The future of Australian property prices

[over9k]

I think there are different factors at work at the moment. Regarding migration generally, I don't think you can bring more than 3 million new working age people into the country in 15 years without that having a significant impact on demand for residential property, especially in cities. That increased demand is likely to have a significant upward pressure on real estate prices.

What's happening at the moment is a rush to hard assets - of which property has always been king - in a time of very limited supply. There simply isn't much stock around at the moment and that lack of property for sale is pushing up prices more than usual.

Bingo. The demand is completely artificial.

 

[over9k]

Use the block button humid. I'm about to.

(for the reason you posted)

 

[MovingAverage]

Use the block button humid. I'm about to.

(for the reason you posted)

Do me a favour man

 

[Joe Blow]

Please folks, use the ignore feature rather than use insults or obscenities. Let's not go there.

 

[Smurf1976]

try buying in or around London, NY, any major city in the world.

Only a sample of one but I know someone who lives in London.

A look online at what appear to be virtually identical terrace houses in the same block sold within the recent past and converting prices to AUD finds it's worth $1.6 million.

3 bedrooms, 2 storey but it's small by Australian standards, measuring from Google maps it would be about 75m2 per floor and the outside land area is literally zero, the building goes right to the property boundary both front and back. Garden is in pots up on the roof which is flat and intended to be walked on with a greenhouse sort of thing up there as well.

Only been there once, since I've only been to London once, but I'd describe the building as old but solid. Internal walls are brick, painted in the bedrooms and bathroom but unpainted in the open plan kitchen / dining / lounge area. No laundry, the washing machine and dryer are in the kitchen under the benches. No air-conditioning but there's hydronic radiators in every room.

Big cities aren't cheap generally.

 

[Humid]

Please folks, use the ignore feature rather than use insults or obscenities. Let's not go there.

Deflect

 

[over9k]

Only a sample of one but I know someone who lives in London.

A look online at what appear to be virtually identical terrace houses in the same block sold within the recent past and converting prices to AUD finds it's worth $1.6 million.

3 bedrooms, 2 storey but it's small by Australian standards, measuring from Google maps it would be about 75m2 per floor and the outside land area is literally zero, the building goes right to the property boundary both front and back. Garden is in pots up on the roof which is flat and intended to be walked on with a greenhouse sort of thing up there as well.

Only been there once, since I've only been to London once, but I'd describe the building as old but solid. Internal walls are brick, painted in the bedrooms and bathroom but unpainted in the open plan kitchen / dining / lounge area. No laundry, the washing machine and dryer are in the kitchen under the benches. No air-conditioning but there's hydronic radiators in every room.

Big cities aren't cheap generally.

But again, the question is why?


A good place to look here is the U.S - take a look at property prices in california vs texas, internal migration patterns, so on and so forth. The united states is actually currently undergoing is largest internal migration in its history, true story.

And people are moving away from the coasts and into middle america, which is the complete opposite to essentially three generations' before now.

Again, we need to be focusing on why, not what, and you need only talk to anyone who has left or is going to leave california to hear the exact same explanation every single time.



And it's the same thing you hear whenever you ask someone why they have (or are going to) left sydney, or london: It's an expensive, congested, clusterfuck.

 

[sptrawler]

Really the only way Sydney/ Melbourne are going to have a reset, is as smurf says, a major recession.
But having said that, how we are going to have a recession, when governments decide to print money is anyone's guess.
The only other way could be if there is a major conflict with China, that will bring house prices down, but whether people could then afford to pay their rates etc is another thing.

 

[Mrmagoo]

Exactly. Interest rates dictate P/E. That's literally what they do.

But prices and affordability are not the same thing.

Not sure if this was sarcasm but labor's policies won't do a damn thing to improve housing whilst the immigration floodgates remain open. Hell, rudd upped the level to even higher than the libs were running it.

The simple fact of the matter is housing is not affordable. Housing in some very poor quality areas is affordable to those on a high income. That is not that same as saying housing is affordable in general.

 

[sptrawler]

The simple fact of the matter is housing is not affordable. Housing in some very poor quality areas is affordable to those on a high income. That is not that same as saying housing is affordable in general.

The problem is only a major issue in Sydney/Melbourne, most other State capitals don't have the runaway prices Sydney/Melbourne do.
To make a blanket statement that housing is unaffordable is misleading, when 95% of the country isn't unaffordable.
I truly do feel sorry for people trying to buy in Sydney/Melbourne, but there is the option to relocate to another area, that is affordable.
What other option is there? If prices aren't coming down there is only so many things a person can do, going on endlessly about it may make someone feel better, but I don't think it will affect Sydney/Melbourne prices.

 

[Mrmagoo]

Only a sample of one but I know someone who lives in London.

A look online at what appear to be virtually identical terrace houses in the same block sold within the recent past and converting prices to AUD finds it's worth $1.6 million.

3 bedrooms, 2 storey but it's small by Australian standards, measuring from Google maps it would be about 75m2 per floor and the outside land area is literally zero, the building goes right to the property boundary both front and back. Garden is in pots up on the roof which is flat and intended to be walked on with a greenhouse sort of thing up there as well.

Only been there once, since I've only been to London once, but I'd describe the building as old but solid. Internal walls are brick, painted in the bedrooms and bathroom but unpainted in the open plan kitchen / dining / lounge area. No laundry, the washing machine and dryer are in the kitchen under the benches. No air-conditioning but there's hydronic radiators in every room.

Big cities aren't cheap generally.

I really don't get this "by Australian standards" thing. Unless you are wealthy, the housing options are quite small.

The problem is only a major issue in Sydney/Melbourne, most other State capitals don't have the runaway prices Sydney/Melbourne do.
To make a blanket statement that housing is unaffordable is misleading, when 95% of the country isn't unaffordable.
I truly do feel sorry for people trying to buy in Sydney/Melbourne, but there is the option to relocate to another area, that is affordable.
What other option is there? If prices aren't coming down there is only so many things a person can do, going on endlessly about it may make someone feel better, but I don't think it will affect Sydney/Melbourne prices.

Rubbish, houses are expensive everywhere. There is no other option, Australia is a backwards backwater, all of the good jobs and infrastructure are in Melbourne and Sydney.

 

[Smurf1976]

I really don't get this "by Australian standards" thing. Unless you are wealthy, the housing options are quite small.

Point is simply that a house that's seen as "quite small" in Australia isn't quite small at all and just about anywhere else that same house would be seen as average or large.

The average new home in Australia is 235m2 according to Google.

In most other countries simply having a home that size would of itself be a pretty clear indication that whoever's living there is doing pretty damn well financially and is very much at the upper end of society in terms of wealth. And yet somehow that has become average in Australia.

On one hand I do agree that housing has become more expensive in real terms than it used to be. That's proven beyond reasonable doubt for the cities at least.

On the other hand, there seems to be a lot of people expecting to buy a rich person's house without actually being rich. That is not and has never been a reasonable expectation.

Same as it has always been the case that most people don't travel First Class, they don't stay in 5 star hotels, they don't own designer anything, they don't eat at restaurants every day and they don't own a fancy car. That stuff has always been the domain of those at the top and even there not all of them actually want or have it.

If first home buyers can't afford a ~140m2 house with 3 bedrooms and 1 bathroom in a working class suburb then that's a problem yes I agree. If they can't afford a mansion in a rich suburb well that's not surprising, pretty much nobody's ever had that as their first home unless they're from a wealthy family or won the lottery.

I see it as a combination of problems. Housing has become more expensive definitely but at the same time there's at least some with expectations that were never realistic. We're not in Hollywood, most people aren't movie stars.

 

[qldfrog]

And science was science, facts were facts with the communists in Europe admitting at last that there was no paradise behind the iron curtain.
Freedom was coming, so much hope but the seeds of todays problems had been planted

Totally out of subject....
I revert to housing craziness
my ppor took 40% in last 9 months with basically a good initial buy, and a serious cosmetic work.full paint landscaping.
this makes it a mockery of wages taxed jobs when flippers can do that type of deals.
PS..no flipping for the frog

Comparing now with the 1980's or 90's a lot of things make no sense at all.

1. Governments, individuals and even business spend money as though it were unlimited and just fell from the sky. Pretty much everyone lives like a king.

Despite the above there's apparently no money to spend on health care, the environment, wages or paying decent interest on deposits.

2. Perfectly good appliances, furniture, cars and even houses are scrapped for no particular reason.

Despite the above many can't afford a house to live in and there's a constant stream of professed concern for the natural environment and use of resources.

3. Pretty much every large business extolls the virtues of their employment policies and in particular that they embrace diversity.

Despite the above the standard HR approach to hiring is to only hire people much the same as those who already work there. Monocultures and conformity, not diversity, are all but forced in practice.

And so on. There's an awful lot of contradictions in society these days, situations where there's too much but at the same time not enough or where something's actively promoted but you'd be marched out of the building if you did it. And so on, there's a lot of stuff like that in the modern world.

My explanation is that it all comes down to not having had a proper recession for 30 years now. All sorts of economic and societal imbalances have built up and grown to extremes. Without anything to cull the weeds, they've built up to the point of stifling growth of the flowers to such an extent that those of a younger age don't recognise the weeds as what they are.

The only real solution that comes to mind is an actual, proper recession that clears out the dead wood. In the absence of that, it'll need some other major trigger to bring change both to the economic extremes such as house prices and to the strange way of thinking which seems to be present today.

I thought i was the only weirdo thinking the best thing which could happen to the current world is a real crisis, where priorities would be reset: food shelter, ..not FN and money meaning something, taking value not meme as selection criteria
Do not employ someone because he she is lgbt or non white or transsexual, but because he she bring value to the company.
I can dream, and no, covid is not the crisis

Just noticed 2 different posts are merged

 

[over9k]

The problem is only a major issue in Sydney/Melbourne, most other State capitals don't have the runaway prices Sydney/Melbourne do.
To make a blanket statement that housing is unaffordable is misleading, when 95% of the country isn't unaffordable.
I truly do feel sorry for people trying to buy in Sydney/Melbourne, but there is the option to relocate to another area, that is affordable.
What other option is there? If prices aren't coming down there is only so many things a person can do, going on endlessly about it may make someone feel better, but I don't think it will affect Sydney/Melbourne prices.

But there isn't trawler, there isn't any work anywhere else. I've been saying this for several pages now.

I didn't want to move, but I had to to get work.

 

[Smurf1976]

there isn't any work anywhere else

This would obviously depend on what industry someone's in but agreed it's a problem for any industry which exists only or primarily in the big two cities.

 

[moXJO]

I know Thailand doesn't sell land to foreigners and houses prices are increasing. Not sure if it is on par with Western nations as to lazy to look for a graph. There is a huge number of people entering middle-class status across Asia. We have a butt tonne of stimulus money. China's globalisation push enriched a lot of people. And the fact we had massive immigration without being able to keep up with housing stock. We are behind by years, which is represented by the price.

Interestingly enough I had a look at build prices on a single story 4 bedroom that came back as $430000- 380000. I could probably do it myself for about $240000. But once again we have multiple factors for the price increase. Even simply things like the size of homes these days. And land availability.

As for boomers, any generation would have taken advantage of that era. Let's make no mistake about that. I don't agree with the "Big Australia" immigration policy and it was tied directly to supporting the older generations pension. Labor was letting everyone in regardless during their short time.

I didn't want to move, but I had to to get work.

Didn't you move out of Victoria?
That's a blessing not a curse.
Right now the cost of living is ridiculous. I cannot fathom how anyone could justify the prices. I feel for young people. I had to wait about 10 years to time the market for property acquisitions. That was about 8 years ago. Many people don't have that luxury of waiting.

Something is definitely on the horizon to pop this cycle though

 

[MovingAverage]

As for boomers, any generation would have taken advantage of that era. Let's make no mistake about that. I don't agree with the "Big Australia" immigration policy and it was tied directly to supporting the older generations pension. Labor was letting everyone in regardless during their short time.

I don't agree with the Big Australia approach either--not because I'm against immigration but because as a country we are simply not geared up for it nor are we taking proper steps to support it (you don't have to look to far to see Australia is already stretched to support the current population). Successive government are not prepared to invest in the long term change that is required. Anyway, the point I want to make here is that supporting older generations' pension was not a major driver in Big Australia. Conventional wisdom states that to keep an economy growing (and apparently all the economy experts keep telling us we need the economy to grow) you need a certain underlying rate of growth in the population to get there and the fastest and cheapest way to get there is through immigration. We need a growing economy to support a huge range of things not just pensions.

 

[moXJO]

. Anyway, the point I want to make here is that supporting older generations' pension was not a major driver in Big Australia. Conventional wisdom states that to keep an economy growing (and apparently all the economy experts keep telling us we need the economy to grow) you need a certain underlying rate of growth in the population to get there and the fastest and cheapest way to get there is through immigration. We need a growing economy to support a huge range of things not just pensions.

It was a factor as the boomer population was too large to support without the growth. Personally I think its lazy politics to add to the taxable base. I think the demographic has shifted in favour of gen y now but can't really remember off the top of my head. Japan suffers similar with the older population realistically they are shrinking and have been zombie for a while.

 

[MovingAverage]

It was a factor as the boomer population was too large to support without the growth. Personally I think its lazy politics to add to the taxable base. I think the demographic has shifted in favour of gen y now but can't really remember off the top of my head. Japan suffers similar with the older population realistically they are shrinking and have been zombie for a while.

Agree it was a factor. Was just trying to highlight there are other more pressing economic reasons for Big Oz.

 

[sptrawler]

As @moXJO and @MovingAverage both say it has been brought about by lazy politics, on both sides.
There is no point in having population growth, without having secondary and tertiary sector growth, importing a population into an economy where the only growth is in the service sector is a recipe for a third world living standard.
Without encouraging manufacturing and higher skilled job opportunities, importing more competition for fewer and fewer jobs, just festers resentment.
Both parties have been asleep at the wheel regarding this since the early 1980's, it is o.k to reduce tariffs to improve productivity, but when you don't put in place a structure to nurture industrial growth, you end up exactly where we are now, 40 years on.
Neither party can take the moral high ground on the demise of Australian manufacturing, they are both equally to blame.
With the advent of renewables and the pandemic, it gives an opportunity for a kickstart of a growth economy, not completely focussed on mining.
Whichever Party comes up with a viable plan, will win the upcoming election IMO, the ball is in both parties court.