The future of Australian property prices

[luutzu]

Prices will crash when no one's expecting it....likely when the endless stream of Chinese credit finally dries up.

Just last October/December, Beijing put a brake on capital outflow. Not sure how tightly they can control back channels but it definitely slowed down Chinese companies from making overseas acquisition of overpriced property and entertainment assets.

 

[Bill M]

Just thought I'd post this one for those that don't know what's going on in Sydney, it is unbelievable. A knock down old house selling for nearly $2 Million. Click on the link, check it out.
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The decaying three-bedroom home, at 25 Browning Street, was owned by the same family for 100 years and sold for $1,915,000
http://www.dailytelegraph.com.au/ne...e/news-story/6514c9085517978e84eb48885ad4d5f8
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[MrBurns]

Just thought I'd post this one for those that don't know what's going on in Sydney, it is unbelievable. A knock down old house selling for nearly $2 Million. Click on the link, check it out.
---
The decaying three-bedroom home, at 25 Browning Street, was owned by the same family for 100 years and sold for $1,915,000
http://www.dailytelegraph.com.au/ne...e/news-story/6514c9085517978e84eb48885ad4d5f8
---

This as to be money from overseas just being parked here....surely.
Like all the empty units in Melbourne, thousands of them, owned by Chinese.

 

[Bill M]

I just watched that 60 Minutes program on the Sydney Real Estate market. The PM, the builders, the investors, the first home buyers, the economists, virtually everybody said you need more supply in order to bring prices down. So all these people with all the power from top to toe know what needs to be done but they don't seem to be doing much. One builder said something like, I can put up 60 apartments for sale off the plan today and by Monday they are all sold. I can go 10 doors down do it again and they will all be sold.

So everyone knows the problem but it isn't getting fixed, why?

 

[luutzu]

I just watched that 60 Minutes program on the Sydney Real Estate market. The PM, the builders, the investors, the first home buyers, the economists, virtually everybody said you need more supply in order to bring prices down. So all these people with all the power from top to toe know what needs to be done but they don't seem to be doing much. One builder said something like, I can put up 60 apartments for sale off the plan today and by Monday they are all sold. I can go 10 doors down do it again and they will all be sold.

So everyone knows the problem but it isn't getting fixed, why?

Did you watch it on TV Bill? They don't seem to have a web version.

The last time a property bubble hit, a friend of mine got royally screwed. It must have been around 2001 or so, he was at uni and doing a part time job. Got some savings and decides to invest in an apartment in Sydney CBD.

His one-bedroom apartment, bought off the plan for about $550,000, got to him just as the bubble popped. I remember looking up prices for similar apartments when I heard the news, and they were going for something like $400K by then.

The poor guy couldn't afford to offload it and realise the loss so he quit uni, take on two full time jobs. Last I heard of him he was driving forklifts.

This current bubble is going to hurt a whole bunch of people.

 

[Bill M]

Did you watch it on TV Bill? They don't seem to have a web version.

Yes I did, we pre recorded last Sunday's 60 Minutes. Here is part of the program, after the fellow finishes his interview it goes on to another persons point of view.
https://www.9now.com.au/60-minutes/2017/clip-cj2oj49jw00010ho41torq6l8

 

[moXJO]

Did you watch it on TV Bill? They don't seem to have a web version.

The last time a property bubble hit, a friend of mine got royally screwed. It must have been around 2001 or so, he was at uni and doing a part time job. Got some savings and decides to invest in an apartment in Sydney CBD.

His one-bedroom apartment, bought off the plan for about $550,000, got to him just as the bubble popped. I remember looking up prices for similar apartments when I heard the news, and they were going for something like $400K by then.

The poor guy couldn't afford to offload it and realise the loss so he quit uni, take on two full time jobs. Last I heard of him he was driving forklifts.

This current bubble is going to hurt a whole bunch of people.

One reason why you have to let the air out slow. Too many people will go underwater. Everyone else will lose their jobs. Banks will be up the creek and the economy will suffer.
Foreigners will still be cashed up.
There was no stemming of credit from China. From what I've been told, they are deliberately investing into Australia. They have the numbers to deliberately change the demographic. Business and property is being snapped up in Sydney. Hell even my 2nd Mrs Moxjo wife is Asian.

 

[luutzu]

Yes I did, we pre recorded last Sunday's 60 Minutes. Here is part of the program, after the fellow finishes his interview it goes on to another persons point of view.
https://www.9now.com.au/60-minutes/2017/clip-cj2oj49jw00010ho41torq6l8

Thanks Bill.

Saw the whole segment and the "property experts" and our PM are getting this wrong.

It's not really a "supply" problem, not the kind of apartment the developers are supplying. So unless the plan is some sort of social engineering where a block with one house on it is no longer desirable for the gov't - as it increases need for infrastructure etc. that they'd need to fund - and so people are forced into apartments.

Man that young tycoon is quite something. People can't afford houses because they splurge on $19 smash avocado. His other solution is for the gov't [taxpayers] to either fund homebuyers so they can afford more of his stock; or make it easier for the kids to access their parents' property earlier than having to wait for them to die or something.

 

[luutzu]

One reason why you have to let the air out slow. Too many people will go underwater. Everyone else will lose their jobs. Banks will be up the creek and the economy will suffer.
Foreigners will still be cashed up.
There was no stemming of credit from China. From what I've been told, they are deliberately investing into Australia. They have the numbers to deliberately change the demographic. Business and property is being snapped up in Sydney. Hell even my 2nd Mrs Moxjo wife is Asian.

They got to you too ey. Being all pretty and loving, then soon enough get either half or all of our stuff.

Yea, Australia does have a history of knowing how to land the property market softly, and for all our sake maybe they could do it again this time round. But from what some experts are saying, we got out of the GFC unscathed mainly due to the Mining Boom, and then racking up a lot of personal/household debt.

We're at something like 1.2 or 2.1 times household debt to GDP. With an average homeowner in Sydney, at 2016 data, having something like 1 month's worth of cushion if they lose their job. If the economy tank a bit, there'll be a whole lot of trouble in the property market.

 

[moXJO]

They got to you too ey. Being all pretty and loving, then soon enough get either half or all of our stuff.
.

Think I would have learnt the first time around.

 

[PeterJ]

We're at something like 1.2 or 2.1 times household debt to GDP. With an average homeowner in Sydney, at 2016 data, having something like 1 month's worth of cushion if they lose their job. If the economy tank a bit, there'll be a whole lot of trouble in the property market.[/QUOTE]

PERTH !!!!!!
(outer suburbs only have been hit VERY hard)

 

[luutzu]

We're at something like 1.2 or 2.1 times household debt to GDP. With an average homeowner in Sydney, at 2016 data, having something like 1 month's worth of cushion if they lose their job. If the economy tank a bit, there'll be a whole lot of trouble in the property market.

PERTH !!!!!!
(outer suburbs only have been hit VERY hard)[/QUOTE]

How far by train is the outer suburbs of Perth there Peter?

In Sydney's Cabramatta/Fairfield area - about an hour by train to CBD - houses on the wrong side of the track, in low-lying areas goes for about $1100+ per m2. That's generally $800K to $1.2M. And the house is a knock down fibro or old rotten cladding to boot.

There's a couple I saw that's between a river, a major highway and an industrial park where I know council require you to build on stilts - due to 100 year flooding... they're asking over $1M. Because it's a water front property or something.

These are areas where the average income would be around $50K to $70K a year.

A million is still a lot of money right? It's not just me right?

 

[PeterJ]

How far by train is the outer suburbs of Perth there Peter?

around one hour,
however many of the outlying suburbs are not serviced by rail !
Perth would be close to 300km north to south

A million is still a lot of money right? It's not just me right?

yes, but it is relative
when i bought my first home in the 80s,
within 10km of Adelaide i paid $130k,
cheaper the further out you went,
the average wage was 12k
interest rates were 18.5%
much of a muchness, if you want to buy a house you need(ed) 2 incomes
less distractions back then that cost $


Peter

 

[luutzu]

Uh oh.

Rush of Australian securitized home loans tempts yield-starved Japanese


http://www.reuters.com/article/us-australia-securitisation-idUSKBN18J0JX?il=0


Australia has become the world's most active market for securitized home loans, with sales at their highest in a decade as lenders seek to take advantage of surging demand from yield-starved Japanese investors.

Issues of residential mortgage-backed securities (RMBS) total of A$67 billion, with A$12 billion ($9 billion) sold so far this year.

The strong overseas demand comes amid warnings over the country frothy property market from regulators, the central bank and the International Monetary.

Home prices in Australia's two biggest cities of Sydney and Melbourne have doubled since 2009.

Offshore buying accounts for as much as half of certain Australian bond offers, estimated Will Mortimer, head of securitized products at Citibank Australia. International investors had completely vanished after the 2008-2009 global financial crisis.

While demand from Europe, the U.S. and Asia has been growing, Japan is the clear stand out....

 

[Bill M]

Uh oh.

Rush of Australian securitized home loans tempts yield-starved Japanese

I get 3% for my cash in a government guaranteed online bank account and they want to essentially buy RBMS's at a 2.5% yield and take on all the risk? Good luck to them, I wouldn't touch them with a barge pole.

Honestly, why don't they just buy an Australian High Yield Share ETF and pull 6%?

 

[luutzu]

I get 3% for my cash in a government guaranteed online bank account and they want to essentially buy RBMS's at a 2.5% yield and take on all the risk? Good luck to them, I wouldn't touch them with a barge pole.

Honestly, why don't they just buy an Australian High Yield Share ETF and pull 6%?

Sure beats me. Maybe those Japanese fund managers have an eye out for those cushy job with a couple of our banks when the thing is over? You know, I destroy other people's savings to your benefit, you give me a nice couple million a year job.

Man, this is just the those stinking CDOs crashing the world all over again.

 

[sptrawler]

This is the problem with buying rental properties .IMO
https://thewest.com.au/news/wa/tena...ty-in-worst-condition-ever-seen-ng-b88505158z
That is just a nonsense headline, I've had a property where it was just easier to demolish it and sell off the land, rather than fix it.
Why would you bother going to the media? As if they have any sympathy for a landlord.lol
The property slide will continue for several years, as disposable income limits rental returns.IMO

 

[Quant]

Banks now doing the job of RBA , cash rate & actual available interest rates disconnect


http://www.smh.com.au/business/bank...ed-to-pay-higher-premium-20170611-gwoy42.html

 

[Cam019]

RBA holding TCR at 1.5% yesterday. CBA announcement from last week states that as of Friday, IO owner occupier and investor interest rates will increase by 30bps to 5.77% and 6.24% respectively. P & I investor rates are holding steady at 5.80%, whilst P & I owner occupier rates have been cut by 3 bps to 5.22%. Friday will bring a 102 bps difference between IO investor and P & I owner occupier rates. Things are getting interesting.

 

[sptrawler]

RBA holding TCR at 1.5% yesterday. CBA announcement from last week states that as of Friday, IO owner occupier and investor interest rates will increase by 30bps to 5.77% and 6.24% respectively. P & I investor rates are holding steady at 5.80%, whilst P & I owner occupier rates have been cut by 3 bps to 5.22%. Friday will bring a 102 bps difference between IO investor and P & I owner occupier rates. Things are getting interesting.

I wonder if many IO investors, are converting their loans to P & I ?