The future of Australian property prices

[basilio]

Last few posts have been off topic (really off) but thanks for the info. I have learned something. I recall an earlier post, a student accommodation plan layout that intrigued and appalled me, as it was exceptionally tight but still accommodated a double bed. (post 14202 page 711 by @basilio ) I thought to myself well that might be handy if you 'get lucky'. Maybe the layout it is much more sinister in its overall plan. It would interesting to see if these were collectively owned and run by criminals.

No I don't believe so. I suspect you will find that the company that builds these complexes sells individual flats to investors and thenoffers to manage them.

I came across the prospectus for some of these orgs a few years ago,

 

[Smurf1976]

Last few posts have been off topic (really off) but thanks for the info. I have learned something.

I could say a lot more but I’m conscious of it being well off topic and a subject that some may see as inappropriate or detracting from the forum.

I’ll simply say that it’s a subject where society cringes and avoids what could be politely termed a very inconvenient truth.

I’ll leave it at that - back to house prices.

 

[satanoperca]

I think the really relevant aspect of OS students and Australian Universities is their financial contribution to housing demand and economic demand in the big cities. The loss of hundreds of thousands of these students will punch a hole in Uni budgets and staffing and undermine economic activity in the cities and regional cities that host these students.

Just for a start the huge purpose built O/S student housing flats will stay empty for at least another 6 months.

I hope you are correct, as that will mean better opportunities in both education and housing for the younger Australian generation.

 

[moXJO]

Just for a start the huge purpose built O/S student housing flats will stay empty for at least another 6 momonths.

It may well take longer. The cash economy infrastructure that kept a lot of these students employed has been decimated. Rents should be coming down. I'm really surprised the market has held up so well.

 

[sptrawler]

Well the combination of Government stimulus housing grants and lockdown induced saving, has certainly put a rocket under home buyers, while property investors have taken a back seat.

What’s different about this property boom?

Latest quarterly figures from CoreLogic imply the national market is growing at 11.2 per cent a year. But unlike the last boom, investors are not the driving force.

www.smh.com.au

From the article:
Latest quarterly figures from CoreLogic, when annualised, imply the national property market is growing at 11.2 per cent a year.

However, there are some big differences between the latest price upswing and previous booms in Australian bricks and mortar.
A glaring distinction is the market is overwhelmingly being driven by owner-occupier homebuyers, rather than investors, who turbo-charged the property surge of the past decade.

CoreLogic’s Tim Lawless says at the peak in 2015, property investors made up about 46 per cent of all new mortgage lending. Today, investors account for just 23 per cent.
“Weaker rental demand, especially in the investment enclaves of Melbourne and Sydney’s inner-city unit markets, is likely a significant disincentive for investors,” Lawless says.

Peter King, chief executive of Westpac, has also described the investor market as “relatively quiet.”

Another unusual feature of the latest property boom is that it is occurring amidst the slowest population growth since the First World War – something that you might expect to detract from housing demand.


Like we have said for ages, it is amazing how much money people can save, if they stop going out for a while.
Another article on the state of Australian housing.

Why are Australian home prices rising again and can it last?

Don’t values drop when there’s a recession? What’s going on – and can the rise continue?

www.smh.com.au

 

[dyna]

"We don't need icecream-lickers at $20 million auctions" Selling agent's quote,last Saturday, to registered bidders on a Portsea, unrenovated clifftop mansion on 4,400 sq. m. They were only allowed a look-see,if prepared to bid above the $16.5 mill reserve.Anyway,the riff-raff were warned off and it was all over in minutes.The joint sold for a bit over $22 mill.
"Lifestyle" huh? I think that's agent-speak for tax free capital gains.The great australian ponzi scheme(great australian dream,I mean) carries on its merry way....onwards and upwards,we hope.Comes with a huge cost though.First up, an eye watering stamp duty has got to be handed over to a state government for doing.... not much at all,then the necessary reno for the next auction fool. Imagine the council rates and repairs on a place like that.Keeps a few tradies employed but there's not much else in the way of real economic input.The game works,I suppose,so shoudn't knock it.

 

[jbocker]

Keeps a few tradies employed but there's not much else in the way of real economic input.

Hey Now that explains why so many shoddy home constructions in boom times.. keep tradies busy in maintenance and repair for years to come. That is brilliant - repeat business.

Talking with someone selling new constructions (WA). They have shut down display homes because they have so many homes for construction they cannot keep up. They have so many slabs to lay by cut off grant deadline (I think they said end of March) they are genuinely concerned some will miss. They are putting down slabs and telling owners they wont be back for some time.

 

[dyna]

According to Digital Finance Analytics,tens of thousands of property owners are facing negative equity.In Sydney over 5,000 apartments(and 48 houses) were valued at less than the current loan amount.Mostly due to over supply,low demand,nil migration and defects, in the high rise sector.For Melbourne,9,000 apartments(and 108 houses) were affected.Perth was not spared either.1in 10 households in Mandurah are underwater on their mortgage to valuation.

 

[Smurf1976]

Hey Now that explains why so many shoddy home constructions in boom times.. keep tradies busy in maintenance and repair for years to come.

It's the old time, cost, quality - pick any two.

If time is fixed then you choose between cost and quality.

At a guess, most will choose cost which means quality suffers.

 

[over9k]

According to Digital Finance Analytics,tens of thousands of property owners are facing negative equity.In Sydney over 5,000 apartments(and 48 houses) were valued at less than the current loan amount.Mostly due to over supply,low demand,nil migration and defects, in the high rise sector.For Melbourne,9,000 apartments(and 108 houses) were affected.Perth was not spared either.1in 10 households in Mandurah are underwater on their mortgage to valuation.

Good. Property prices have needed to come down for a long time.

The idea of perpetual expansion is just... ugh. I genuinely wonder how this country is so stupid at times.

Then I remember that the boomers are profiting from it.

 

[Warr87]

yea prices definitely need to come down. though i still feel sorry for many that probably haven't done anything wrong and now have negative equity. on the flip side, i have no sympathy for anyone who over leveraged on the basis of perpetual growth and almost 0% interest rates.

 

[sptrawler]

I have had my house for 14 years and it has gone up 50%, that is some profit.?

 

[Bill M]

Good. Property prices have needed to come down for a long time.

The point is, they aren't coming down, well not just yet anyway. In Sydney and further up through the Central Coast, Newcastle and the Hunter prices are still climbing. A lot of properties being sold before they even hit the market, I am watching it each week. Sydneysiders are cashing in and moving north and therefore fuelling prices in regional areas as well. It isn't coming down until it really is coming down.

Domain House Price Report: December Quarter 2020
Capital city: Average house price: Year-on-year growth:

Sydney $1,211,488 + 6.7 per cent

Melbourne $936,073 + 3.9 per cent

Brisbane $616,387 + 5.6 per cent

Adelaide $574,264 + 6.1 per cent

 

[qldfrog]

The point is, they aren't coming down, well not just yet anyway. In Sydney and further up through the Central Coast, Newcastle and the Hunter prices are still climbing. A lot of properties being sold before they even hit the market, I am watching it each week. Sydneysiders are cashing in and moving north and therefore fuelling prices in regional areas as well. It isn't coming down until it really is coming down.

Domain House Price Report: December Quarter 2020
Capital city: Average house price: Year-on-year growth:

Sydney $1,211,488 + 6.7 per cent

Melbourne $936,073 + 3.9 per cent

Brisbane $616,387 + 5.6 per cent

Adelaide $574,264 + 6.1 per cent

still ongoing crazy price rises here in Sunshine Coast/ Noosa

 

[sptrawler]

still ongoing crazy price rises here in Sunshine Coast/ Noosa

Perth/ Mandurah the same, it is interesting that this run appears to be Australia wide, as opposed to the Sydney/ Melbourne bubble.
It might be because of the extra savings slushing around, added to the State and Federal incentives, but also there may be overseas money buying sight unseen after the way the virus was handled here?
There is a huge amount of new builds going up, so I'm expecting another oversupply problem in the West again, in three to four years.
Just my thoughts.

 

[qldfrog]

Perth/ Mandurah the same, it is interesting that this run appears to be Australia wide, as opposed to the Sydney/ Melbourne bubble.
It might be because of the extra savings slushing around, added to the State and Federal incentives, but also there may be overseas money buying sight unseen after the way the virus was handled here?
There is a huge amount of new builds going up, so I'm expecting another oversupply problem in the West again, in three to four years.
Just my thoughts.

Here, just people from Sydney Melbourne Brisbane, WFH and retired moving north.
Covid sped the move and with Sydney Melbourne still h9gh, some are rushing to sell and move.
You do not need a huge influx to significantly affect price..
works the other way too?

 

[over9k]

Interest rates.

 

[Dark1975]

I know the rba said rates are on hold currently till 2024, but highly unlikely,
Give another 2-3 months of rising housing prices.
Then i bet the rba will re-adjust there tune, they will need to lift interest rates to curb consumer confidence,
Well not the only answer, could curb confidence with tax on investment properties/ land tax/stamp duty , but im hedging rates go higher .
Anyways enjoying the current bull cycle ,
Tho interest rates could change the current rederick. ?

 

[over9k]

House prices aren't factored into the inflation calculation - it's precisely why they've been able to inflate so much over the past couple of decades.

The even crueller twist is that the more expensive housing gets, the less money is left over to inflate the price of everything else, and thus the more the central bank will actually DROP interest rates, and thus make house prices even higher.

It's in this way that you can understand that increasing house prices are actually in a feedback loop with lowering interest rates.


I keep saying to all the econ students/kids whenever I talk to them, we've actually seen massive, revolution-causing inflation over the past 20 years, it's just all been concentrated in house prices and not the cpi.


The better question to ask is whether any of this is an accident, and what the politicians are going to do when the piper has to be paid. Those are much more concerning.

 

[Dark1975]

House prices aren't factored into the inflation calculation - it's precisely why they've been able to inflate so much over the past couple of decades.

The even crueller twist is that the more expensive housing gets, the less money is left over to inflate the price of everything else, and thus the more the central bank will actually DROP interest rates, and thus make house prices even higher.

It's in this way that you can understand that increasing house prices are actually in a feedback loop with lowering interest rates.


I keep saying to all the econ students/kids whenever I talk to them, we've actually seen massive, revolution-causing inflation over the past 20 years, it's just all been concentrated in house prices and not the cpi.


The better question to ask is whether any of this is an accident, and what the politicians are going to do when the piper has to be paid. Those are much more concerning.

I agree,

But I look at not housing prices rising is the devaluing of the $dollar, just takes more useless dollars to be the same asset in the future ,
Hence the type of deflationary/ inflation discussed,
The dollar devalues over time as more stimulus or printing of money continues.

Hence a hyperthical debate in the future of a reset.
Like nixon in 1972 took gold of the standard of curriences , I think the governments around the world are setting up quite quickly
Digital cuttencies.
Hence ripple / XRP are in court with SEC,
Its no secret that SEC needs a large case against the second oldest cypto 'XRP to set new laws in place for the digital / crypto space.
People can belive what they want with xrp being a security, but i think the question is that SEC is setting forth a case to in act new laws to better move in to digital currencies.
XRP are on there last stage with testing currencency transfers with the central bank.
The chess pieces are set.
So i think a Reset is a possible outcome.
I've actually moved 30% of my capital from stock to the cypto markets.
I think crypto / defi coins are still in its infancy stage like google / amazon was 20 years ago.

Maybe should have moved this topic in curriences ?