Society/Culture Australian Property Prices to Crash?

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Norm Smith Medallist
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I want to say the data was from corelogic but I can't 100% remember. I would trust trust their numbers though.
Yes I would trust theirs (and SQM’s as well), but every player is talking their book. CoreLogic have always had a bullish outlook, SQM neutral or bearish.

The banks, the real estate lobbyists (REIV etc), the RBA and now it seems APRA, are either playing an angle or wilfully blind.
 

_Swoon

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I mean the market is circa 70% OO buying with emotion but okay.
That's nice, the most recent spike in value correlates with the first time that investors have ever invested more money than owner occupiers in the market. Funnily enough, the following drop also correlates with the reduction of investment in the market.

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And if you're wondering what the market price looked like before investors were handed an enormous leg up by the Howard government in the late 90's, check this graph:

1553303960879.png


Meanwhile wages and disposable income have barely changed in 20 years. Pretty clear which group has been the driver.
 

CheapCharlie

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Jun 12, 2015
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Some great charts in this video showing the reduction in loan assistance from the parents of first home buyers, primarily using equity in their homes. Dropped from 60% of first home buyers down to 20%.

However the 'bank of mom and dad' is still $29billion in loans outstanding and still in the top 10 lenders in Australia.


 

CheapCharlie

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Moody's dramatically downgrades its forecasts for house prices
Falls in house prices across the country are going to accelerate this year, rating's agency Moody's has forecast, with parts of Sydney and Melbourne likely to face drops of more than 15 per cent over the next 12 months.
Revising downwards its predictions for the nation's property market, the agency on Tuesday said it believed house prices would drop 7.7 per cent through 2019. In January, when it released its first forecasts, it predicted a 3 per cent fall.
Melbourne's drop-off is even more acute, with the agency now predicting an 11.4 per cent fall in the city's house prices. In January, it was tipping a 6 per cent decline.
Key parts of both cities are likely to suffer even bigger falls.
Sydney's inner south-west is tipped to endure falls of 14.4 per cent while in Ryde prices are forecast to drop by a city-worst 15.8 per cent. That would be after falls last year of 8.1 per cent and 11.3 per cent respectively.
Every part of Sydney is expected to see a fall in house values with the best performed likely to be the northern beaches (down by 4.3 per cent) and the Blacktown area (down 6.1 per cent).

Melbourne's market is facing a bigger downturn. The city's inner east is tipped to see falls of 16.3 per cent after a five per cent drop last year while across the inner south prices are forecast to edge down by 14.2 per cent after a 4.4 per cent decline in 2018.
Like Sydney, no part of Melbourne is expected to be spared a sharp fall in prices this year.
The "best" performed parts of Melbourne are tipped to be the city's north-east and west with falls of 8.5 per cent.

Full article here
 

_Swoon

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https://www.abc.net.au/news/2019-05-02/negative-equity-on-the-rise-as-house-prices-continue-to-fall/11061780

Key points:
  • ANZ says mortgage delinquencies are rising as households are "doing it tough" with low wage growth
  • Falling house prices are exacerbating the problem, leading to borrowers owing more than their house is worth
  • There is evidence banks are losing patience and forced selling of houses may pick up, hitting both the owner and the bank

Thing I found most interesting is the Victorian and NSW property markets (most of which are Melb + Syd) are the two lowest deliquency rates in Australia despite being two of the most expensive and suffering the greatest relative price drops of the market.

1556797394833.png


But conversely, it's no surprise WA & the NT are where they are right now. Nearly 7 years of decline will do that.
 

maryjames

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The market has officially slowed up in places that boomed longer. Geelong, Ballarat and Hobart. The market no doubt will continue to go down. I know top end realestate agents/owners telling me it’s stopped. People are not going to open homes and its a buyers market. I see a fall of another 10% over the next 15 months.
 

JeanLucGoddard

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Aug 21, 2018
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The building approval figures and lending rates for March tell yiu the knock on is happening hard. This time next year will be interesting .... recession be coming.
 

Steinfreo

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Marx 100 year ago predicted the property price crash and land grab cycle. The next stage is large private enterprises come in, buy up massive portions of the commons at low cost as smaller private and government agents panic sell. Its part of the ever increasing concentration of wealth/power within an ever reducing number of people.
 

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Frank Grimes

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I think apartments are already on the nose anyway because of this whole flammable cladding issue. With an additional supply of apartments I think apartment prices are going to drop and not rise any time soon.

Though it is only going to have a mild impact on prices other types of dwellings (Units, townhouses, detached houses).
 

Steinfreo

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I think apartments are already on the nose anyway because of this whole flammable cladding issue. With an additional supply of apartments I think apartment prices are going to drop and not rise any time soon.

Though it is only going to have a mild impact on prices other types of dwellings (Units, townhouses, detached houses).
Its all on the nose simply because none of it is worth anywhere near as much as its priced, simple as that.

Demand and Supply, low interest rates and low unemployment. Not much is gonna be changing till these change
Employment figures are so bulls**t. My generation is chronically underemployed, even in my industry the amount of 65-70 year old architects clogging up Project manager and senior roles is insane, they are basically all sitting on massive property porfolios, should retire but dont because its to boring at home. You cant push them out either no matter how hard to grind because they all went to WAIT and UWA with the boss in the 70s.
 

Bumpswithagrin

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I think apartments are already on the nose anyway because of this whole flammable cladding issue. With an additional supply of apartments I think apartment prices are going to drop and not rise any time soon.

Though it is only going to have a mild impact on prices other types of dwellings (Units, townhouses, detached houses).
The apartment building in Sydney that sprung a huge crack didn't fill people with confidence either.

Its all on the nose simply because none of it is worth anywhere near as much as its priced, simple as that.
They are totally unappealing to live in for some people also. Why would I want to live in a dog box? I feel in about 10 or 20 years they will be the equivalent to housing commission flats.
 

DidakDelight

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Its all on the nose simply because none of it is worth anywhere near as much as its priced, simple as that.



My generation is chronically underemployed, even in my industry the amount of 65-70 year old architects clogging up Project manager and senior roles is insane, they are basically all sitting on massive property porfolios, should retire but dont because its to boring at home. You cant push them out either no matter how hard to grind because they all went to WAIT and UWA with the boss in the 70s.
Interesting, some would say, me included, that work is good for you, keeps the mind active and keeps you engaged socially.
But I’m a long way off retirement age so who knows?

But anyway that’s another topic, what’s underemployment in your sector got to do with house prices?

We have low unemployment in Australia with high demand and low supply of houses, add in low interest rates and those dreaming of a crash are doing exactly that, dreaming. A correction of 10 - 15% wouldn’t be the end of the world and that’s the likely scenario.
 

CheapCharlie

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Article in irish newspaper comparing the similarities of the Australian property market to the Irish crash

https://www.irishexaminer.com/breakingnews/views/analysis/eddie-hobbs-are-we-seeing-early-signs-of-an-australian-debt-asteroid-strike-and-why-it-matters-916553.html

"...Fast forward, in 2019 over 40% of Australia’s big bank home loan book is out on interest only deals. Despite Government attempts to rebalance the market in favour of home buyers and the likelihood of a new Government adding further measures, the worry is that it may be too late.
The worst case scenario is that Australia could be the location of the next impact crater for the IMF to fret over and the first since Cyprus 2012 to experience haircuts on deposits. The best case scenario is that Australia becomes a textbook example of controlled deflation of a housing bubble..."
 

Steinfreo

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Interesting, some would say, me included, that work is good for you, keeps the mind active and keeps you engaged socially.
But I’m a long way off retirement age so who knows?

But anyway that’s another topic, what’s underemployment in your sector got to do with house prices?

We have low unemployment in Australia with high demand and low supply of houses, add in low interest rates and those dreaming of a crash are doing exactly that, dreaming. A correction of 10 - 15% wouldn’t be the end of the world and that’s the likely scenario.
There is employment and then theres employment. I lived in NYC briefly and it gives you a good insight into our future, young people there are grinding, working 7 days a week and getting no where. the US's unemployment rate is better than ours but its all bulls**t, young professional people there arent aspirational anymore, they are just surviving. Its easy to just right millennials off as lazy, but the lack of the inherent resilience provided by reliable long term employment has taken its toll on them and its taking its toll on the economy. apartments are young people houses and young people arent doing so well in the west at the moment.
 

Poor Form

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Article in irish newspaper comparing the similarities of the Australian property market to the Irish crash

https://www.irishexaminer.com/breakingnews/views/analysis/eddie-hobbs-are-we-seeing-early-signs-of-an-australian-debt-asteroid-strike-and-why-it-matters-916553.html

"...Fast forward, in 2019 over 40% of Australia’s big bank home loan book is out on interest only deals. Despite Government attempts to rebalance the market in favour of home buyers and the likelihood of a new Government adding further measures, the worry is that it may be too late.
The worst case scenario is that Australia could be the location of the next impact crater for the IMF to fret over and the first since Cyprus 2012 to experience haircuts on deposits. The best case scenario is that Australia becomes a textbook example of controlled deflation of a housing bubble..."
I'm not across Ireland enough but do they have anything similar to superfunds? Our funds last I heard had over $2.7t in assets as far as I know no where else in the world is there a comparable system of forced savings like that and i think it is a large part of why we haven't seen the crash people have been predicting for years. Eventually they will get it right but i don't know that anyone has the magic 8-ball to account for the effects of Superannuation on Australia's growth and markets.
 

Mr_Moogle

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The Rba and government are going to give the housing market one big push again. Equivalent to 4-5 rate cuts. This is getting pathetic now.
Damn. Thank god I live in Adelaide where the prices haven't tanked yet. I'm so close to selling my IP and loading up on cash. I really don't want to be on the hook with a big loan when the s**t hits the fan.
 

Seeds

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Damn. Thank god I live in Adelaide where the prices haven't tanked yet. I'm so close to selling my IP and loading up on cash. I really don't want to be on the hook with a big loan when the **** hits the fan.
I would wait a bit as these rate cuts are going to pump the market further. Would revisit early next year.
 
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