Society/Culture Australian Property Prices to Crash?

Aug 14, 2011
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interpolate? My point is there’s a whole load of dross published in this space

Like it or not there are any number of interested parties in the space. Those looking to get on to the property ladder to people wanting a rental property to build a nest egg etc. All with different takes, thats why helping yourself to 'sort the wood from the trees' ...

Where you can live for work/life balance adds pressure for some, not others. Same applies to public transport links focussed on the CBD.
 

ElectricG

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I remember reading reddit threads on this topic in around 2011. I wonder how many people have been “holding out” for the crash.
 

Frank Grimes

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I remember reading reddit threads on this topic in around 2011. I wonder how many people have been “holding out” for the crash.
I have been hearing people saying property prices were too high and wait for them to come down back in the early 00's.

I even remember some economist in the mid 00's spruiking that house prices are going to fall 40% and had a bet to walk to Mt Kosciuszko (which he lost). He was so certain he even sold his house expecting to buy into the market when the crash happens.

That was back in the mid 00's where I think the average house price was something like 350k~400k. That just looks incredibly cheap now.

A house next to me was sold for $1.1 million the other week. It is a 3 bed house in the outer east suburbs on a 600sqm block. It is in very good condition, but nothing like a fancy mansion and about 25 years old. That price is insane.
 
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We are just so lucky we live in a strong economy that seems to defy Obstacles like the GFC and now the Pandemic.
The GFC correction was probably only about 10-20% on average even though the pre GFC boom pushed everything up 30-40% .
The momentum behind the current boom will likely see demand sustain for a couple more years yet, followed by probably another 10-20% correction .
( Note - don’t put your life savings down on my opinion, I’m probably wrong )
 
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I have been hearing people saying property prices were too high and wait for them to come down back in the early 00's.

I even remember some economist in the mid 00's spruiking that house prices are going to fall 40% and had a bet to walk to Mt Kosciuszko (which he lost). He was so certain he even sold his house expecting to buy into the market when the crash happens.

That was back in the mid 00's where I think the average house price was something like 350k~400k. That just looks incredibly cheap now.

A house next to me was sold for $1.1 million the other week. It is a 3 bed house in the outer east suburbs on a 600sqm block. It is in very good condition, but nothing like a fancy mansion and about 25 years old. That price is insane.

haha fall by 40% - yeah dont think he was good at his job, not even close.

Do people expect if/when there is a downturn that $1m properties will be available for $600k? If so, then ive got bad news for you
 
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, sh*t for those that want in.

I mean you are absolutely right.

The government has over the period of 20 years allowed housing to now be worth in excess 9 trillion dollars. Let that sink in. 9 TRILLION dollars. This is almost 5 x our national GDP for gods sake.

It is worth more than the ASX and Superannuation combined and better yet there is ZERO Housing policy in relation to affordable housing. Let that also sink in. There is effectively zero policy from State and Federal ensuring housing affordability for people in 10, 20, 30 years time. Australia biggest monetary value has ZERO bus driver.

It is absolute insanity what is occurring and you are 100% correct that vested interests are at play. Any common sense country would be making this issue numero uno yet here we are with the Australian Government doing absolutely sweet * all about it, if anything they are actively ensuring it continues to increases.
 
Aug 14, 2011
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"By comparison, the previous increase of just over $1 trillion took 15 months, rising from $7.2 trillion in the December quarter 2019 to $8.4 trillion in the March quarter 2021."

The ABS residential property prices index shows house prices rose 5.7 per cent in the September quarter, while attached dwelling prices rose 3.1 per cent.'

The only way house values will fall is if the cost of borrowing increases.

 
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I mean you are absolutely right.

The government has over the period of 20 years allowed housing to now be worth in excess 9 trillion dollars. Let that sink in. 9 TRILLION dollars. This is almost 5 x our national GDP for gods sake.

It is worth more than the ASX and Superannuation combined and better yet there is ZERO Housing policy in relation to affordable housing. Let that also sink in. There is effectively zero policy from State and Federal ensuring housing affordability for people in 10, 20, 30 years time. Australia biggest monetary value has ZERO bus driver.

It is absolute insanity what is occurring and you are 100% correct that vested interests are at play. Any common sense country would be making this issue numero uno yet here we are with the Australian Government doing absolutely sweet fu** all about it, if anything they are actively ensuring it continues to increases.

how much is blue chip (or maybe better described as gravity defying) such asparts of melbourne and sydney
They seem to have a lot in common with other similar hot markets around the world
And does the tree change acceleration due to wfh acceptance have a part to play

also in the UK recently they reckoned only less than 10% of loans were for tangible assets such as property. The rest was derivatives
 

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22% in one year is insane, with the almost total absence of immigration.
That’s 400k on a 2 million property,which aren’t that rare these days
so if there is a 20% crash, values have still risen over the longer term

So everyone is right
 

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I just did some rough spreadsheet calcs Since 1993 my house has averaged a 7.5% annual value and my salary 4%

may 1993 salary was 12% of the purchase price and I estimate about 5% now. The paper returns now being not that much below mineand partners take home combined. Before getting too excited, we haven’t had SGL most of our lives so super balances are quite modest, although the flexibility of the home equity will allow us to keep the super on max investment settings instead of going conservative.

my daughter graduated and will start on 3/4 my current salary

I can see the difficulty in raising a deposit but where is the argument for a crash or even much deviation from the ongoing 7% annual average rise?

theres negligible immigration and it seems the market is as hot as ever $2m house set to be $4m inside a decade. Sounds improbable but it did ten years ago too
 
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Frank Grimes

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I remember reading reddit threads on this topic in around 2011. I wonder how many people have been “holding out” for the crash.
I found a youtube video of a presentation 10 years ago I remember seeing. Effectively telling people to "hold out". In hindsight if people took that advice at the time they would probably be regretting it.

What I find wrong with his advice is he appears to be advising first home buyers to "play" the market. For people to try to buy at a time when the prices are lowest. While he may be having good intentions in advising this to save people money, it can actually be bad advice as we have seen with house prices over the last ten years.

The time to buy a house imo is when you can comfortably make the loan repayments factoring in increases of interest rates. Admittedly it's harder for a lot of people to meet this criteria these days.

 
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I found a youtube video of a presentation 10 years ago I remember seeing. Effectively telling people to "hold out". In hindsight if people took that advice at the time they would probably be regretting it.

What I find wrong with his advice is he appears to be advising first home buyers to "play" the market. For people to try to buy at a time when the prices are lowest. While he may be having good intentions in advising this to save people money, it can actually be bad advice as we have seen with house prices over the last ten years.

The time to buy a house imo is when you can comfortably make the loan repayments factoring in increases of interest rates. Admittedly it's harder for a lot of people to meet this criteria these days.



Even this thread from 2018 is enlightening. Same arguments.
 
Aug 14, 2011
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Long time since we faced inflation - tough time if you have a mortgage or aspire to home ownership.
 

Pessimistic

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So the ‘crash’ is now being forecast as 4% in 2023 now (ANZ) implicit in the headline is threat prices are still ‘booming’

 
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Here's everything wrong wirh Australia's market in a few sentences:

The number of new loans being taken out by first home buyers has fallen by 11 per cent in a year, according to ABS lending indicators.

But the amount borrowed by them is up 1 per cent (because house prices are going up).

The value of investor mortgages rose 83 per cent.
 
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