Society/Culture Australian Property Prices to Crash?

[VineySMASH]

Follow where the money went after your grandfather departed this world & I'd reckon you would know the answers. Asset values have a relativity, a house, a holiday house, a pension - how many people got a feed.

My folks home was divided 3 ways & my mortgage got the benefit & my 2 kids will get the benefit of that. Mind you the folks home was a 2 br home, built after Dad got back from Europe after WW2 & it was built in the late 40s, in the sticks on a gravel road, no driveway or garage, not a problem because they didnt own a car. No service pension, a war service loan though.

My comment was more about income and the value of a dollar thesedays, rather than asset value.

It was a very different era and I hope I'm not sounding like a boomer, but I just think people need to recognise how much Australia has changed - Melbourne isn't a 3 million person city anymore, its a 6 million person city, and it will very soon be a 10 million person city.

If you're going to live in Melbourne as a young person straight after uni, be prepared to rent or live in share houses for many years. In fact, you may never be able to buy a 3 or 4 bedroom house on a decent block in Melbourne - just as you probably couldn't afford to buy something like that in London.

If you want more space you're eitehr going to have to live at the absolute fringes of the city, or move to a regional area. COVID has probably sped this up a bit, but even the regions will be unaffordable soon.

 

[Kwality]

My comment was more about income and the value of a dollar thesedays, rather than asset value.

It was a very different era and I hope I'm not sounding like a boomer, but I just think people need to recognise how much Australia has changed - Melbourne isn't a 3 million person city anymore, its a 6 million person city, and it will very soon be a 10 million person city.

If you're going to live in Melbourne as a young person straight after uni, be prepared to rent or live in share houses for many years. In fact, you may never be able to buy a 3 or 4 bedroom house on a decent block in Melbourne - just as you probably couldn't afford to buy something like that in London.

If you want more space you're eitehr going to have to live at the absolute fringes of the city, or move to a regional area. COVID has probably sped this up a bit, but even the regions will be unaffordable soon.

I understand your point, well made.

As an early baby boomer (b 1948),I saw inflation take off in the late 60s, flowing through to the Hawke initiative, the wage accord. House payments going up when your wage wasnt meant you curtailed your life style. Saving a deposit wasnt easy, even when we had 2 incomes.
The thing about baby boomers is their folks houses were assets that were inflated & this money flowed thru to the boomer generation as their parent passed away. Where that money was directed to baby boomer housing, that money will see current generations & make the inner suburbs even more expensive.

Add to that superannuation, that was something you needed to find from your pay, now that 10% is compulsorily taken from the pay packet & not reflected in take home pay. The employer pays it, but the employee doesnt see it.

 

[fishardansin]

It would be nice to see the government invest to increase their share of the property market to over 50% and then provide means-tested rent.

 

[Kwality]

It would be nice to see the government invest to increase their share of the property market to over 50% and then provide means-tested rent.

The governments are selling off any asset they think will get a dollar, see VicRoads.
They are taking 10% of wages to squirrel away for you, what % of the pay do you want for rent?

 

[Frank Grimes]

Melbourne isn't a 3 million person city anymore, its a 6 million person city, and it will very soon be a 10 million person city.

While I think there is structural reasons from government policy and particularly the banking system why house prices have got out of control, I think you make a fair point here to keep in mind of comparing the past to now.

Put simply it needs to be taken in consideration there would be less demand for land 10km out of the CBD in a city with 3 million people than there would be with 6 million people for example.

 

[VineySMASH]

While I think there is structural reasons from government policy and particularly the banking system why house prices have got out of control, I think you make a fair point here to keep in mind of comparing the past to now.

Put simply it needs to be taken in consideration there would be less demand for land 10km out of the CBD in a city with 3 million people than there would be with 6 million people for example.

Yeah and I don't want to be condescending toward young people either - it is undoubtedly tougher.

 

[Deliverance]

While I think there is structural reasons from government policy and particularly the banking system why house prices have got out of control, I think you make a fair point here to keep in mind of comparing the past to now.

Put simply it needs to be taken in consideration there would be less demand for land 10km out of the CBD in a city with 3 million people than there would be with 6 million people for example.

Doesn't help that half of Melbourne properties are rentals. Drains a lot of the supply.

 

[Kwality]

Yeah and I don't want to be condescending toward young people either - it is undoubtedly tougher.

Its not condescending to question or compare.

 

[HirdsTheWord]

The idea someone working for 40 years, earning money for 40 years, has done more work than someone who has been working for 10 years, earning money for 10 years. Thats not got anything to do with working hard. Compre?
People working 6 day weeks do more paid work than someone working 4 day weeks - they end up with more money to spend, to save, to acquire or pee up against the wall.
It does not constitute working darker. Not Einstein stuff Hirdy even for a dum-ass, you'd wouldnt hear about it, dumbass.
What about equity, you were close but no cigar AGAIN.

Did you buy your first house at 60 years of age mate? No. you didn't buy your first house after 40 years of work you pillock. That is the Point.

Jesus Christ. Just log out.

 

[HirdsTheWord]

I'm not claiming the property market is not stuffed.
Understanding how we got there is a graph that suits your attempt to blame baby boomers for todays problems & you are dinkum.

That you blame the RBA for no wages growth suggests you are not as across the status quo that you believe you are.

Why Governments dont want house prices to fall has many factors, not the least of which is the effect of throwing people out on the street - its not as simple as the GFC that routed home owners in the US, as those going out the front door here are liable for their mortgages.
Sure blame the rich, good one & there a conga line of people who use that as an excuse to avoid self responsibility.

Wage growth is a key mandate of the RBA.........so, yes they should be blamed for not achieving it, for 5+ years.

You are way out of your depth in this discussion mate.

 

[Kwality]

Did you buy your first house at 60 years of age mate? No. you didn't buy your first house after 40 years of work you pillock. That is the Point.

Jesus Christ. Just log out.

You'd do better to acknowledge your own inability to read the written word. At least you understand now.

 

[Kwality]

Wage growth is a key mandate of the RBA.........so, yes they should be blamed for not achieving it, for 5+ years.

You are way out of your depth in this discussion mate.

The RBA does not set wages, as well you know.
It does not set compulsory superannuation rates as well you know.

You are also well aware that wage costs for employers have continued to rise* but its is in the on costs, such as Super, & public holidays ....

* I dont dispute wages need to increase, nor that inflation rates have a twin edge to them & the current generation is on the wrong end of that effect.

 

[Ned_Flanders]

Wage growth is a key mandate of the RBA.........so, yes they should be blamed for not achieving it, for 5+ years.

You are way out of your depth in this discussion mate.

No it's not. The RBA has three objectives:

A) the stability of the currency of Australia;

B)the maintenance of full employment in Australia; and

C) the economic prosperity and welfare of the people of Australia.

Long ago the RBA got on board with the view that economic stability is the best way to achieve these goals, and low inflation is a key to that. Wage growth is only good if it isn't inflationary (above acceptable levels)

Most of our wage growth in the 90s was due to productivity gains - awesome because that isn't inflationary. The issue is productivity gains have plateaued, which is why wage growth has stagnated.

 

[Kwality]

From the Weekend Australian:
'Something very unusual is happening at the very top of the property sector – the head of the nation’s biggest mortgage lender wants the government to step in and cool the market.
Matt Comyn, the chief executive of Commonwealth Bank, is openly calling for moves to cool the same market in which the bank makes most of its money … what on earth is happening?

It’s a measure of just how stretched the gap between the real world and the residential property market has become that Comyn is doing this.

What he fears is crucial to understanding where house prices are likely to go from here for homeowners and investors alike.

It’s also highly relevant in getting a picture of how banking stocks may perform in the months ahead.

There are two issues here.
The first is the prospect of a further upward swing in residential prices once lockdowns fade away across the metropolitan capitals. That would mean an upswing on top of the 20 per cent that is already clocked up over the last year.

The second is the extraordinary situation where no single government agency has explicit responsibility for house prices – even though we are in what is surely the most unlikely house price boom in a century.'

Come on down those needing someone to blame, Hirdstheword

Society/Culture - Australian Property Prices to Crash?

If you're just out of uni aren't you most likely going to want to live in Melbourne or Sydney (depending on industry)? Neither of those cities are going to be affordable for a uni studeny to purchase a home in our lifetimes, they've grown in population by almost 100% since the 80's, and the...

www.bigfooty.com

https://www.theaustralian.com.au/business/wealth/james-kirby-banking-on-cooler-house-prices/news-story/367ffbbb1ca898e184ad81554ab40ee3

 

[Kwality]

There is an inconsistency in government policy.

A house is supposed to be a family's big chance to invest for the future.

But when the future comes, the oldies don't want to cash in that investment. That is where the younger generation could buy property: from retirees supporting themselves.

Not policy, its the legislation & the regulatory bodies:

'.... the RBA’s mission to stimulate employment means it is holding rates lower. This is the opposite of what an overheating residential market needs.

We do have a bank regulator – the Australian Prudential Regulatory Authority – and it is there to make sure the banks are operating well and there is no deterioration in lending standards.

The problem is that on paper the banking industry is humming away nicely – after all, interest rates have never been so low so bad debts are within a normal range.

But they are looking the wrong way – the banks are fine, it’s the customers that are facing trouble.

When something finally triggers government action, it may be much too late.'

https://www.theaustralian.com.au/business/wealth/james-kirby-banking-on-cooler-house-prices/news-story/367ffbbb1ca898e184ad81554ab40ee3

 

[HirdsTheWord]

No it's not. The RBA has three objectives:

A) the stability of the currency of Australia;

B)the maintenance of full employment in Australia; and

C) the economic prosperity and welfare of the people of Australia.

Long ago the RBA got on board with the view that economic stability is the best way to achieve these goals, and low inflation is a key to that. Wage growth is only good if it isn't inflationary (above acceptable levels)

Most of our wage growth in the 90s was due to productivity gains - awesome because that isn't inflationary. The issue is productivity gains have plateaued, which is why wage growth has stagnated.

incorrect. Wage growth is a key element in the inflation mandate of the RBA. It may not be a key callout in the 3 dot points but wage growth is definitely on their agenda, just like inflation is without specially calling it out.

Page has moved. Redirecting to the new location.

www.rba.gov.au

Both of these fall under the economic prosperity and welfare of the people of Australia. in their corporate plan. The RBA are targeting wage growth by keeping interest rates low so businesses essentially excel and need to pay staff more to keep them due to a low unemployment %

Call me crazy but allowing the average mortgage rise by 30% in a single calendar year without achieving a single wage increase in 5 years does not seem in the best interest of the economic prosperity and welfare of the people of Australia.

 

[Ned_Flanders]

incorrect. Wage growth is a key element in the inflation mandate of the RBA. It may not be a key callout in the 3 dot points but wage growth is definitely on their agenda, just like inflation is without specially calling it out.

Page has moved. Redirecting to the new location.

www.rba.gov.au

Both of these fall under the economic prosperity and welfare of the people of Australia. in their corporate plan. The RBA are targeting wage growth by keeping interest rates low so businesses essentially excel and need to pay staff more to keep them due to a low unemployment %

Call me crazy but allowing the average mortgage rise by 30% in a single calendar year without achieving a single wage increase in 5 years does not seem in the best interest of the economic prosperity and welfare of the people of Australia.

this is why i hate discussing economics with youtubers

wage growth IS INFLATIONARY UNLESS its tied to productivity gains

Inflation is the criteria the RBA have a bracket that they target - not wage growth

It has been this way since the reforms of the 80's thanks to our mate across the ditch

 

[Kwality]

this is why i hate discussing economics with youtubers

wage growth IS INFLATIONARY UNLESS its tied to productivity gains

Inflation is the criteria the RBA have a bracket that they target - not wage growth

It has been this way since the reforms of the 80's thanks to our mate across the ditch

The OP is trying hard to justify his claims & has simply lost the place. Its a shame as they are invested in the property issue but unfortunately are looking back, not forwards.

 

[Pessimistic]

You could just run this thread on endless loop

 

[Seeds]

So are all the racists finally ready to admit that australias high migration rate was not a major cause of rising house prices? If a cause at all.

its always been interest rate changes combined with any other policy changes that drive up incentives to invest in existing housing stock or reduce incentives to build.

 

[Deliverance]

So are all the racists finally ready to admit that australias high migration rate was not a major cause of rising house prices? If a cause at all.

its always been interest rate changes combined with any other policy changes that drive up incentives to invest in existing housing stock or reduce incentives to build.

Victoria has lost 50k people and house prices are booming still. Investors have been getting back in the the market in droves this year. Nothing to do with negative gearing I'm sure.

 

[Kwality]

So are all the racists finally ready to admit that australias high migration rate was not a major cause of rising house prices? If a cause at all.

its always been interest rate changes combined with any other policy changes that drive up incentives to invest in existing housing stock or reduce incentives to build.

Why is it racist to to regard immigration as a force in housing prices ?
Are there any stats on immigration & house purchases, or is it a driver in the rental market?

 

[Kwality]

A relevant article by Robert Gottliebsen in The Aus:

NoCookies | The Australian

www.theaustralian.com.au

But if students do not return in something like the numbers of previous years and our migration remains restricted then we will need to adopt a new series of economic assumptions.

House prices will not keep rising because we will have built too much accommodation. The massive infrastructure projects we are now building assume a continuation of strong population growth.

The debt the states and the Commonwealth are building up as part of this investment will not be easily covered if the population stagnates and interest rates rise.

One of Australia’s problems will be that whereas the British are welcoming migrants, particularly those from Hong Kong, Australians are divided on this issue and have very little understanding of the impacts they face if migration does not resume.

 

[Kwality]

Another home loan crackdown is looming. Here's what it might look like

The Treasurer gives a strong indication that new limits on large home loans will soon be introduced. But what will they look like and what will it mean for property prices?

www.abc.net.au

Key points:

• Treasurer Josh Frydenberg says the Council of Financial Regulators discussed the recent surge in home prices last week
• Analysts expect the council to announce new home lending restrictions before the end of this year
• The last time home lending rules were tightened property prices fell, especially in Sydney and Melbourne

..... the architects of the latest housing boom — the Reserve Bank, through record-low interest rates; the banking regulator APRA, through looser lending standards; and the federal government, through its HomeBuilder stimulus scheme — have met to discuss what to do about it.

"Last Friday, I joined the Council of Financial Regulators to discuss a range of issues including the state of the housing market which is a particular focus for both APRA and the RBA," Treasurer Josh Frydenberg told the ABC in a statement.

"Carefully targeted and timely adjustments are sometimes necessary. There are a range of tools available to APRA to deliver this outcome."

 

[HirdsTheWord]

Another home loan crackdown is looming. Here's what it might look like

The Treasurer gives a strong indication that new limits on large home loans will soon be introduced. But what will they look like and what will it mean for property prices?

www.abc.net.au

Key points:

• Treasurer Josh Frydenberg says the Council of Financial Regulators discussed the recent surge in home prices last week
• Analysts expect the council to announce new home lending restrictions before the end of this year
• The last time home lending rules were tightened property prices fell, especially in Sydney and Melbourne

..... the architects of the latest housing boom — the Reserve Bank, through record-low interest rates; the banking regulator APRA, through looser lending standards; and the federal government, through its HomeBuilder stimulus scheme — have met to discuss what to do about it.

"Last Friday, I joined the Council of Financial Regulators to discuss a range of issues including the state of the housing market which is a particular focus for both APRA and the RBA," Treasurer Josh Frydenberg told the ABC in a statement.

"Carefully targeted and timely adjustments are sometimes necessary. There are a range of tools available to APRA to deliver this outcome."

too little too late imo. Government & Regulators should have acted within the first 3 months of 2021, not wait until the head of a *in Bank (the guy who actually is creaming profits from these massive mortgages) says something.

Those stats are damning. 1/5 people (20%) are taking out mortgages in excess of 6 times their household incomes. how ******* stupid can people be?. I have little sympathy for these people who will inevitably struggle when interest rates do creep up. Only takes a small increase in % to massively increase your repayments. Loan commitments DOUBLED within a year from 17 billion to 33 Billion. In Sane.

How are banks even allowed to loan people that kind of Money? I'm guessing they are not banks but rather 3rd party lenders.

What an absolute mismanaged s**t show. There has been a significant lack of long term planning for sustainable house growth since 2010. Future generations are literally being forced to lock into these enormous loans whilst the government simply puts existing homeowners at the forefront every. single. time.

It wont be long until a 40 year mortgage product is released. Can guarantee it will be here within 10 years.