Society/Culture Australian Property Prices to Crash?

[Number37]

Markets can dump together.

As long as the ROR > i , does it matter?

 

[Evolved1]

As long as the ROR > i , does it matter?

I don't understand your point.

 

[sdfc]

I don't understand your point.

Neither does he.

 

[sdfc]

US hiking rates by 0.75%, if the UK does the same we're on track for similar, if not .50% at the absolute very least.

The market's pricing in 3.75% cash by the end of the year and almost 4.5% by the middle of 2023. It's insane.

 

[HairyO]

The market's pricing in 3.75% cash by the end of the year and almost 4.5% by the middle of 2023. It's insane.

Its insane that we will be back to our long term average in a year or 2 ?

We should have been heading upwards 6 months ago, but instead the RBA Governor was saying we wouldnt see rate rises for at least a year.

Central Banks everywhere got very lazy.

 

[sdfc]

Its insane that we will be back to our long term average in a year or 2 ?

We should have been heading upwards 6 months ago, but instead the RBA Governor was saying we wouldnt see rate rises for at least a year.

Central Banks everywhere got very lazy.

The cash rate should never have been cut anywhere near this low in the first place. Years of cutting rates to chop off the bottom of the business cycle has fuelled such a huge run up in household debt that the economy can't handle rates anywhere near the long-term average.

 

[Number37]

I don't understand your point.

You don't understand simple maths?

 

[Evolved1]

You don't understand simple maths?

I understand maths. I don't understand your point.

 

[HairyO]

The cash rate should never have been cut anywhere near this low in the first place. Years of cutting rates to chop off the bottom of the business cycle has fuelled such a huge run up in household debt that the economy can't handle rates anywhere near the long-term average.

Lowering rates is fine but they waited way too long. We have known for months that inflation was going to go up a lot. And they sat on their hands.

The longer they waited the worse the housing market got.

 

[Pessimistic]

We will have 40 year mortgages by the end of 2029.

Interesting they only offer a 5 year fixed mortage. Huge de risk for them.

If you are a retiree and the home loan is averaging 5% and your super 9%. So long as it’s not a huge portion of your home equity why not?

It’s a nice basic diversified portfolio
Redraw is like very cheap credit card

Retirees or those about to retire soon might be asset rich (property boom) but cash poor (not a full lifetime of 10% sgl)

 

[Pessimistic]

ATH property and stock prices during a pandemic never made any sense to me. You can only prop the markets up so long before something gives, and I for one would love to see a big dump in property prices so our youth can get their foot in the door.

The youth which will have almost 50 years of 10% super levy by the time they retire? Maybe it’s not so bleak

Many now retiring will have had 20 years at most. Thank god they are living in decent property assets

 

[Crankyhawk]

I don't understand your point.

if your return on what you borrow is higher than the interest you pay on what you borrow, its "all good"
Until interest goes up or rate or return drops, and you find that the capital is also of less value..
then if you have to sell, you have debt left over with no asset...

risks of leveraging imo.

 

[Pessimistic]

if your return on what you borrow is higher than the interest you pay on what you borrow, its "all good"
Until interest goes up or rate or return drops, and you find that the capital is also of less value..
then if you have to sell, you have debt left over with no asset...

risks of leveraging imo.

Sacrifice some gains to keep a decent liquid cashflow

 

[Number37]

if your return on what you borrow is higher than the interest you pay on what you borrow, its "all good"
Until interest goes up or rate or return drops, and you find that the capital is also of less value..
then if you have to sell, you have debt left over with no asset...

risks of leveraging imo.

What happens if you do it short term?
Just keep turning it over, like it is a casino.
Money for jam.
The richest 1% have gotten richer over the last 3 years, whilst most others have almost reached the point of eating the paint off the walls. Who would have thought paint would be cheaper than lettuce!
Capitalism is like the carny kids at all the agricultural shows promising "everyone's a winner".
When it is really more like musical chairs where there is 5 billion people and maybe only a million or so chairs at best.

 

[sdfc]

Lowering rates is fine but they waited way too long. We have known for months that inflation was going to go up a lot. And they sat on their hands.

The longer they waited the worse the housing market got.

Keeping rates too low fuelled the increase in household debt to truly astronomical levels. The housing market was a mess before covid.

Cutting rates to push inflation up to an arbitrary target of 2% to 3% during a period of disinflation drove household debt to around 180% of disposable income pre-covid.

There are no free lunches, loose monetary policy begets financial instability.

 

[hamohawk1]

Lowish clearance rate (around 50%) but stock levels are still pretty consistent/ lower than normal over the past 2/3 years. Next months rate rise will be the point where people would be beginning to question whether its time to list or try weather the storm.

 

[Pessimistic]

The correction will be a fraction of the huge gains recently. Especially in blue chip areas. Press always put Mayo on it no matter the trend.

 

[Scotland]

The correction will be a fraction of the huge gains recently. Especially in blue chip areas. Press always put Mayo on it no matter the trend.

One of my friends has recently boarded the doom and gloom train. I've only been in the market a decade or so and I reckon I've heard that I'm going to lose 20-30% maybe 4 or 5 times.

 

[Madas]

One of my friends has recently boarded the doom and gloom train. I've only been in the market a decade or so and I reckon I've heard that I'm going to lose 20-30% maybe 4 or 5 times.

I reckon It’ll be 10% for an average correction and 20% if things get rough .
But if you can hang on 10 years it will come back and then it will go up even more

 

[Scotland]

I reckon It’ll be 10% for an average correction and 20% if things get rough .
But if you can hang on 10 years it will come back and then it will go up even more

Each market and each market segment is different. And each property in each segment is different. Etc.

I just think the 'x% across the board' type statements do nothing but create panic.

 

[Madas]

Each market and each market segment is different. And each property in each segment is different. Etc.

I just think the 'x% across the board' type statements do nothing but create panic.

Nothing surer and making broad unfounded statements like I did is ridiculous
But I’m just conveying what I’ve seen in my 30 years in the work force and 25 years of property ownership

 

[Scotland]

Nothing surer and making broad unfounded statements like I did is ridiculous
But I’m just conveying what I’ve seen in my 30 years in the work force and 25 years of property ownership

Could be even worse for some.

I take a what goes up must (should) go down view. Whatever has gone up the most recently should fall the hardest.

I did a refinance 8-9 months ago so kept an eye on similar sales. Some have been comparable, others I wouldn't want to be selling soon.

 

[Pessimistic]

Treechange and seachange places had been pretty stagnant for a decade or more. There was an even than capital city bigger post pandemic boost there. First places to suffer when the R word comes around

 

[Sqotty from office works]

Treechange and seachange places had been pretty stagnant for a decade or more. There was an even bigger post pandemic boost there. First places to suffer when the R word comes around

Yes.
People currently overpaying, but more so in country towns.
They are enjoying the pony club,cheap golf course , cutesy bakery and such.
But all over soon and a distinct lack of buyers in the next 5 years.
When they look for a local job their eyes will pop out and they will need to make the decision to drive to a major city for work.

 

[Kwality]

One of my friends has recently boarded the doom and gloom train. I've only been in the market a decade or so and I reckon I've heard that I'm going to lose 20-30% maybe 4 or 5 times.

Unless you sell out of the market, its a paper loss.