Society/Culture Australian Property Prices to Crash?

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Snake_Baker

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you're confusing two things

banks maintaining loans is very different to banks issuing new ones

after the GFC getting a loan in the USA became a lot harder, and that suppressed demand for new houses (and therefore prices in specific markets)

if the banks got hit here, the price would be a similar restriction on new credit, but you have to look who gets that. first homeowner and lower end of the market would be crushed. the rest would be okay, slower, but okay (as people are using existing equity to get loans)

the exception is apartments, these are driven by demand from migrants, so its immigration that will dictate their demand
Fair enough.
 

Deliverance

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you're confusing two things

banks maintaining loans is very different to banks issuing new ones

after the GFC getting a loan in the USA became a lot harder, and that suppressed demand for new houses (and therefore prices in specific markets)

if the banks got hit here, the price would be a similar restriction on new credit, but you have to look who gets that. first homeowner and lower end of the market would be crushed. the rest would be okay, slower, but okay (as people are using existing equity to get loans)

the exception is apartments, these are driven by demand from migrants, so its immigration that will dictate their demand
After the banking RC we tightened lending requirements as well, which had the desired effect on property prices. Unfortunately Scomo loosened APRAs restrictions and surprise surprise, prices rose again.
 

CheapCharlie

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How many of the top 10 stocks in this country are banks? Imagine what a 10% default rate would do to them?

I hope the market does collapse, because I reckon it's the biggest racket in the country. Housing is ridiculously overpriced.
The big 4 banks make up 4 of the top 6 Australian public companies.

Given they act in unison with one another rather than compete with one another, we effectively we have one large bank here with 4 separate brands.

No way the government will ever let the banks fail
 

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Poor Form

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You've got the answer, how did you get there.
We're no where near the price increases of the inflation era of 70s under Whitlam. Lonnng bubble.
I've got the answer how we got to this situation, not the solution to the affordability though.

I do feel like we are hitting the wall in certain markets, property above $2.5m-10m seems to have stabilised sub 10% growth since 2016. People realising that their salary will never pay off these properties no matter how low the interest rates. Probably changes when interest rates go deep negative.
 

Frank Grimes

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The big 4 banks make up 4 of the top 6 Australian public companies.

Given they act in unison with one another rather than compete with one another, we effectively we have one large bank here with 4 separate brands.

No way the government will ever let the banks fail
Just a shame the Commonwealth bank was privatised. That would give the government/people more control over the banks and the competition.

Instead as mentioned the big 4 appear to act in unison.
 

hamohawk1

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The day property prices (average 3 bed house 10-15km from the city) got beyond 5 x the yearly wage is when its all become a bit of a joke.

The government can solve this a few ways:
1. Decentralise the big cities. Become serious about sending services and incentivise to go out to the country.
2. Remove NG and other incentives.
3. Make apartments desirable for families to live in. The majority of 3+ bedroom apartments in Melbourne are either tailored towards high end customers, or dog boxes. Can be incentivised through the correct policy.


Anyone who claims supply is an issue is laughing. The only reason we were near capacity (firmly believe we've always had a big surplus of houses/ TH/ apartments) is we were pumping migrants into this country at a rate of notches.
 

utility

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Anyone who claims supply is an issue is laughing. The only reason we were near capacity (firmly believe we've always had a big surplus of houses/ TH/ apartments) is we were pumping migrants into this country at a rate of notches.
Migrants + mortgage credit.

I had a look online at some country towns in Victoria...400k! That's 300,000 USD. When you compare what you can buy overseas for that much it's simply not worth it. For the same amount you can buy a 3 room (2 bedroom) apartment in downtown Moscow, and it's one of the most expensive cities in the world.

One thing that annoys me in Melbourne is that it's almost impossible to find a decent 3 bedroom apartment anywhere, except for million-plus "penthouse" apartments. My current apartment is a comfortable size (2br) but really need three with kids getting older.
 

hamohawk1

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Migrants + mortgage credit.

I had a look online at some country towns in Victoria...400k! That's 300,000 USD. When you compare what you can buy overseas for that much it's simply not worth it. For the same amount you can buy a 3 room (2 bedroom) apartment in downtown Moscow, and it's one of the most expensive cities in the world.

One thing that annoys me in Melbourne is that it's almost impossible to find a decent 3 bedroom apartment anywhere, except for million-plus "penthouse" apartments. My current apartment is a comfortable size (2br) but really need three with kids getting older.
As i stated above, the bolded part resonates highly, as the apartment market doesnt seem to factor this in. Add onto this body corp fees, its still doesnt seem as attractive to many people who would rather still go to the fringe and spend 400k on a 300m2 block with a detached house.
 

hamohawk1

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You get a lot more for your dollar in parts of regional Victoria than in Melbourne but it depends where you look.
You get a bit more but Melbourne will always win out when it is the cultural, sporting, working hub of Victoria with any PT from regional areas being pretty sub-par access wise and slow.
 

Power Raid

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Adelaide housing market continues to be insane. Houses going for above asking prices in no time. Just offered top dollar on a house yesterday and was knocked back. It’s getting disheartening looking at very mediocre houses pop up and seeing their asking prices. I’m honestly not sure what to do at this point. I want a house but I don’t want to settle for anything, but I know the longer I wait the more prices will escalate.
wait until the first home owners grants and the job keeper gets rolled back
 

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TheBrownDog
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There has to be investors in the market to create enough properties for rentals, but it seems the scales have tipped way too much in favour of investors who are looking at the capital growth and using negative gearing as a means to enter and stay and increase their market presence
If you look internationally property prices increased at the same time as here in Australia, in jurisdictions that don't have negative gearing

The drivers are increased incomes, low interest rates and the big one being the parking of foreign income/ wealth
 

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TheBrownDog
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FHO grants won't get wound back. Helps keep supply being churned onto the market i.e. tradies employed. Will inevitably lead to an oversupply of housing if immigration doesnt come back in the next 12-18 months.
it always gets wound back

I land bank when the property market is slow and then sub-divide and sell when the first home owners stimulus gets pumped up

easy formula but it does highlight the first home owners is not an "all good thing" for first home owners
 

RegHickeyStand

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FHO grants won't get wound back. Helps keep supply being churned onto the market i.e. tradies employed. Will inevitably lead to an oversupply of housing if immigration doesnt come back in the next 12-18 months.
If the property market plunges due to oversupply and general economic down turn, the house price plunges. Builders and developers will literally cease building because there is no money in it. The government will pour money into another sector of the economy to get it going.

Talking to a realestate guy yesterday. He has run out of properties. Told me the market is only up because houses there are so few houses on sale.
 

Herne Hill Hammer

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There has to be investors in the market to create enough properties for rentals, but it seems the scales have tipped way too much in favour of investors who are looking at the capital growth and using negative gearing as a means to enter and stay and increase their market presence
There are pretty much no long term rentals where I live, they're all Airbnb / short term holiday rentals.

At the start of COVID a lot were put up for 6 month leases and now the lock down is lifted they're all back to short term holiday rentals.
 

Herne Hill Hammer

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it always gets wound back

I land bank when the property market is slow and then sub-divide and sell when the first home owners stimulus gets pumped up

easy formula but it does highlight the first home owners is not an "all good thing" for first home owners
The Builders Grant will disappear, not so sure about the FHOG.

States, such as Victoria, are offering 25 to 50% stamp duty discounts. WA were offering $20k on top of the Federal $25k Builders Grant.
 

hamohawk1

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If the property market plunges due to oversupply and general economic down turn, the house price plunges. Builders and developers will literally cease building because there is no money in it. The government will pour money into another sector of the economy to get it going.

Talking to a realestate guy yesterday. He has run out of properties. Told me the market is only up because houses there are so few houses on sale.
I know its early Jan, but a quick scroll of domain, or realestate shows very few new properties, with the same ones sitting their or reappearing again.

Are people holding on for dear life?
 

Ned_Flanders

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I know its early Jan, but a quick scroll of domain, or realestate shows very few new properties, with the same ones sitting their or reappearing again.

Are people holding on for dear life?
1) doesnt stock normally tighten over chrissy with fewer people buying?

2) people dont want to list during lockdown - getting a high price with no inspections is tough
 

hamohawk1

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1) doesnt stock normally tighten over chrissy with fewer people buying?

2) people dont want to list during lockdown - getting a high price with no inspections is tough
I would consider both of your points correct, but as housing stock was so low during lockdown, many people expected it to fire up in the coming months, yet it has barely risen above pre-civid levels.
 

Nuggs Bunny

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I would consider both of your points correct, but as housing stock was so low during lockdown, many people expected it to fire up in the coming months, yet it has barely risen above pre-civid levels.
Nobody expected it to fire up over the holiday period because it never fires up over the holiday period
 

Ned_Flanders

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I would consider both of your points correct, but as housing stock was so low during lockdown, many people expected it to fire up in the coming months, yet it has barely risen above pre-civid levels.
I was looking from May (??) and bought in August. We did a check just this week (to see if we f’ed or got f’ed)

this is melbourne centric, and most inner eastern and northern suburbs

- pretty houses and good location houses still moved ******* fast, and with premiums

- anything requiring work or with issues, seriously struggled

- a lot of places were taken off market entirely in 2020 (we did this ourselves)

- there is no decent stock for what we were buying now compared to Q3 and Q4 last year. and im not talking just for good properties, i mean full stop

- apartments are beyond f’ed, and the amount of stock still in the pipeline is huge
 

hamohawk1

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I was looking from May (??) and bought in August. We did a check just this week (to see if we f’ed or got f’ed)

this is melbourne centric, and most inner eastern and northern suburbs

- pretty houses and good location houses still moved ******* fast, and with premiums

- anything requiring work or with issues, seriously struggled

- a lot of places were taken off market entirely in 2020 (we did this ourselves)

- there is no decent stock for what we were buying now compared to Q3 and Q4 last year. and im not talking just for good properties, i mean full stop

- apartments are beyond f’ed, and the amount of stock still in the pipeline is huge
Apartments are likely going to allow a lot of people (including myself) get into the market. Just unlikely to build significant equity in them, with the risk of going down further.
 

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