The future of Australian property prices

[sptrawler]

Big indicator to the beginning of the end imo. Just look at any other south American Communist sht hole and how it all began to unravel.

I don't think people have though about the ramifications of what was recently proposed, with regard to tax breaks and incentives for landlords of new build rentals, that would have pushed the gap between rich and poor to new heights IMO..
Any changes to the tax breaks on property IMO, have to be universal to maintain relativity between dwellings.
There is no point crashing established home prices, while increasing new build prices, that just makes it more difficult to get from a house suitable for a couple, to a house suitable for a family.

 

[Smurf1976]

10% from 500k is 50k 10% from 1m is 100k 10% from 2m is 200k and so on.

How can we keep seeing the same gains on and on?

The problem of constant compound growth.

It works until a point comes where it doesn't work.

1, 2, 4, 8, 16, 32, 64, 128, 256, 512, 1024, 2048, 4096, 8192, 16384, 32768, 65536, 131072, 262144, 524288, 1048576, 2097152, 4194304, 8388608, 16777216, 33554432, 67108864, 132217728, 268435456, 5368780912, 1073741824, 2147438648, 4294967296, 8589934592, 17179869184, 34359738368, 687194768736, 137438953472, 274877906944, 549755813888........

Keep doubling and even if you start from a really low base it ends up reaching a point where it's simply ridiculous.

Do the same exercise with anything from roads to utilities to house prices and it ends up the same way. It keeps going until it can't and then it comes crashing down pretty quickly.

 

[over9k]

Big indicator to the beginning of the end imo. Just look at any other south American Communist sht hole and how it all began to unravel.

Well that's the thing isn't it, what's going to give?

 

[againsthegrain]

The problem of constant compound growth.

It works until a point comes where it doesn't work.

1, 2, 4, 8, 16, 32, 64, 128, 256, 512, 1024, 2048, 4096, 8192, 16384, 32768, 65536, 131072, 262144, 524288, 1048576, 2097152, 4194304, 8388608, 16777216, 33554432, 67108864, 132217728, 268435456, 5368780912, 1073741824, 2147438648, 4294967296, 8589934592, 17179869184, 34359738368, 687194768736, 137438953472, 274877906944, 549755813888........

Keep doubling and even if you start from a really low base it ends up reaching a point where it's simply ridiculous.

Do the same exercise with anything from roads to utilities to house prices and it ends up the same way. It keeps going until it can't and then it comes crashing down pretty quickly.

Much like the Martingale system in roulette which every beginner thinks can win by doubling up their bet, simple double $5 eight times and you are on $1280 suddenly very quickly blow your budget and blocked by house maximum. In this case the house is corrupt no maximum and even lets you borrow all you can lose.. until comes time to cash out

 

[moXJO]

Well that's the thing isn't it, what's going to give?

Any ability to get ahead and rights/freedoms are generally first to go.
So long as iron ore holds up we should steam along for a while.

 

[sptrawler]

Any ability to get ahead and rights/freedoms are generally first to go.
So long as iron ore holds up we should steam along for a while.

I think a lot will depend on how feasible this hydrogen production becomes and how serious the EU and the western world is about emissions.
If it does go the way they are talking and it is just talk really, there may be a possibility of clean steel production being viable in the NW of W.A, where that would lead to is anyone's guess but it is all pie in the sky stuff at the moment.
On a lot of levels it does make sense, especially if the move away from China being the sole provider of manufacturing, gains momentum.
Transporting the hydrogen and transporting the iron ore etc, to process it in Europe doesn't make sense, but shipping green steel may be economically viable.
That would give Australia a long term option, but if we continue the way we are going, we go to Rio. ?
The next 20 years will cast our destiny IMO and with it the future living standards for our kids.

 

[over9k]

Much like the Martingale system in roulette which every beginner thinks can win by doubling up their bet, simple double $5 eight times and you are on $1280 suddenly very quickly blow your budget and blocked by house maximum. In this case the house is corrupt no maximum and even lets you borrow all you can lose.. until comes time to cash out

If it's a housing meltdown then it'll trigger mass bankruptcies etc.

So it'll just be what happened to the yanks (i.e the same things/patterns will occur in the same ways for the same reasons) with the GFC but way worse.

 

[sptrawler]

If it's a housing meltdown then it'll trigger mass bankruptcies etc.

So it'll just be what happened to the yanks (i.e the same things/patterns will occur in the same ways for the same reasons) with the GFC but way worse.

It may bring about mass bankrupts in Sydney/Melbourne, I'm not sure it will cause a meltdown anywhere else.
When the mining boom popped in 2015, house prices in Karratha, Port Hedland dropped by upto 70% from their peak, now they are on the way back up again.
A similar thing happened in areas of Perth, they drop about 30-40%, it didn't cause mass bankruptcies, no doubt those who were over extended and lost employment were affected but there are others who just soldier on and maintain their payments.
For mass bankruptcies, it really requires mass unemployment, otherwise people adjust and some unwind their gearing, others plod on as it is their PPR and they maintain their payments.

 

[moXJO]

I'd say to just prepare for things to run higher in the meantime. Housing has a way of taking forever to pop.

 

[wayneL]

I'd say to just prepare for things to run higher in the meantime. Housing has a way of taking forever to pop.

It will pop when we've all given up on the Idea of it ever popping... When I've flogged all my shares and gold and buy property

 

[gartley]

The yield on 3-year Australian Government Bonds has EXPLODED in the past 24 hours to 0.45%, well above the RBA’s official Yield Curve Control target of 0.1%!

Has the market OVERPOWERED the RBA?

According to the RBA’s own website, the 0.1% target on 3-year Australian Government Bonds is still official RBA Board policy.

ALARM BELLS going off in the financial markets & the banks?

 

[over9k]

First there was:



Then:



Followed by:



Result:




Whilst everyone lost their minds on the short term yields shown here:



Note the date on the screencap of the yield curve flattening: 17th of June.


You know, right where the market took off like a gunshot.

 

[MovingAverage]

It may bring about mass bankrupts in Sydney/Melbourne, I'm not sure it will cause a meltdown anywhere else.

Can't help but think if the Sydney/Melbourne markets sneeze the other markets will get a cold.

 

[sptrawler]

Can't help but think if the Sydney/Melbourne markets sneeze the other markets will get a cold.

I can see areas in the immediate vicinity of Sydney/Melbourne being affected, central coast etc.
But the prices of houses in Sydney/Melbourne, have never had any impact on prices in W.A, from my memory.
Maybe over East a crash, may encourage people who commute, to sell up and move to the city?

 

[Smurf1976]

But the prices of houses in Sydney/Melbourne, have never had any impact on prices in W.A, from my memory.

One thing I note is that prices in several cities are about the same:

Brisbane = $616,387
Adelaide = $574,264
Perth = $563,214
Hobart = $533,845
Darwin = $533,845

So all within a few % of Perth with only Canberra ($855,530), Melbourne ($936,073) and Sydney ($1.2 million) being substantially different.

Australia's average house price is now more than $850,000

www.9news.com.au

 

[sptrawler]

One thing I note is that prices in several cities are about the same:

Brisbane = $616,387
Adelaide = $574,264
Perth = $563,214
Hobart = $533,845
Darwin = $533,845

So all within a few % of Perth with only Canberra ($855,530), Melbourne ($936,073) and Sydney ($1.2 million) being substantially different.

Australia's average house price is now more than $850,000

www.9news.com.au

Which is what everyone, including the politicians and media, arent taking into account.
That is the whole problem with trying to burst a bubble, with legislation, it affects everywhere not just the area you want to pop.
That is one of the reasons Shorten imploded, trying to get votes in one small area, lost votes in the rest of Australia that didnt have the same problem.
It all boils back to Australia, been run by politicians who live in Canberra, focussed on Sydney, Melbourne and their own backyards.

 

[sptrawler]

At last the media is starting to talk about the underlying issue, interest rates and the banks sound worried.

Interest rates could rise: Economists warn home owners about higher repayments in 2022

Home buyers taking on huge loans to get into Australia’s property market could face higher mortgage repayments as early as November next year.

www.smh.com.au

From the article:
Commonwealth Bank head of Australian economics Gareth Aird on Wednesday said not only would the RBA have to reconsider its interest rate strategy, but the federal government may have to make a choice between higher wages growth or letting in more immigrants to help staff local businesses.
Mr Aird said a cash rate of 0.5 per cent by the end of next year, reaching 1.25 per cent by the third quarter of 2023, was now much more likely. An increase in the cash rate to 0.5 per cent would take the monthly repayments on a 25-year, $450,000 mortgage to $2158, an increase of $93.

The last time the RBA increased interest rates was in November 2010 when they were taken to 4.75 per cent.

AMP Capital chief economist Shane Oliver expects a rate hike in 2023, although he said next year wasn’t completely out of the question.

Westpac chief economist Bill Evans, who is tipping the cash rate to be pushed up to 0.75 per cent by the third quarter of 2023, said the jobs market was much stronger than when the RBA first made its 2024 pledge.

RBA assistant governor Luci Ellis on Wednesday maintained the bank’s position about interest rate movements, saying it was committed to “maintaining highly supporting monetary conditions”.
“It is far easier for a firm to change business models when demand is robust, and far easier for a worker to switch industries or careers when there are plenty of jobs available,” she said.

 

[over9k]

Wage growth is not a concern for this government.

 

[dyna]

Credit Swiss Australia says, when interest rates rise, this will dampen current asset prices. Thanks to booming real estate, last year, 400,000 Aussies ( 1 in 10 adults) became a $US millionaire. The median adult finished last year with a $US 1/4 Mill. net worth, richer than any other country. Next in line, were those of Belgium, HK and NZ.
Core Logic says this country's households own 95% of its housing, compared to 80% in the USA and 70% in Germany. Financial assets were 42% of householder's net worth, a bit below the 55% of typical high income countries.

 

[MovingAverage]

Credit Swiss Australia says, when interest rates rise, this will dampen current asset prices. Thanks to booming real estate, last year, 400,000 Aussies ( 1 in 10 adults) became a $US millionaire. The median adult finished last year with a $US 1/4 Mill. net worth, richer than any other country. Next in line, were those of Belgium, HK and NZ.
Core Logic says this country's households own 95% of its housing, compared to 80% in the USA and 70% in Germany. Financial assets were 42% of householder's net worth, a bit below the 55% of typical high income countries.

I wonder what the general public narrative will be if a rate rise does cool off the current enthusiasm and we see a pull back in housing prices. No one likes to see their investments/assets drop in value especially those buying in a peak. My tip is the public narrative will shift to one of expecting the government to prop up and drive up housing prices