The future of Australian property prices

[sptrawler]

Been watching a few interviews and docos lately on the 10th anniversary of the GFC... from what I gathered were to two possible action a gov't could take in the (very, very likely) event of a crash to prevent homeowners from losing everything... they're not going to do it.

1. George Soros gave an interview where he said he recommended to Larry Sumners - Obama's economic advisor - that while the banks do need a cash injection, the cash should go to the equity side.

i.e. the gov't buy out the banks. Own it. Then as the banks are saved by taxpayers money, when it return to profitability, the taxpayers too will gain as they took the risk, bought at the low, and can refloat the banks again at a profit.

Soros said nah, stuffed that. We're a capitalist country, we don't do socialism.

But, Soros laugh, you're bailing out failed businesses. That's pretty much socialism. You're just doing it to benefit your pals on Wall St and the current shareholders. Doing it at the cost to taxpayers without any benefit to them.

That and by putting cash into the capital/asset side instead of the equity... you'd need to put in a lot more cash to deleverage.

That's where trillions of dollars were spent... giving cash away and taking in [buying] toxic assets.

If Australian lenders were proven to be corrupt and lend to anyone with a pulse... will our gov't let the banks fail or do what Soros suggest or do what Obama's admin did and let some 10M families lose their homes while Wall St get bailed out and big bonuses in a couple years?


2. Economic Professor [can't remember his name] was saying that one or two US lawmakers suggest to let the banks collapse. The gov't take over its ownership.

With that the gov't can then reduce the mortgages to those tens of millions of American families. Bringing to mortgage down to a "reasonable" level, not letting them either drown or quit declaring bankrupt... can never buy a house again if they have money... and just live their life renting.

All that while those who could manage to mortgage are so under the debt that the economy in general goes to sleep for a decade.


So unless Canberra do things like that... Australian who are in debt will go the way of their American friends a decade ago.

Bankers will get bailed out. Maybe one or two mid-level lamb will get slaughtered but yah... It's going to crash and remain, as is still the case in the US, Ireland, Spain etc., for another decade and still not recover.

Instantly, I see problems with both, due to human nature.
The first one if the Government bought it out with taxpayers money, then re floated it to taxpayers, the rich would pick it if it was a bargain. Just look at the Telstra float, what a FFk up. Big business bought the first float at $3.40, mums and dad's bought into T2 at $7.40, just another bunch of baby boomer fat cats.lol

The second suggestion the Government picks up the debt, and has to increase taxes to account for it, every taxpayer loses, not those who don't pay tax big business and those on welfare, only the productive side of the economy. lol I think they've been stiffed enough.

 

[luutzu]

Instantly, I see problems with both, due to human nature.
The first one if the Government bought it out with taxpayers money, then re floated it to taxpayers, the rich would pick it if it was a bargain. Just look at the Telstra float, what a FFk up. Big business bought the first float at $3.40, mums and dad's bought into T2 at $7.40, just another bunch of baby boomer fat cats.lol

The second suggestion the Government picks up the debt, and has to increase taxes to account for it, every taxpayer loses, not those who don't pay tax big business and those on welfare, only the productive side of the economy. lol I think they've been stiffed enough.

Yea, ideally you'd want to see companies that failed due to their own greed and corruption go to the dustbin and its executives to prison. But... capitalism mean you gotta protect those who own the place.

That and these banks are systemic. Too freaking big to fail. They know it, we all know it...

The Royal Commission have shown that watchdogs like ASIC and APRA are in their pockets. So will the honourable ministers step up to make sure laws are enforce? Crimes punished? I wouldn't bet on it.

So if we go down the road of the US... they just print and borrow more money.

The benefit of printing more money is that the debt you owe to foreigners became cheap. The interest rates became nothing... Then to add the cherry on top you use the money to bail out the rich folks, save their literal azzes.

Win-win for everyone except those on "entitlement", food stamps and gov't services.

Got to remember that this driving up of property prices aren't just to lure the Chinese and other rich foreign idiots to part with their cash. It's also a tool to control the plebs.

People in democracies have too much rights you can't just force them into slave labour with sticks and stones.

You get them into debt. They soon enough get screwed. Then work a few jobs without much complain about working conditions or rights and safety.

With enough financial worries, they're also not going to care about those imaginary widows and orphans either. Or read or think too much about anything beside the next meal or the next work hour.

It's called freedom.

 

[sptrawler]

Yea, ideally you'd want to see companies that failed due to their own greed and corruption go to the dustbin and its executives to prison. But... capitalism mean you gotta protect those who own the place.

That and these banks are systemic. Too freaking big to fail. They know it, we all know it...

The Royal Commission have shown that watchdogs like ASIC and APRA are in their pockets. So will the honourable ministers step up to make sure laws are enforce? Crimes punished? I wouldn't bet on it.

So if we go down the road of the US... they just print and borrow more money.

The benefit of printing more money is that the debt you owe to foreigners became cheap. The interest rates became nothing... Then to add the cherry on top you use the money to bail out the rich folks, save their literal azzes.

Win-win for everyone except those on "entitlement", food stamps and gov't services.

Got to remember that this driving up of property prices aren't just to lure the Chinese and other rich foreign idiots to part with their cash. It's also a tool to control the plebs.

People in democracies have too much rights you can't just force them into slave labour with sticks and stones.

You get them into debt. They soon enough get screwed. Then work a few jobs without much complain about working conditions or rights and safety.

With enough financial worries, they're also not going to care about those imaginary widows and orphans either. Or read or think too much about anything beside the next meal or the next work hour.

It's called freedom.

So we should move to China and Russia, for the freedom that socialism brings, and the caring nature of its regime?

Or maybe load up the boats and move to Indonesia, Philippines, Singapore,Vietnam, must be much better than here, or should we wait until it sinks? lol

 

[luutzu]

So we should move to China and Russia, for the freedom that socialism brings, and the caring nature of its regime?

Or maybe load up the boats and move to Indonesia, Philippines, Singapore,Vietnam, must be much better than here, or should we wait until it sinks? lol

We should try to save what have been achieved since WWII.

Namely, properly regulated capitalism with social safety nets, social mobility - where you work hard, go to school, get a job that feeds the family. etc.

We've been following the new US model for far too long and are starting to pay for it the way the American plebs have.

Western civilisation created a great society not because it goes nuts on imperialism and kick the poor while they're down.

Most, if not all, of the "values" and egalitarianism and all that good stuff we believe have always been there since Christ was born... they were achieved mostly when the West came to respect women's rights; afford free education to its peasants, giving them opportunities to gain productive employment, advance themselves... Those weren't around until maybe 100 years ago.

Then came the civil rights for the coloured coolies; then the gays a few years ago... protect the environment; provide socialist programmes like electricity and affordable clean drinking water to every citizen.

Most of these achievements have, sine about the 1970s, been systematically removed. The plebs are being turned stupid, ignorant and against themselves and those worst off then they are.

So while they argue with refugees and immigrants over crumbs; how many jobs they ought to work; whose nibbles are showing and what great stupid meal they ought to save up a weeks wage to "treat themselves"... the foundation, and the treasury, that made a more fair and equal society are being looted from under them.

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Places like China, Vietnam... you don't need me to tell you they're worst. But they're worst for the many... those few in the know have done very, very well.

They're worst because they're just a few steps ahead of where the West is heading back to - yes, the West is in reverse.

If we want to see how unfettered capitalism works... go to those places. Also get to learn how it'll end up too.

I mean, just look at the working conditions of Amazon's "associates". The only difference between them and those slave labourers working for Apple's Foxconn's Chinese operations is a literal safety net stopping them from committing suicide when they get cheated out of their wages - leaving nothing to send home to take care of their children or elderly parents.

Heck, at least China is starting to recognise you can't keep on polluting your rivers and atmosphere... Trump's America just shrugs. What hog manure, ponds of toxic waste and chemicals being stored where hurricanes every couple of years will just wash them all away into (poor) people's towns and suburbs.

Competition in all thing is good, I suppose.

 

[sptrawler]

We should try to save what have been achieved since WWII.

Namely, properly regulated capitalism with social safety nets, social mobility - where you work hard, go to school, get a job that feeds the family. etc.

So the pension is $35,500 for a couple.
and about $25,000 for a single.
How much should it be?

 

[luutzu]

So the pension is $35,500 for a couple.
and about $25,000 for a single.
How much should it be?

Depends on their life circumstances.

"To each according to their need." as Uncle Ho quotes Marx

Or as Lao Tzu says... have much and be distressed. Have enough and be contend.

Have nothing and watch with glee the coming property collapse

 

[sptrawler]

Depends on their life circumstances.

"To each according to their need." as Uncle Ho quotes Marx

Or as Lao Tzu says... have much and be distressed. Have enough and be contend.

Have nothing and watch with glee the coming property collapse

Well the pensioners, just have to wait until March, then it will be indexed again.
It won't be long before the married pension, will earn more than working at Bunnings. Funnily enough I have my name down for a job there, I think I will be re assessing my options.

 

[willy1111]

Reading a book yesterday...a 350 yr study of house prices in the Netherlands from 1627 to the 1950's showed that after adjusting prices for inflation, houses prices rose on average 0.2% p.a.

In Australia in the last 24 odd years, house prices after adjusting for inflation grew an average of 3.6%. The book suggested the main reason was that interest rates went from 15.5% to 6.5%. They have continued to fall since the book was written and prices have continued to grow.

Normally they would just grow with wage inflation.

If interest rates can't fall much further, house prices are unlikely to increase faster than wage inflation.

Then again there is so much variation between cities/suburbs/price brackets

 

[CanOz]

I reckon house price growth in Australia had as much to do with loose monetary policy in China as well as Australia....

 

[tech/a]

Well while away I purchased the house behind me.
I knew it was coming up and I was going to be away
So appointed a buying agent.
They secured it and we did the paperwork over the net.

The house is directly behind me.
I live on the Esplanade so the non
Esplanade property will soon add more to my property
And I’ll purpose build on the rest for B&B rental up market.

There are still opportunities out there.

 

[luutzu]

Well the pensioners, just have to wait until March, then it will be indexed again.
It won't be long before the married pension, will earn more than working at Bunnings. Funnily enough I have my name down for a job there, I think I will be re assessing my options.

Old people don't work at Bunnings for the pay, they work there for the sharing of wisdom, don't they?

I noticed that they've cut back a lot of staff at Bunnings the past few years.

Used to be you could find a staff every couple aisle... and one or two of them grey hairs really know their stuff.

Now they're mainly a few younger people who's just there to stack stuff.

 

[luutzu]

Reading a book yesterday...a 350 yr study of house prices in the Netherlands from 1627 to the 1950's showed that after adjusting prices for inflation, houses prices rose on average 0.2% p.a.

In Australia in the last 24 odd years, house prices after adjusting for inflation grew an average of 3.6%. The book suggested the main reason was that interest rates went from 15.5% to 6.5%. They have continued to fall since the book was written and prices have continued to grow.

Normally they would just grow with wage inflation.

If interest rates can't fall much further, house prices are unlikely to increase faster than wage inflation.

Then again there is so much variation between cities/suburbs/price brackets

A similar study by that Yale professor [of Irrational Exuberance] in the US also find the same, practically inflation adjusted zero-gain in property.

Though I think his interpretation/assumption are wrong though. So the conclusion is, mathematically, right... but the reality proves such conclusion wrong.

I haven't read the original paper but my guess is that they define "housing" as a "house"... a roof over people's head.

But a house back a century ago would most likely be on a much bigger block of land. Land that have since been sliced and diced - i.e. making great amount of profit to the investor.

Then there's the further dicing and partitioning of a large house into four unit, say.

But yea, housing can't grow beyond people's ability to pay for it. If it is above their pay rate, they'll just have to get creative, downsize etc. to have a place to sleep.

For Australian property investor, there's plenty of land in Australia. The only think that they lack would be utilities and infrastructure... So I'd count an abnormal profitability in it a once or twice in a generation event.

If a person happen to be lucky enough to buy at the cycle's low, they should do well over 20 to 30 years. If they buy at the height... would be lucky to break even over 20 years.

 

[sptrawler]

Well while away I purchased the house behind me.
I knew it was coming up and I was going to be away
So appointed a buying agent.
They secured it and we did the paperwork over the net.

The house is directly behind me.
I live on the Esplanade so the non
Esplanade property will soon add more to my property
And I’ll purpose build on the rest for B&B rental up market.

There are still opportunities out there.

Sounds like opportunities, to stay at your place. Yeh

 

[luutzu]

Sounds like opportunities, to stay at your place. Yeh

He did say "up market", Homer.

It's a lot different to the caravan park by the sea shore-ish.

 

[tech/a]

Sounds like opportunities, to stay at your place. Yeh

Of course.
Back a little I had 2 apartments down the road (sold in 2014)
A couple of guys from “The Chartist” came over and stayed
So in a couple of years I’ll be setting a good rate for ASF members.

If it’s of interest I’m thinking of perhaps running a development thread on the project for those who have an interest in property.
Just perhaps the process ups and downs of which there will be plenty.
Happy to answer questions about and during the process.Photos etc.

Settlement is end of September.
I haven’t been inside yet.

 

[sptrawler]

All the people who felt they missed out on the last housing boom in Perth, can now start and pick up properties at pre 2007 prices, so feel free to jump in.

https://thewest.com.au/lifestyle/re...ining-boom-affordability-levels-ng-b88969580z

 

[sptrawler]

Property could be in for a real shock, next year. IMO
All the ducks are lining up.
Tighter lending criteria, higher interest rates, lower loan to valuation loans, reduced investor tax offsets.
The only upside at the moment, is immigration, which is becoming a political hot potato.
IMO unless we have some spectacular wage growth, the house prices will return to the long term average, which means a correction.

 

[SirRumpole]

IMO unless we have some spectacular wage growth, the house prices will return to the long term average, which means a correction.

And that's bad ?

 

[willy1111]

Property could be in for a real shock, next year. IMO
All the ducks are lining up.
Tighter lending criteria, higher interest rates, lower loan to valuation loans, reduced investor tax offsets.
The only upside at the moment, is immigration, which is becoming a political hot potato.
IMO unless we have some spectacular wage growth, the house prices will return to the long term average, which means a correction.

Certainly some headwinds.

I don't think there will be much growth, but I also don't think there will be much of a correction, more so a few years of pretty flat.

For a correction, there have to be more sellers than buyers... if the sellers can't get their price they may be more likely to hold on.

5 yr fixed rates are still under 5% so I don't think rates will rise enough to force enough into mortgage distress that would be forced to sell and create a correction.

 

[Smurf1976]

For a correction, there have to be more sellers than buyers... if the sellers can't get their price they may be more likely to hold on.

True although there will always be some who have to sell regardless of price.

Death, divorce, moving to a nursing home, loss of income, relocation for work, etc.