The future of Australian property prices

[sptrawler]

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.

Exactly and the result from those sales, is the lead in price for the next sale, if everyone can hold out until the prices return to present prices all is good.
That applies to most things.
Well not true, if you had held on to your Tandy TRS80 computer that you bought in 1981 for $Aus1,500, it is a sad scenario.
https://www.ebay.com/itm/RADIO-SHAC...561372?hash=item5210f1349c:g:pbgAAOSwSGRbrUOB
Thankfully I was a quick learner, I sold it in 1983 for $Aus 1,400 to someone who saw more potential than me.

 

[CanOz]

Brisbane housing market holding up nicely...

 

[DNA2013]

Australia experienced this in the commercial property sector in the early 90's and took a battering in terms of defaults and capital losses.

It took at least a decade to say early 2000 before people saw some genuine capital growth in commercial properties.

 

[tech/a]

Australia experienced this in the commercial property sector in the early 90's and took a battering in terms of defaults and capital losses.

It took at least a decade to say early 2000 before people saw some genuine capital growth in commercial properties.

Yes this is true.
Commercial generally follows 3-5yrs behind.
Due to move up again.

 

[SirRumpole]

"Unintended consequences" of the banking Royal Commission ?

http://www.abc.net.au/news/2018-10-...n-could-trigger-house-price-collapse/10333150

 

[Toyota Lexcen]

On the radio the other day a mortgage broker was saying if you don't have ALL your documents in order then you will find it difficult to get a loan.

Couldn't find the thread on the Royal Commission, but "shadow" banking is starting to grow. Plenty of ads on radio from Pepper, Prospa, Ahmed Fahour's new firm. The Commissioner will have to look closely at the outcome.

 

[luutzu]

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.

I'm betting you're wrong on that one.

The costs of everything is going up. Wages are flat or declining.

Interest rate is rising overseas, it will get here soon.

There's the oversupply of housing and apartments. Yes, an over supply. More are coming. Man, there's at least some 10 cranes just popping up a couple months ago within 10km radius of where I live.

With granny flat to practically every house, a couple millions of new apartments; who knows how many subdivision and duplexes over the past few years....

and still the average house goes for about $900K if it's an renovator's dream; or $1.2M to $1.5M if it's a new 3-bedroom, single garage duplex.

How does an average family on $80K per mum or pop afford a house? How can they afford to do any fixing or rennovating over the next 20 years if an entire parent's income pays to mortgage while the other one pay for the food and clothing?

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I reckon we're just at the beginning of what's going to be one heck of a recession.

The vicious loop from this property crisis will need a miracle to get out of.

For one, no one's but the working poor will be paying income taxes as they'll negate the capital losses from their income. That'll do wonders to the state and federal budget.

They'll cut costs, the costs will be passed onto the poor and mid-range plebs... they won't be able to buy anything; that will further reduce employment.

"Unintended consequences" of the banking Royal Commission ?

http://www.abc.net.au/news/2018-10-...n-could-trigger-house-price-collapse/10333150

The guy they quoted is not thinking straight.

First, why would a Royal Commissioner take notes from the RBA etc., to learn about the impact of his commission's recommendation on this or that market?

Whatever happen to telling the truth, enforcing prudential regulation and let the market fall where it may?

But mainly, first home buyers aren't going to be disadvantaged and can't buy if the RC recommend proper paper work and sensible lending practices like not assuming people can pay 13x their income.

If anything, proper paperwork and sensible lending will see property prices drop to where people can sensibly pay for it.

That will mean more people can afford it, honestly rather than fudging their income; or really stretching the family budget to get housing; or leverage to their eyeballs thinking that it's safe and smart.

 

[sptrawler]

Don't worry Iuutzu, help is on its way, so to speak.

http://www.abc.net.au/news/2018-10-...n-could-trigger-house-price-collapse/10333150

From the article:
In the lead-up to the next federal election, though, shadow assistant treasurer Andrew Leigh said Labor would be sticking to its policies around capital gains tax and negative gearing in order to take further price pressure off the market.

He welcomed the exodus of investors but said first home buyers still needed more support.

Also I have heard Bowen say recently, they will definately go ahead with the CG and Neg Gearing changes, so I would say prices will tank big time.

 

[explod]

"Also I have heard Bowen say recently, they will definately go ahead with the CG and Neg Gearing changes, so I would say prices will tank big time."

A home (shelter) tops Maslow's Law. Anything to drop prices and take homes away from the investment platform is to be applauded.

 

[sptrawler]

"Also I have heard Bowen say recently, they will definately go ahead with the CG and Neg Gearing changes, so I would say prices will tank big time."

A home (shelter) tops Maslow's Law. Anything to drop prices and take homes away from the investment platform is to be applauded.

The only problem with that is, who will house those who can't afford a house? It hopefully doesn't become a problem.
Also just maybe, the State Governments will get back into public housing, as they should. IMO

 

[Trendnomics]

Prepare your angus ... we are most likely facing a banking crisis (cash will carry risk).

Canary in the coal mine: https://www.google.com/search?q=asx+gma

 

[Klogg]

"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."

I'm not so sure of that. Flat means losses in this case, as cost of finance is greater than rental yield. And that doesn't include agency fees, maintenance, rates, insurance, etc.

If landlords see 2-3 years of nothing but a lower taxable income, I think the sentiment will change.


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."

A correction doesn't mean more sellers, just means the marginal seller/buyer has shifted (i.e. the ones that meet to perform the transaction). Given the cost of finance is increasing (increased reason to sell/lesser reason to buy) and it's harder to get finance (even less reason to buy), the marginal buyer moves down in what they can afford.

Volumes will definitely decrease (as they have), but anything that forces a few sellers; for example, an inability to refinance an IO loan, or inability to service the higher interest rate, will cause transactions to occur at lower prices than current.

In basically every other housing downturn, the RBA has cut rates to get credit flowing again. Our current RBA head seemingly wants to avoid this, and in light of the RC findings, I think he's right.


More interestingly, Phil Lowe wrote a piece on managing a credit bubble many years ago, and how to deal with the early and late stages of credit bubbles to avoid catastrophe.
I'm not categorically saying that this is a bubble (although I think it looks like one), but it looks like he's following his own playbook, tracking to the 'late stage' set of instructions. It could be a coincidence, but I'm not so sure.

 

[SirRumpole]

Psychology and physics in the property market.

http://www.abc.net.au/news/2018-10-08/australian-housing-market-good-bad-and-ugly/10348856

 

[moXJO]

Banks have really tightened up lending.

Petrol, bills, groceries are all expensive.

People do not want to work but expect high wages.

Large debt.

Chinese have disappeared.
Theres a lot more as well, chinese australia relationship, drought, etc

I think we are in for a continuing drift down.

If tradies start struggling its only going to add to the problem.
And labors ng tinkering will be interesting.

Its slowly drifting down in my area with property on market for a lot longer.
Lots of Subdivision going on and what feels like the last rushed unit builds.

 

[sptrawler]

If tradies start struggling its only going to add to the problem.
And labors ng tinkering will be interesting.

At the moment IMO, the tradies are causing a problem for themselves, they cranked up their labor charges as the mining wages went up.
But they haven't wound them down with the economy, so the establishment steps in and squeezes them, now a 'sparky' can do a five day course and install split system air cons.
Why? because the prices Reefer's charged for installs became stupid.
It is the same Australia wide, no one can gently milk the system, they all have to pull the #!^$ off it.
Within a few years refrigeration mechanics, will be a thing of the past, much like instrumentation mechanics.
The way this will affect housing will be, houses will be modular construction, pre fabricated and dropped on a slab in a few years. IMO

 

[luutzu]

At the moment IMO, the tradies are causing a problem for themselves, they cranked up their labor charges as the mining wages went up.
But they haven't wound them down with the economy, so the establishment steps in and squeezes them, now a 'sparky' can do a five day course and install split system air cons.
Why? because the prices Reefer's charged for installs became stupid.
It is the same Australia wide, no one can gently milk the system, they all have to pull the #!^$ off it.
Within a few years refrigeration mechanics, will be a thing of the past, much like instrumentation mechanics.
The way this will affect housing will be, houses will be modular construction, pre fabricated and dropped on a slab in a few years. IMO

From personal experience, the White tradies' prices are a bit stupid. A lot stupid actually.

Got a Telstra cable booked some years ago. The dude turned up and wanted $800 to run a phone/internet cable inside the house. Why so much man? It's hard because blah blah.

Telstra told me it's free 'cause I only want one socket.
Na mate, not free 'cause yours hard. Have to climb under the house to run it.

So called Telstra again and they sent an Italian gentleman. He used the old cable we had as a pull wire and it's done in half an hour. For FREE.

Another one... wife's friend was doing a renovation some years back and the plumber charged $1200 to move the sewage connection around the old bathroom. Timber floor with crawl space... maybe $50 worth of piping and glue if you're generous with hit.

But I guess the husband want to have it done right instead of a couple hours on YT.

Anyway, I find that tradies around here are generally quite reasonable with their prices. Some can be a bit unreasonable if they see you got a nice house though.

 

[sptrawler]

Housing has been a stop gap, to prop up the economy, but the economy is picking up.
The problem is, those connected to the housing, haven't worked it out.IMO

 

[moXJO]

At the moment IMO, the tradies are causing a problem for themselves, they cranked up their labor charges as the mining wages went up.
But they haven't wound them down with the economy, so the establishment steps in and squeezes them, now a 'sparky' can do a five day course and install split system air cons.
Why? because the prices Reefer's charged for installs became stupid.
It is the same Australia wide, no one can gently milk the system, they all have to pull the #!^$ off it.
Within a few years refrigeration mechanics, will be a thing of the past, much like instrumentation mechanics.
The way this will affect housing will be, houses will be modular construction, pre fabricated and dropped on a slab in a few years. IMO

I'm finding its pretty cut throat out there in regards to prices. I know from personal experience that prices can be high on the downturn due to lack of work and excess bills.
Tradies don't get a weekly wage. Some months you are flat ass broke and the bills keep rolling in.
But there are guys out there (sole traders) working for $150 a day. Stuff that.

Glad I transitioned out of the building game. To many friken headaches, to much risk and to much hard work.

 

[moXJO]

The way this will affect housing will be, houses will be modular construction, pre fabricated and dropped on a slab in a few years. IMO

I repaired a few of these and they are rubbish. I think we still have a fair way to go before that becomes an issue.

 

[moXJO]

From personal experience, the White tradies' prices are a bit stupid. A lot stupid actually.

Got a Telstra cable booked some years ago. The dude turned up and wanted $800 to run a phone/internet cable inside the house. Why so much man? It's hard because blah blah.

Telstra told me it's free 'cause I only want one socket.
Na mate, not free 'cause yours hard. Have to climb under the house to run it.

So called Telstra again and they sent an Italian gentleman. He used the old cable we had as a pull wire and it's done in half an hour. For FREE.

Another one... wife's friend was doing a renovation some years back and the plumber charged $1200 to move the sewage connection around the old bathroom. Timber floor with crawl space... maybe $50 worth of piping and glue if you're generous with hit.

But I guess the husband want to have it done right instead of a couple hours on YT.

Anyway, I find that tradies around here are generally quite reasonable with their prices. Some can be a bit unreasonable if they see you got a nice house though.

Some guys just don't want the job and jack up the price.

Any electrical, or plumbing just be careful as insurance won't pay if something happens and they can prove it was unlicensed. And insurance companies don't want to pay out anything right now.

I do love youtube though.
All the building standards can be found over at

sai-global if you need to make it A/S. The booklets cost a lot though. Just remember they show the minimum standard.