Society/Culture Australian Property Prices to Crash?

[Ned_Flanders]

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.

the way to look at apartments is they dont hold value like dirt does, but it allows you to build equity

lets say you buy an apartment for $400k. you do that with nothing more than a shitty deposit. in x years, you want something new. you "deposit" this time is effectively the principle you paid off on the loan (which is why dont go interest only)

good luck mate

 

[Herne Hill Hammer]

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

Last week my wife and I were driving around Beaconsfield, Officer, Berwick, Narre Warren, Hampton Park and Clyde, there were streets and streets of new builds in very early stages. I'm not talking a few houses per street, I'm talking entire streets of mainly double storey townhouses by the looks or houses on very small blocks, we couldn't believe how much was going up.

 

[Deliverance]

Last week my wife and I were driving around Beaconsfield, Officer, Berwick, Narre Warren, Hampton Park and Clyde, there were streets and streets of new builds in very early stages. I'm not talking a few houses per street, I'm talking entire streets of mainly double storey townhouses by the looks or houses on very small blocks, we couldn't believe how much was going up.

Melbourne's, f’ed. This is happening in every suburb. Way too populated these days.

 

[rdhopkins2]

Once the government Corona assistance dries up and the banks start forcing people to repay mortgages after deferment, it will get interesting.

 

[00Stinger]

the way to look at apartments is they dont hold value like dirt does, but it allows you to build equity

lets say you buy an apartment for $400k. you do that with nothing more than a shitty deposit. in x years, you want something new. you "deposit" this time is effectively the principle you paid off on the loan (which is why dont go interest only)

good luck mate

the issue with that is that in x years the value of dirt has increased at a much higher rate than the principle you have paid of your apartment and therefore are no better off, if anything further behind the 8 ball in buying a house

The first property I bought was an apartment, except for the lifestyle it was a money pit.

 

[Ned_Flanders]

the issue with that is that in x years the value of dirt has increased at a much higher rate than the principle you have paid of your apartment and therefore are no better off, if anything further behind the 8 ball in buying a house

The first property I bought was an apartment, except for the lifestyle it was a money pit.

Like all properties, you have to make allowance if maintenance or other issues are likely

The bigger problem is too many pay back interest only. Then I 100% agree

 

[Power Raid]

Once the government Corona assistance dries up and the banks start forcing people to repay mortgages after deferment, it will get interesting.

currency is at greater risk of devaluation that property

I dare say if property pulls back 10%, currency will fall further as a mechanism to protect asset values and the banks

 

[hamohawk1]

the issue with that is that in x years the value of dirt has increased at a much higher rate than the principle you have paid of your apartment and therefore are no better off, if anything further behind the 8 ball in buying a house

The first property I bought was an apartment, except for the lifestyle it was a money pit.

Doubt land will ever go up in value as quick or much as it did from 2000-2017ish.

In saying that, governments give little incentive for living in an apartment. At the very lest you should not be getting charge body corp and Council fees. Has to be 1 or the other.

 

[Power Raid]

Doubt land will ever go up in value as quick or much as it did from 2000-2017ish.

In saying that, governments give little incentive for living in an apartment. At the very lest you should not be getting charge body corp and Council fees. Has to be 1 or the other.

body corporate is the equivalent of paying for your own water bill, insurance and painting of your own house

council is the equivalent of roads and rubbish collection for your own house



the bigger issue is the failure to decentralise and the pork barrelling which has people paying four times as much for an apartment as you could get a house in the late 90s

decentralise and reverse r codes and you'll find affordable housing will return, along with an improved quality of life

 

[Jimmy_the_Gent]

In saying that, governments give little incentive for living in an apartment. At the very lest you should not be getting charge body corp and Council fees. Has to be 1 or the other.

I thought I was the only one who an opinion similar to the above.

Council rates (at least in WA) are based on gross rentable value. The more you can rent your place, the more you pay in rates.

However, if you pay strata fees, that would obviously eat into the actual amount of cash you get if you rent your place out. Therefore, your rates should also take your strata fees into account and charge you less.

If your a state government, why both making this change? To encourage density.

 

[Power Raid]

I thought I was the only one who an opinion similar to the above.

Council rates (at least in WA) are based on gross rentable value. The more you can rent your place, the more you pay in rates.

However, if you pay strata fees, that would obviously eat into the actual amount of cash you get if you rent your place out. Therefore, your rates should also take your strata fees into account and charge you less.

If your a state government, why both making this change? To encourage density.

I would base income tax rate on Gross Rental Values and a property tax based on Gross Rental Values on all properties, with the Gross Rental Value based on the land and not land improvements.

This is an efficient way of taxing city improvements resulting in an increase in the value of property.

 

[hamohawk1]

I thought I was the only one who an opinion similar to the above.

Council rates (at least in WA) are based on gross rentable value. The more you can rent your place, the more you pay in rates.

However, if you pay strata fees, that would obviously eat into the actual amount of cash you get if you rent your place out. Therefore, your rates should also take your strata fees into account and charge you less.

If your a state government, why both making this change? To encourage density.

Yep - seems completely illogical to me. In Vic most owners corp fees start around $1500, with the average i would say around $3-5k for a 1-2 bed apartment without the shared services e.g. gym, rooftop deck etc.

Not to mention, most new apartment complexes don't receive Council waste services and require contracted pickup = higher OC fees.

As property ownership of detached single dwellings was relatively high until 20ish years ago the legislation hasn't caught up for renters/ higher density living. Only in VIC in the past 2-3 years has it become illegal to have bedrooms that don't have direct light access.

 

[Messenger]

Last week my wife and I were driving around Beaconsfield, Officer, Berwick, Narre Warren, Hampton Park and Clyde, there were streets and streets of new builds in very early stages. I'm not talking a few houses per street, I'm talking entire streets of mainly double storey townhouses by the looks or houses on very small blocks, we couldn't believe how much was going up.

And if you go to Craigieburn, Tarneit, Armstrong Creek, South Morang, etc it is exactly the same. In fact the estates are utterly interchangeable. A large block is now anything over 500sqm and the gutters of these houses nearly touch.

Its horrible.

 

[hamohawk1]

And if you go to Craigieburn, Tarneit, Armstrong Creek, South Morang, etc it is exactly the same. In fact the estates are utterly interchangeable. A large block is now anything over 500sqm and the gutters of these houses nearly touch.

Its horrible.

The great australian dream of a 400m2 block with the house covering 75% of it.

 

[Messenger]

The great australian dream of a 400m2 block with the house covering 75% of it.

85%

 

[hamohawk1]

85%

And just 45km from the CBD. Honestly astounds me people buying on the fringe when they can grab something for not that much a few more kms out e.g. Truginina vs geelong

 

[Nuggs Bunny]

And if you go to Craigieburn, Tarneit, Armstrong Creek, South Morang, etc it is exactly the same. In fact the estates are utterly interchangeable. A large block is now anything over 500sqm and the gutters of these houses nearly touch.

Its horrible.

Its the new reality of big city living unfortunately. If everybody lived in a detached house on an 800m2 block the urban boundary would stretch to Kyneton. The suburbs in the middle ring Melbourne that have those sorts of houses date back to when Melbourne was a much smaller place.

 

[Messenger]

And just 45km from the CBD. Honestly astounds me people buying on the fringe when they can grab something for not that much a few more kms out e.g. Truginina vs geelong

It’s what they can get, though.

We bought our first home in 2003 and moved further out in 2019 to get better value for money. Distance to the CBD is utterly immaterial to our lives.

 

[hamohawk1]

It’s what they can get, though.

We bought our first home in 2003 and moved further out in 2019 to get better value for money. Distance to the CBD is utterly immaterial to our lives.

For me its proximity to PT services. If you're close to a train station, be that of the metro or regional i don't think it matters as much. You can be 7km from Melbourne's CBD (inner west) and it can take you the same/ longer than being 20-25km.

 

[RegHickeyStand]

Last week my wife and I were driving around Beaconsfield, Officer, Berwick, Narre Warren, Hampton Park and Clyde, there were streets and streets of new builds in very early stages. I'm not talking a few houses per street, I'm talking entire streets of mainly double storey townhouses by the looks or houses on very small blocks, we couldn't believe how much was going up.

My son bought one in Clyde 5 years back. I was amazed how they are letting developers make the blocks so freaking small. They are one coat of paint from being semi-detached places.

 

[Herne Hill Hammer]

My son bought one in Clyde 5 years back. I was amazed how they are letting developers make the blocks so freaking small. They are one coat of paint from being semi-detached places.

Yep, Clyde was the other one as we were driving from Beaconsfield to Cranbourne. For decades I always thought that Clyde must have been like a little fishing village or something, I used to see the turnoff just the other side of Cranbourne on the way to Philip Island. When I moved back from WA in 2017 I bought some furniture off someone from Clyde and went to pick it up. Wow!

 

[RegHickeyStand]

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?

I checked the market and everyone was saying its going to go crazy when the lockdown relaxes. Never did. I have wondered if the timing of Covid hid a major worldwide financial meltdown we might have had. Governments worldwide pouring money into economies while we run down stock?

I did some figures about a month ago. The price of houses (Australia) went up nearly 100% in real terms (cost of living Vs house price) from 1999 to 2009, and a further 65% from 2009 to 2019. House prices have never gone up like that in Australia's history. Not by that much, or that continuous lenth of time. As a matter of fact, I checked other countries, and could not find anything likee it over such a length of time. Closest I got was Ireland. Just as steep, but not as long. And when it plummetted (2009/10?) it was dramatic, but short-lived. House prices nearly halved.

 

[Scotland]

the way to look at apartments is they dont hold value like dirt does, but it allows you to build equity

lets say you buy an apartment for $400k. you do that with nothing more than a shitty deposit. in x years, you want something new. you "deposit" this time is effectively the principle you paid off on the loan (which is why dont go interest only)

good luck mate

A friend of mine bought an apartment in Perth about 10 years ago. Cost low to mid $600s. Bank valuation in 2020 came in at $500k. One with an identical floor plan in the same building recently sold for $560k, another $445k.

I don't like apartments personally (don't need an acreage, but at least a courtyard and some privacy) but their values fluctuate with the overall housing market going up and down and with supply of apartments. My old street had about 20 houses on it. Unless I went full Selling Houses Australia on my house it was just going to go up and down in value the same as every other house in the street. Problem with apartments is that there might be enough demand to warrant the price being $600k at the current supply level and then 2 or 3 more buildings go up and suddenly there are a couple of hundred more of them available. Couple that with a slow or falling market and the values can drop significantly.

 

[Ned_Flanders]

A friend of mine bought an apartment in Perth about 10 years ago. Cost low to mid $600s. Bank valuation in 2020 came in at $500k. One with an identical floor plan in the same building recently sold for $560k, another $445k.

I don't like apartments personally (don't need an acreage, but at least a courtyard and some privacy) but their values fluctuate with the overall housing market going up and down and with supply of apartments. My old street had about 20 houses on it. Unless I went full Selling Houses Australia on my house it was just going to go up and down in value the same as every other house in the street. Problem with apartments is that there might be enough demand to warrant the price being $600k at the current supply level and then 2 or 3 more buildings go up and suddenly there are a couple of hundred more of them available. Couple that with a slow or falling market and the values can drop significantly.

It's why you have to research

If you buy an old one in an area with a tonne going up, you will lose money

If it's shitty and better stock is on the market, you will lose money

If you buy during a major bubble like the mining boom, you will lose money.

I've made and lost money on apartments, BUT we know exactly why we lost it (we got f’ed by about a dozen developments going up 12 months after our building was complete - lack of research by us)

 

[hamohawk1]

Seems to be a lot of positive sentiment in the market at the moment.