they still need a dwelling to live in.
Going back 8 years demand for rent was so high, they were bidding offers above asking price of rent

Sent from my Pixel 3 XL using Tapatalk

You do know there's a massive oversupply of apartments on the market now?

 

[Royal Flush]

You do know there's a massive oversupply of apartments on the market now?

Yes inside the 5km arch of major CBDs.

That is a very tiny proportion sector of the housing market



Sent from my Pixel 3 XL using Tapatalk

 

[its free real estate]

Demand for rental property.
If people aren't buying or able to buy due to credit , they still need a dwelling to live in.
Going back 8 years demand for rent was so high, they were bidding offers above asking price of rent

Sent from my Pixel 3 XL using Tapatalk

I highly doubt it tbh.

 

[The Warlord]

Yes inside the 5km arch of major CBDs.

That is a very tiny proportion sector of the housing market



Sent from my Pixel 3 XL using Tapatalk

Major cities is where the population growth is.

There's no lack of land in Melbourne (which has highest growth) on the outskirts to restrict demand there for new builds.

 

[Royal Flush]

I highly doubt it tbh.

here buddy a stock standard property cycle.
Note increase in rents as part of the cycle. Unless there is a plague or war and population decreasing, this is how the cycle has gone and will continue to go

 

[Frank Grimes]

Demand for rental property.
If people aren't buying or able to buy due to credit , they still need a dwelling to live in.
Going back 8 years demand for rent was so high, they were bidding offers above asking price of rent

Sent from my Pixel 3 XL using Tapatalk

I agree the the market would look attractive to investors who are looking at the income the property makes when the rental yield is higher due to cheaper property, but I can't see rent sky rocketing.

The argument of a person renting buying a house or unable to buy a house is a zero sums game. If the renter buys a house it may mean there is one less renter in the market, but it also means the is one less house to rent out due to the renter buying it. There is no change to supply and demand.

Also rents don't appear to be linked to house prices that much. Houses have almost doubled between 2011-2017, but rent increases haven't increased anything like that.

The main link to rents imo is wages. Which means rents are going to simply stagnate or rise only mildly in the current environment. Admittedly there are other factors, but I see wages as being the main one.

 

[its free real estate]

here buddy a stock standard property cycle.
Note increase in rents as part of the cycle. Unless their is a plague or war and population decreasing, this is how the cycle has gone and will continue to go

If credit contracts then that affects all sectors, meaning less money available for rent, employment, etc.

 

[The Warlord]

here buddy a stock standard property cycle.
Note increase in rents as part of the cycle. Unless there is a plague or war and population decreasing, this is how the cycle has gone and will continue to go

This isn't a stock standard property cycle though, because the massive price growth was created by a credit bubble we've literally never seen before in history, so ipso facto, the play out will be different from anything we've seen before too.

 

[Royal Flush]

The argument of a person renting buying a house or unable to buy a house is a zero sums game. If the renter buys a house it may mean there is one less renter in the market, but it also means the is one less house to rent out due to the renter buying it. There is no change to supply and demand.

population growth, i just did a quick google search for this quote for the sake of this point. This is where demand comes from
"These showed Australia's population had grown by 1.6 per cent in the previous 12 months — a rise of roughly 388,000 people to reach a total of 24.8 million."

Also rents don't appear to be linked to house prices that much. Houses have almost doubled between 2011-2017, but rent increases haven't increased anything like that.

Yes they do and they will