The future of Australian property prices

[qldfrog]

ato will receive thank you letters from china soon:
https://www.businessinsider.com.au/housing-foreign-buyers-government-crackdown-2018-12

 

[sptrawler]

I am starting to see a lot of houses, that are put under contract, being returned to the market.
The banks must be meeting their lending obligations.
Interesting that the RBA and the W.A Government, are now asking the banks not to tighten lending, it's a funny old World.IMO

 

[sptrawler]

Well it looks as though the worst might be over for the Banks. The housing sector supplies a lot of jobs, now all we need do, is get people to want to build one. lol

https://thewest.com.au/business/hou...as-regulator-vows-no-more-hits-ng-b881066211z

 

[basilio]

No surprise to realise housing prices in the big cities are falling. Found an excellent report on ABC which analyses where prices are collapsing and looks at historical comparisons.
House of cards
By Inga Ting, Geoff Thompson and Alex McDonald

7.30

Updated 17 Dec 2018, 10:12am
Published 10 Dec 2018, 6:02am
The tide is turning on Australia’s $7.6-trillion property market.

Home prices in more than four out of five council areas have reached their peak and are sliding towards an unknown nadir, according to the latest figures from property market analyst CoreLogic.

As the slump moves into its second year with little or no prospect of rebound, the downturn in capital city property markets threatens to drag down the rest of the economy.

And with a mixed outlook for the global economy, doubts are surfacing about where Australia is going to find the fuel to extend its near-record run of 27 years of unbroken economic growth.

“The likelihood of Australia facing the longest housing downturn in history has increased,” says UBS chief economist George Tharenou.

“It seems quite plausible to me that house prices will continue to fall for all of the next year into 2020.”
https://www.abc.net.au/news/2018-12...as-property-downturn-hit-your-suburb/10588960

 

[SirRumpole]

“It seems quite plausible to me that house prices will continue to fall for all of the next year into 2020.”

So why is it bad news that housing is becoming more affordable ?

Incentives for investors distorted the market in the first place, now that investors are pulling out prices will go to a level that the average income earners will be able to afford.

 

[sptrawler]

No surprise to realise housing prices in the big cities are falling. Found an excellent report on ABC which analyses where prices are collapsing and looks at historical comparisons.
House of cards
By Inga Ting, Geoff Thompson and Alex McDonald

7.30

Updated 17 Dec 2018, 10:12am
Published 10 Dec 2018, 6:02am
The tide is turning on Australia’s $7.6-trillion property market.

Home prices in more than four out of five council areas have reached their peak and are sliding towards an unknown nadir, according to the latest figures from property market analyst CoreLogic.

As the slump moves into its second year with little or no prospect of rebound, the downturn in capital city property markets threatens to drag down the rest of the economy.

And with a mixed outlook for the global economy, doubts are surfacing about where Australia is going to find the fuel to extend its near-record run of 27 years of unbroken economic growth.

“The likelihood of Australia facing the longest housing downturn in history has increased,” says UBS chief economist George Tharenou.

“It seems quite plausible to me that house prices will continue to fall for all of the next year into 2020.”
https://www.abc.net.au/news/2018-12...as-property-downturn-hit-your-suburb/10588960

It is the same as most items in an open market, once the supply outstrips demand, the price falls untill the supply meets the demand again.

 

[sptrawler]

So why is it bad news that housing is becoming more affordable ?

Incentives for investors distorted the market in the first place, now that investors are pulling out prices will go to a level that the average income earners will be able to afford.

That's what the media would have you believe, but the Sydney/Melbourne boom, commenced recently negative gearing commenced 30 odd years ago.
One of the easiest things to manipulate is public opinion, what drove the prices so hard and fast IMO was easy credit and greed, now that greed is being punished.
So be it, at the end of the day, all a house does is keep the weather off you.

 

[luutzu]

No surprise to realise housing prices in the big cities are falling. Found an excellent report on ABC which analyses where prices are collapsing and looks at historical comparisons.
House of cards
By Inga Ting, Geoff Thompson and Alex McDonald

7.30

Updated 17 Dec 2018, 10:12am
Published 10 Dec 2018, 6:02am
The tide is turning on Australia’s $7.6-trillion property market.

Home prices in more than four out of five council areas have reached their peak and are sliding towards an unknown nadir, according to the latest figures from property market analyst CoreLogic.

As the slump moves into its second year with little or no prospect of rebound, the downturn in capital city property markets threatens to drag down the rest of the economy.

And with a mixed outlook for the global economy, doubts are surfacing about where Australia is going to find the fuel to extend its near-record run of 27 years of unbroken economic growth.

“The likelihood of Australia facing the longest housing downturn in history has increased,” says UBS chief economist George Tharenou.

“It seems quite plausible to me that house prices will continue to fall for all of the next year into 2020.”
https://www.abc.net.au/news/2018-12...as-property-downturn-hit-your-suburb/10588960

Great article there Bas. Very well researched.

 

[SirRumpole]

easy credit and greed, now that greed is being punished.

Greed by whom ?

 

[luutzu]

So why is it bad news that housing is becoming more affordable ?

Incentives for investors distorted the market in the first place, now that investors are pulling out prices will go to a level that the average income earners will be able to afford.

Bad because people got to learn to struggle to make ends meet with a roof over their heads?

Investors aren't making any money so that's bad.

No more stamp duty for that gravy train. Bad too.

Councils might, though I doubt it, have to reduce their rates seeing how property is crashing now. So that's bad.

Construction making up some 15% [?] of the workforce will be struggling. Infrastructure and all that boom is almost off the drawing board...

No consumption and spending beyond the absolute minimum; capital gains and negative gearing will mean little to no tax for most Aussies for years to come.

Yea, we're about to get properly done for.

 

[basilio]

So why is it bad news that housing is becoming more affordable ?

Incentives for investors distorted the market in the first place, now that investors are pulling out prices will go to a level that the average income earners will be able to afford.

In theory I totally agree with you Rumpy. In fact for a long time the value of properties was tied to
1) How much potential buyers could afford based on one income families
2) A rent return of around 5%. Again the rents were in line with capacity to pay.

The housing market has been corrupted by the process of turning it into a get rich quick ponzi scheme. It has been financed by banks and promoted by real estate agents and property gurus. As long as enough people believed the hype it was self supporting. When belief in the "bigger bunny" concept failed, the artificially inflated markets can't sustain themselves.

The broader issue is the amount of debt floating around the world which has pumped up asset prices of property, shares and almost any other asset that could be "invested".

https://www.abc.net.au/news/2018-11...-cause-of-the-next-stock-market-jolt/10486554
https://www.abc.net.au/news/2018-11...ng-housing-and-why-we-fear-the-truth/10509138
https://www.abc.net.au/news/2018-12-10/how-low-can-stocks-and-property-go/10598708

 

[sptrawler]

Greed by whom ?

By all that were driven by FOMO, whatever the reason, nobody pushed anyone's arm up their back to buy into the bubble.
The same happens with the share market, herd mentality. When it takes off people jump on, when it crashes, people get burnt.
Life is about choices and consequences, we are trying to find ways of encouraging people to make choices, without explaining there are consequences.
Just another way of dumbing down people.
That's why people now, always blame someone else, for their poor choices.
Maybe they should think more, before making the decision, in the first place.
What are we hearing now, I can't afford the loan, why did they give it to me. DUH

 

[basilio]

One of the key points made in the ABC stories is that we don't have a buyers market in property. Property prices are falling but basically it is because

1) The music has stopped for the get rich quick brigade and they are now caught trying to sell properties they don't own, at prices they can't sustain to people who can't afford them.

2) Real dinkum buyers (not speculators) are unable to get the credit for house purchasers at anywhere near their current prices as banks drastically tighten lending criteria.

 

[basilio]

Life is about choices and consequences, we are trying to find ways of encouraging people to make choices, without explaining there are consequences.
Just another way of dumbing down people.
That's why people now, always blame someone else, for their poor choices.

Interesting observation. I would have really liked there to have been more consequences around when financial institutions were throwing money at people to buy property because it would never go down.
I wouldn't mind some consequences for the myriad property gurus who created the ponzi scheme in the first place.
And at the start of the line there are the political parties who introduced capital gains exemptions and encouraged and took part in the property speculation game. Any consequences for them?

 

[SirRumpole]

No consumption and spending beyond the absolute minimum; capital gains and negative gearing will mean little to no tax for most Aussies for years to come.

Cheaper houses, lower mortgage repayments, more disposable income , increased consumer spending, more GST revenue ?

 

[sptrawler]

Interesting observation. I would have really liked there to have been more consequences around when financial institutions were throwing money at people to buy property because it would never go down.
I wouldn't mind some consequences for the myriad property gurus who created the ponzi scheme in the first place.
And at the start of the line there are the political parties who introduced capital gains exemptions and encouraged and took part in the property speculation game. Any consequences for them?

There you go, all the people who forced the person, into taking out a loan.
It's a bit like all the fast food outlets, causing obesity.
The biggest ponzi scheme going in Australia, is telling everyone that it isn't their fault, then they can feel good while they keep repeating the mistake.
The people telling them, should be fined.

 

[sptrawler]

Cheaper houses, lower mortgage repayments, more disposable income , increased consumer spending, more GST revenue ?

We will see how that works out, the figures should be coming through soon.

 

[luutzu]

Cheaper houses, lower mortgage repayments, more disposable income , increased consumer spending, more GST revenue ?

Yes, true. But that's reconstruction after the demolition. The phase we're in right now is the demo.

Looking around where my folks live, forget about where I live, it's a few hundreds K more... working class area; basically 50+ year old houses, mostly cladding/fibro and brick veneer 3-bedder... Still going for some $700k. The cheaper $650 are fibros you need to knock down.

Man, it's a big ask on the budget to ask working people to pay close to a million if they want a liveable house.

 

[sptrawler]

Yes, true. But that's reconstruction after the demolition. The phase we're in right now is the demo.

Looking around where my folks live, forget about where I live, it's a few hundreds K more... working class area; basically 50+ year old houses, mostly cladding/fibro and brick veneer 3-bedder... Still going for some $700k. The cheaper $650 are fibros you need to knock down.

Man, it's a big ask on the budget to ask working people to pay close to a million if they want a liveable house.

Don't worry, it has a way to go yet.
Friends of ours, have a unit they paid $140k, 15years ago, the one next door just went under offer $180K.

 

[luutzu]

Don't worry, it has a way to go yet.
Friends of ours, have a unit they paid $140k, 15years ago, the one next door just went under offer $180K.

Yea, especially apartments.

Sad to see but the poor people buying apartments and are hoping to hang on through this cycle to hopefully have something for retirement... I think they'll be in for a big disappointment.

The built quality and lowering of standards mean they'll be lucky to not have major rework after a few years. Hanging onto them longer and they'll realise that buildings do deteriorate and the cost to renovate ain't cheap. And that's if the original builder did a proper job with the foundation and structural stuff.

Judging by Opal and other stories I've heard... these aren't built to last.