Society/Culture Australian Property Prices to Crash?

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Frank Grimes

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May 8, 2007
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Did you acquire to keep them, or did you intend to do a quick flip? Property is fickle for the latter but if you’re holding on to it then you just ride the waves.
It also depends on other factors even holding on to it long term.

For example buying into a country tiwn which relies on a commodity such as mining for employment can be risky. If the mine is mined out or there is a down turn for the demand of the resource then it can affect property prices negatively.

Or another example is buying an apartment. As we have seen with the cladding issue it c an affect it negatively.

Even a deteched house in a capital city isn't safe if something undesirable it built close by (e.g. a land fill).

We have even seen a big down turn in Perth about 10 years ago.

However, it has been hard to 'lose' in property in the last 30 years in General. I know it has been said many times over the years, but I can't see how it can keep going the way it has. Especially if wages have been stagnant for a while now and there doesn't appear to be a rise in wages on the horizon.
 

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juss

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I've been house hunting recently. The auction market so far is insane in Melbourne this recent period.

It doesn't bode well for first home buyers as it doesn't look like slowing any time soon and these prices are now being used to set the benchmark for comparable properties
 

Deliverance

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It will come down to inferest rates and whether or not people can afford to repay their borrowimgs if rates go up.
Obviously the reserve will keep them as low as possible for as long as possible. Central banks globally are shitting themselves about increasing.
 

Simon_Nesbit

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Regional areas have more demand now than at any time in living history. Australia wide, if you own property outside the major centres, your property value has likely increased 10-20% in the last twelve months, and showing no signs of slowing down.

If COVID is 'fixed' and immigration returns, the major metropolitan centres will eventually recover. It's natural that someone who lives in a highly centralised urban area will feel more comfortable replicating that in a new country. Until then, the correction of the hyper-inflated prices of centralised apartments will continue.

Australia, for all it's "great open spaces" is incredibly bad at future planning/proofing. COVID could be the greatest thing that has ever happened to us as a Country - as it's proven that our desire for a centralised lifestyle (wannabe USA/Asia/Europe) we covet is contrary to our physical advantages. Dramatic increases in spending for transport, communication and satellite services will help Australia take full advantage of it's assets.

Centralised Office/Commercial spaces are in for a world of pain - I doubt they will ever fully recover. Similar for centralised shopping areas. Convenience is key and the 'shopping centre' (giant retail warehouses) supported by network of online shopping/local distribution are the future.

I don't see residential property having any negative corrections in the near future - I think we have just had our collective eyes opened.
 

Simon_Nesbit

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One I've held for over a decade

The notion of guaranteed capital gains is a myth
I'm sorry to hear that Ned - if you feel comfortable it would be a great exercise to work through so that others can learn from your experience.

Whereabouts did you buy?
From an investment perspective, what was the trigger for that particular property over others in different areas?
What changed since your purchase that changed the Investment value?
Is it still a worthwhile Investment, or are you trying to protect what are now sunk costs?
 

FRUMPY

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Aug 18, 2006
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I drive past farm land out near where I live and just see $$$$$. The property development going on in my area (outer northern suburbs) I'd love to own a farm out here. Heard of one that sold, over $100m dollars.....most would be in their families for generations I'd reckon as well

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twotooto

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Sep 26, 2015
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It also depends on other factors even holding on to it long term.

For example buying into a country tiwn which relies on a commodity such as mining for employment can be risky. If the mine is mined out or there is a down turn for the demand of the resource then it can affect property prices negatively.

Or another example is buying an apartment. As we have seen with the cladding issue it c an affect it negatively.

Even a deteched house in a capital city isn't safe if something undesirable it built close by (e.g. a land fill).

We have even seen a big down turn in Perth about 10 years ago.

However, it has been hard to 'lose' in property in the last 30 years in General. I know it has been said many times over the years, but I can't see how it can keep going the way it has. Especially if wages have been stagnant for a while now and there doesn't appear to be a rise in wages on the horizon.
Was going to post similar. Many got burnt here(WA) buying in regional towns during construction phases and/or boom times.

Also potential to get burnt with collaborative sorts of projects.

Re Perth...yep, the arse well and truly fell out of the market over the past 7-8 years but it's had a nice little upward swing in the last 8 months or so. Potential for it to reach pre-crash levels(and even surpass) with all of the factors combining at the moment(low interest rates, low rental availability, govt incentives, yada yada).
 

juss

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I drive past farm land out near where I live and just see $$$$$. The property development going on in my area (outer northern suburbs) I'd love to own a farm out here. Heard of one that sold, over $100m dollars.....most would be in their families for generations I'd reckon as well

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I reckon that's where the money is. Over decades we expand and grow and if you buy just further out can see big returns in 10-30 years.
 

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Drummond

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By law they need to update the quoted range if that's the case. Hold them to that, you can report them if they don't.
It’s happening all the time. Put in max asking price 2 months back. Put in 10k over max last week and yeah 22k over this week. I need a house but this is madness, not sure what to do at this point.

The price brackets are almost meaningless at this point. You have to well and truly exceed max price to even get a look-in.
 

RAPPA

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Feb 20, 2008
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I drive past farm land out near where I live and just see $$$$$. The property development going on in my area (outer northern suburbs) I'd love to own a farm out here. Heard of one that sold, over $100m dollars.....most would be in their families for generations I'd reckon as well

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Early 2000s there was a significant parcel of land available for $1 mil in the north west (Plumpton, now called Fraser Rise, 5 mins from Caroline Springs). Fast forward to now and that entire stretch of land is worth tens of millions if not in excess of 100 mil.
How many of us have a mil plus available to dump on an investment and hold on to it for a decade or two? Not the majority. But yeah, buying outer suburbs will be the key. Far too dense in inner Melbourne.
 

FRUMPY

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Guy I used to play footy with just got $300,000 over his reserve......seems crazy and would piss a fair few off who wanted it around reserve price. Went for 1.5m apparently....

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Scotland

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May 5, 2006
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Just put in 22k above max asking price, rejected. I’m getting real frustrated. This is ridiculous.
It's absurd. Everything around me is selling for subjectively good prices but also in a hurry. My house was on the market for months and sold for under the asking price which itself was under the previous sale price from a few years earlier. This was pre-COVID. A couple of houses down from me that is pretty comparable sold for $100k more, which was $30k above the asking price, within a week. And interest rates have been low the whole time. It's not like after the GFC when they went from 7/8% to 3% and below.
 

Ned_Flanders

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I'm sorry to hear that Ned - if you feel comfortable it would be a great exercise to work through so that others can learn from your experience.

Whereabouts did you buy?
From an investment perspective, what was the trigger for that particular property over others in different areas?
What changed since your purchase that changed the Investment value?
Is it still a worthwhile Investment, or are you trying to protect what are now sunk costs?
As FRUMPY said, there are no guarantees with any investment, property included.

We bought in a good area for a good property, but market conditions changed after we bought. Stock has flooded for market, and prices were suppressed for many years.

If a property is an investment, you need to understand the profile of the local market, what is driving demand, and what developers are doing. Too many assume it will just appreciate
 

FRUMPY

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Next 12-24mths we'll be looking to buy a bigger house in the same suburb but plan on keeping the current one as a rental.

Loan repayments are pretty small on the current property so portion of the rent can help pay the loan repayments on the new property so higher prices won't be a massive issue I hope.

I don't trust renters so will be a bit of a stress for me hoping we can get good renters. Place in front of us has had some sh*t renters who haven't treated the house that well.

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FRUMPY

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My brother is looking to move to the country where they can get the land and house of their dreams for same or less than they can get in outer suburbs melb.

They also plan to keep their current house as a rental and hopefully cash it in 10-20 years down the track at decent value.

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twotooto

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Sep 26, 2015
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Personally would not bother with an investment property again. From my own experience and several others whom I know very well(including my brother) we've all been burnt. Just an honest to god head fu** of epic proportions, especially if/when the market goes a bit sideways(or worse, worse still) + other variable factors(job, tenant etc). Just my/our experience though. YMMV.

EDiT: in fact, with the benefit of hindsight, would not have even bought in the first place! If you had have just rented(at least in Perth) over the last 8-10 years or so, you'd be MILES ahead. The days of making money on property are numbered. The 'Great Australian Dream' will soon be a thing of the past IMO. New spheres are opening up, and old, tried and true ones are closing. If you don't have a house, or the means to get one, fear not, with a bit of head down and bum up and a bit of nous, you are going to be ok, same as it ever was.
 
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FRUMPY

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Aug 18, 2006
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Personally would not bother with an investment property again. From my own experience and several others whom I know very well(including my brother) we've all been burnt. Just an honest to god head fu** of epic proportions if the market goes a bit sideways + other variable factors(job, tenant etc). Just my/our experience though. YMMV.
Way I see it, we own 70% of it, at worst it'll cover the last 30% of the loan life, probably 5 years.

I do worry that we'll get assholes who wreck the joint though.

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FRUMPY

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Aug 18, 2006
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EDiT: in fact, with the benefit of hindsight, would not have even bought in the first place! If you had have just rented(at least in Perth) over the last 8-10 years or so, you'd be MILES ahead. The days of making money on property are numbered. The 'Great Australian Dream' will soon be a thing of the past IMO. New spheres are opening up, and old, tried and true ones are closing. If you don't have a house, or the means to get one, fear not, with a bit of head down and bum up and a bit of nous, you are going to be ok, same as it ever was.
Come and rent off me and pay my mortgage for me (if and when I decide to put my current home up for rent)

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juss

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It’s happening all the time. Put in max asking price 2 months back. Put in 10k over max last week and yeah 22k over this week. I need a house but this is madness, not sure what to do at this point.

The price brackets are almost meaningless at this point. You have to well and truly exceed max price to even get a look-in.
I'm not sure about other states but I'd assume they'd have similar rules. In VIC under the underquoting rules, if you submit an offer above the range that is taken to the vendors and not accepted then they must update the advertised range.

So if a house range is 500-550k and you offer 555k and its knocked back, they need to update the range by law or you can report them. I encourage people to report them whenever this is the case. Its the only way agents will stop this.
 

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