The future of Australian property prices

[sptrawler]

Here is a typical headline by a newspaper. House prices fall by the fastest rate in 6 years.

https://www.theage.com.au/business/...astest-rate-in-six-years-20180801-p4zuuc.html

Then when you read on, the article says house prices have gone up 45% in the last 5 years, in Sydney and Melbourne.
So any fall will be the fastest in the last 6, if they went up for 5 of them, weird stuff.

 

[luutzu]

Here is a typical headline by a newspaper. House prices fall by the fastest rate in 6 years.

https://www.theage.com.au/business/...astest-rate-in-six-years-20180801-p4zuuc.html

Then when you read on, the article says house prices have gone up 45% in the last 5 years, in Sydney and Melbourne.
So any fall will be the fastest in the last 6, if they went up for 5 of them, weird stuff.

Those ads don't sell themselves Homer.

 

[luutzu]

Here is a typical headline by a newspaper. House prices fall by the fastest rate in 6 years.

https://www.theage.com.au/business/...astest-rate-in-six-years-20180801-p4zuuc.html

Then when you read on, the article says house prices have gone up 45% in the last 5 years, in Sydney and Melbourne.
So any fall will be the fastest in the last 6, if they went up for 5 of them, weird stuff.

So the market gained some 40% past few years, just dropped about 7.5% but it will "stablise" next year, says the experts... because.... why?

No one can predict the future and all that, but come on guys.

 

[sptrawler]

This idea on changes to negative gearing, makes a lot of sense, Labor's proposal is like taking a sledge hammer to a walnut.

http://www.abc.net.au/news/2018-03-07/report-reveals-new-negative-gearing-proposal/9519586

 

[CanOz]

Here is a typical headline by a newspaper. House prices fall by the fastest rate in 6 years.

https://www.theage.com.au/business/...astest-rate-in-six-years-20180801-p4zuuc.html

Then when you read on, the article says house prices have gone up 45% in the last 5 years, in Sydney and Melbourne.
So any fall will be the fastest in the last 6, if they went up for 5 of them, weird stuff.

This drives me crazy, that's why I like Twitter, I follow the credible sources and not the "tabloids" as they're all just out to sell news....

 

[luutzu]

This idea on changes to negative gearing, makes a lot of sense, Labor's proposal is like taking a sledge hammer to a walnut.

http://www.abc.net.au/news/2018-03-07/report-reveals-new-negative-gearing-proposal/9519586

That doesn't sound like a sledgehammer at all homer.

A sledgehammer would be getting rid of that welfare program in one go. They're trying to get the more well-off to not own like 5 properties, making "losses" on all of them, sit back and wait for another boom to cash in.

Here, the average mom and pop can own, maybe a couple, investment property and still get the tax-subsidy

 

[sptrawler]

That doesn't sound like a sledgehammer at all homer.

A sledgehammer would be getting rid of that welfare program in one go. They're trying to get the more well-off to not own like 5 properties, making "losses" on all of them, sit back and wait for another boom to cash in.

Here, the average mom and pop can own, maybe a couple, investment property and still get the tax-subsidy

The articles say's only the low income earners get existing benefits, middle income get reduced benefits and high income earners get no benefit. It sounded good to me, but I am not saying you should like it.

Labor is suggesting reducing the offset to 25% for everyone, I thought that was heavy handed, but if you find it not so that is your prerogative.

 

[Junior]

This idea on changes to negative gearing, makes a lot of sense, Labor's proposal is like taking a sledge hammer to a walnut.

http://www.abc.net.au/news/2018-03-07/report-reveals-new-negative-gearing-proposal/9519586

I'm opposed to adding new layers of complexity to the tax system, which is what this does. Income tax rates are already progressive.

Grandfather existing arrangements and disallow neg. gearing for new arrangements. Rental property expenses are quarantined and can be offset against rental income. Where expenses exceed income, these can be carried forward to future years.

 

[sptrawler]

I'm opposed to adding new layers of complexity to the tax system, which is what this does. Income tax rates are already progressive.

Grandfather existing arrangements and disallow neg. gearing for new arrangements. Rental property expenses are quarantined and can be offset against rental income. Where expenses exceed income, these can be carried forward to future years.

The problem I see with that Junior is, 80% of people negative gearing are low to middle income earners, who make very little return out of it.
Yet they provide the majority of the low cost rental housing, if there is no return in it, they would be dumb to do it. Just my opinion.
Time will tell, but my guess is it will be the first major back flip, the Labor Party does.
It is the same as Labor's dumb idea on franking credits, to SMSF's, how much money will that save now the new pension caps are in? Sod all is my guess.

 

[sptrawler]

While on housing and associated costs, Westpac has put up interest rates, blaming funding cost pressures.

 

[Junior]

While on housing and associated costs, Westpac has put up interest rates, blaming funding cost pressures.

The thing which drives me mad, is how they cut rates for New Business, while at the same time hiking rates for existing customers, and blaming increased cost of funding. Loyalty is punished under this system - same strategy used by energy retailers, Foxtel, Life insurance companies etc.

 

[sptrawler]

The thing which drives me mad, is how they cut rates for New Business, while at the same time hiking rates for existing customers, and blaming increased cost of funding. Loyalty is punished under this system - same strategy used by energy retailers, Foxtel, Life insurance companies etc.

This is indicative of our society ATM.
The above companies not only charge new business less, they use existing customers premiums to advertise and bring the new customers. I would have thought it better, to reward loyal customers first.
It is the same with those who save to stay off welfare.
It is just the way it works here, loyalty and endeavour, are not highly regarded in our society.
If you lost your house because your business went broke, you would be told to get over it, you wouldn't even rate a mention.
If you lost all your money at the casino, then lost your house, the casino would be blamed you would probably get on t.v and a go fund me page would be started for you.

 

[DNA2013]

https://mywealthforlife.com/buy-property-now-or-wait-for-prices-to-crash/

End of the day it is up to people's choices and circumstances.

 

[luutzu]

https://mywealthforlife.com/buy-property-now-or-wait-for-prices-to-crash/

End of the day it is up to people's choices and circumstances.

Nice website.

End of the day, it gotta make financial sense.

You're right there that if a person need housing they'd just have to buy or rent or such depends on their credit. But for the investor though... an investment decision shouldn't be made based on personal choices should it?

Sure there are businesses and companies an investor might not want to associate with, but regarding property as an investment, I think the price will need to make financial sense. At current prices, I'm not sure how the maths and the tax subsidies make any sense.

I guess if the investor has unlimited amount of cash and doesn't see anywhere to put it... otherwise, interest rate will rise; oversupply in apartments, granny flats will mean yield is going to be practically nothing.

So that leave the capital gains and negative gearing. It's hard to see a property gaining anywhere near an acceptable rate of return of, say, 5%p.a. over next decade. If it were to gain that much, a property in the outer west would be in the $1.5M to $2M range... I can't imagine an average working family being able to afford that.

 

[sptrawler]

Iuutzu, we have been talking about this for a long time, there will be a crash as has happened in W.A, the only difference next time the worker will struggle to get a loan to buy a house.

 

[luutzu]

Iuutzu, we have been talking about this for a long time, there will be a crash as has happened in W.A, the only difference next time the worker will struggle to get a loan to buy a house.

When there's a crash this time, we're going to hear it, real loud.

So far it's just the sound of stress creaking away. The wind's coming.

From what I saw growing up in the early 90s... seem that those who aren't over-leveraged during the boom a few years prior... the crash allow them the rare opportunity to get a property.

Price crashed, they've been saving up and working hard, pick up one property real cheap... then soon enough get to call later generation lazy whiners who don't work hard enough to buy a property for "only" a million or so

 

[Smurf1976]

When there's a crash this time, we're going to hear it, real loud.

So far it's just the sound of stress creaking away. The wind's coming.

I now have visions of houses physically falling over, not just in terms of price.

As for prices, well I had no trouble selling my house for the exact price I was expecting but I do see a lot of signs that the market is slowing (indeed the agent I'm using confirmed this).

 

[sptrawler]

The combines effect of interest rate rises, tighter lending standards, changes to negative gearing and capital gains, will have the desired result, I think.

 

[sptrawler]

When there's a crash this time, we're going to hear it, real loud.

So far it's just the sound of stress creaking away. The wind's coming.

From what I saw growing up in the early 90s... seem that those who aren't over-leveraged during the boom a few years prior... the crash allow them the rare opportunity to get a property.

Price crashed, they've been saving up and working hard, pick up one property real cheap... then soon enough get to call later generation lazy whiners who don't work hard enough to buy a property for "only" a million or so

I think Sydney, will always be difficult to break into, even if there is a crash, I doubt Sydney will feel it as much as everywhere else.
Simple supply and demand, most want to live there, so there will always be competition.

 

[luutzu]

I think Sydney, will always be difficult to break into, even if there is a crash, I doubt Sydney will feel it as much as everywhere else.
Simple supply and demand, most want to live there, so there will always be competition.

You're right that Sydney and Melbourne are tough to get into and over the long run, should recover/do better than other cities.

As to not feeling the crash if it comes... I don't know what it's like to lose a couple or more hundred thousands, but I bet the people that do will feel it though.

My brother in law's friend, and brother's friend... the lost a couple hundred thousand in value on their property this year.

One got their off the plan apartment valued at $1M couple years ago... paid the deposit etc., and just recently went to CBA to have it settled. They came back with $800K valuation so the guy have to either lose the deposit or cough up the extra above what the bank will lend.

I guess it's not too bad if the buyer bought to live in it. But as an investment... gotta earn pretty high salary for the Nanny State to ease the pain a bit.