The future of Australian property prices

[gartley]

Government policy is what determines that.

I.e flood of foreign students/migrants or not.

This is nothing other than a supply & demand problem. People forget that.

I don't doubt that, but what component of the supply and demand equation as it stands is going to drive up properly prices 30% in the next few years as the RBA is expecting?
Remembering of course when it comes to market forecasts the RBA (and other world central banks don't have such a good track record).
Example: RBA and the BOE selling the bulk of the countries gold reserves right at the bottom in 2000. Later in 2012 the US FED buying Gold at the very top.......

 

[basilio]

Yeah, rentals around the uni's are reeeeally cheap at the moment.

Not sure which ones you are talking about here.

If you mean "normal" houses flats I think they are still very pricey. There will be a ton of purpose built student accommodation available for example by companies like Scape. Couple of issues here
1) Rental costs start at $475 pw and go to $650
2) They are absolute dog boxes. Total size of the studio units will be 2.1m x 4.5 m. - roughly half the size of single room in a normal house

I can't see how these units at these prices will be appropriate for a wider market than captive o/s students.

Student Accommodation near Swanston St Melbourne | Scape

Scape Swanston is the best place to live & study for students in Melbourne with world class amenities, modern apartments and 24/7 support.

www.scape.com

 

[over9k]

Not sure which ones you are talking about here.

If you mean "normal" houses flats I think they are still very pricey. There will be a ton of purpose built student accommodation available for example by companies like Scape. Couple of issues here
1) Rental costs start at $475 pw and go to $650
2) They are absolute dog boxes. Total size of the studio units will be 2.1m x 4.5 m. - roughly half the size of single room in a normal house

I can't see how these units at these prices will be appropriate for a wider market than captive o/s students.

Student Accommodation near Swanston St Melbourne | Scape

Scape Swanston is the best place to live & study for students in Melbourne with world class amenities, modern apartments and 24/7 support.

www.scape.com

View attachment 118908

Oh I wasn't talking about purpose built student housing, just places that uni students used to live in.

But the same does actually go with the uni student accommodation - if there's nobody to live in them, are they just going to sit empty or will they rent dirt cheap?


Or are the powers that be going to open the floodgates to half a million+ people a year in order to artificially prop up housing demand and therefore artificially prop up housing prices?

I don't doubt that, but what component of the supply and demand equation as it stands is going to drive up properly prices 30% in the next few years as the RBA is expecting?
Remembering of course when it comes to market forecasts the RBA (and other world central banks don't have such a good track record).
Example: RBA and the BOE selling the bulk of the countries gold reserves right at the bottom in 2000. Later in 2012 the US FED buying Gold at the very top.......

Immigration.

 

[gartley]

Immigration.

Unless something changes drasitcally with respect to borders I can't see immigration alone propelling the housing market up 30% in in the next few years. Having said that it never ceases to amaze at the lengths governmants will go to protect the ponzi's namely the Australian Housing Bubble and Zombie markets in the US propelled in large part by FED policy. Thus, it is now “common knowledge” that the housing market cannot go down because the RBA and government will not allow it.
This is a false mythology and also a psychological vestige of the waning days of the great gull market.

 

[againsthegrain]

governmants will go to protect the ponzi's namely the Australian Housing Bubble

This seems to be the only fundamental left that most clever investors are buying on these days

 

[over9k]

Unless something changes drasitcally with respect to borders I can't see immigration alone propelling the housing market up 30% in in the next few years. Having said that it never ceases to amaze at the lengths governmants will go to protect the ponzi's namely the Australian Housing Bubble and Zombie markets in the US propelled in large part by FED policy. Thus, it is now “common knowledge” that the housing market cannot go down because the RBA and government will not allow it.
This is a false mythology and also a psychological vestige of the waning days of the great gull market.

9% average for a three year period... It's done it before.

This seems to be the only fundamental left that most clever investors are buying on these days

Exactly. You want to know what the most protected investment in the country (and probably the highest yielding too) is? Just look at what the politicians hold.

Hence my major concern that they will do literally anything to keep house prices rising.

 

[gartley]

9% average for a three year period... It's done it before.



Exactly. You want to know what the most protected investment in the country (and probably the highest yielding too) is? Just look at what the politicians hold.

Hence my major concern that they will do literally anything to keep house prices rising.

Best of luck with your future property investments. Since the government has your back then property investment is a risk free trade or is it?....
Basing investment decisions on the trust and promises of governments is definately not for me.

 

[Smurf1976]

I can't see how these units at these prices will be appropriate for a wider market than captive o/s students.

Apart from the presence of the very small kitchen, the basic layout makes me think of hotel rooms or ship cabins.

I'd expect that the market is limited mostly to those either with limited $ or for short term use.

 

[qldfrog]

RBA quote 30pc increase but not inflation rate.if cpi goes at 10pc, you will have RE serious increases

 

[Mrmagoo]

Whats the consensus prediction. If prices jump 30% Aus will be a messed up place but its something good to know in that case you should buuy now.

 

[over9k]

Best of luck with your future property investments. Since the government has your back then property investment is a risk free trade or is it?....
Basing investment decisions on the trust and promises of governments is definately not for me.

Why not? Do you think their top priority is something other than their own money?

 

[gartley]

Why not? Do you think their top priority is something other than their own money?

I'm sure it is..... But the manipulation can't last for ever, water will eventually seek it's own level with respect to prices, irrespective of continued government interventions which eventually end up being a trap.
Just like when Scomo gave the buy signal in stocks and property after the election only for investors portfolios to get smashed 1.5 years later.
For now the RBA has already played all it's cards and has nowhere left to manoevere sooner or later rates will have nowehere left to go but up as hyperinflation will slowly emerges. The government has pulled out all stops to keep the levitation alive, negative gearing, lucrative first buyer grants, endelss migration policies when there not even enough jobs here for the existing population. In the end they will ultimately fail natural price discovery will take it's course.
The history of markets is full of widespread government intervetions, in the end the result is always the same.

 

[sptrawler]

Whats the consensus prediction. If prices jump 30% Aus will be a messed up place but its something good to know in that case you should buuy now.

I can see some property markets moving 30%, but not Sydney, Melbourne, they are already ridiculous in relation to average wages.
Without O/S migration, the only thing that will drive the local market, is increased savings as a result of reduced spending on travel, because of covid.
However I can see Perth rising 30%, due to increased demand from Eastern States workers relocating for work, however Perth is starting from a very low base due to the exodus after the mining bust.
So in reality it is just another wave in W.A's boom and bust cycles.
So did the RBA mention where there will be a 30% increase, or is it just sensationalising by the media? I mean really in the last 5 years Sydney, Melbourne property prices have doubles, Perth has halved.
So in Sydney, Melbourne you had a property boom, in Perth you have had a property bust, so it just depends how you want the story to read.

 

[qldfrog]

I can see some property markets moving 30%, but not Sydney, Melbourne, they are already ridiculous in relation to average wages.
Without O/S migration, the only thing that will drive the local market, is increased savings as a result of reduced spending on travel, because of covid.
However I can see Perth rising 30%, due to increased demand from Eastern States workers relocating for work, however Perth is starting from a very low base due to the exodus after the mining bust.
So in reality it is just another wave in W.A's boom and bust cycles.
So did the RBA mention where there will be a 30% increase, or is it just sensationalising by the media? I mean really in the last 5 years Sydney, Melbourne property prices have doubles, Perth has halved.
So in Sydney, Melbourne you had a property boom, in Perth you have had a property bust, so it just depends how you want the story to read.

Here on the sunshine coast, i would not be surprised to be told we have had a 20pc RE increase in the last 6months.time will tell but it is booming.
Inflation will be the factor: if inflation and still pathetic returns on deposit, add a share market crash and RE will explode up the qioted 30pc..ready to then crash a big way

 

[over9k]

I'm sure it is..... But the manipulation can't last for ever, water will eventually seek it's own level with respect to prices, irrespective of continued government interventions which eventually end up being a trap.
Just like when Scomo gave the buy signal in stocks and property after the election only for investors portfolios to get smashed 1.5 years later.
For now the RBA has already played all it's cards and has nowhere left to manoevere sooner or later rates will have nowehere left to go but up as hyperinflation will slowly emerges. The government has pulled out all stops to keep the levitation alive, negative gearing, lucrative first buyer grants, endelss migration policies when there not even enough jobs here for the existing population. In the end they will ultimately fail natural price discovery will take it's course.
The history of markets is full of widespread government intervetions, in the end the result is always the same.

The money printing hasn't even begun, and house prices aren't counted in the inflation calculations.

As long as the printed money is diverted into house prices alone, we won't see interest rate increases but we will see house price increases.

They know how to keep it going.

 

[againsthegrain]

The money printing hasn't even begun, and house prices aren't counted in the inflation calculations.

As long as the printed money is diverted into house prices alone, we won't see interest rate increases but we will see house price increases.

They know how to keep it going.

The only thing that is going up is cost of living, wage growth is dead and will be stagnant for a good while. Rba has nothing left I can't see this going much higher. Job keeper is ending, seeker is getting trimmed to 40 bux a day... printer is low on ink

 

[over9k]

Sure it can. "Home buyer's grant", funded with freshly printed cash.

 

[againsthegrain]

Sure it can. "Home buyer's grant", funded with freshly printed cash.

The grant stands at around what 10k right now? Doubling the grant would not double or add 30% to property prices, it would add another 10k or 15k to prices which is a drop in the ocean. Perhaps if the grant was 100k or even 200k then yeah to the moon babey... is that a realistic scenario?

 

[jbocker]

Unless something changes drasitcally with respect to borders I can't see immigration alone propelling the housing market up 30% in in the next few years. Having said that it never ceases to amaze at the lengths governmants will go to protect the ponzi's namely the Australian Housing Bubble and Zombie markets in the US propelled in large part by FED policy. Thus, it is now “common knowledge” that the housing market cannot go down because the RBA and government will not allow it.
This is a false mythology and also a psychological vestige of the waning days of the great gull market.

Not sure this is an Aus wide comment. But it seems totally non applicable in WA. I know of many properties that are still underwater since the mining boom broke a few years back. Investors had stopped building. People left in droves. Property prices went DOWN and significantly. a lot of selling properties remained on market for many months.
Covid comes along and the house prices were going to fall off the planet, rentals (tenants) became heavily protected till March 2021. It was going to be dire straits.
Today - Right now you put a property up for sale, do not put an upper price limit on it, you probably be under offer within two weeks. If you want to rent GOOD LUCK be prepared to wait in a long long line. The buyers are nearly entirely home owners. Now do we call the stimulus and building grants packaging contributors to the ponzi scheme, now the prices are going up. You could test the theory and pull up to a couple of building sites and yell out you want to talk about how they are wrapped up in a ponzi. Remember to take your hard hat.
Oh and guess what there has been very little overseas immigration unless you want to count returning Aussies. Most immigration is the interstate FIFOs now living in the state where they work due to border restrictions, and frankly the way it should be.
Supply and demand will be the greatest driver in housing prices, as it is with nearly everything else. Well in WA at least. Interested in the state of play in other states - maybe there a ponzi is applicable.

 

[sptrawler]

Spot on @jbocker , my oldest son was down yesterday from the Goldfields, he was one of the female engineers who is married, hasn't been home to Qld in 6 months.
She is going to buy a house in Perth.
The Eastern States FIFOs are worried about going home and the borders closing, or having to do quarantine.