The future of Australian property prices

[againsthegrain]

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.

Its a argument that has been done just 1 too many times, I am not going on that ride

 

[Smurf1976]

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

No disagreement there but, key point, that’s governments, central banks, developers and so on primarily.

Someone who just happened to be born at a certain time isn’t the cause just by virtue of when they were born, bearing in mind that the average person in the older half of the population isn’t a landlord.

 

[sptrawler]

No disagreement there but, key point, that’s governments, central banks, developers and so on primarily.

Someone who just happened to be born at a certain time isn’t the cause just by virtue of when they were born, bearing in mind that the average person in the older half of the population isn’t a landlord.

That is the crux of the matter, I bet Dennis Lillee wishes he was born 20 years later, so he would be on $1m a year.
Rather than having to have a second job and getting $1,000 a test match in the 1970's when he was the best bowler in the World.

 

[moXJO]

Sooner or later interest rates become a thing again.

 

[sptrawler]

Sooner or later interest rates become a thing again.

That is a given, i mean you have to have rocks in your head to think interest rates are going to stay at this level, the RBA has said for years they want them between 3 - 5%.
The system only works with inflation, no inflation = no growth, no growth = no profits, no profits= no investment, no investment= no jobs, no jobs= no spending and a downward spiral starts.

 

[againsthegrain]

That is a given, i mean you have to have rocks in your head to think interest rates are going to stay at this level, the RBA has said for years they want them between 3 - 5%.
The system only works with inflation, no inflation = no growth, no growth = no profits, no profits= no investment, no investment= no jobs, no jobs= no spending and a downward spiral starts.

I miss the days of 7% rates used to get ~$500 a month from 50k savings account with a bonus rate... now ~$150 from 500k

 

[sptrawler]

I miss the days of 7% rates used to get ~$500 a month from 50k savings account with a bonus rate... now ~$150 from 500k

I feel your pain, i stopped work at 55 with two knees replaced and a hip replaced, still living on savings and dividends, neither have been great the last 12 months.
Only 12 months to go to be eligible for Government assistance. Yah.

 

[MovingAverage]

I miss the days of 7% rates used to get ~$500 a month from 50k savings account with a bonus rate... now ~$150 from 500k

I haven't gone near term deposits in decades but recently had reason to shop around. Best I could find for $200k over 12 months was 1% Think I'd rather buy that storage unit I was looking at in Western Sydney. Recent development consisting of 45 units. $170k, outgoing of circa $1500 a year and would net around 7% yield annually, which is pretty attractive in the current environment

 

[sptrawler]

I haven't gone near term deposits in decades but recently had reason to shop around. Best I could find for $200k over 12 months was 1% Think I'd rather buy that storage unit I was looking at in Western Sydney. Recent development consisting of 45 units. $170k, outgoing of circa $1500 a year and would net around 7% yield annually, which is pretty attractive in the current environment

It all boils back to your personal circumstances, I have three generations living with me, I really couldn't do that if I lost my savings.
So I have a very conservative approach, it has to last a long time, hopefully.
God willing.?

 

[Smurf1976]

If interest rates were higher then that would be a huge step toward lower property prices.

1. Gives another credible option for those needing to invest in something thus deterring at least some from property speculation.

2. Directly lowers the amount banks will lend on any given property under otherwise the same circumstances.

Where this will become extremely painful is when whatever circumstance arises which effectively forces a rise in interest rates. That's going to bring a world of pain to many. It'll be a step to lowering house prices of course but not without a downside at the time.

 

[MovingAverage]

It all boils back to your personal circumstances, I have three generations living with me, I really couldn't do that if I lost my savings.
So I have a very conservative approach, it has to last a long time, hopefully.
God willing.?

Personal circumstances...that’s a very important factor ?

 

[againsthegrain]

If interest rates were higher then that would be a huge step toward lower property prices.

1. Gives another credible option for those needing to invest in something thus deterring at least some from property speculation.

2. Directly lowers the amount banks will lend on any given property under otherwise the same circumstances.

Where this will become extremely painful is when whatever circumstance arises which effectively forces a rise in interest rates. That's going to bring a world of pain to many. It'll be a step to lowering house prices of course but not without a downside at the time.

The inflation is there, prices are slowly creeping. Not huge jumps but in the shops milk bread etc 5c 10c here and there. Also I have seen some job recruitment agencies hinting at wage increases on the horizon. Altho I sense rba will do anything to push it back. We do need rates to move up, retirees, savers, business you name it.

Meanwhile I still sit on 80-90% cash similar as sptrawler, I have a old school before my generation mentality save save save and only buy with what you saved. However im slowly picking up some dividend paying shares, only some.

 

[sptrawler]

If interest rates were higher then that would be a huge step toward lower property prices.

1. Gives another credible option for those needing to invest in something thus deterring at least some from property speculation.

2. Directly lowers the amount banks will lend on any given property under otherwise the same circumstances.

Where this will become extremely painful is when whatever circumstance arises which effectively forces a rise in interest rates. That's going to bring a world of pain to many. It'll be a step to lowering house prices of course but not without a downside at the time.

Then we will hear those who have over extended themselves, complaining that they were told interest rates were going to stay low forever and the media will support them as it makes good sensational doom and gloom headlines.
And so life goes on.

 

[MovingAverage]

If interest rates were higher then that would be a huge step toward lower property prices.

The media and others love to blame neg gearing, CGT discounts and a raft of other tax incentives associated with houses as the root of all evil when it comes to the current unaffordable housing predicament. Now I’m no economist, but I reckon it is the low interest environment that driving house prices up. There is so much cheap money floating around. If the government was serious about putting a lid on the property market then it could just wind up interest rates. However, we all know the predicament that would place the government in—we’re in a stagnant environment (maybe deflationary environment) and winding up interest rates would further bring the economy to grind. I think at the moment the reserve bank is more concerned with keeping the economy going than it is with tempering the housing market so low interest rates are here to stay for a while.

 

[sptrawler]

The inflation is there, prices are slowly creeping. Not huge jumps but in the shops milk bread etc 5c 10c here and there. Also I have seen some job recruitment agencies hinting at wage increases on the horizon. Altho I sense rba will do anything to push it back. We do need rates to move up, retirees, savers, business you name it.

I have noticed a huge increase in people doing their major grocery shop in Aldi, they have only been operating in W.A for a relatively short time, but I have noticed my wife is topping up at Woolies and Coles rather than topping up at Aldi.
When I asked why, she said Woolies and Coles have been cranking up their prices since the virus and haven't stopped.
So I as you say there is inflation, obviously the RBA wants it to get traction, before moving.

 

[gartley]

That is a given, i mean you have to have rocks in your head to think interest rates are going to stay at this level, the RBA has said for years they want them between 3 - 5%.
The system only works with inflation, no inflation = no growth, no growth = no profits, no profits= no investment, no investment= no jobs, no jobs= no spending and a downward spiral starts.

Unfortunately for the RBA for the larger part it's not up to them. They are at the mercy of global debt markets, which most likely has the 40 year bear market as complete.
Unfortunately people like to project current trends into the future.
Back in the 1970s and early 80s of the high inflation years both stocks and property did jack being net sideways inflation adjusted basis.
Definitely not a buy and holders market....

 

[sptrawler]

Unfortunately for the RBA for the larger part it's not up to them. They are at the mercy of global debt markets, which most likely has the 40 year bear market as complete.
Unfortunately people like to project current trends into the future.
Back in the 1970s and early 80s of the high inflation years both stocks and property did jack being net sideways inflation adjusted basis.
Definitely not a buy and holders market....

I kind of wonder if somehow all this isn't leading toward a World crypto currency, just trying to join the dots, it seems to me with the EU, China and U.S trying to work out how to tax electronic data e.g google, facebook, weibo, wechat etc an electronic currency somehow attached to data transfer seems like an option.
Which then does lead back to the RBA, working with a clunky abacus system, in a faster and faster paced monetary system, I think big changes aren't far away.
What the changes are I have no idea, but to me it seems the governments either speed up, or loose control of their currency.

 

[over9k]

We've seen massive, unprecedented inflation for 22 years running now, we've just seen it in something that isn't counted in the metric: Housing.

Hence why housing can (will... has) go stratospheric and the central bank does nothing. Which is exactly what has happened.

Only NZ is even so much as acknowledging this, which of course begs the question of whether it's an accident or not


Fact is that there's only two politicians in the country that don't own an investment property. Two. That should really tell you everything you need to know reference what is going to happen/continue to happen to house prices.

 

[qldfrog]

I kind of wonder if somehow all this isn't leading toward a World crypto currency, just trying to join the dots, it seems to me with the EU, China and U.S trying to work out how to tax electronic data e.g google, facebook, weibo, wechat etc an electronic currency somehow attached to data transfer seems like an option.
Which then does lead back to the RBA, working with a clunky abacus system, in a faster and faster paced monetary system, I think big changes aren't far away.
What the changes are I have no idea, but to me it seems the governments either speed up, or loose control of their currency.

The big issue is the USD ending its refuge status.it could go very quickly.
Look at the swiss Franc.20y ago, you would have seen the Swiss franc in any currency chart.now gone and dusted..
If you have money and you have inflation you need a safe refuge, will not be the USD, or the Euro..
as Aussies,i suspect the USD fall will mirror the AUD.so we will have a problem
People will avoid staying in cash and will move to real assets: gold, land and for the small fry Real Estate.
But we will also see an exit of foreign investment RE here, and a smaller increase of interest rates..so not all rosy.
Add increase taxation, land tax, etc and pathetic returns for leasing.
I see PPOR ok, but not that great for commercial or IP.
So in my opinion price will stagnate after inflation is taken into account, and for pure ip, industrial, fall..
Talking 3y ahead

 

[sptrawler]

We've seen massive, unprecedented inflation for 22 years running now, we've just seen it in something that isn't counted in the metric: Housing.

Hence why housing can (will... has) go stratospheric and the central bank does nothing. Which is exactly what has happened.

Only NZ is even so much as acknowledging this, which of course begs the question of whether it's an accident or not


Fact is that there's only two politicians in the country that don't own an investment property. Two. That should really tell you everything you need to know reference what is going to happen/continue to happen to house prices.

Well that does beg the question, why don't you buy a house, if Sydney is unaffordable, relocate to somewhere that is.
Obviously if this trend is going to just keep going, you have to catch the trend, everywhere will go up and wages will go up and prices will go up.
So if you don't mind me asking, what is your plan?