Society/Culture Australian Property Prices to Crash?

[Bombermania]

Typical uni bludgers wanting a house gifted to them on a silver platter.

IT professional Brendon Miszka and his wife Gauri are inspecting a house in Sydney's north-western suburbs. They're looking to buy their first home but, despite good jobs and a decent deposit, they're finding it tough.

"I think we're competing with a lot of people that would be happier to take a lot more risk," Brendon says.

"There's a general attitude that you go off to the bank and see what's the maximum that the bank is prepared to lend and then go out and try and spend all that money on a property and everything will be OK."

Edwin Almeida is their buyer's agent — he's a property consultant who has 25 years' real estate experience both buying and selling.

"I haven't really seen anything as hot as what it is at the moment," he says.

While real estate agents are often known for their propensity to exaggerate, CoreLogic's latest March house price data backs up his observation.

"Over the month Australian dwelling values rose 2.8 per cent," says Eliza Owen, CoreLogic's head of Australian research.

"That's the highest growth rate we've seen since October 1988 and it's pushed values higher 6.2 per cent over the year."

https://www.abc.net.au/news/2021-04-02/housing-boom-nz-and-australia-lending-tax-crackdown/100046056


They aren't alone - I personally know at least 8 couples/individuals that have healthy deposits/savings and are exasperated with years of routinely being priced out of the market. Not necessarily talking about inner-city either properties either - prices have risen dramatically in outer suburbs and regionally.

Huh how is that equal to uni bludgers wanting it handed to them when the main comments are from a buyers advocate and an analysts.

 

[Suspense]

They have good jobs and a decent deposit but were risk averse.

I thought the problem was "uni dropouts wanting to be handed a house in inner-city areas" not "middle-aged people with good jobs, a history of savings and a healthy deposit being reasonably risk-averse to excessive levels of mortgage debt given ~12 years of being told "don't borrow more than you can afford" in a post-GFC environment".

Would you like to amend your initial statement, perhaps?

Then stood out the front of somebody else's house smiling for some reason.

Never seen anyone so utterly bewildered by the concept of a photo op.

Like your friends who had healthy savings and deposits and chose not to buy, for years, and are whinging that prices have gone up. Maybe they should've bought years ago? The prices went up.

They were continually priced out of the market.
Median dwellings rose 2.8% in a month - 6.2% YTD.

Cash interest on savings/deposit currently ~0.35% p.a.

 

[yodellinhank]

I thought the problem was "uni dropouts wanting to be handed a house in inner-city areas" not "middle-aged people with good jobs, a history of savings and a healthy deposit being reasonably risk-averse to eye-watering levels of mortgage debt given the 16 years of being told "don't borrow more than you can afford" in a post-GFC.

Would you like to amend your initial statement, perhaps?


Never seen anyone so utterly bewildered by the concept of a photo op.


They were continually priced out of the market.
Median dwellings rose 2.8% in a month - 6.2% YTD.

Cash interest on savings/deposit currently ~0.35% p.a.

View attachment 1093457

Fresh Uni graduates wanting to purchase straight up in the inner city, People with loads of money too scared to take the plunge - i've no sympathy for either.

 

[Bombermania]

Half the properties on the market went for less than the median and the top of the market is taking the median higher.

 

[Suspense]

Fresh Uni graduates wanting to purchase straight up in the inner city, People with loads of money too scared to take the plunge - i've no sympathy for either.

Just regular hard-working Aussies - saving, scrimping and trying to buy a home. At least you've acknowledged that you don't care about the issue itself or the people impacted.

I guess you just wanted to show off to anonymous internet people how "brave" you were that you "took the plunge"?

Weird flex but OK.

 

[yodellinhank]

Just regular hard-working Aussies - saving, scrimping and trying to buy a home. At least you've acknowledged that you don't care about the issue itself or the people impacted.

I guess you just wanted to show off to anonymous internet people how "brave" you were that you "took the plunge"?

Weird flex but OK.

I'm renting. Your friends didn't want to pay the price, and the prices went up. You see that as a problem. The people who bought the house your friends had their eye on don't.

 

[Suspense]

I'm renting. Your friends didn't want to pay the price, and the prices went up. You see that as a problem.

They didn't get a chance. Prices kept going up - at a rate where they were continually being outpriced - based on their maximum borrowings and risk profile. These aren't people who were trying to "pick the low" in the market or "grab a bargain" - they were trying to buy an affordable, suitable property while saving, building a career and family.

Do the math - house prices are outstripping earnings on savings and have real wages have barely grown for 10 years now.




Again, your view that anyone who is unable to buy a house is either gutless or an entitled uni dropout is completely at odds with the real world.

The people who bought the house your friends had their eye on don't.

Not everyone is myopic as you are. I own my property and would have no problem with a gradual downturn in the market (as real wages don't look like improving).

 

[FRUMPY]

They didn't get a chance. Prices kept going up - at a rate where they were continually being outpriced - based on their maximum borrowings and risk profile. These aren't people who were trying to "pick the low" in the market or "grab a bargain" - they were trying to buy an affordable, suitable property while saving, building a career and family.

Do the math - house prices are outstripping earnings on savings and have real wages have barely grown for 10 years now.

View attachment 1093481
View attachment 1093482

Again, your view that anyone who is unable to buy a house is either gutless or an entitled uni dropout is completely at odds with the real world.


Not everyone is myopic as you are. I own my property and would have no problem with a gradual downturn in the market (as real wages don't look like improving).

So they couldn't buy a house anywhere? Amazing, truely amazing.

And their solution is to continue to pay off someone else's mortgage (rent) and unable to save? Smart move....

Sent from my CPH2005 using Tapatalk

 

[yodellinhank]

They didn't get a chance. Prices kept going up - at a rate where they were continually being outpriced - based on their maximum borrowings and risk profile. These aren't people who were trying to "pick the low" in the market or "grab a bargain" - they were trying to buy an affordable, suitable property while saving, building a career and family.

Do the math - house prices are outstripping earnings on savings and have real wages have barely grown for 10 years now.

View attachment 1093481
View attachment 1093482

Again, your view that anyone who is unable to buy a house is either gutless or an entitled uni dropout is completely at odds with the real world.

Not everyone is myopic as you are. I own my property and would have no problem with a gradual downturn in the market (as real wages don't look like improving).

Sounds like they just didn't have a clue about the market, if they were constantly outpriced with what they were looking at. "Something suitable" is a common qualifier. Freddy Mercury I want it all and I want it now.

 

[Bombermania]

So they couldn't buy a house anywhere? Amazing, truely amazing.

And their solution is to continue to pay off someone else's mortgage (rent) and unable to save? Smart move....

Sent from my CPH2005 using Tapatalk

If they invest their savings wisely they could come out ahead.

 

[Evolved1]

The last eight pages of this thread are the same circular arguments for the last 10 years.

The housing unaffordability for millennials and soon gen z is clear through any statistic which shows wages. house prices and debt to income levels over the last 10 years. Denying the unaffordability is akin to denying climate change. Saying you could afford something in a outer suburb or you know someone who bought in a rural city is like saying the climate is fine cause it rained yesterday.

The reason why housing is high is because we as a voting nation want them to be high. If we didn't want them to be high we would elect politicians or have policy which would make housing more affordable. This would enable the supply and demand of housing to change to bring down prices. Governments can do this with any industry and there is no reason why housing is any different.

As a nation we need to accept what we are doing to younger generations. If you are a boomer i dont know how you could look your kids and grandkids in the eyes, feathering your own nest as the expense of people who are just like you.

The people who are 'getting ahead" - who are you getting ahead of? - the answer is your children and their children. They need to pay for the money you are making.

Self interest is key to understanding all angles of the game. My hope is to get sufficiently ahead in order to help my kids buy their own homes.

 

[Bombermania]

I think people these days are mistaken a lack of courage for genuine prudency. Waiting for a section 32 to completed so you actually know what you are buying before making an offer or not borrowing every cent the bank will offer shows you how warped some people minds are.

Maybe you are looking for a different word but a section 32 authorizes the selling of a property.

 

[Evolved1]

What about the people who dont have parents that can help them out? Bad luck? Hope you have a better go in your next life?

Basically. Equality is an ideal that doesn't play out in practice.

 

[Cuzz09]

My uncle purchased his house in Elsternwick in the mid 90s for around $150k.... Its now apparently worth over $2 mill.

Absolutely laughing!

 

[Bombermania]

As someone who is trying to buy a property atm in Victoria. People are making offers well before the s32 is even finalised. Its insane as i believe the transaction isnt even enforceable without a s32, but people genuinely don't care.

Its always been possible for someone to knock on someone's door and ask if they are selling but the property cannot be listed without a signed s32.

 

[Evolved1]

Most of the solutions proposed only result in money being pushed towards wealthy people. Why do you think the markets have been booming while poor people struggle to keep a job?

 

[Bombermania]

Well remove tax incentives from housing (negative gearing and capital gains), tax the money earnt from a PPOR sale and also remove the pension with anyone with assets of $1m (includes their house).

I would also implement a land tax on all properties and replace all assets CGT discount, with a discount only for inflation. Then we can reduce tax for those actually earning an income as a working stiff.

Land tax is one of the greatest ideas. Gets people to make a choice between living on a quarter acre block and paying tax or living in an apartment and paying none or little.

You can't fix housing affordability through taxation.

The problem with including the family home in the pension assets test is it will discriminate against low to middle income earners based on postcode.

Land tax already applies to investment properties and adding it too residential property will discriminate against low to middle income earners.

The only ways to fix home affordability is to increase supply and decentralize the population or people need to accept that can't buy in their favorite suburb because there are affordable locations.

 

[Deliverance]

Self interest is key to understanding all angles of the game. My hope is to get sufficiently ahead in order to help my kids buy their own homes.

At least you're open about this, unlike others in this thread. I'm the same, but currently doing this via 2 means. The stock market and teaching my kids to avoid avocados.

 

[Bombermania]

Well actually if you look at my suggestion (assets above $1M) low income earners wont have to sell their house, as it would be below the threshold. So they will be fine. Also in making these suggestions i am anticipating such changes will reduce the price of houses and will benefit these people as they can earn the pension and keep their houses.

Land tax - again wont discriminate as the land tax will offset the lower income tax they will pay. They would be better off actually - keeping more of the money they earn.

I am sure the best way for people to decide to live away from their favourite suburb would be - it costs $15k a year to live in Camberwell due to land tax, but $2k to live in Melton. With lower taxes from your income tax they would be actually a lot better off. This would get people to decentralise. Same argument to get people into higher density townhouses or apartments.

I agree we need to create more supply - but as you can see from what is happening due to pandemic. Lose your job or cant pay your loan - doesnt matter - you still dont need to sell. If you only sell in Australia because you want to - the demand will always outstrip supply.

The decentralise argument you make doesn't go further than your statement in reality. You are pretty much telling young people to live way from infrastructure in outer ring suburb where they can spend every day waiting in traffic, whilst they await the train line that will never come. It also doesnt live in reality, but rather a throw away line to justify the status quo

Using your example, it is an assumption that everyone in Camberwell has a spare $15k a year to pay for a land tax on top of their council rates.

Just because a suburb is considered wealthy doesn't mean everyone living in that suburb is wealthy and because some suburbs have within a few decades seen large price rises you will be discriminating against lower to middle income earners.

A low income earner probably wouldn't pay $15k in income tax per year so if you then hit them for a land tax just because you want to force them to sell is not good policy.

You can reduce access to negative gearing but the only fair way to fix the problem is through increasing supply.

In Melbourne the train from the outer suburbs to the city can be faster than the tram from the middle ring suburbs to the city is because traffic congestion in the inner city is a major problem and decentralization could focus on sizable regional towns.

There are times when people become transfixed on their favorite suburb that they miss similar properties in cheaper locations or they overlook cheaper options because they don't tick every box.

 

[Nuggs Bunny]

people need to accept that can't buy in their favorite suburb because there are affordable locations.

This is a bad stereotype of first home buyers.

What needs to be accepted is that the affordable locations are simply not that affordable anymore. Like I've said in this thread already, the bottom of the market in Melbourne or even Greater Melbourne still basically requires a $50k deposit + buyers expenses to get into the market with 90% LVR; that's about three years of strict saving for two people on the average salary and yet, you're still left with a high risk loan. Seriously, people need to start paying attention to what the "affordable" house prices in the outer suburbs are at the moment.

This is an issue now, and it's going to be an even bigger issue in a few years time until the point where owning a house in Melbourne is not a realistic option for couples without family money. It is already not a realistic option for singles.

 

[Bombermania]

This is a bad stereotype of first home buyers.

What needs to be accepted is that the affordable locations are simply not that affordable anymore. Like I've said in this thread already, the bottom of the market in Melbourne or even Greater Melbourne still basically requires a $50k deposit + buyers expenses to get into the market with 90% LVR; that's about three years of strict saving for two people on the average salary and yet, you're still left with a high risk loan. Seriously, people need to start paying attention to what the "affordable" house prices in the outer suburbs are at the moment.

This is an issue now, and it's going to be an even bigger issue in a few years time until the point where owning a house in Melbourne is not a realistic option for couples without family money. It is already not a realistic option for singles.

I'm being careful not to single out first home buyers because it can apply to anyone but there are times when people will look at a certain suburb or area within a suburb while overlooking nearby suburbs that might be cheaper and even in Melbourne's inner suburbs there can be a sizable different between neighboring suburbs but that is changing.

 

[Nuggs Bunny]

I'm being careful not to single out first home buyers because it can apply to anyone but there are times when people will look at a certain suburb or area within a suburb while overlooking nearby suburbs that might be cheaper. Even in Melbourne's inner suburbs there can be a sizable different between neighboring suburbs but that is changing.

Sure, but that's a separate issue if it's even an issue at all. The real problem is as I've said; the cheapest 10% of properties on the market in the Melbourne region are simply not that affordable anymore and the number of people who are priced out of owning a home is growing every day. When people do a quick search on Domain to find some random cheap houses and say that those ones are still affordable, they're missing the point that the pool is getting smaller and smaller by the day. That's the real issue.

 

[Suspense]

So they couldn't buy a house anywhere? Amazing, truely amazing.

And their solution is to continue to pay off someone else's mortgage (rent) and unable to save? Smart move....

As opposed to living on the street?

 

[Bombermania]

Sure, but that's a separate issue if it's even an issue at all. The real problem is as I've said; the cheapest 10% of properties on the market in the Melbourne region are simply not that affordable anymore and the number of people who are priced out of owning a home is growing every day. When people do a quick search on Domain to find some random cheap houses and say that those ones are still affordable, they're missing the point that the pool is getting smaller and smaller by the day. That's the real issue.

That is differently the issue and that why i don't think the problem can be fixed by charging new taxes. Reducing negative gearing would help but there needs to be more supply of affordable housing that can only be purchased by first home buyers.

 

[hamohawk1]

Interest rates will either go up in the next 6 months, or there will be some faux government policy.