Society/Culture Australian Property Prices to Crash?

[Taylor]

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

How do they do that without inflation/higher interest rates?

 

[Power Raid]

How do they do that without inflation/higher interest rates?

The cute arrangement between the RBA and treasury is keeping interest rates lower than market

 

[Taylor]

The cute arrangement between the RBA and treasury is keeping interest rates lower than market

I thought they were trying to stimulate the economy like that, but would they care if the economy crashes as long as their debt isn't worthless?

 

[hamohawk1]

I thought they were trying to stimulate the economy like that, but would they care if the economy crashes as long as their debt isn't worthless?

They've got to save face at all costs. Enough excuses to blame if it all goes to s*it anyway

 

[Power Raid]

I thought they were trying to stimulate the economy like that, but would they care if the economy crashes as long as their debt isn't worthless?

It stimulates the economy by injecting liquidity and lowering Fx. Other countries are doing this as stimulus but also a currency war.

What is scary is currency wars are always followed by trade wars and then real wars.

 

[HirdsTheWord]

The cute arrangement between the RBA and treasury is keeping interest rates lower than market

The government cant afford to raise interest rates - they need people spending money in the economy, not worrying about their mortgage payments.

The government has shown to everyone now that they are absolutely steadfast in fighting any natural correction to the Australian housing market.

Lowering interest rates in the first place hasn't done anything to allow people to enter the housing market, all its done is allow people to pay more for a property which has essentially inflated the market. Its absolutely crazy and has just created a huge divide between people who already own property compared to those who don't. People literally have no choice but to get a $1,000,000 mortgage. Raising interests rates on that would be a disaster for anyone new in the market.

Its absolutely nuts what's going on, and the government has essentially allowed it to happen.

I would love to see the statistics of how many people own houses that couldn't actually afford to buy, without taking into accounting equity.

 

[Mofra]

The government cant afford to raise interest rates - they need people spending money in the economy, not worrying about their mortgage payments.

The government has shown to everyone now that they are absolutely steadfast in fighting any natural correction to the Australian housing market.

Lowering interest rates in the first place hasn't done anything to allow people to enter the housing market, all its done is allow people to pay more for a property which has essentially inflated the market. Its absolutely crazy and has just created a huge divide between people who already own property compared to those who don't. People literally have no choice but to get a $1,000,000 mortgage. Raising interests rates on that would be a disaster for anyone new in the market.

Its absolutely nuts what's going on, and the government has essentially allowed it to happen.

The RBA and government are independent of each other, by design.
Rates globally are low (negative in some countries) so we're hardly outliers.

 

[HirdsTheWord]

The RBA and government are independent of each other, by design.
Rates globally are low (negative in some countries) so we're hardly outliers.

I know, i'm just saying the government cant afford for them to be raised.

they need people spending in the wider economy.

 

[HirdsTheWord]

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.

If you think Adelaide is bad try living in Sydney.

Me and my Wife earn a combined Salary of 300k a year before tax, we are both 33. That's almost 3 times the Australian Average Household income, which many would say is quite comfortable.

The houses we are looking at which are 25-35km's away from the CBD are all $1.5m+......these are generally 3 to 4 bed houses that need work to modernize, and on 500-600m2 blocks, nothing crazy.

Even with a $500,000 deposit We are looking at a $1,000,000 mortgage just to buy a house, not including $ needed to renovate. its utterly insane. I have no idea how people afford to spend as much as they are on houses, if like I said the average household income is just over 100k, they either must have a sh*t load of equity, a dead relative or they are mortgaged up to their absolute eyeballs.

I can only imagine what someone earning the Australian Average Household income is facing in order to get a house.

 

[Jimmy_the_Gent]

Plenty of commentary at the moment about no immigration but plenty of building, which may cause price falls.

Australia is used to an under supply of housing.

The other part of this is that interest as a proportion of repayments is at an all time low.

 

[Power Raid]

The government cant afford to raise interest rates - they need people spending money in the economy, not worrying about their mortgage payments.

The government has shown to everyone now that they are absolutely steadfast in fighting any natural correction to the Australian housing market.

Lowering interest rates in the first place hasn't done anything to allow people to enter the housing market, all its done is allow people to pay more for a property which has essentially inflated the market. Its absolutely crazy and has just created a huge divide between people who already own property compared to those who don't. People literally have no choice but to get a $1,000,000 mortgage. Raising interests rates on that would be a disaster for anyone new in the market.

Its absolutely nuts what's going on, and the government has essentially allowed it to happen.

I would love to see the statistics of how many people own houses that couldn't actually afford to buy, without taking into accounting equity.

but how does it end? ugly

who would lend money to the government at near zero interest? no one other than someone who can print money
who would buy a government bond at near zero interest rates? no one other than the government or a deep discount to face value
So how does the government borrow in the future? they can't without printing money

There is no escape from this other than hoping the currency devaluation to assets (as you highlight in property and hard assets like mining) results in economic stimulus. The reality is, its just a band aid hiding the pain yet to come.

Once other nations cease the currency war, we can't print money without inflation. With that we will see real gdp decrease and synthetic wage cuts.

To curb inflation, we will see a return to 1970s type economy pressures.

 

[Jimmy_the_Gent]

Before we get inflation, we need to get wage inflation. Basically people will need to be able to push prices up before they go up (inflation).

As a result, even if rates increase to curb inflation, people will have more income to pay the added interest.

Also, if we do get a bunch of inflation, people and the government can inflate away their debt.

We're not in a bad spot.

 

[hamohawk1]

The FOMO that's been created in the market the last 6 months is crazy.

It's hard to continue to be bearish on the market, but local demand can't keep this going forever can it?

 

[Deliverance]

Before we get inflation, we need to get wage inflation. Basically people will need to be able to push prices up before they go up (inflation).

As a result, even if rates increase to curb inflation, people will have more income to pay the added interest.

Also, if we do get a bunch of inflation, people and the government can inflate away their debt.

We're not in a bad spot.

Unless inflation happens overseas first. They raise rates, then we're forced to raise rates.

 

[Power Raid]

Before we get inflation, we need to get wage inflation. Basically people will need to be able to push prices up before they go up (inflation).

As a result, even if rates increase to curb inflation, people will have more income to pay the added interest.

Also, if we do get a bunch of inflation, people and the government can inflate away their debt.

We're not in a bad spot.

that's not quite how it works in globalisation, where lower costs of production have kept the lid on inflation for three decades or more AND Australia's income is immaterial to global supply. Inflation will however occur with currency devaluation post currency wars, as imports become more expensive.

we will also see inflation increase with the decoupling of globalisation, due to security of supply.

Inflate away the debt? how do we raise further debt by f'ing over the last debt holders? The answer is printing money

 

[Jimmy_the_Gent]

Unless inflation happens overseas first. They raise rates, then we're forced to raise rates.

I'm pretty sure "forced" isn't the right word.

Please explain why raising rates can't be avoided if, say, the USA raises theirs.

 

[Deliverance]

I'm pretty sure "forced" isn't the right word.

Please explain why raising rates can't be avoided if, say, the USA raises theirs.

Pretty simple equation. If US rates go up Aussie banks must raise to remain competitive.

 

[Jimmy_the_Gent]

Pretty simple equation. If US rates go up Aussie banks must raise to remain competitive.

That can't be the simple equation. Having higher rates makes you less competitive. Customers will go where they pay less interest.

Also are we talking about reserve banks or just general banks. Because inflation is more a reserve bank thing but you're making it sound like the big 4 matter the most here.

 

[Deliverance]

That can't be the simple equation. Having higher rates makes you less competitive. Customers will go where they pay less interest.

Also are we talking about reserve banks or just general banks. Because inflation is more a reserve bank thing but you're making it sound like the big 4 matter the most here.

Aussie banks. Though the reserve will have to worry about AUD value.

 

[Jimmy_the_Gent]

Aussie banks. Though the reserve will have to worry about AUD value.

Got it. Funding costs for our retail banks who have to get funds from overseas increase so they pass on the cost to households.

That's all well and good but the banks here aren't going to rush into blowing up the housing market. That would be cutting off their nose to spite their face, seeing as mortgage defaults are lost revenue for them and the equity in a house is their cushion.

Our banks would rather have their net interest margin squeezed than have the property market blow up.

 

[Deliverance]

Got it. Funding costs for our retail banks who have to get funds from overseas increase so they pass on the cost to households.

That's all well and good but the banks here aren't going to rush into blowing up the housing market. That would be cutting off their nose to spite their face, seeing as mortgage defaults are lost revenue for them and the equity in a house is their cushion.

Our banks would rather have their net interest margin squeezed than have the property market blow up.

Not saying they'll rush in to it, but bottom line is we generally follow the trends of the US and OECD in regards to interest rates.

 

[Pessimistic]

And...here we are again

 

[Jesse Custer]

Can never lose with owning property.

 

[Pessimistic]

Can never lose with owning property.

Except society loses. It should be shelter first, investment next. Building sh*t for investment not people is so Fukked

 

[Pie eyed]

Given the current facts. (record prices in and even more record outside the Cities)
I know two things for sure.
I was very wise to tell my daughter and son-in-law to buy a new home, which is now valued at $35,000 more than their contract price, a month before it is even finished.

The opinion of an economic "expert" is worthless especially one who works for the real estate industry or the ******* Liberal party.
An idiot knows more than these shitstains

I knew this in any case because I have lived through decades of economic incompetence, arse covering and Liberal Party bullshit.
I reckon we should shoot each and every surviving Liberal Treasurer, once every time they lied.
Joe, you're first up you fat, cigar chomping, lying stripper molesting **********.