Society/Culture Australian Property Prices to Crash?

[CheapCharlie]

Well, when you offer a retort like "surely you must be joking" then you can't expect much substance in return.


Did you just back up my own argument for me? Thanks, I guess.

urgh..
The article goes against what you are claiming, stating the price decreases are creeping out to the outer suburbs
Historical mas show the prices will decrease there also

As prices fall in desirable suburbs people who couldn't buy there before will move from the outer suburbs into the now more affordable desirable inner suburbs. There will be less demand for outer suburbs, pushing down prices

 

[Nuggs Bunny]

urgh..
The article state the price decreases are creeping out to the outer suburbs
Historical mas show the prices will decrease there also

As prices fall in desirable suburbs people who couldn't buy there before will move from the outer suburbs into the now more affordable desirable inner suburbs. There will be less demand for outer suburbs, pushing down prices

No it doesn't, there's literally nothing to say that price falls in the inner city will be replicated in the outer suburbs nor does it make any sense for that to happen either. The inner suburbs grossly overvalued to the point where the banks aren't comfortable loaning money for those properties and that's why the value is declining, the outer suburbs are not.

There's a serious misconception among people that the minute house prices decline by a tenth or so, there'll be thousands of first home buyers who were waiting for this to happen ready to jump in and pay prices they can now afford for the desirable, inner city lots. But it doesn't work that way, because those thousands of first home buyers also suddenly have a lot less money to spend. What first home buyers could borrow has also been reduced in the current climate and they're still no closer to these post codes than they were last year or the year before that. Suburbs and house prices remain relative to a bell curve. A suburb that was previously affordable to only 5% of people and has since fallen in value by 10% is very much likely still only affordable to 5% of people.

 

[Scotland]

Problem with stagnation is people get burned because their investment was dependent on capital growth. Either way it amounts to a “lost decade” for the economy.

Bad luck for them, that's the nature of risk vs reward. Real estate doesn't add value, and endless growth outpacing inflation isn't possible.

 

[its free real estate]

Bad luck for them, that's the nature of risk vs reward. Real estate doesn't add value, and endless growth outpacing inflation isn't possible.

Sure. But the consequences are nearly as bad as a full on crash.

 

[nicky]

This will be good for smart operators.

My son and his wife have been holding off getting into the home ownership lifelong debt burden, maybe this will be their chance as well.

Ditto. My spider senses tell me that prices will fall.

 

[Scotland]

Sure. But the consequences are nearly as bad as a full on crash.

Absolutely. Except that they aren't.

 

[Scotland]

This will be good for smart operators.

My son and his wife have been holding off getting into the home ownership lifelong debt burden, maybe this will be their chance as well.

I've heard of people doing this my entire adult life. Most of them don't get a win on the board.

 

[Taylor]

No it doesn't, there's literally nothing to say that price falls in the inner city will be replicated in the outer suburbs nor does it make any sense for that to happen either. The inner suburbs grossly overvalued to the point where the banks aren't comfortable loaning money for those properties and that's why the value is declining, the outer suburbs are not.

There's a serious misconception among people that the minute house prices decline by a tenth or so, there'll be thousands of first home buyers who were waiting for this to happen ready to jump in and pay prices they can now afford for the desirable, inner city lots. But it doesn't work that way, because those thousands of first home buyers also suddenly have a lot less money to spend. What first home buyers could borrow has also been reduced in the current climate and they're still no closer to these post codes than they were last year or the year before that. Suburbs and house prices remain relative to a bell curve. A suburb that was previously affordable to only 5% of people and has since fallen in value by 10% is very much likely still only affordable to 5% of people.

It looked like the inner city property was diving and the outer was rising, so I think the theory would be those on the outer who have seen the 20% increase could decide to buy inner if they see that as a better place, now it's more affordable.

There could be a period of time where retirees will sell up their massive capital gains home, because they have held it for 20 years or more, and move to a place further away from the busy city - artificially inflating those desirable destination areas.

 

[Nuggs Bunny]

I've heard of people doing this my entire adult life. Most of them don't get a win on the board.

If you've been waiting since 2011, when they first started crapping on about an imminent decline in house pricing, you'll have seen prices rise by about 50% in that period.

 

[Taylor]

Ditto. My spider senses tell me that prices will fall.

What are the circumstances that people will sell at a loss large enough to be considered a win for the buyer? Deceased estate?

Some of my friends were going to sell their investment property but in the end decided that it was better to hold and get rent from it than cop a whack.

 

[Nuggs Bunny]

It looked like the inner city property was diving and the outer was rising, so I think the theory would be those on the outer who have seen the 20% increase could decide to buy inner if they see that as a better place, now it's more affordable.

There could be a period of time where retirees will sell up their massive capital gains home, because they have held it for 20 years or more, and move to a place further away from the busy city - artificially inflating those desirable destination areas.

I'd say there'd be very few. If you've bought in the outer suburbs it's generally because you couldn't afford anywhere nicer and if you're living in a newish estate, then you probably haven't owned property for very long and the chances are that you probably don't have enough equity in the property to make the jump to the inner city without a significant increase in personal income. Some will, but I'd be tipping not many.

 

[CheapCharlie]

No it doesn't, there's literally nothing to say that price falls in the inner city will be replicated in the outer suburbs nor does it make any sense for that to happen either. The inner suburbs grossly overvalued to the point where the banks aren't comfortable loaning money for those properties and that's why the value is declining, the outer suburbs are not.

There's a serious misconception among people that the minute house prices decline by a tenth or so, there'll be thousands of first home buyers who were waiting for this to happen ready to jump in and pay prices they can now afford for the desirable, inner city lots. But it doesn't work that way, because those thousands of first home buyers also suddenly have a lot less money to spend. What first home buyers could borrow has also been reduced in the current climate and they're still no closer to these post codes than they were last year or the year before that. Suburbs and house prices remain relative to a bell curve. A suburb that was previously affordable to only 5% of people and has since fallen in value by 10% is very much likely still only affordable to 5% of people.

Show the same Melbourne map in another 12 months and the house price fall will have covered fairly much the entire area now in blue. The price decreases in Melbourne are spreading outwards.

As for Sydney, based n the same site you linked, the map shows house prices fall across nearly all outer suburbs, with the suburbs holding their ground nearly all inner city types.

 

[nicky]

Correct, so when people argue the hypothetical bubble burst, it’s not going to be at a fire sale price drop. Average price drops of 8-10% would be reasonable in reaction to the market factors led by a change in the banks lending practices

I want a fire sale.

 

[Taylor]

I want a fire sale.

I think you'll get better returns with this game plan in the stock market.

There are always a couple of "sudden" nosedives and sell offs that quickly recover. You can short it to start, buy it yourself two days later with the profit and then sell it again in six weeks.

Repeat.

 

[nicky]

How many beers are you down when you post?

Lol i know right. I was hovering on liking his post but you cant like a post that wishes cancer on people.

Chill out pie eyed.

 

[Deliverance]

I said crash, not fall. Mine rose, fell, rose again and right now is probably a bit above where it was in 2007. Plenty of others have fallen a similar amount. Rising and falling is natural, crashing is highly undesirable. If the day comes that my unremarkable ~median CBD house is worth half what I paid for it then we'll all be in deep poop.

What makes you think Chinese will stop investing? Or that immigration will fall? Or that interest rates will rise? The cash rate hasn't changed for two years. Govts talk a big game but they know where their bread is buttered. A housing crash would be a disaster for the govt and the country.

Chinese are gone for two reasons. One is they have been banned from taking too much money out of China by the Chinese government.
Part two may only be applicable for Victoria, but there's 7.5% extra stamp duty for overseas buyers.

 

[Nuggs Bunny]

Show the same Melbourne map in another 12 months and the house price fall will have covered fairly much the entire area now in blue. The price decreases in Melbourne are spreading outwards.

As for Sydney, based n the same site you linked, the map shows house prices fall across nearly all outer suburbs, with the suburbs holding their ground nearly all inner city types.

View attachment 595964

That's because there were basically no affordable suburbs in Sydney and subsequently the entire city is falling off a cliff. Melbourne's median price is nearly a third lower and the affordable suburbs are much closer to the CBD.

 

[its free real estate]

Absolutely. Except that they aren't.

But they are. Same levels of unemployment, recession, etc. Just nominal prices float for a decade.

 

[Seeds]

Interest rates won't rise for the next year at least, and when they do rise they're probably not going to be raising by more than 50 basis points in a year barring some dramatic and unforseen change in the global economy. The sky is not falling, this is a normal part of the property market. People haven't seen a property decline in ten years and all of a sudden everyone is losing their minds.

Ok do you understand that the interest rates people and banks pay on loans is different to the RBA's policy rate?

When have property prices ever fallen 5-10 percent when unemployment and interest rates were low? When has our net foreign debt ever been this high? When have we ever started unwinding housing policy support and reducing immigration after house prices have already started to fall?

This is not normal.

 

[Nuggs Bunny]

Ok do you understand that the interest rates people and banks pay on loans is different to the RBA's policy rate?

When have property prices ever fallen 10 percent when unemployment and interest rates were low? When has our net foreign debt ever been this high? This is not normal.

No it's not normal, this property decrease was entirely planned in an attempt to cool the property market before things got out of hand. Had the RC and the banks not combined to make it harder for investors to play with fire then prices would likely still be going through the roof at the moment. I don't know if this has ever been done before but I'm tipping not. Regardless, it's the decline we needed as we were most definitely heading for a dark place had things continued in the way they were trending.

I'm not worried about our debt level, Australia's a stable country and a large economy so we've got no problems making repayments on our debt and the banks aren't about to bring on their own demise by raising their interest rates on mortgages if the RBA doesn't force their hand into doing so. If these are the things keeping you up at night, hopefully my words of reassurance will help you get some sleep.

 

[CheapCharlie]

That's because there were basically no affordable suburbs in Sydney and subsequently the entire city is falling off a cliff. Melbourne's median price is nearly a third lower and the affordable suburbs are much closer to the CBD.

It doesn't really matter if the Melbourne median price is lower, they are still seeing overall price drops.
Its unlikely the outer melb suburbs will hold their prices as everything else falls. They might have less % losses, but the likelihood is the prices will drop a fair whack.
We can come back here in a year and see which scenario panned out

 

[Nuggs Bunny]

It doesn't really matter if the Melbourne median price is lower, they are still seeing overall price drops.
Its unlikely the outer melb suburbs will hold their prices as everything else falls. They might have less % losses, but the likelihood is the prices will drop a fair whack.
We can come back here in a year and see which scenario panned out

Yeah we can, if they decline 50% of the extent as prices are going to decline in the inner east, I'll shout you a beer.

 

[CheapCharlie]

Yeah we can, if they decline 50% of the extent as prices are going to decline in the inner east, I'll shout you a beer.

Ill take a 5-10% decrease as being in my favour

 

[CheapCharlie]

I think you'll get better returns with this game plan in the stock market.

There are always a couple of "sudden" nosedives and sell offs that quickly recover. You can short it to start, buy it yourself two days later with the profit and then sell it again in six weeks.

Repeat.

So easy everyone should do it

 

[Taylor]

50%? That will be a huge proportion of Australia carrying bankruptcy against them, unless it's a result of demand collapsing.

I can't picture a motivation for selling at such a loss, I'd rather hold. Maybe a disease that kills a massive amount of people and the remaining family just sell to get whatever they can.