Society/Culture Australian Property Prices to Crash?

[yodellinhank]

Even starting at 230k you wont have 3 million in super by the time you retire.

you are doing your math's wrong.

Should self manage and put it all into buying investment properties.

 

[HirdsTheWord]

2023 here we come!

 

[HirdsTheWord]

This is a pretty good article for anyone interested.

And it confirms what i have been banging on in here at nauseum. There is no clear body responsible for housing affordability.

What is the answer to skyrocketing house prices?

Australia's skyrocketing property market has seen house prices increase 22 per cent in 12 months. As Alan Kohler writes, there's no easy answer to housing affordability.

www.abc.net.au

 

[Gigantic]

Should be more than that, are you not adding super growth each year. Unless I'm totally fluffing this

10k - each year contribution without inflation

1.1 - 10% yearly super fund growth on average

(230k+10k)*1.1 = 264k

(264k+10k)*1.1 = 301.4k

That's the next two years unless I'm ballsing this up

I'm not sure but 3 million is a huge super number. maybe the calcs are a bit off. I don't think super is cumulative interest year on year.

My projected Super balance at retirement is 1.2 million based on;

- my salary of 170k
- Age of 33
- Current Super Balance 95k
- Employer Contributions of 12%


if i take your calculation method of (90k+10k)*1.1 and apply it to myself I get the below.......Doesn't seem right.

Age 65 - $4.1m of super........

You're missing the 15% tax on super

Also haven't included management fees (which can really eat into over time)

And 10% is a pretty generous assumption by any standards, most calculators would probably use something between 7-8% (unless you plan on staying high growth option even in your 60s)

 

[Gigantic]

I'm not sure but 3 million is a huge super number. maybe the calcs are a bit off. I don't think super is cumulative interest year on year.

My projected Super balance at retirement is 1.2 million based on;

- my salary of 170k
- Age of 33
- Current Super Balance 95k
- Employer Contributions of 12%

View attachment 1285770

if i take your calculation method of (90k+10k)*1.1 and apply it to myself I get the below.......Doesn't seem right.

Age 65 - $4.1m of super........

View attachment 1285779

Here you go, I quickly did it with a growth rate of 8% p.a and applying fees and tax



Which comes out just a bit more than the calculator.

 

[Number37]

I'm sitting at 230k in super at 33 years old, I started full time work at 16 and was adding extra until a purchase a house.

All I can do is use prior results for a rough guess and super grows at 10% on average.

The closer you get to retirement the lower the return on your super, for 2 reasons, (1) the greater the return the greater the risk. You wouldn't want to risk all that $$$ you have accumulated chasing 10% when you can get 5% with far less risk. (2) 5% of $1m (your balance later in life) is the same as 10% of $1/2m (your balance earlier in life)

 

[HirdyLannister]

You're missing the 15% tax on super

Also haven't included management fees (which can really eat into over time)

And 10% is a pretty generous assumption by any standards, most calculators would probably use something between 7-8% (unless you plan on staying high growth option even in your 60s)

The closer you get to retirement the lower the return on your super, for 2 reasons, (1) the greater the return the greater the risk. You wouldn't want to risk all that $$$ you have accumulated chasing 10% when you can get 5% with far less risk. (2) 5% of $1m (your balance later in life) is the same as 10% of $1/2m (your balance earlier in life)

Thanks, looks like I'll need to buy more property then to support myself.

 

[HirdsTheWord]

Here you go, I quickly did it with a growth rate of 8% p.a and applying fees and tax

View attachment 1286797

Which comes out just a bit more than the calculator.

yeah i know

i prefer the 4.1m though lol

 

[ibd77]

Better not burst before mid year as I got two properties to sell to fund a new bigger better build.

 

[Sqotty from office works]

Better not burst before mid year as I got two properties to sell to fund a new bigger better build.

Bad news for you, it's all over.
The cavalcade of 5 bedroom 4 bathroom 12 car garages and indoor and outdoor spas, for sale will match the biggest bank jetison of property in Australian history.

Good luck.

 

[Pessimistic]

I think I see a pattern:

rising house prices: ‘experts’ predicting house prices to ‘crash’

falling house prices: ‘experts’ advising to buy cos house prices to rise sharply

There seems to be a complete absence of people predicting rising market to keep rising, or a falling market to keep falling, which is probably what happens 95% of the time

 

[Deliverance]

Thanks, looks like I'll need to buy more property then to support myself.

LOL, 1.7 mill is enough to support yourself.

 

[Sqotty from office works]

I think I see a pattern:

rising house prices: ‘experts’ predicting house prices to ‘crash’

falling house prices: ‘experts’ advising to buy cos house prices to rise sharply

There seems to be a complete absence of people predicting rising market to keep rising, or a falling market to keep falling, which is probably what happens 95% of the time

In 1992ish all economists predicted they would go lower after initial crash.
In 1987 they said it would fall lower than expected.

Maybe you're under 50.

 

[Herne Hill Hammer]

This is such a massive , difficult topic and one which I would love to see change within my generation.
The main finger pointing seems to be aimed at Negative Gearing fuelling speculation , which I agree with but feel that the majorities opinions are being clouded by the craziness that is happening in Sydney and Melbourne where ( correct me if I’m wrong) people are buying / building/ renovating all with the intent of flipping it as soon as possible to the next person with the same idea .
This is boom mentality that doesn’t last too long - maybe 2-3 years ( although Sydney seems to be an anomaly?)
To get to my point, and with full disclosure I am someone who has taken advantage of NG as a form of forced savings and investment for retirement.
Theres a difference between the majority of mums and dads ( like me) who buy a rental with the intent of keeping it till retirement and the crazy speculators fuelling this fire in Sydney/ Melbourne.
I can’t be certain but I’d be pretty sure that a lot of people like me who don’t understand shares and possibly haven’t contributed to super as much as they should have as it wasn’t so common in our earlier days or they may be self employed use property as an investment tool for retirement.
My message to those who are anti NG is to be considerate of people like us and also the fact that one day you may be in the position to take advantage of it as an investment tool .
Yes I think the laws around ownership of the property should be strengthened ( property needs to be held for 3-5 years instead of 12 months before CGT is applied, perhaps cap the amount of properties that can be owned to 3 including the primary residence, tighter controls on overseas investment and who actually owns the property)
But as far as NG being a drain on the economy when in reality it is a great tool to provide rental accommodation , maybe aim your angst at the Googles , Facebooks , Mining Companies , corruption etc draining massive amounts of cash out of the country. If you could harness that money to be put towards more public housing you would see real change.

The problem now is all of the long term rental stock is being swallowed up by Airbnb and other short term rental options. Why have a family living in your house paying you $4 or 500 a week in rent when you can jam it full of beds and rent it out for $1,000 a weekend and be able to use it yourself when you want?

I live on Phillip Island, there are currently 3 rentals available in Cowes where I live and only 7 others on the rest of the island. Families are posting almost daily on the local fb buy, swap and sell pages, desperate for a rental for them and their families.

I see stories almost daily from WA, NSW and Qld about a massive rental shortage.

 

[Herne Hill Hammer]

I hope so. But in expressing such hope, i fear for the younger gen who have already committed to grossly inflated purchases.

I guess it will really only affect them if they want to sell.

 

[Madas]

The problem now is all of the long term rental stock is being swallowed up by Airbnb and other short term rental options. Why have a family living in your house paying you $4 or 500 a week in rent when you can jam it full of beds and rent it out for $1,000 a weekend and be able to use it yourself when you want?

I live on Phillip Island, there are currently 3 rentals available in Cowes where I live and only 7 others on the rest of the island. Families are posting almost daily on the local fb buy, swap and sell pages, desperate for a rental for them and their families.

I see stories almost daily from WA, NSW and Qld about a massive rental shortage.

This is very true and same where I live
This Pandemic has just created the perfect storm
Everyone traveling nationally so chewing up all holiday accomodation
Then they decide they want out of the cities so sell up and move .
Once they find a place they need to wait till a build happens , chewing up rental accommodation.
Meanwhile investors taking advantage of low interest rates are buying up left right and centre trying to take advantage of this rental squeeze .

This stupid pandemic has got a lot to answer for .

 

[Opine]

I guess it will really only affect them if they want to sell.

That too. My other concern is that prices escalated so much so quickly that without parental assistance many first home buyers have to borrow alarmingly high amount to get into the market. This is going to have enormous consequences on relationships, family, children and health. Young couples may have less real choice about selling.

 

[Herne Hill Hammer]

This is very true and same where I live
This Pandemic has just created the perfect storm
Everyone traveling nationally so chewing up all holiday accomodation
Then they decide they want out of the cities so sell up and move .
Once they find a place they need to wait till a build happens , chewing up rental accommodation.
Meanwhile investors taking advantage of low interest rates are buying up left right and centre trying to take advantage of this rental squeeze .

This stupid pandemic has got a lot to answer for .

WA shutting their borders to eastern state fifo workers and telling them that if you want to work in WA then you need to move here, the locals were cheering for this. So a lot did relocate to WA and took all the rentals and the locals were screaming about it.

Be careful what you wish for sometimes.

Also a lot of people returning from overseas and moving back into their homes all over the country.

 

[Pessimistic]

In 1992ish all economists predicted they would go lower after initial crash.
In 1987 they said it would fall lower than expected.

Maybe you're under 50.

well ive been here since 2000 - and some parts of australia have had crashes

 

[Number37]

WA shutting their borders to eastern state fifo workers and telling them that if you want to work in WA then you need to move here, the locals were cheering for this. So a lot did relocate to WA and took all the rentals and the locals were screaming about it.

Be careful what you wish for sometimes.

Also a lot of people returning from overseas and moving back into their homes all over the country.

IMO, when all those people remember why they left in the first place and return to wherever they went (when the pandemic is over) ...that exodus will trigger the collapse of the housing market because it won't happen over years it will be a sudden thing.

 

[Madas]

IMO, when all those people remember why they left in the first place and return to wherever they went (when the pandemic is over) ...that exodus will trigger the collapse of the housing market because it won't happen over years it will be a sudden thing.

I don’t reckon
IMO we are going to get our doors beaten down by immigrants from all over the world wanting to move here.
It’s proven the safest place for a pandemic and is a land of opportunity and prosperity.
Imagine the stories that immigrants that have moved here in the last 5 years are telling the folks back home
“ yeh we just arrived in Sydney , bought a house in ........... for $500,0000 next thing we know it was worth $1 million , you’re not gonna believe this place. Get over here !”

 

[Number37]

I don’t reckon
IMO we are going to get our doors beaten down by immigrants from all over the world wanting to move here.
It’s proven the safest place for a pandemic and is a land of opportunity and prosperity.
Imagine the stories that immigrants that have moved here in the last 5 years are telling the folks back home
“ yeh we just arrived in Sydney , bought a house in ........... for $500,0000 next thing we know it was worth $1 million , you’re not gonna believe this place. Get over here !”

That's a possibility.
IMO the exodus will be swift.
The mass immigration can only happen over time.

 

[Forever North]

Too many vested interests and fingers in the pie within governments, banks, developers, investors, elites etc for any large scale housing collapse. Our economy/banking system is largely based on housing, whether ownership or investing. Just have a look what’s happened the past 18 months, a global pandemic, countries shutting down, massive disruption everywhere, huge uncertainty, the worst event in our lifeline, probably since WWII. In theory all the hallmarks and factors for a massive housing collapse but bizarrely enough the exact opposite has occurred. If the past 18 months hasn’t seen prices drop wtf will? Banks with the encouragement of government have done their bit by keeping the official rates at record lows (for the foreseeable future as well) to keep the market stimulated and have been flexible with customers regarding repayments, loan deferals etc. Fed govt has thrown plenty of money around via jobkeeper and jobseeker. Without this I’d say a lot more people would have lost their homes sending the market and confidence downward. I know quite a few people that took advantage of the low rates and purchased properties up in Queensland, Noosa, GC, Sunshine Coast etc. Prices have jumped around 30% over the past 18 months in those regions. They aren’t likely to come down either given that a lot of people are moving up there for work/lifestyle/fed up reasons. There’s bugger all rentals available up there further inflating the market. Eventually pretty much overseas migrants will replace those that have left Vic and NSW once borders re open keeping housing on the up in those states. One issue I can see is housing materials shortages and world wide supply chain issues slowing down construction of new dwellings. This will probably create an illusion of scarcity futher driving prices up. Great for owners and investors, s**t for those that want in.

 

[Kwality]

Any way you look at the property market, it remains tough to get into:
'An exodus of property investors has resulted in the largest shortfall of homes being bought to lease out in seven years, increasing the pressure on an already stretched rental market.
Smaller returns, tighter lending policy and a jostling between landlords and tenants for rights has caused many mum and dad property investors – who provide the majority of Australia’s rental stock – to sell and look elsewhere.
Over the past five to seven years, a clear trend has emerged nationally showing the portion of investors buying into the market is not keeping up with those selling, despite investor levels rising over the past six months.
This has inevitably caused the number of properties available to tenants to shrink.'

NoCookies | The Australian

www.theaustralian.com.au

..... real estate offices were being told by landlords that they were fed up with “over-zealous” new rental legislation imposed by state governments.
“One can’t expect to meet rising demand requirements by constantly discouraging those capable of providing the rental supply. It’s not rocket science.”

 

[Pessimistic]

Like the real estate industry could be trusted to lie straight in bd