The future of Australian property prices

[dyna]

During the last real estate boom from 2013-15,Sydney house prices rose 12 % p.a. compound.
The last peak before the current boom was in June 2017 followed by a downturn of 9% the following year. This was exacerbated by a sort of "fear of missing out" among the herd of nervous sellers, who,by this time,had missed the top of the market.
Currently,in this city, the median house price sits at $1,187,000 which will require a buyer's Stamp Duty of over $52,000. The grand kids will end up paying the last bit, off the mortgage. It's a great racket ,innit? For state governments , developers, building suppliers, all the way down to the lowly tradies.

 

[TechnoCap]

I'm founder of a nationwide buyers agency representing investors from local and abroad.

Most areas in Australia are experiencing strong demand due to low supply.

The eastern side of the country is our primary focus and regional over city for affordability, desirability, growth, yields and manufactured growth strategies. Regional job adverts generally speaking are 10-20x that of the capital cities.

We've paid down considerable debt during the pandemic which leaves a concoction of low supply of property or land, government stimulus and low interest rates. What we have found is that investors have only use started t re-enter the market which highlights an owner occupier driven pandemic recovery.

 

[sptrawler]

I'm founder of a nationwide buyers agency representing investors from local and abroad.

Most areas in Australia are experiencing strong demand due to low supply.

The eastern side of the country is our primary focus and regional over city for affordability, desirability, growth, yields and manufactured growth strategies. Regional job adverts generally speaking are 10-20x that of the capital cities.

We've paid down considerable debt during the pandemic which leaves a concoction of low supply of property or land, government stimulus and low interest rates. What we have found is that investors have only use started t re-enter the market which highlights an owner occupier driven pandemic recovery.

Interesting comments, especially the last sentence.

 

[MovingAverage]

Which will be an election loser. Too many boomers (and even some X'ers) with IP's.

This sums up everything--the entitled generation blaming the older generations for not having everything handed to them

 

[over9k]

This sums up everything--the entitled generation blaming the older generations for not having everything handed to them

It's very hard to get someone to understand something when they are financially enriched by not understanding it.

Boomers are the first generation since the great depression to live better than both their parents and their children. Or, to put it another way, we are the first generation to not live as well as our parents since the great depression.

 

[MovingAverage]

Or, to put it another way, we are the first generation to not live as well as our parents since the great depression.

The world is not fair--that's just the reality of life. The sooner some generations accept this and get on with it the better it will be for them

 

[over9k]

The world is not fair--that's just the reality of life. The sooner some generations accept this and get on with it the better it will be for them

"I'm ******* you over, and you should just deal with it"

 

[MovingAverage]

"I'm ******* you over, and you should just deal with it"

That’s not what I’m suggesting. What I’m saying is that every generation has its opportunities and challenges. Your generation has opportunities that future generations will not and good luck to you and I wish you all the best for being able to benefit from them. I certainly hope future generations do not try to diminish the benefits you get from the actions you are taking now.

 

[sptrawler]

It's very hard to get someone to understand something when they are financially enriched by not understanding it.

Boomers are the first generation since the great depression to live better than both their parents and their children. Or, to put it another way, we are the first generation to not live as well as our parents since the great depression.

How do you know that, until you get to the same age as your parents are now, I have four kids who range through all aspects of the socio economic spectrum.
What Im seeing is, wages are higher as a percentage of living costs, than they were when I was at their stage.
Inflation increased the value of baby boomers ppr, but not many earned enough to buy an IP.
Where you are making a flawed assumption IMO, is that you think your assets wont inflate, by the time you are the age your parents are now.

Also the inflated value of your parents assets will be passed on to you.

The baby boomers parents were poor, so baby boomers inherited nothing, I actually inherited my fathers belt, which was very symbolic and my 90 year old mother has nothing other than the pension.

So Im really finding it hard to be sympathetic to your plight.lol
But hey you keep telling everyone how hard it is for you.
Over 9k, you make some great posts and great points, but the fundamentals of capitalism is, that someone starts a business and makes something, then sells it at a profit, that profit then translates in to increased wages, as the people who supply the resources get paid more for them and so it goes on.
If everything is sold at a loss, businesses go broke, people lose jobs and buying power drops.
So wages go up, buying power goes up, prices go up. Thats capitalism, the governments just have to keep it within the desired range.
So your assets if they have intrinsic value, will go up over time, that is the down side in trading you are always having to pick winners.

 

[sptrawler]

Following on from last post, forgot to mention, Mum sold the PPR 20 years ago, so there isnt any inheritance between me and my three siblings, when Mum finally passes.

So really the baby boomers arent in as good a situation, as the next generation that cant stop complaining.

It will be a real hoot, if the media get their way and convince the entitled generation that they are right and the baby boomers should have an inheritance tax applied to their ill gotten gains.
That would be hillarious.
It is only the boomers that are holding it off, sooner or later they will say,why bother.lol

 

[over9k]

That’s not what I’m suggesting. What I’m saying is that every generation has its opportunities and challenges. Your generation has opportunities that future generations will not and good luck to you and I wish you all the best for being able to benefit from them. I certainly hope future generations do not try to diminish the benefits you get from the actions you are taking now.

I would trade places/times with my grandparents in a heartbeat.

How do you know that, until you get to the same age as your parents are now, I have four kids who range through all aspects of the socio economic spectrum.
What Im seeing is, wages are higher as a percentage of living costs, than they were when I was at their stage.
Inflation increased the value of baby boomers ppr, but not many earned enough to buy an IP.
Where you are making a flawed assumption IMO, is that you think your assets wont inflate, by the time you are the age your parents are now.

Also the inflated value of your parents assets will be passed on to you.

The baby boomers parents were poor, so baby boomers inherited nothing, I actually inherited my fathers belt, which was very symbolic and my 90 year old mother has nothing other than the pension.

So Im really finding it hard to be sympathetic to your plight.lol
But hey you keep telling everyone how hard it is for you.
Over 9k, you make some great posts and great points, but the fundamentals of capitalism is, that someone starts a business and makes something, then sells it at a profit, that profit then translates in to increased wages, as the people who supply the resources get paid more for them and so it goes on.
If everything is sold at a loss, businesses go broke, people lose jobs and buying power drops.
So wages go up, buying power goes up, prices go up. Thats capitalism, the governments just have to keep it within the desired range.
So your assets if they have intrinsic value, will go up over time, that is the down side in trading you are always having to pick winners.

Cold hard economic data trawler. It's a fact. In fact it's so much of a fact that boomers have given up even trying to deny it and have instead changed the argument by this point. We're now getting rubbish like "well that just means you're going to inherit more" and so forth like you're giving me now.

I don't need the money in 20 years when my parents are dead. I need to put a roof over the head of their grandchildren now.

And that's what your generation just doesn't get - it's not your kids that are the real victims of what you've done, it's your grandchildren. I/we simply cannot provide for them what we should be able to. We simply cannot. My children are not going to live as well/have as good a childhood as I did. They just aren't.

And they just aren't because of their grandparents, not me.

 

[Smurf1976]

I would trade places/times with my grandparents in a heartbeat.

There's good and bad.

Houses were cheap, that's the good bit.

A blind eye was turned to all manner of things which would be regarded as unacceptable or even outright criminal today.

Massive social pressure to conform to all sorts of things but especially marriage and kids at a young age.

Complete disregard to human health and safety in practically every situation.

Every consumer durable item other than houses cost an outright fortune.

The past had cheap houses and I agree that's a truly massive problem today but the past did come with plenty of problems of its own, there's a lot to dislike about how things used to be.

 

[over9k]

There's good and bad.

Houses were cheap, that's the good bit.

A blind eye was turned to all manner of things which would be regarded as unacceptable or even outright criminal today.

Massive social pressure to conform to all sorts of things but especially marriage and kids at a young age.

Complete disregard to human health and safety in practically every situation.

Every consumer durable item other than houses cost an outright fortune.

The past had cheap houses and I agree that's a truly massive problem today but the past did come with plenty of problems of its own, there's a lot to dislike about how things used to be.

Depends what class you were, what job you had etc etc. My parents are from complete opposite ends of the socio-economic spectrum (they're the oddest couple I've ever known but hey, 35 years of marriage later they're still together...) so I saw each pair of grandparents/know life from both ends.

Working class life is better now, not least of all because tradies are all making a fortune. Anything above that, previous generations had it way better.

 

[sptrawler]

Depends what class you were, what job you had etc etc. My parents are from complete opposite ends of the socio-economic spectrum (they're the oddest couple I've ever known but hey, 35 years of marriage later they're still together...) so I saw each pair of grandparents/know life from both ends.

Working class life is better now, not least of all because tradies are all making a fortune. Anything above that, previous generations had it way better.

Trades are paid a lot better now than they were last generation.
I think the major problem for today's generation is, there are a huge amount of outside influences that put pressure on people to spend their money.
The 24/7 media and the advertising that comes with it, means that a lot of disposable income, finds its way into non productive spending.
The boomer generation didn't have that problem, there were no mobile phones, no internet, no netflicks, no afterpay, no 100's of t.v channels showing what you should be spending your money on.
I'm seeing it with my kids, one has lived in the bush for 20 years, he and his wife earning heaps, yet had nothing to show for it except all the toys, now they have decided they want to move back to civilization they have bought a place and are paying it down at $8k a month.
If they had done that for the last 20years, they would have a McMansion.
So maybe set your bar lower, then when that is paid off, sell and move up the ladder? It was always impossible to jump in at the top even though everyone wanted to.
In my situation, I had 3 kids by the time I bought my first house, it was a weatherboard and tile chopped in half taken on two truck 200kl and re stumped.
Then I spent two years doing it up, sold it and made 150% profit and moved to the city, bought a house in an outer suburb again worst house in the best street of a crap suburb, did it up sold 10 years later 100% profit and moved to a nicer suburb rear stata house.
My son in law late 30's runs a 6 person business, they have three kids just built a McMansion in Mt Pleasant Perth and has paid it off but he wastes nothing.
So I really think that either you are either looking in the wrong place to buy a house, or are in the wrong job for the house you want.
Just my opinion and I'm not criticising, just looking at it from my own families position and I was always a sparky on wages.

 

[over9k]

Trades are paid a lot better now than they were last generation.
I think the major problem for today's generation is, there are a huge amount of outside influences that put pressure on people to spend their money.
The 24/7 media and the advertising that comes with it, means that a lot of disposable income, finds its way into non productive spending.
The boomer generation didn't have that problem, there were no mobile phones, no internet, no netflicks, no afterpay, no 100's of t.v channels showing what you should be spending your money on.
I'm seeing it with my kids, one has lived in the bush for 20 years, he and his wife earning heaps, yet had nothing to show for it except all the toys, now they have decided they want to move back to civilization they have bought a place and are paying it down at $8k a month.
If they had done that for the last 20years, they would have a McMansion.
So maybe set your bar lower, then when that is paid off, sell and move up the ladder? It was always impossible to jump in at the top even though everyone wanted to.
In my situation, I had 3 kids by the time I bought my first house, it was a weatherboard and tile chopped in half taken on two truck 200kl and re stumped.
Then I spent two years doing it up, sold it and made 150% profit and moved to the city, bought a house in an outer suburb again worst house in the best street of a crap suburb, did it up sold 10 years later 100% profit and moved to a nicer suburb rear stata house.
My son in law late 30's runs a 6 person business, they have three kids just built a McMansion in Mt Pleasant Perth and has paid it off but he wastes nothing.
So I really think that either you are either looking in the wrong place to buy a house, or are in the wrong job for the house you want.
Just my opinion and I'm not criticising, just looking at it from my own families position and I was always a sparky on wages.

Good grief. I'm surprised you didn't mention avocado toast.

If you think you can function in the modern world without a smartphone or internet connection then you're even more out of touch than I thought.


People have looked into this. The grattan institute has done report after report after report after report on it. My generation actually spends less on discretionary expenses than yours did. In fact, the only thing my generation spends more on than yours did is rent. I pulled these up in 30 seconds from an old uni assignment I did so they're a few years old but you get the point:



"I think" and "The data shows" are two very different statements.

Compare like for like - see what, say, a doctor from your generation could afford vs what one from mine can. Doctors from my generation are buying houses off of mechanics from yours. Just think about that for a moment, take all the time you need.

 

[sptrawler]

Compare like for like - see what, say, a doctor from your generation could afford vs what one from mine can. Doctors from my generation are buying houses off of mechanics from yours. Just think about that for a moment, take all the time you need.

I've never had avacado's so wouldn't know.

If you buy a house now, in 30 years time, a young doctor will have trouble affording to buy it from you, same for same.
That has never changed from one generation to the next, if in 1994 a mechanic had bought 1,000 CBA shares @$10, a young doctor today would have trouble buying them.
If in 2010 you had bought a house in Perth, it would not have moved in price, until this year, now they have gone up about 20-30% in a matter of months.
It is ridiculous to whinge about it, if you can't afford to buy where you want to live, move somewhere else, get a different job, start a business.
If you want to buy in Sydney/Melbourne, it is going to be a huge outlay and a huge gamble and my guess is that it is driven by greed.
So my guess is eventually like crypto it will end in tears, that is why I haven't bought in Sydney or crypto, I've missed out on huge gains, but i haven't lost anything either.
I have nothing but admiration for those with the gonads to take the gamble, kudo's to them and I'm not going to complain about it.
Anyway getting all bitter and twisted and blaming others certainly wont change anything, it is what it is, build a bridge as they say.

 

[over9k]

I've never had avacado's so wouldn't know.

If you buy a house now, in 30 years time, a young doctor will have trouble affording to buy it from you, same for same.
That has never changed from one generation to the next, if in 1994 a mechanic had bought 1,000 CBA shares, a young doctor today would have trouble buying them.
If in 2010 you had bought a house in Perth, it would not have moved in price, until this year, now they have gone up about 20-30%.
It is ridiculous to whinge about it, if you can't afford to buy where you want to live, move somewhere else, get a different job, start a business.
If you want to buy in Sydney/Melbourne, it is going to be a huge outlay and a huge gamble and my guess is that it is driven by greed.
So my guess is eventually like crypto it will end in tears, that is why I haven't bought in Sydney or crypto, I've missed out on huge gains, but i haven't lost anything either.
I have nothing but admiration for those with the gonads to take the gamble, kudo's to them and I'm not going to complain about it.
Anyway getting all bitter and twisted and blaming others certainly wont change anything, it is what it is, build a bridge as they say.

A lot could/would change if the people causing the problem were to stop causing it

 

[sptrawler]

A lot could/would change if the people causing the problem were to stop causing it

Yes if people stopped using Sydney/Melbourne, crypto etc as a ponzi scheme, but you can't stop that happening, all you can do is choose whether to join in or not.
The same happened in the NW of W.A Karratha, Port Headland in the early 2000-2013 houses went up to $1m for bog standard 4x2, then 2013 crash down to $250k, now this year they are heading up the same way. Not because people want to live there but because they want to milk it, someone ends up holding the bunny, when it goes pear shaped next time.
Wait and see house prices in Sydney/ Melbourne when something causes it to pop, be that a serious problem with China or inflation moving and with it interest rates.

 

[againsthegrain]

Yes if people stopped using Sydney/Melbourne crypto etc as a ponzi scheme, but you can't stop that happening, all you can do is choose whether to join in or not.

unless you were born too late to join

 

[sptrawler]

unless you were born too late to join

Then as I said you have to build up to it, buy somewhere you can afford pay iy down, improve it, flip it and move up.
Or the other answer is take an eye watering loan and gamble on making more when you sell it.
I took the first option and never made it to the dizzy hights but I do own what I have.