Inflation

tech/a · 27 January 2023

There will be a return to very much lower real estate prices and rents in the large metropolitan cities and a concomitant rise in values in those centres where the real work of Australia is done, mining materials, oil and gas production and exploration and agriculture.

Supply governs everything. You dont have supply in the metro area or the local towns so rents and house prices won't be falling.

The real wealth will return to the North and the West with high wages and near full employment in the regions producing wealth.

You currently have high wages and full employment. So higher wages will just pull a finite number of people from other industries to add to the cost of housing and rents as those who are cashed up in super and understand inflation,---- rush (NOW) to buy anything that has a resistance to diminished value (IE anything that isn't cash) housing and increasing rent is the top of the list.

Nobody cares about inflation when they are earning the big bucks.

The biggest losers are those with heaps of cash and no assets and those with no assets and no cash but earning heaps and living week or month by month.
Lots of Super fuelled cash-rich retirees are smashing asking prices on Housing scrambling to grab an asset that can return a better-than-average rate without being eaten alive by a diminishing value of cash held.

My best guess is that there will be a slow unwinding of real asset value against earnings and affordability.
this will take many years until we return to something that looks more like an equilibrium.
Right now it is severely skewed toward those who have money. They are the current drivers of inflation. Everyone else is left behind.
The gap is wider than ever and will take many years to close.

You won't see bargains these piranhas are just hovering for anything that reeks 5 + % return. You may want to live in it ---they want to rent it!

Pain for years Im afraid--the writing has been on the wall for a LONG LONG time.
None are as blind as those who cannot see.

againsthegrain · 27 January 2023

tech/a said:
Supply governs everything. You dont have supply in the metro area or the local towns so rents and house prices won't be falling.

You currently have high wages and full employment. So higher wages will just pull a finite number of people from other industries to add to the cost of housing and rents as those who are cashed up in super and understand inflation,---- rush (NOW) to buy anything that has a resistance to diminished value (IE anything that isn't cash) housing and increasing rent is the top of the list.

The biggest losers are those with heaps of cash and no assets and those with no assets and no cash but earning heaps and living week or month by month.
Lots of Super fuelled cash-rich retirees are smashing asking prices on Housing scrambling to grab an asset that can return a better-than-average rate without being eaten alive by a diminishing value of cash held.

My best guess is that there will be a slow unwinding of real asset value against earnings and affordability.
this will take many years until we return to something that looks more like an equilibrium.
Right now it is severely skewed toward those who have money. They are the current drivers of inflation. Everyone else is left behind.
The gap is wider than ever and will take many years to close.

You won't see bargains these piranhas are just hovering for anything that reeks 5 + % return. You may want to live in it ---they want to rent it!

Pain for years Im afraid--the writing has been on the wall for a LONG LONG time.
None are as blind as those who cannot see.

While the interest rates are going up and paying better then rent at the moment it is a downwards pressure on the house prices, I think the mega rich are happily watching and licking their lips for when the eventual moment comes and a swing in the rates and prices will be very quick, then the game will be on, picking bottoms is impossible

tech/a · 27 January 2023

againsthegrain said:
While the interest rates are going up and paying better then rent at the moment it is a downwards pressure on the house prices, I think the mega rich are happily watching and licking their lips for when the eventual moment comes and a swing in the rates and prices will be very quick, then the game will be on, picking bottoms is impossible

Not what Im seeing.
I am active in the Property market both with super and privately.

I've bid on 3 houses in the last 3 weeks all 4 bedrooms in the Southern beach suburbs of SA.
I want one privately not for super.

On every occasion, the Asking price was Mid $600k and in every case, I was outbid even though my bid was $110K over the Indicative
asking price. $780K is the highest and $765K is the lowest.

Everyone was cashed either privately or Super related.
One even had an offer of $825K with a subject to sale and that was rejected for $780K cash (So to speak).

It's on NOW.
The savvy doesn't pick bottoms they do not have to as next year the ridiculous price paid will be the bottom!
I've been doing this for 40 years and this is the strongest seller's market I've ever seen!

frugal.rock · 27 January 2023

Constant pressure now also from immigration.

againsthegrain · 27 January 2023

tech/a said:
Not what Im seeing.
I am active in the Property market both with super and privately.

I've bid on 3 houses in the last 3 weeks all 4 bedrooms in the Southern beach suburbs of SA.
I want one privately not for super.

On every occasion, the Asking price was Mid $600k and in every case, I was outbid even though my bid was $110K over the Indicative
asking price. $780K is the highest and $765K is the lowest.

Everyone was cashed either privately or Super related.
One even had an offer of $825K with a subject to sale and that was rejected for $780K cash (So to speak).

It's on NOW.
The savvy doesn't pick bottoms they do not have to as next year the ridiculous price paid will be the bottom!
I've been doing this for 40 years and this is the strongest seller's market I've ever seen!

I guess its hard to generalise the market as 1, in Melbourne I look from time to time. At the moment it seems prices have fallen since this time last year. I am looking for a entry myself at 700~900, still on the fence for some personal reasons and also seeing how far the rates will go. The writing is on the wall, hope won't be looking at this post in a few years with regret ?

JohnDe · 27 January 2023

tech/a said:
Not what Im seeing.
I am active in the Property market both with super and privately.

I've bid on 3 houses in the last 3 weeks all 4 bedrooms in the Southern beach suburbs of SA.
I want one privately not for super.

On every occasion, the Asking price was Mid $600k and in every case, I was outbid even though my bid was $110K over the Indicative
asking price. $780K is the highest and $765K is the lowest.

Everyone was cashed either privately or Super related.
One even had an offer of $825K with a subject to sale and that was rejected for $780K cash (So to speak).

It's on NOW.
The savvy doesn't pick bottoms they do not have to as next year the ridiculous price paid will be the bottom!
I've been doing this for 40 years and this is the strongest seller's market I've ever seen!

Pretty much the same for me. I had to adjust expectations and scored a place that has turned out to be a dream, for me. Still looking, but as you say it is a "seller's market".

I don't think prices will be coming down anytime soon, like some have predicted. Supply is too low, demand is growing, and there is still a lot of cash and equity around the place.

Spoke to a carpenter this morning, he told me that he doesn't believe all the negative news and that it just negatives people getting loud. Reckons that he is flat out, has enough workers and material is back online. Prices are not as serious as everyone reports, and the interest rate should be about 5% anyway, especially since he and his mates managed to buy when rates where at 17%.

mullokintyre · 27 January 2023

tech/a said:
Not what Im seeing.

It's on NOW.
The savvy doesn't pick bottoms they do not have to as next year the ridiculous price paid will be the bottom!
I've been doing this for 40 years and this is the strongest seller's market I've ever seen!

Sigh, wish it was happening in Darwin.
House I paid 570k for ten years ago, cannot get a bid for 500k now.
And the agents keep telling me Darwin is Booming!.
Mick

JohnDe · 27 January 2023

mullokintyre said:
Sigh, wish it was happening in Darwin.
House I paid 570k for ten years ago, cannot get a bid for 500k now.
And the agents keep telling me Darwin is Booming!.
Mick

The three L's for real-estate investment - Location, Location, Location

5 Best Suburbs to Invest in Darwin in 2023 | Canstar

Find out which suburbs in Darwin made the top five list in Canstar’s Rising Stars Australian Property Market Report powered by Hotspotting.

www.canstar.com.au

tech/a · 27 January 2023

mullokintyre said:
Sigh, wish it was happening in Darwin.
House I paid 570k for ten years ago, cannot get a bid for 500k now.
And the agents keep telling me Darwin is Booming!.
Mick

The worm will turn

frugal.rock · 27 January 2023

mullokintyre said:
Sigh, wish it was happening in Darwin.
House I paid 570k for ten years ago, cannot get a bid for 500k now.
And the agents keep telling me Darwin is Booming!.
Mick

Oh no.
NT and WA have had increased delinquencies in the last 15 years with the greatest category being the negative loan to value ratio category, which in itself, has also widened.
Poor Mr Mik. ?

mullokintyre · 27 January 2023

frugal.rock said:
Oh no.
NT and WA have had increased delinquencies in the last 15 years with the greatest category being the negative loan to value ratio category, which in itself, has also widened.
Poor Mr Mik. ?

Yea well, I paid cash for it, so the negative loan vals not a problem for me.
Might be for the next sucker who eventually buys it.
Mick

over9k · 27 January 2023

frugal.rock said:
Constant pressure now also from immigration.

THIS.

The powers that be will do whatever it takes to keep the ball rolling.

over9k · 27 January 2023

tech/a said:
Not what Im seeing.
I am active in the Property market both with super and privately.

I've bid on 3 houses in the last 3 weeks all 4 bedrooms in the Southern beach suburbs of SA.
I want one privately not for super.

On every occasion, the Asking price was Mid $600k and in every case, I was outbid even though my bid was $110K over the Indicative
asking price. $780K is the highest and $765K is the lowest.

Everyone was cashed either privately or Super related.
One even had an offer of $825K with a subject to sale and that was rejected for $780K cash (So to speak).

It's on NOW.
The savvy doesn't pick bottoms they do not have to as next year the ridiculous price paid will be the bottom!
I've been doing this for 40 years and this is the strongest seller's market I've ever seen!

Are you bidding on places that other retirees might want tech?

Buying a place a few years back that you knew people would want to retire to one day would have gotten you a very tidy return

Are you not just bidding on those places now and being late to the game?

over9k · 27 January 2023

tech/a said:
Supply governs everything. You dont have supply in the metro area or the local towns so rents and house prices won't be falling.

Only because the immigration floodgates are open. But yes, throw open immigration, restrict supply of new housing, the end.

tech/a said:
You currently have high wages and full employment. So higher wages will just pull a finite number of people from other industries to add to the cost of housing and rents as those who are cashed up in super and understand inflation,---- rush (NOW) to buy anything that has a resistance to diminished value (IE anything that isn't cash) housing and increasing rent is the top of the list.

Only because of the aforementioned immigration & lack of housing supply however. Not to say it's a bad bet as all the politicians own investment properties, but let's not pretend like there's some kind of real structural/fundamental thing going on here - it's entirely artificial.

tech/a said:
Lots of Super fuelled cash-rich retirees are smashing asking prices on Housing scrambling to grab an asset that can return a better-than-average rate without being eaten alive by a diminishing value of cash held.

Crank the immigration numbers and you'll see the general public bled dry to such an extent that there won't be any money left over to pay for the other stuff - making housing the wiser investment from both perspectives.

tech/a said:
My best guess is that there will be a slow unwinding of real asset value against earnings and affordability.
this will take many years until we return to something that looks more like an equilibrium.

No way. More people and relatively less housing = housing is even more expensive. If anything, things are only going to get worse from an affordability perspective.

Prices might have come down a bit due to interest rates bouncing but interest rates do nothing to effect affordability, just yield and therefore asset prices.

From an affordability perspective rates change nothing.

tech/a said:
You won't see bargains these piranhas are just hovering for anything that reeks 5 + % return. You may want to live in it ---they want to rent it!

Exactly - whilst immigration might pump demand for almost everything (fuel, food, whatever), housing is the one thing the government can restrict the supply of and therefore push out of equilibrium.

Bleeding everyone dry through monopolisation/control of the very thing they need to survive (a roof over their head) is the oldest trick in the book.

over9k · 28 January 2023

Spending down but inflation static hey?

There's a term for this...

tech/a · 28 January 2023

over9k said:
Are you bidding on places that other retirees might want tech?

Buying a place a few years back that you knew people would want to retire to one day would have gotten you a very tidy return

Are you not just bidding on those places now and being late to the game?

Everytime and I mean everytime I buy property I always remark at how expensive it was.
Everytime and I mean Everytime 2-3 years later Im remarking on how cheap it was.

You know in 40 years of buying I’ve not seen a smashing DOWN of pricing to the same extent that I’m seeing a smashing up of prices ( here in Adelaide).

I always feel I’m late.
It would be worse if I’d have been paralysed by fear.

I look for properties I can rent at top dollar on a block which is sub-dividable and the property is habitable where I have more value in the land in 5 years than the house.
older Esplanade and up to a few streets back fit the bill.
and—-so do a few others unfortunately we keep seeing each other on sites until we fill our book!

As a property investor V home buyer I think it’s impossible to be late to the party
I’m going to use it as a tool for wealth creation ( business) Home buyers don’t get a return just a place to live. No deductions ( unless they have a Granny flat Air Bn B sort of thing) they can be late to the extent that they just secure a property, any increase only keeps them in the market at THAT level.

The properties I’m looking for are still under a Million
potential in 5 years ( I think) $1.3 to 1.5 Mill— conservatively)
I don’t have to do much.

Don’t know about you Over9k but I seem to be permanently employed by working opportunity!

over9k · 28 January 2023

Well, I inquired about this place just before christmas as it was listed without a price: https://www.realestate.com.au/property-house-qld-woodwark-140882696

And I was told that I had to beat an offer of 2.6 mostly cash and do so within ~48 hours as they were about to pull the trigger on acceptance and they've since sent me an unsolicited special email with a "price update", brochure etc, put the price on the ad, and dropped the price by 200k (assuming it was 2.6 previously and they weren't bullshitting me).

This one here by comparison has been up for sale at "offers over 1.9" for aaaaages: https://www.realestate.com.au/property-house-qld-woodwark-139739875

And is still listed the same but has "under offer" attached so I suspect someone's lowballed them by a good 100k+ as well.

Meanwhile there's a virgin block literally two blocks over from the first one for 620k: https://www.realestate.com.au/property-residential+land-qld-woodwark-203487820 and a waterfront one just in front of it for 800: https://www.realestate.com.au/property-residential+land-qld-woodwark-203464703

Even this villa further along that they do expensive asian new money weddings at is up for sale: https://www.realestate.com.au/property-acreage+semi-rural-qld-woodwark-141167480 and with an asian real estate agent that couldn't possibly have any potential overseas buyers in hong kong or whatever, nope.

So yeah, depends where you're looking. Inflation squeezes cost of living so when money gets tight then superior goods go on the chopping block first and this is no less true of holiday houses vs living in houses. Econ 101.

JohnDe · 28 January 2023

over9k said:
Only because the immigration floodgates are open. But yes, throw open immigration, restrict supply of new housing, the end.

Only because of the aforementioned immigration & lack of housing supply however. Not to say it's a bad bet as all the politicians own investment properties, but let's not pretend like there's some kind of real structural/fundamental thing going on here - it's entirely artificial.

Crank the immigration numbers and you'll see the general public bled dry to such an extent that there won't be any money left over to pay for the other stuff - making housing the wiser investment from both perspectives.

No way. More people and relatively less housing = housing is even more expensive. If anything, things are only going to get worse from an affordability perspective.

Prices might have come down a bit due to interest rates bouncing but interest rates do nothing to effect affordability, just yield and therefore asset prices.

From an affordability perspective rates change nothing.

Exactly - whilst immigration might pump demand for almost everything (fuel, food, whatever), housing is the one thing the government can restrict the supply of and therefore push out of equilibrium.

Bleeding everyone dry through monopolisation/control of the very thing they need to survive (a roof over their head) is the oldest trick in the book.

Sounds like you have a problem with immigration.

over9k · 28 January 2023

JohnDe said:
Sounds like you have a problem with immigration.

Sounds like I understand economics

JohnDe · 28 January 2023

over9k said:
Sounds like I understand economics

Because you know the immigration numbers for the past few years?

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