Australian (ASX) Stock Market Forum

The future of Australian property prices

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luutzu said:
Oh, the DIY was just in preparation for the bargain hunting.

Nobody listens to me Homer. I need a Lexus and a job at the office to have any weight.

I honestly don't think the coming "correction" will be 10% or 15% some big investment bank is saying. It'll be a lot worst.
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Its all down to how much the debt bomb blows up. It can get real messy on a panic.

Boomers must be draining their super funds now as well. Wasn't that a big talking issue about a decade ago
 
Regardless is if it or is not a drop of greater than 15% from peak, if it remains 10% down from peak for a sustained period of time, the mindset will change that property only ever goes up.

I agree with you Luutzu, I have believed for over 8 years, that when the next correction happened it would be significant, what I was able to predict 8 years ago, was that the whole nation would pile into debt and make the situation even worse when the time come.

I also feel, that the govnuts will work out a way to kick the can a little further this time, which in turn will make the situation worse when it does arrive in full force.

Homes are for shelter, we all need shelter
 
satanoperca said:
Regardless is if it or is not a drop of greater than 15% from peak, if it remains 10% down from peak for a sustained period of time, the mindset will change that property only ever goes up.

I agree with you Luutzu, I have believed for over 8 years, that when the next correction happened it would be significant, what I was able to predict 8 years ago, was that the whole nation would pile into debt and make the situation even worse when the time come.

I also feel, that the govnuts will work out a way to kick the can a little further this time, which in turn will make the situation worse when it does arrive in full force.

Homes are for shelter, we all need shelter
Click to expand...

I think property investors will soon wake up and wonder what the heck they were thinking.

About 6 years ago I started to noticed that property was getting a bit pricey. That was when the average property was about $500K - $600K?

Good thing I don't short anything.
 
From Corelogic :
In Sydney, 30% of off-the-plan unit valuations were lower than the contract price at the time of settlement in September, double the percentage from a year ago. In Melbourne, 28% of off-the-plan unit settlements received a valuation lower than the contract price. In Brisbane, where unit values remain 10.5% below their 2008 peak, the proportion was substantially higher, at 48%, although the trend is easing due to the unit construction cycle peaking two years ago and much of the unit supply now absorbed.

So let just play the % game for Melbourne and yes I am making a lot of assumptions :
  • Bought 2 Bedroom Apartment OTP for $700,000 several years ago, with a 5% deposit.
  • Time comes for settlement, property is valued at $630K - 10% less than purchase price.
  • I have to come up with x2 my deposit or $35K. If all I had was $35K to start with, where do I find another $35K or X2 my initial savings.
Question is what to do. I can find the money, but I am still down x2 my initial deposit and wait for the market to return. I can loose the deposit and possibility be sued by the developer.

So, if everyone who bought these apartments was under the belief that they would increase in price (free money), what happens when they realise that it can work in reverse, but under this scenario they realise the free money on the way up, turns into hardcore savings on the down side

Got to love leverage and numbers and for 80% of the population blind belief.
 
Off the plan apartment in Melb where Vals come in low are normally the high rise stuff. They aren't good for cap growth coz they just keep pumping them out.

This was very common through 07-08. A lot of high rise type apartments (blocks that have 100 units+) bought in 07-08 sold 10 yrs later for more or less same price. Didn't stop the rest of stock in Melb, houses, villa units, townhouses, older style apartments with 12 or so in a block increasing 60-100%+ over the same period.

Melb has just gone through 5m population and is expected to hit 8m in the next 30yrs. With that much demand I don't see a massive crash in house prices. There should be reasonable demand for well located, quality housing/apartments to hold prices just as there always has been.
 
willy1111 said:
Off the plan apartment in Melb where Vals come in low are normally the high rise stuff. They aren't good for cap growth coz they just keep pumping them out.

This was very common through 07-08. A lot of high rise type apartments (blocks that have 100 units+) bought in 07-08 sold 10 yrs later for more or less same price. Didn't stop the rest of stock in Melb, houses, villa units, townhouses, older style apartments with 12 or so in a block increasing 60-100%+ over the same period.

Melb has just gone through 5m population and is expected to hit 8m in the next 30yrs. With that much demand I don't see a massive crash in house prices. There should be reasonable demand for well located, quality housing/apartments to hold prices just as there always has been.
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There will always be demand, for pretty much everything. But as they say in economics, no money no demand.

For instance, around the world, only 10% of total R&D are spent trying to solve 90% of the world's health crisis while 90% are spent trying to solve 10% of the health issue. Some of which aren't really health issue, they being wrinkles and hair lost etc.

Why? No money to be made helping those without money. So demand all you want. Not going to change without cash.

Now... property is just housing really. I'm sure most of us would like a McMansion close to civilisation as much as we all like a healthy home cooked meal all days of the week.

But without easy credit, a person will find housing that suits their budget, not their demand.

The record low interest rate environment is ending; interest-only mortgages are over... Those on them will find it hard to renegotiate when most of them switch to normal coming year or two.

Employers know the likelihood of job seekers and employees being in financial stress... so no pay rise, no negotiation.

Potential investors are unlikely to pour more cash into property... lost of jobs, lost of income.

If people haven't overleveraged and can hang on, I'm sure it will work out alright next couple decade. For those that were too optimistic about property... it's not going to be good I reckon.
 
sptrawler said:
I would expect that to accelerate next year.
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Some US Fed guy said he expect 3 more rises by them over next year just to bring the rates back to normal.

I don't think the bank have passed on much of their new costs of borrowing though right?

Yea, should be more pain coming.

Was talking to brother in law the other day... he was saying how at $800K for a 2 bedroom apartment... the buyer still need to save $200K for a deposit. Average wage is now some $81K. Not easy to save that much for a deposit at that pay.

Something gotta give. If it ain't the bank giving easy credit or the bosses giving a raise, sellers will either have to lower by a lot or hang on for a while.
 
sptrawler said:
We have been saying for a while, that there is a perfect storm coming for housing, when Labor take over Government.
Looks as though the main stream press, have finally taken note of the indicators, they are starting to print quite a lot on the issue. I think it is about 12 months too late.

https://www.smh.com.au/business/the...on-morgan-stanley-report-20181030-p50crc.html
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In the housing market, as in the stock market there will always be winners and losers, you can't protect everyone all the time nor should you try.

It's been a sellers market in property in the major cities for decades now it's gone the other way, that's what happens in the marketplace.
 
luutzu said:
It's a good thing we don't rely on these guys to tell us where the cliff ends.
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It's a good thing, first home buyers, couldn't afford to get into the housing market IMO.
There will always be booms and busts, in a capitalist system, it just takes nerve to not have a FOMO.
There will be many opportunities, through a persons life, having a realistic goal and a plan to achieve it is paramount. IMO
No one will tell you where the cliff ends, that's your personal responsibility, it is where greed and common sense meet head on.
There is still a long way to go with the housing downturn.IMO

https://www.smh.com.au/business/com...cent-on-compliance-costs-20181031-p50d11.html
 
sptrawler said:
It's a good thing, first home buyers, couldn't afford to get into the housing market IMO.
There will always be booms and busts, in a capitalist system, it just takes nerve to not have a FOMO.
There will be many opportunities, through a persons life, having a realistic goal and a plan to achieve it is paramount. IMO
No one will tell you where the cliff ends, that's your personal responsibility, it is where greed and common sense meet head on.
There is still a long way to go with the housing downturn.IMO

https://www.smh.com.au/business/com...cent-on-compliance-costs-20181031-p50d11.html
Click to expand...

Yea, seems that it's not just Fear OR Greed. Sometime they both happen at once.
 
F--k me, some expert(s) realise that a home in the outer suburbs of a major city in Australia (an island in the middle of nowhere) is worth X8 the average income or under the new metric (x6 the average household income - as who care who looks after the children) is sustainable.
Seems reasonable to me, not.

What happened to the country of innovation and not house flipping and cheap credit.
 
satanoperca said:
Sprawler, great link, the tide has turned, just read the comments, Scomo and the RBA should have pulled the heads out of each other arses to realise that how this would play out.

Houses are for shelter, everyone needs shelter, even if it is a tent. Deployment of capital should be for productive means that benefit all in our society.
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At the end of the day, people bought into the bubble, those who think like you and me didn't.

So who you blame is subjective, I find these day's, there is always someone else to blame for people's bad choices.
 

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