Australian (ASX) Stock Market Forum

The future of Australian property prices

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I think the problem is we have had it good for far to long. Unless the job pays a fortune and the work is not too taxing Australians just aren't interested. Everyone is more concerned with work life balance with the emphasis on life, than building a solid future. In a lot of ways it is migrants and work visa holders that are sustaining our standard of living.
 
rcm617 said:
I think the problem is we have had it good for far to long. Unless the job pays a fortune and the work is not too taxing Australians just aren't interested. Everyone is more concerned with work life balance with the emphasis on life, than building a solid future. In a lot of ways it is migrants and work visa holders that are sustaining our standard of living.
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Actually, i think it is more millions of Chineses sweating in their factories 6 days a week more than the fruit pickers, indians with a laptop bag or baristas fresh from the plane...
But yes, you got the point.
 
And that is a good example of thread drift.

The questions are:
1. How many citizens are over invested?

2. How high will interest rates go? We seem to be tracking the US.

3. Will we escape a recession as we often do, or not?
If not and employment stays high then history shows a property crash will not occur, just a correction.

To me the balls are very much in the air.
 
Knobby22 said:
And that is a good example of thread drift.

The questions are:
1. How many citizens are over invested?

2. How high will interest rates go? We seem to be tracking the US.

3. Will we escape a recession as we often do, or not?
If not and employment stays high then history shows a property crash will not occur, just a correction.

To me the balls are very much in the air.
Click to expand...
McStalin has come out predicting a recession next year, FWIW

 
wayneL said:
I think the odds are in favour, but prediction is a mug's caper.
Click to expand...

More grist for the mill... RBNZ torpedoing their economy to control inflation, predicts recession... wayneL wonders if global factors will be more important in the inflation game?

www.interest.co.nz

Orr: 'We're sorry'; but also concedes RBNZ deliberately engineering a recession

Reserve Bank Governor says the central bank is sorry that New Zealanders are being buffeted by significant shocks and inflation is above target; inflation is no one’s friend and causes economic costs
www.interest.co.nz www.interest.co.nz
 
wayneL said:
More grist for the mill... RBNZ torpedoing their economy to control inflation, predicts recession... wayneL wonders if global factors will be more important in the inflation game?

www.interest.co.nz

Orr: 'We're sorry'; but also concedes RBNZ deliberately engineering a recession

Reserve Bank Governor says the central bank is sorry that New Zealanders are being buffeted by significant shocks and inflation is above target; inflation is no one’s friend and causes economic costs
www.interest.co.nz www.interest.co.nz
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The bubble can't just keep expanding, that is the flaw in a capitalist system and is the reason that it has to be pricked occasionally. :2twocents
 
sptrawler said:
The bubble can't just keep expanding, that is the flaw in a capitalist system and is the reason that it has to be pricked occasionally. :2twocents
Click to expand...
Agree totally. But I do think it is better if the market does it itself, rather than with CB intervention.
 
So now we are blaming the RBA, for saying that interest rates are likely to stay low until 2024 and people rushing out and borrowing up to the hilt now find themselves under duress.
Well if the RBA had actually known that Russia was going to invade Ukraine, they may have said something else, the fact people borrowed more than they can afford will happen no matter what the interest rates go to.
If a couple of % increase, is the difference between being able to afford to keep a house or not, it sounds like the people were either speculating, have very poor risk management skills or the media are doing what they do best making a story from nothing. IMO

www.watoday.com.au

Reserve Bank governor apologises for interest rate comments

Lowe said the RBA had failed by not making clear that its commentary about steady interest rates was heavily conditional on the state of the economy.
www.watoday.com.au www.watoday.com.au

Reserve Bank governor Philip Lowe has apologised to the thousands of Australians who took out mortgages expecting interest rates to stay unchanged until 2024 amid early signs consumers may already be feeling the pain of higher mortgage repayments.
Lowe, giving evidence to a Senate estimates committee for the first time, said the RBA had failed by not making clear that its commentary about steady interest rates was heavily conditional on the state of the economy.
 
Interesting article on the unaffordable housing in Sydney, by an expert, who is from overseas.

www.smh.com.au

Australia warned of its American-style mistake on housing

After four years running the Committee for Sydney think tank, American Gabriel Metcalf leaves the city he loves.
www.smh.com.au www.smh.com.au

In January, Metcalf will return to San Francisco after four years at the helm of the Committee for Sydney, an urban policy think tank. Back in California, he will be confronted by an eerily similar political environment, where housing affordability is a wicked problem and property ownership is the great social divide.
Superlative though he generally is in his appraisal of Sydney, Metcalf says that’s the one aspect of life here that came as an unpleasant surprise.
“Australia has made essentially the same mistake as the US ... it has created a system where all the current homeowners are terrified of housing becoming more affordable because that means their primary asset is not increasing in value the way they want,” he says.

“If there’s anything that most strikes at the heart of this beautiful Australian idea of the fair go, it is the rising cost of housing - and for Australia, that is a dire contradiction with its core ideals.”
California is embroiled in an ongoing tussle between so-called Not In My Backyard (NIMBY) forces opposed to higher density development, and a Yes In My Backyard (YIMBY) counter-movement that is trying to rework housing laws and repair a crisis it says has been “forced” on the state by a vocal minority.
Metcalf notes the contradiction between what people say at a macro level (they want their children to be able to afford a home, they want walkable communities instead of endless sprawl) and what they say at a micro level (they don’t want tall buildings next to them).

He says the solution might be simple: stop consulting residents about what gets built near them.
“The best way to democratically determine what gets built is through electing your member of parliament,” Metcalf says. “[That] has much greater legitimacy than listening to whoever happens to show up at a community meeting.”
 
IMF sees potential for imminent ‘sizeable’ bust in Australia’s housing market

“The IMF noted that Australia’s housing and rental markets are among the most misaligned compared with similar economies...”

Other factors are at play in the Aus property market price "misalignment", pop QE (immigration), land banking, FHOG schemes, shared equity, foreign investment, short stay rentals and various local, state and federal interventions are key supports for elevated prices. Under such circumstances, predicting a bust has proven to be just wishful forecasting in the past.

When I scan the city apartment buildings near me in the Melbourne CBD at night, as many as half are dark and seemingly vacant. In my high rise, the $1.4 million apartment next door is vacant, has been for 6 months now and never listed for rent (even though the body corporate fees are $3500/quarter). Of the 377 apartments here, I would estimate at least one third appear vacant. An enormous amount of money is parked in our market by offshore entities due to favorable foreign ownership laws.
 
Trader X said:
When I scan the city apartment buildings near me in the Melbourne CBD at night, as many as half are dark and seemingly vacant. In my high rise, the $1.4 million apartment next door is vacant, has been for 6 months now and never listed for rent (even though the body corporate fees are $3500/quarter). Of the 377 apartments here, I would estimate at least one third appear vacant. An enormous amount of money is parked in our market by offshore entities due to favorable foreign ownership laws.
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Well, that's an obsolete business model, if the plan is to sell into a stronger market. Only the nimble will survive.

If owned by overseas entities, its often a form of insurance, somewhere down the track it may serve a purpose (bolthole) like gold or diamonds, whilst ticking the FIRB guidelines.
 
Dona Ferentes said:
If owned by overseas entities, its often a form of insurance, somewhere down the track it may serve a purpose (bolthole) like gold or diamonds, whilst ticking the FIB guidelines.
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Many off-the-plan projects are marketed primarily to offshore investors and compliant with FIRB rules. Take the apartment tower project at the The Glen shopping complex in Glen Waverley. The sales center and materials were clearly pitched to Asian (Chinese) investors and staffed accordingly. Many other such examples of course but yes, used as a vehicle safely domicile funds even if the ultimate ROE is negative.
 
Trader X said:
Many off-the-plan projects are marketed primarily to offshore investors and compliant with FIRB rules. Take the apartment tower project at the The Glen shopping complex in Glen Waverley. The sales center and materials were clearly pitched to Asian (Chinese) investors and staffed accordingly. Many other such examples of course but yes, used as a vehicle safely domicile funds even if the ultimate ROE is negative.
Click to expand...
When currencies play yo-yo as they do in the last few years, you do not invest in a flat ,overseas to gain local currency profit or a pathetic 2% return for renting..you just keep it sparkling new, untenanted as you would for a lump of gold.
This is the Chinese model BTW.
Even well before covid, most brand new apartments were purchased..and locked there.
 
sptrawler said:
A few interesting facts about the property market.

Federal MPs have snouts planted in property trough

The biggest beneficiaries of the 20-year boom in Australian property values are clearly Australia’s federal MPs, with new analysis from News Corp showing that the share of federal MPs with three or more properties has soared by more than half since 2001: This has come as property ownership among...
www.macrobusiness.com.au www.macrobusiness.com.au
The biggest beneficiaries of the 20-year boom in Australian property values are clearly Australia’s federal MPs, with new analysis from News Corp showing that the share of federal MPs with three or more properties has soared by more than half since 2001:

This has come as property ownership among the general population has fallen 5.7% over the same period.

The biggest increase in MPs owning three or properties has come from the Labor Party, which overtook the Coalition for the first time after the 2019 election when 37.6% of Labor MPs owned at least three properties compared to 36.3% of Coalition members:

View attachment 149552
Eighteen Labor MPs in the current parliament own four or more properties, compared to just four MPs in 2001.

Australian federal MPs (including their spouses) own 526 properties, or 2.32 per person, compared to 426 in 2001 (1.88 per person):

View attachment 149553
Commenting on the result, Australian National University political scientist Patrick Leslie noted the shift represents Labor’s abandonment of its working class roots and its embrace of neoliberalism:


Dr Leslie also noted that the explosion in MP property portfolios is a troubling development:


If you have ever wondered why Australia’s politicians never implement genuine policies to improve housing affordability, you only need to follow the money.
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interesting , i thought properties per MP might have been higher ( even allowing for the independents who are mostly less affluent )
 

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