The future of Australian property prices

[sptrawler]

Isn’t part of a government’s role to maintain economic security of the nation and its people?

There doesn't seem to be a lack of economic security in the population, many are borrowing up to their eyeballs, to get into the Sydney/Melbourne property market, so confidence isn't an issue.
If they didn't have economic security, there would be a reluctance to borrow and spend IMO.

The issue is what people see as an investment, the only way to financial security for a worker is to have money that will replace their wages and provide them an income, as several have said your house doesn't earn you money other than saving you rent.

Your PPR only keeps the weather off you and your family, it has to be paid for with after tax dollars and there no tax breaks until you sell it.
Pouring all your earnings into your PPR for 30 years, isn't my idea of a clever move, but everyone to their own we all do things differently and come from various backgrounds one size doesn't fit all.

 

[Smurf1976]

it strikes me very abruptly that we have an obsession with home ownership.

Past discussion on another forum has taught me that if you want a peaceful life then there are two things you should avoid having anything at all to do with.

One is "real estate" in the context of that term referring to an agency renting you a property.

The other is "strata" from which you should run like hell and not look back.

Rent an apartment and you'll find yourself living under the control, and control is exactly what it is, of both and that's a damn good reason to want your own house.

I could say some harsher words but I don't want anyone to take it personally.....

 

[JohnDe]

I’m 55 this year, I’ve been involved in property since I was 12 years old and my dad would bring me along to work on a investment property that he purchased. I did this many times and in all those years gone not once do I recall someone say ‘jeese houses are cheap’. Nor do I recall house prices drop dramatically, I do remember the 1990’s recession that we ‘had to have’, when there was hardly any work and interest rates at 17+%. Even then there weren’t too many places where house prices dropped significantly, most just stagnated.

Wages were different all through those years, and there wasn’t as much to spend spare cash on as there is today.

The wise youth of all generations get on with it and buy the property that the complainers leave alone.

To many complain these days.

 

[sptrawler]

The wise youth of all generations get on with it and buy the property that the complainers leave alone.

Never have truer words been said, I had many an argument with my wife in the early years, usually over why can't we have what the 'Joneses' have.

 

[Smurf1976]

At present you are right but we have been living in an artificial boom for the past 20 years.

When the shyte hits the fan, commercial can be empty for years, hence the higher yields

It probably doesn't happen in Sydney or Melbourne (just an assumption on my part) but in the smaller capitals and regional areas things can sit empty for an extremely long time.

Extremely long as in skipping an entire decade or even more. It ends up shut longer than it was ever open in its previous use.

No doubt everyone in Adelaide will be well aware of what's simply referred to as "the Le Cornu site" - suffice to say the shop closed down in 1988 and it has taken until 2022 to not put a new tenant in the building but to start building apartments on the land. Countless proposals have come and gone in that time.

Quite a few I can think of in other places too where something sat empty for an extended period once the previous use ended. Particularly so with anything for which there's only fairly limited possible uses - cinemas, new car dealerships or other large showroom type buildings, nightclubs, department stores, large industrial sites and so on. Can take an extremely long time to find a new tenant once it's empty and often anything that goes in doesn't last long. Even things like take away food shops are a problem if the shop existed largely due to surrounding industry which has ceased to exist and only ever had limited business from the wider public.

 

[wayneL]

I’m 55 this year, I’ve been involved in property since I was 12 years old and my dad would bring me along to work on a investment property that he purchased. I did this many times and in all those years gone not once do I recall someone say ‘jeese houses are cheap’. Nor do I recall house prices drop dramatically, I do remember the 1990’s recession that we ‘had to have’, when there was hardly any work and interest rates at 17+%. Even then there weren’t too many places where house prices dropped significantly, most just stagnated.

Wages were different all through those years, and there wasn’t as much to spend spare cash on as there is today.

The wise youth of all generations get on with it and buy the property that the complainers leave alone.

To many change complain these days.

There is no question that it has been a successful strategy over the last 30 or 40 years... or more.

And who knows, it may just be just as successful over the next 30 or 40 years.... For the young'uns in my extended family I hope so.

I wouldn't be betting on it personally but, whatever.

Maybe it's got a bit to go, but how far can you kick a can?

 

[over9k]

There is no question that it has been a successful strategy over the last 30 or 40 years... or more.

And who knows, it may just be just as successful over the next 30 or 40 years.... For the young'uns in my extended family I hope so.

I wouldn't be betting on it personally but, whatever.

Maybe it's got a bit to go, but how far can you kick a can?

Helicopter money is next (and has actually already started, see: the latest budget)

 

[qldfrog]

https://www.smh.com.au/property/new...-are-zero-homes-for-sale-20220404-p5aaml.html
Mr @sptrawler is at long last going to join us in the merry world of RE forever??

 

[gartley]

I don't know how the RBA is gonna handle IR and they obviously have miscalculated here. How many times have we as traders seen these patterns of trend over the years!!. The result is always the same, an abrupt and sharp move in the opposite direction back to the base of the wedge,. In this case expect a very fast move ( it's already started) to a cash rate of around 7% by end 2023 or early 2024!!! on the 2 Yr

 

[sptrawler]

https://www.smh.com.au/property/new...-are-zero-homes-for-sale-20220404-p5aaml.html
Mr @sptrawler is at long last going to join us in the merry world of RE forever??

It is an interesting suburb Winthrop, a couple of my ex workmates live there, it isn't close to the river, Fremantle, or Perth CBD. It is about the same distance South of the CBD as the suburb, I live in and is a similar distance West of the freeway as I am East of the freeway.
When the suburb was first released, it was an instant hit with affluent Asians and became fairly expensive quite quickly, also being a new and comparatively expensive suburb I don't think social housing was very prevalent. A lot of the people who bought there, couldn't afford the nearby suburbs of Booragoon and Mount Pleasant, from memory.
I personally never liked the suburb, it has a somewhat sterile feel about it, that I don't particularly like. I would say it is still popular with the Asian community.

 

[Humid]

It is an interesting suburb Winthrop, a couple of my ex workmates live there, it isn't close to the river, Fremantle, or Perth CBD. It is about the same distance South of the CBD as the suburb, I live in and is a similar distance West of the freeway as I am East of the freeway.
When the suburb was first released, it was an instant hit with affluent Asians and became fairly expensive quite quickly, also being a new and comparatively expensive suburb I don't think social housing was very prevalent. A lot of the people who bought there, couldn't afford the nearby suburbs of Booragoon and Mount Pleasant, from memory.
I personally never liked the suburb, it has a somewhat sterile feel about it, that I don't particularly like. I would say it is still popular with the Asian community.

Worked with a lot of Korean welders who lived there.
Some like areas where it gives them access to public schools not full of disruptive bogans.....not speaking from experience ....

 

[sptrawler]

Worked with a lot of Korean welders who lived there.
Some like areas where it gives them access to public schools not full of disruptive bogans.....not speaking from experience ....

Yes the suburb I'm in Riverton, is starting to take off as Asians and Indians move in to be able to send their kids to Rossmoyne senior high. Indians and Asians place a lot of importance on their children's education, so are prepared to pay top dollar, to get into a certain schools catchment area.

 

[wayneL]

Disruptive bogans eh?

I wonder if Keating's prophecy will come true.

 

[sptrawler]

Well it looks as though the RBA is coming out of its slumber, if this article is correct.

Prospective homebuyers urged to heed the RBA's warning of rising rates and falling prices

The Reserve Bank is confident most borrowers will be able to cope with rising interest rates, but it also warns recent buyers in particular should brace for falling property prices.

www.abc.net.au

From the article:
The bank's twice-yearly Financial Stability Review (FSR) reported that, on the whole, Australian mortgage borrowers are in a much better position to deal with rising interest rates than they were before the pandemic.

"Most indebted households have benefited from strong growth in housing prices over the past year and, coupled with higher mortgage repayments in excess of scheduled requirements, the vast majority have accumulated substantial additional equity in their homes," the report noted.

The RBA estimated that only around 5 per cent of loans now have an outstanding loan-to-value ratio (LVR) greater than 75 per cent, compared to almost a quarter at the beginning of 2020.
This means that for 95 per cent of borrowers, it would take more than a 25 per cent drop in home prices to send them into negative equity, the dangerous position where the borrower owes more to the bank than their home is worth.

"The share of loans in negative equity is also estimated to be exceptionally low, at less than 0.25 of a per cent, down from 2.25 per cent in January 2020," the review added.
The improvement in both of these metrics has been mainly driven by the exceptional surge in housing values during the pandemic, with property prices surging by almost a quarter over the past year in the steepest growth seen since the late-1980s.

However, the RBA also warned that much of that gain is likely to be unwound over the next couple of years as interest rates rise.

"Estimates using a model of the housing market that takes into account historical relationships between interest rates and both demand and supply factors suggest that a 200-basis-point increase in interest rates from current levels would lower real housing prices by around 15 per cent over a two-year period," the FSR noted.

 

[MovingAverage]

So it isn’t the foreign investors driving our expensive housing (media loved that a few years ago). So who’s being blamed these days

Foreign investment in Australian homes falls to 15-year low

Residential homes may have been shunned but the falls were offset by a surge in commercial real estate investment.

www.theage.com.au

 

[MovingAverage]

Disruptive bogans eh?

I wonder if Keating's prophecy will come true.

What was Keating’s prophecy? That we’d become a banana republic full of bogans…we’re getting there

 

[MovingAverage]

I did this many times and in all those years gone not once do I recall someone say ‘jeese houses are cheap’.

A lot of people today would do very well to remember this.

 

[wayneL]

What was Keating’s prophecy? That we’d become a banana republic full of bogans…we’re getting there

Paraphrasing.... That we would become the white trash of Asia.

 

[MovingAverage]

Paraphrasing.... That we would become the white trash of Asia.

Go on a holiday to Fiji or Bali and you’d be forgiven for thinking this is true

 

[sptrawler]

The new answer to social housing, "build to rent" it's a brand new idea apparently a block of apartments are built with the sole reason of renting out, what a great idea sounds a bit like the old state housing commission flats from the 1960's to me.
https://www.macrobusiness.com.au/2022/04/beware-the-booming-build-to-rent-model/
From the article:
Build-to-rent (BTR) describes the development of an apartment complex with the express intention of retaining all those dwellings to lease them out. It’s a well-established model in the United States and the United Kingdom but is still in its infancy in Australia – but not for long.

A recent report from EY estimates BTR in Australia will produce 175,000 new homes over the next 10 years…

What is build to rent and how does it work?

Build to rent may be a growing global phenomenon but it’s still relatively new in Australia. So, what is build to rent and how does it work?

www.bmtqs.com.au

Hopefully the wash, rinse, repeat works better this time round. Just my thoughts.

Brownlie Towers went from being a utopian paradise to a hotbed of crime

The housing complex in Perth promised so much, but it soon degenerated into a notorious ghetto of crime and violence that left a lasting impact on its former residents.

www.abc.net.au