Society/Culture Australian Property Prices to Crash?

Pie eyed

Premium Platinum
Joined
Jun 26, 2007
Posts
37,715
Likes
15,078
AFL Club
Collingwood
Other Teams
Magpies
#76
Lmfao, ease up Kerry. That's what the 'half wits' you're talking about said before they went balls deep and mortgaged themselves to the hilt. They're now on the way to Titsupsville so good luck with that!
When you have the capital to buy outright, you buy when the market suits. I have never listened to RE agents BS.
You ignore the "pundits".
I got 3 houses in the late 90's for half the price they sold for a decade earlier despite the RE agents BS.
The seller just wanted to get rid of them because he could not afford the payments.
Beside Liberal party members, RE agents are the scum of the earth.
 

(Log in to remove this ad.)

CheapCharlie

Premiership Player
Joined
Jun 12, 2015
Posts
4,131
Likes
4,403
AFL Club
Sydney
Thread starter #77
However, it's mostly only a concern for investors. People trying to purchase their sole property might find the bank takes longer to process their application and will certainly find the banks will scrutinize their expenses with a fine-toothed comb, but realistically the amount a first home buyer or a sole owner might be able to borrow hasn't changed drastically. Hence, the percentage of investors is dropping in the market while the first home buyer sales are remaining fairly steady.
Required deposit amounts are increasing. 10% is now 20%
I feel a bit for anyone who has put down a deposit in an off the plan development in the last year or two and are asked to stump up settlement on a place worth 10% less than what they put the initial deposit down on.
I know people are still buying but right now it looks like catching a falling knife
 

Tayl0r

Moderator
Joined
Jul 16, 2009
Posts
34,243
Likes
33,959
Location
Perth
AFL Club
Fremantle
Moderator #78
This "value" is an apparition, sold to the stupid by the corrupt.
When the bank forecloses or you sell at a loss don't complain.



I will profit with glee.

I really enjoy being right about the dirty real estate campaigners.
You speak of value being meaningless out of one side of your mouth and talk of profit out the other.

Good luck. I'd just leverage my home to buy more, along with everyone else with wealth and soon enough those with will have even more.

Watch those without really chew the coffee table then
 

twotooto

Club Legend
Joined
Sep 26, 2015
Posts
1,093
Likes
2,075
AFL Club
West Coast
#79
When you have the capital to buy outright, you buy when the market suits. I have never listened to RE agents BS.
You ignore the "pundits".
I got 3 houses in the late 90's for half the price they sold for a decade earlier despite the RE agents BS.
The seller just wanted to get rid of them because he could not afford the payments.
Beside Liberal party members, RE agents are the scum of the earth.
That's fine, but do you realise that hovering like a vulture whilst hoping the market goes tits up and then swooping in with fat stax of hoarded capital and feasting on the carcass of the unfortunate is a very LNP/conservative thing to do? :rolleyes:
 

Seeds

Brownlow Medallist
Joined
Sep 15, 2007
Posts
27,021
Likes
23,152
Location
I don't know
AFL Club
Geelong
#81
I'm.confused. why will banks stop lending money to urban middle class professionals? The stereotypical 'smashed avocado' kids who have stable, good jobs (public service, etc). Banks still have to make money - that means they need more good loans.

That's my situation. We have a very moderate mortgage on a small house now. We could get an uncomfortable mortgage and upgrade, but choose not to. If house prices dropped 10% we would snap it up. If house prices are even flat for 2-3 years we will be able to comfortably do so.

I'd say almost every one of my friends is in some similar boat (some are renting but waiting to buy, etc). All very stable, professionally employed (mostly 2 incomes or 1 + maternity and back to 2 soon).

If lending criteria tighten it will be on LVRs. Or on credit rating. Or on low doc loans, etc. None if those are restraining factors for a lot of us. Its just pure prices (And prices growing faster than incomes + savings)
Because the value of houses is ridiculous and middle class millenianls cant afford them over the long term unless they want to be slaves to a bank and never go on holidays. Sure they could get a deposit before but that doesnt mean they could afford them. Using a small sample size of your mates intentions is not how to evaluate the housing market. Particularly given some of your mates might lose a job when the economic downturn happens. On top of that interest rates are currently near record lows. What happens when interest rates go back to normal? Prices will crash even more because payments have gone up. The fact we are having a housing market downturn right now with record low interest rates and low unemployment is simply unbelievable. Im not sure this has ever happened before. The main drivers of housing downturns havent even kicked into gear yet. When they do it will get much worse. Then there is labours housing policies. They are designed to lower prices no matter what anyone says. They are good policies. Well they are better then the liberals housing policies at least. But they look like coming once the horse has already bolted. If you guys jump in with only a slight further fall in prices you will be catching a falling knife.
 

_Swoon

Coriander Enthusiast
Joined
Oct 12, 2015
Posts
3,460
Likes
5,179
Location
A kitchen near you
AFL Club
Essendon
Other Teams
Dallas Cowboys
#83
Required deposit amounts are increasing. 10% is now 20%
I feel a bit for anyone who has put down a deposit in an off the plan development in the last year or two and are asked to stump up settlement on a place worth 10% less than what they put the initial deposit down on.
I know people are still buying but right now it looks like catching a falling knife
Most banks will still let you buy with 10% with lenders mortgage insurance, so the market is still very much accessible. Only 5% loans and definitely no-deposit loans are out. The reality is, most first home buyers don't care about where the market is at the moment and nor should they, because they'd be trying to predict something that rarely any expert gets right let alone an amateur investor. The minute they scrape together the deposit and have a decent enough job to get what they want, they'll buy like always.

And I see where you're coming from, but I don't feel sorry for people who bought off the plan or bought a block before title because the risks of doing so are well publicised. Simply put, they should have known what they were signing up for.
 

_Swoon

Coriander Enthusiast
Joined
Oct 12, 2015
Posts
3,460
Likes
5,179
Location
A kitchen near you
AFL Club
Essendon
Other Teams
Dallas Cowboys
#84
Because the value of houses is ridiculous and middle class millenianls cant afford them over the long term unless they want to be slaves to a bank and never go on holidays. Sure they could get a deposit before but that doesnt mean they could afford them. Using a small sample size of your mates intentions is not how to evaluate the housing market. Particularly given some of your mates might lose a job when the economic downturn happens. On top of that interest rates are currently near record lows. What happens when interest rates go back to normal? Prices will crash even more because payments have gone up. The fact we are having a housing market downturn right now with record low interest rates and low unemployment is simply unbelievable. Im not sure this has ever happened before. The main drivers of housing downturns havent even kicked into gear yet. When they do it will get much worse. Then there is labours housing policies. They are designed to lower prices no matter what anyone says. They are good policies. Well they are better then the liberals housing policies at least. But they look like coming once the horse has already bolted. If you guys jump in with only a slight further fall in prices you will be catching a falling knife.
The RBA is not going to push the national economy off a precipice by raising interest rates when house prices are falling lmao. Can we stop with the doomsday scenarios?

We're having a housing market downturn now because we've just been through a five year cycle of high-risk, high-reward lending that's pushed prices to breaking point. We're now going through an engineered downturn by removing those lending practices in order to stave off a catastrophe.

There's two kinds of properties that are significantly overvalued at the moment; properties that had the potential to be sub-divided into higher density residency (ie, big blocks in the inner city) and properties that already were (ie. townhouses and apartments). This is where the damage will be most felt, and these were mostly being snapped up by investors. Those who bought in the outer suburbs are far less affected and might not even realise any decreases to their property value.

Australia is not like the US; if you default on your loan then the debt stays with you. The bank isn't left with the problem of a house worth less than a loan, the investor is left with the problem of having to sell their own house to cover the debt.
 

Pie eyed

Premium Platinum
Joined
Jun 26, 2007
Posts
37,715
Likes
15,078
AFL Club
Collingwood
Other Teams
Magpies
#86
You speak of value being meaningless out of one side of your mouth and talk of profit out the other.

Good luck. I'd just leverage my home to buy more, along with everyone else with wealth and soon enough those with will have even more.

Watch those without really chew the coffee table then
"Value" is a ghost. It does not exist out side of what a buyer will pay.

For nigh on a decade the "market " has danced to tune of shit like "the Block" and the BS they propagated through their "invisible" partner real estate agents, one of which has gone down the shitshoot..rhythms with macarr.

This has all been based on up-selling "jerry built" cheap shit overpriced property to idiots, who paid and now stand to get arse raped.

I absolutely revel in the loss of these idiots.

I hope they have half a brain and sue the people who raped them like Scott Cam and his band of tools and unskilled labourers but doubt many of them have the where with all to even identify who ripped them off.
 

(Log in to remove this ad.)

Pie eyed

Premium Platinum
Joined
Jun 26, 2007
Posts
37,715
Likes
15,078
AFL Club
Collingwood
Other Teams
Magpies
#87
That's fine, but do you realise that hovering like a vulture whilst hoping the market goes tits up and then swooping in with fat stax of hoarded capital and feasting on the carcass of the unfortunate is a very LNP/conservative thing to do? :rolleyes:
I, and my wife, paid off our first house under the heel of 19% interest rates in the 90's.
We both worked 2 jobs and lived on 2 minute noodles.
We had to wait 8 years to have our first child because we could not afford carpet or curtains.

In those days a large block of land (1000-900m2) was 1/4 of the price of your well built 130m2 house that looked like a house.

Now you pay 60% for the (600-500m2) land and 20% hidden tax to the Government and the rest gets you a cheap shit built 180m2 house that looks like a ******* shopping mall.

I honestly don't give crap if every RE agent and property developer in Australia starves to death to be honest.
I would happily put a stake through most of their hearts.

The ones flogging themselves on TV can all die from cancer for all I care the lying self promoting campaigners.
 

Seeds

Brownlow Medallist
Joined
Sep 15, 2007
Posts
27,021
Likes
23,152
Location
I don't know
AFL Club
Geelong
#88
The RBA is not going to push the national economy off a precipice by raising interest rates when house prices are falling lmao. Can we stop with the doomsday scenarios?

We're having a housing market downturn now because we've just been through a five year cycle of high-risk, high-reward lending that's pushed prices to breaking point. We're now going through an engineered downturn by removing those lending practices in order to stave off a catastrophe.

There's two kinds of properties that are significantly overvalued at the moment; properties that had the potential to be sub-divided into higher density residency (ie, big blocks in the inner city) and properties that already were (ie. townhouses and apartments). This is where the damage will be most felt, and these were mostly being snapped up by investors. Those who bought in the outer suburbs are far less affected and might not even realise any decreases to their property value.

Australia is not like the US; if you default on your loan then the debt stays with you. The bank isn't left with the problem of a house worth less than a loan, the investor is left with the problem of having to sell their own house to cover the debt.
You are right the RBA will go lower initially. But interest rates are rising overseas so the rates our banks borrow at will probably go up. Our exchange rate will crash if we have all 3 of property investment falling sharply, the RBA lowering rates and the rest of the world increasing interest rates. This is going to cause major debt payment problems for the banks. Foreign lenders will get might nervous about further lending to them. Its also going to cause high inflation given import costs will rise sharply. The RBA wont be able to keep rates lower for long and will soon have to increase them sharply to respond to the exchange rate crash. Perhaps the one thing that will prevent this scenario from playing out is an economic crisis in the US that sees them reverse course on interest rates. I think thats at least a year away though and strong chance its a couple of years away.
 

its free real estate

Premiership Player
Joined
Jul 30, 2018
Posts
3,922
Likes
4,768
AFL Club
Fremantle
#89
"Value" is a ghost. It does not exist out side of what a buyer will pay.

For nigh on a decade the "market " has danced to tune of shit like "the Block" and the BS they propagated through their "invisible" partner real estate agents, one of which has gone down the shitshoot..rhythms with macarr.

This has all been based on up-selling "jerry built" cheap shit overpriced property to idiots, who paid and now stand to get arse raped.

I absolutely revel in the loss of these idiots.

I hope they have half a brain and sue the people who raped them like Scott Cam and his band of tools and unskilled labourers but doubt many of them have the where with all to even identify who ripped them off.
How many beers are you down when you post?
 

its free real estate

Premiership Player
Joined
Jul 30, 2018
Posts
3,922
Likes
4,768
AFL Club
Fremantle
#90
Australia is not like the US; if you default on your loan then the debt stays with you. The bank isn't left with the problem of a house worth less than a loan, the investor is left with the problem of having to sell their own house to cover the debt.
This was only true of a handful of states. More states have full recourse loans than not.
 

Scotland

Hall of Famer
Joined
May 5, 2006
Posts
45,854
Likes
46,878
AFL Club
West Coast
#91
The Australian housing market has been about to crash since at least 2007.

Really the discussion should be about markets. Port Hedland isn't Sydney which isn't Adelaide.

As far as Perth goes, most places are worth the same as they were 5-10 years ago. A shit investment, but a stable market. Sydney and parts of Melbourne are out of control, but people still flock to live there.

The sooner people let go of 'house prices should always go up' and stop obsessing over the value of their homes the better. If you want to invest in real estate, invest in it. If you want somewhere to live and maintain quality of life then focus on maximising your income/minimising your repayments.

Buy a house for $500k earning $80k a year and it goes up to $600k, you are no better off until you sell it and buy that $600k place you wanted... which is now $720k. Stamp duty goes up, commission goes up...

Buy a house for $500k earning $80k a year, it stays at $500k and you later earn $100k a year... well you're $20k a year better off.
 

Seeds

Brownlow Medallist
Joined
Sep 15, 2007
Posts
27,021
Likes
23,152
Location
I don't know
AFL Club
Geelong
#92
The Australian housing market has been about to crash since at least 2007.

Really the discussion should be about markets. Port Hedland isn't Sydney which isn't Adelaide.

As far as Perth goes, most places are worth the same as they were 5-10 years ago. A shit investment, but a stable market. Sydney and parts of Melbourne are out of control, but people still flock to live there.

The sooner people let go of 'house prices should always go up' and stop obsessing over the value of their homes the better. If you want to invest in real estate, invest in it. If you want somewhere to live and maintain quality of life then focus on maximising your income/minimising your repayments.

Buy a house for $500k earning $80k a year and it goes up to $600k, you are no better off until you sell it and buy that $600k place you wanted... which is now $720k. Stamp duty goes up, commission goes up...

Buy a house for $500k earning $80k a year, it stays at $500k and you later earn $100k a year... well you're $20k a year better off.
The reason why house prices didnt fall in 2007 is because interest rates fell sharply and stayed low (something never seen before), immigration increased and chinese foreigners were looking for somewhere to park their money and choose australian housing as one of their destinations. First home owner grants also increased across many states. If we knew this we would of all said prices would keep rising dramatcally.

Immigration is now going to fall, chinese foreigners have exited the markets and labour us going to reduce the returns to housing investors. Interest rates will only go lower if prices are falling to limit the falls and even then it will most likely not last long due to inflationary and capital outflow pressure. In the medium term the pressure on interest rates will definately be up.
 

Scotland

Hall of Famer
Joined
May 5, 2006
Posts
45,854
Likes
46,878
AFL Club
West Coast
#93
The reason why house prices didnt fall in 2007 is because interest rates fell sharply and stayed low (something never seen before), immigration increased and chinese foreigners were looking for somewhere to park their money and choose australian housing as one of their destinations. First home owner grants also increased across many states. If we knew this we would of all said prices would keep rising dramatcally.

Immigration is now going to fall, chinese foreigners have exited the markets and labour us going to reduce the returns to housing investors. Interest rates will only go lower if prices are falling to limit the falls and even then it will most likely not last long due to inflationary and capital outflow pressure. In the medium term the pressure on interest rates will definately be up.
I said crash, not fall. Mine rose, fell, rose again and right now is probably a bit above where it was in 2007. Plenty of others have fallen a similar amount. Rising and falling is natural, crashing is highly undesirable. If the day comes that my unremarkable ~median CBD house is worth half what I paid for it then we'll all be in deep poop.

What makes you think Chinese will stop investing? Or that immigration will fall? Or that interest rates will rise? The cash rate hasn't changed for two years. Govts talk a big game but they know where their bread is buttered. A housing crash would be a disaster for the govt and the country.
 

_Swoon

Coriander Enthusiast
Joined
Oct 12, 2015
Posts
3,460
Likes
5,179
Location
A kitchen near you
AFL Club
Essendon
Other Teams
Dallas Cowboys
#95
You are right the RBA will go lower initially. But interest rates are rising overseas so the rates our banks borrow at will probably go up. Our exchange rate will crash if we have all 3 of property investment falling sharply, the RBA lowering rates and the rest of the world increasing interest rates. This is going to cause major debt payment problems for the banks. Foreign lenders will get might nervous about further lending to them. Its also going to cause high inflation given import costs will rise sharply. The RBA wont be able to keep rates lower for long and will soon have to increase them sharply to respond to the exchange rate crash. Perhaps the one thing that will prevent this scenario from playing out is an economic crisis in the US that sees them reverse course on interest rates. I think thats at least a year away though and strong chance its a couple of years away.
Interest rates won't rise for the next year at least, and when they do rise they're probably not going to be raising by more than 50 basis points in a year barring some dramatic and unforseen change in the global economy. The sky is not falling, this is a normal part of the property market. People haven't seen a property decline in ten years and all of a sudden everyone is losing their minds.
 

CheapCharlie

Premiership Player
Joined
Jun 12, 2015
Posts
4,131
Likes
4,403
AFL Club
Sydney
Thread starter #98
I know what it shows, but you offered no context or date, which i assume was intentional on your part

As prices fall in the more desirable suburbs the price decrease will spread to the outer suburbs. So what you have in blue now, will see a decrease in price. You will especially see this in re-sales in the outer suburbs, rather than new dwelling sales

This quote is from the very article you quoted:

"In Melbourne, the current downturn is yet to mirror the intensity of the 2008–09 slump but the maps show it has already spread further.

Experts warn that while Melbourne may be faring slightly better than Sydney — home prices in Melbourne are down 5.8 per cent since the peak in November 2017 — it’s following a similar trajectory, albeit four months behind.

“If we look at Sydney, it’s falling pretty much across the board … The rate of the current decline is generally much faster than many of the other periods we’ve seen,” says Cameron Kusher, head of research for Australia at CoreLogic.

In Melbourne you can see that in 2018 the falls have been largely in those areas closer to the city and it’s slowly creeping out to the more affordable suburban areas.”

Mr Kusher says he “wouldn’t be surprised” if Melbourne’s current decline deepened to the 10 per cent fall of the global financial crisis.

“In Melbourne, we’ve not gone quite as deep as the financial crisis yet but… it’s certainly gathering pace.”..
 

its free real estate

Premiership Player
Joined
Jul 30, 2018
Posts
3,922
Likes
4,768
AFL Club
Fremantle
#99
I said crash, not fall. Mine rose, fell, rose again and right now is probably a bit above where it was in 2007. Plenty of others have fallen a similar amount. Rising and falling is natural, crashing is highly undesirable. If the day comes that my unremarkable ~median CBD house is worth half what I paid for it then we'll all be in deep poop.

What makes you think Chinese will stop investing? Or that immigration will fall? Or that interest rates will rise? The cash rate hasn't changed for two years. Govts talk a big game but they know where their bread is buttered. A housing crash would be a disaster for the govt and the country.
Problem with stagnation is people get burned because their investment was dependent on capital growth. Either way it amounts to a “lost decade” for the economy.
 

_Swoon

Coriander Enthusiast
Joined
Oct 12, 2015
Posts
3,460
Likes
5,179
Location
A kitchen near you
AFL Club
Essendon
Other Teams
Dallas Cowboys
I know what it shows, but you offered no context or date, which i assume was intentional on your part
Well, when you offer a retort like "surely you must be joking" then you can't expect much substance in return.

As prices fall in the more desirable suburbs the price decrease will spread to the outer suburbs. So what you have in blue now, will see a decrease in price. You will especially see this in re-sales in the outer suburbs, rather than new dwelling sales

This quote is from the very article you quoted:

"In Melbourne, the current downturn is yet to mirror the intensity of the 2008–09 slump but the maps show it has already spread further.

Experts warn that while Melbourne may be faring slightly better than Sydney — home prices in Melbourne are down 5.8 per cent since the peak in November 2017 — it’s following a similar trajectory, albeit four months behind.

“If we look at Sydney, it’s falling pretty much across the board … The rate of the current decline is generally much faster than many of the other periods we’ve seen,” says Cameron Kusher, head of research for Australia at CoreLogic.

In Melbourne you can see that in 2018 the falls have been largely in those areas closer to the city and it’s slowly creeping out to the more affordable suburban areas.”

Mr Kusher says he “wouldn’t be surprised” if Melbourne’s current decline deepened to the 10 per cent fall of the global financial crisis.

“In Melbourne, we’ve not gone quite as deep as the financial crisis yet but… it’s certainly gathering pace.”..
Did you just back up my own argument for me? Thanks, I guess.
 
Top Bottom