Society/Culture Australian Property Prices to Crash?

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Ned_Flanders

Premium Platinum
Aug 22, 2009
64,863
120,019
AFL Club
Richmond
Other Teams
76'ers
This is just in my ignorant opinion, but i also think people need to calm the farm over the current "boom" in prices

covid last year had two effects on sales (esp in victoria):

- buyers stopped buying. everyone wanted discounts, and im talking massive discounts. We had people offering us 20% below advertised prior to auction. It was the first time since the GFC i started seeing a lot of no bid auctions, and a lot of sales switched to expression of interest because of this. The whole "we cant hold on the street auctions" was a smokescreen (and one we used to cancel our auction). Truth was buyers had zero interest in most properties unless they got a bargain.

the exception was the picture postcard places. best house on best street, people paid premiums. everything else was no go.

- sellers stopped selling. we had been looking for our new place since 2019 AND sold/tried to sell a number of places over 2019/20 (in preparation of our buy). here's how we found stuff:

* 2019 - we were looking to buy a "good" property, but premiums were tough. we came close a couple of times, but competition was tough (combo of chinese money and people looking to upsize like us). Stock was plentiful though. We spent most weekends looking at places, and would do 3-5 inspections on most saturdays.

* 2020 - chinese money started bugging out in March. We had two sales fall over because chinese buyers changed their mind (one walked from the deposit!). In June/july, things started looking positive, but then ground to a halt. We took all our places off the market and rented them out. For our buy, stock plummeted. Even though we were looking every weekend, we were seeing no new stock and properties being removed from sale. The place we bought was one taken off the market after failing at auction, when the agent contacted us 2 months later. We came close on 4 other properties, but everyone was still holding out for premiums - people chose to remove from market if they didnt get the price they wanted.


I say all of this because the buyers like me (if i hadnt found my new place) for 2020 were still in the market. There is a lot of pent up demand of people who were planning to buy but couldnt. Likewise the people who pulled their properties in 2020 still want to sell. What 2021 is when the dam breaks. Its a big boom in the pent up demand, and stock is keeping pace with it to keep the prices up. at some stage the equilibrium will return, and the lag will be all caught up.

then you have the chaos ball - China. Chinese buyers were a big part of the market. the channel partner agents however are still silent (we have heard nothing this year, when my wife was being rung by them constantly in 2019). easy way to explain the channel partners is they are an agent who promotes your property to a network of hundreds of agents in china, who often would arrange sales without physical inspection (just online). With the travel bans and the trade war, no chinese students need their rich parents to by them a house, and no chinese families are relocating to australia. if this tap is turned back on, the boom wont maintain, but it will be steady. if this tap isnt, the current demand can only last so long before it walks away
 
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kaka

Rookie
Jul 10, 2004
38
5
AFL Club
Geelong
Having Kids is a choice. If you choose to do it than you cannot turn around in the same breath and sook about housing prices. Everyone knows having kids is just about the most expensive thing you can do, outside of buying a house. Having kids is not an excuse to not being able to save for a house deposit.

If you want to own a house and you cant afford kids then don't have them.

Me and my wife deliberately waited until after we bought a house before we had our daughter, so we cam maximize our savings for a deposit. that's a choice we made.
Wow what a s*** society we are creating when you need to decide between a house and a kid. There are going to be a lot of people in their 40's trying for kids and realising that the body is created for kids in your early 20's. Seeing some people trying for IVF with diminishing chances each time is horrible.

I am sure when they sit alone in their house and age alone, some would change it all in a heart beat.
 

kaka

Rookie
Jul 10, 2004
38
5
AFL Club
Geelong
This is just in my ignorant opinion, but i also think people need to calm the farm over the current "boom" in prices

covid last year had two effects on sales (esp in victoria):

- buyers stopped buying. everyone wanted discounts, and im talking massive discounts. We had people offering us 20% below advertised prior to auction. It was the first time since the GFC i started seeing a lot of no bid auctions, and a lot of sales switched to expression of interest because of this. The whole "we cant hold on the street auctions" was a smokescreen (and one we used to cancel our auction). Truth was buyers had zero interest in most properties unless they got a bargain.

the exception was the picture postcard places. best house on best street, people paid premiums. everything else was no go.

- sellers stopped selling. we had been looking for our new place since 2019 AND sold/tried to sell a number of places over 2019/20 (in preparation of our buy). here's how we found stuff:

* 2019 - we were looking to buy a "good" property, but premiums were tough. we came close a couple of times, but competition was tough (combo of chinese money and people looking to upsize like us). Stock was plentiful though. We spent most weekends looking at places, and would do 3-5 inspections on most saturdays.

* 2020 - chinese money started bugging out in March. We had two sales fall over because chinese buyers changed their mind (one walked from the deposit!). In June/july, things started looking positive, but then ground to a halt. We took all our places off the market and rented them out. For our buy, stock plummeted. Even though we were looking every weekend, we were seeing no new stock and properties being removed from sale. The place we bought was one taken off the market after failing at auction, when the agent contacted us 2 months later. We came close on 4 other properties, but everyone was still holding out for premiums - people chose to remove from market if they didnt get the price they wanted.


I say all of this because the buyers like me (if i hadnt found my new place) for 2020 were still in the market. There is a lot of pent up demand of people who were planning to buy but couldnt. Likewise the people who pulled their properties in 2020 still want to sell. What 2021 is when the dam breaks. Its a big boom in the pent up demand, and stock is keeping pace with it to keep the prices up. at some stage the equilibrium will return, and the lag will be all caught up.

then you have the chaos ball - China. Chinese buyers were a big part of the market. the channel partner agents however are still silent (we have heard nothing this year, when my wife was being rung by them constantly in 2019). easy way to explain the channel partners is they are an agent who promotes your property to a network of hundreds of agents in china, who often would arrange sales without physical inspection (just online). With the travel bans and the trade war, no chinese students need their rich parents to by them a house, and no chinese families are relocating to australia. if this tap is turned back on, the boom wont maintain, but it will be steady. if this tap isnt, the current demand can only last so long before it walks away
The boom has been caused by low interest rates and government incentives designed to bring buyers into the market to rescue the economy.

Normally you would have sellers needing to sell if the economy was bad, but due to overgenerous government support and banks giving mortgage holidays, you have minimal sellers needing to sell. The only sellers are the ones who want to sell, and with pundits suggesting higher prices in the future, they are holding out for a higher price.

You have scarce supply and buyers for the next five years all trying to buy now, prices are bid up. So this boom is purely manufactured on both the demand and supply side. It is just governments and central banks again using younger generations as fodder to "rescue" an economy which was already stuffed before COVID.
 

Ned_Flanders

Premium Platinum
Aug 22, 2009
64,863
120,019
AFL Club
Richmond
Other Teams
76'ers
The boom has been caused by low interest rates and government incentives designed to bring buyers into the market to rescue the economy.

Normally you would have sellers needing to sell if the economy was bad, but due to overgenerous government support and banks giving mortgage holidays, you have minimal sellers needing to sell. The only sellers are the ones who want to sell, and with pundits suggesting higher prices in the future, they are holding out for a higher price.

You have scarce supply and buyers for the next five years all trying to buy now, prices are bid up. So this boom is purely manufactured on both the demand and supply side. It is just governments and central banks again using younger generations as fodder to "rescue" an economy which was already stuffed before COVID.
You need to get out. I'm at an auction literally now, and the auctioneer is begging for $1000 bids.

This isn't a boom, it's a temporary bubble for select properties
 

Scotland

TheBrownDog
May 5, 2006
58,342
63,115
AFL Club
West Coast
Wow what a s*** society we are creating when you need to decide between a house and a kid. There are going to be a lot of people in their 40's trying for kids and realising that the body is created for kids in your early 20's. Seeing some people trying for IVF with diminishing chances each time is horrible.

I am sure when they sit alone in their house and age alone, some would change it all in a heart beat.
Having a kid and owning a house are both choices. They are both expensive and require sacrifice, prioritisation etc.
 

FRUMPY

Brownlow Medallist
Aug 18, 2006
22,099
23,576
Melbourne
AFL Club
Carlton
Wow what a s*** society we are creating when you need to decide between a house and a kid. There are going to be a lot of people in their 40's trying for kids and realising that the body is created for kids in your early 20's. Seeing some people trying for IVF with diminishing chances each time is horrible.

I am sure when they sit alone in their house and age alone, some would change it all in a heart beat.
It's not a choice between either but it needs planning, dumb to say otherwise.

Sent from my CPH2005 using Tapatalk
 

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