The future of Australian property prices

[gartley]

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.

Easy money policies will only produce a temporary illusionary growth and will fail to improve the the fundamentals of a stagnant economy. The more they will try the more the less it will respond. The BOJ tried it for 15 years and got nowhere( and house prices in Japan continued to capitulate). The US now is the same boat, the FED and other central banks must inflate or die.
Forget about perpetually rising asset prices, they already off the planet and whilst they may continue to persist for a short while it won't last because this debt bubble is no different to any other bubble in history. They all eventually end in bust WITHOUT exception.
Markets are now at the crossroads. Most are expecting a slow transition away from the Covid Winter back to normality and the "good times".
Covid is here and will fizzle out in time, but the psychological and economic reality as result of Central Bank reckless monetery policies will not and there will be a heavy price to pay by all of us in the end.
Look at your charts you will see that as a bull market progresses and nears the terminal phase this is characterized by wide ranging bars both up and down and an increase in volatility. We are already there in the US markets (not to mention the housing market here), look at the volatility the last 12 months alone. This sets up for momentum divergence that eventually lead to final high.
Prepare for a lost decade charactirized by large swings up and down and a traders market.

 

[over9k]

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?

They'll find a way dude. "Highest home buyer's grant package ever" or some such bull****. They don't even need to make prices increase by much, as long as they're the only safe haven for cash, people will pump money into them and that's all it will take.

It's ridiculously easy for the powers that be to trigger a run. Governments are incompetent as hell at the best of times, but the one thing politicians ARE good at is lining their own pockets. They will find a way, they always do.

The only time I would ever sell an IP is when the politicians start selling theirs.

 

[Maddamted]

I did find this prediction rather funny though

When have Economists got it right.
Prefer to look at intrinsic value and supply and demand for the particular investment.

 

[over9k]

When have Economists got it right.
Prefer to look at intrinsic value and supply and demand for the particular investment.

Economists are almost always right in their purely economic modelling etc. It's when other factors (generally just governments) get involved that the predictions go out the window.

We've been due for a housing correction for over a decade now for example, and yet...

 

[sptrawler]

Economists tend to predict on the status quo remaining, when in reality disruptors always happen, it is like monitoring any process looking at the charts relies on the future being the same as the past.
I always remember when my wife was doing a post grad in management, she came home from a lecture one day and mentioned the lecturer had said "this is how the stock market should work, but in reality it is driven by emotion".

 

[gartley]

Since this thread has focused more on economic drivers I thought I would give my 2c worth interms of Elliot Wave Analysis on both house prices and interest rates. For the older ones like myself we can remember back in 1981/82 with interest rates at 17% it could have been really tough to sell a property at the price you wanted with much lower turn out rates at auctions.
With the environment we have today, with rates close to zero we are at the other extreme the current hyper bullish forecasts coincide with what appears to be an almost completed and very clear and textbook 5 wave structure from the 1980/81 low. Now being in the fifth and final wave up coming out with a thrust from the wave 4 triangle. Wave 4 triangles are the penultimate moves to the last wave up and the biggest clue a market is coming into a top in the next and last leg up to follow. Once this impulse completes the largest correction or decline may start since the impulse wave started in 1980


Conversely interest rates are in the last throws of a 5 wave structure to the downside during the same period. More importantly the 5th wave is characterized by an ending diagonal type pattern or wedge. When these types of patterns complete the ensuing reversal can buy quite abrupt and usually finds resistance at the same level the ending diagonal started at.
So it will be very interesting to see what type of reversal emerges and when.

 

[over9k]

Mmm and this is where the economists step in. Just what are the powers that be going to do?

 

[Smurf1976]

Interested in the state of play in other states

House near me was put up for sale late last year, sold at the first open home a couple of days after listing.

Another nearby house, a rental, previous tenant broke lease a few weeks before it ran out. New tenant moved in 2 weeks later.

That's in SA.

 

[gartley]

Mmm and this is where the economists step in. Just what are the powers that be going to do?

Initially nothing. Because they won't see it coming and will continue
projecting the current trend into the future.
Wouldn't mind seeing a current statistical bullish consensus amongst economists

 

[qldfrog]

House near me was put up for sale late last year, sold at the first open home a couple of days after listing.

Another nearby house, a rental, previous tenant broke lease a few weeks before it ran out. New tenant moved in 2 weeks later.

That's in SA.

Sunshine coast hinterland,many houses sold after 2 to 7 days in the market.mindblowing

 

[basilio]

I have to say the current situation of housing loans at 2% gives me the absolute willies. Theoretically a person could borrow $700k at 2% interest and have a yearly interest bill of a mere $14k or less than $300 a week.

At that price "Great lets buy a house... or three. " and all will be well..

Of course if interest rates rise by a miserable 1% to 3% the interest bill has now jumped 50% to $21k a year or $450 a week.

And of course to actually pay off the $700k principal there would need to be capital repayment of roughly $30k a year for 25 years. Is this amount included in the loan calculations ?

Honestly I can't see a happy ending here - except for the banks perhaps?

Best home loan rates - 6 expert picks

Looking for the best home loan rate for you? We've analysed rates, fees and features from 100+ home loans to help you find a better deal.

www.finder.com.au

 

[basilio]

Best home loan rates - 6 expert picks

Looking for the best home loan rate for you? We've analysed rates, fees and features from 100+ home loans to help you find a better deal.

www.finder.com.au

 

[basilio]

I should have posted clearer details of the current finance packages available for home loans. A $700k loan will cost $620-650 a week repayments. Please see attached.

But having said that the question of what repayments would look like with a mere 1% increase in interest rates still stands.

Best home loan rates - 6 expert picks

Looking for the best home loan rate for you? We've analysed rates, fees and features from 100+ home loans to help you find a better deal.

www.finder.com.au

 

[againsthegrain]

I should have posted clearer details of the current finance packages available for home loans. A $700k loan will cost $620-650 a week repayments. Please see attached.

But having said that the question of what repayments would look like with a mere 1% increase in interest rates still stands.

View attachment 119380

Best home loan rates - 6 expert picks

Looking for the best home loan rate for you? We've analysed rates, fees and features from 100+ home loans to help you find a better deal.

www.finder.com.au

Obviously the govt is not allowed to raise rates for the next 20-30 years or ELSE!

 

[Warr87]

i really don't think people understand how uncomfortable its going to get when rates eventually rise in the future. like you it gives me the willies to see it so low.

on another note, I wish I could borrow $500,000 @ 2% for trading, though apparently 'too risky' lol.

 

[againsthegrain]

i really don't think people understand how uncomfortable its going to get when rates eventually rise in the future. like you it gives me the willies to see it so low.

on another note, I wish I could borrow $500,000 @ 2% for trading, though apparently 'too risky' lol.

Most people are under the impression they will pay down a big chunk of the loan down 30% + before rates start creeping. Others are convinced bottom rates are here to stay and even qe to kick in by 22-23 so yeah.... fundamentals, what fundamentals?

 

[over9k]

I should have posted clearer details of the current finance packages available for home loans. A $700k loan will cost $620-650 a week repayments. Please see attached.

But having said that the question of what repayments would look like with a mere 1% increase in interest rates still stands.

View attachment 119380

Best home loan rates - 6 expert picks

Looking for the best home loan rate for you? We've analysed rates, fees and features from 100+ home loans to help you find a better deal.

www.finder.com.au

Hence why small changes are such a big deal now - the proportions have changed.

100 basis points on a 17% loan is a very different thing to a 2.2%.

 

[Warr87]

i think the smart play would be to keep your borrowing amount the same as it would have been when rates where 5% or so. im sure some have tried to squeeze out more with lower rates. probably not ideal. and the savy investor would be trying to pay that down super quick before rates rise. sounds like too much of a gamble for me though. but knowing my risk tolerance and moderating my risk is probably why I like trading, lol.

i feel sorry for whatever government is in power when rates rise. its gonna be a train wreck. it'll be easy pickings for any journo wanting to write a piece as well. the analogy i think is fitting is a hot potato lol.

 

[againsthegrain]

i think the smart play would be to keep your borrowing amount the same as it would have been when rates where 5% or so. im sure some have tried to squeeze out more with lower rates. probably not ideal. and the savy investor would be trying to pay that down super quick before rates rise. sounds like too much of a gamble for me though. but knowing my risk tolerance and moderating my risk is probably why I like trading, lol.

i feel sorry for whatever government is in power when rates rise. its gonna be a train wreck. it'll be easy pickings for any journo wanting to write a piece as well. the analogy i think is fitting is a hot potato lol.

Unless we happen to have a outbreak and lockdown every year, print more money keep rates down... as @over9k said govt is getting more and more creative and keeping the ball pumped up

 

[satanoperca]

Unless we happen to have a outbreak and lockdown every year, print more money keep rates down... as @over9k said govt is getting more and more creative and keeping the ball pumped up

Will someone please think about the retirees.

In saying that, why is property moving again and the share market going as well, well stupidly low interest rates and nowhere to park your money except to investment classes, property & shares.

You need to have big ba---ls these days to start a business (something that might be a positive for society and the country)