Australian (ASX) Stock Market Forum

The future of Australian property prices

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qldfrog said:
In an inflation scenario, you want have real items so stuff, very rarely does RE fall if inflation explodes.it may not rises as much but I doubt real estate prices will fall with inflation..but they might in a depression
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And apologies for mistakes galore in that short post..more than my usual high level
 
wayneL said:
Just an interesting tidbit

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a major war for nearly five years might have influenced that ( lots of men were overseas getting shot or shouted at , aka not rolling in money )

but would history rhyme ( a big war is far from impossible , currently )
 
qldfrog said:
In an inflation scenario, you want have real items so stuff, very rarely does RE fall if inflation explodes.it may not rises as much but I doubt real estate prices will fall with inflation..but they might in a depression
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in theory rising inflation would be soften the selling pressure ( more loans liable to be refinanced/roll-over ) than lender foreclosures , a depression means few jobs/income and plenty of forced sellers ( a lender is more likely to extend a mortgage , if you still have a regular income , and the underlying asset isn't plummeting towards zero/unsaleable )

then the lender has a problem ( after foreclosing ) a property you now fully own is still accruing costs and depreciation , do they sell to cut the out-goings , or grit the teeth and hold ( and hopefully rent ) until better times
 
Wow the obvious has started hitting the media, maybe something will finally happen, now the ruling sector have flagged it. ;)
Three articles in the same paper on the same day, somethings got to be brewing IMO.

www.smh.com.au

Squeezed out of the Australian dream: Two-thirds of young people are giving up on home ownership

Experts believe the nation’s living standards and productivity performance are being harmed by the way the property sector is distorting business and consumer behaviour.
www.smh.com.au www.smh.com.au

Experts believe the nation’s living standards and productivity performance are being harmed by the way the property sector commands a growing proportion of consumers’ incomes and distorts the way businesses and employees make key economic choices.

Since 2005, the mortgages held by the nation’s four big banks have climbed from $364 billion, or 25 per cent of gross domestic product, to almost $1.6 trillion or 70 per cent of GDP.

In Sydney and Melbourne, over the same period, the median house price has climbed 3.5 times the inflation rate and 2.5 times the increase in average weekly earnings.
Seventy-two per cent of people support encouraging more homes to be built in new suburbs outside city centres.

Support fell to 51 per cent to relax planning rules to allow more homes outside a person’s local area. This dropped to 41 per cent if laws were eased to allow more homes in a person’s own suburb.
Labor went to the 2019 election with plans to restrict negative gearing concessions. The Resolve poll shows 49 per cent support for capping the number of investment properties a person can own while 54 per cent backed axing negative gearing for any properties bought after a certain date.
Productivity Commission chair Michael Brennan says the affordability of housing was hurting the overall economy.

“The ability to house people close to job opportunities, and for firms to locate close to skilled labour, is the equivalent of mining or manufacturing firms locating close to raw materials or port infrastructure – the key difference being that the location of skilled workers is based on individual choices and shaped by policy,” he said.

The Grattan Institute’s Brendan Coates said young Australians faced a plight not all that different to the world portrayed by Jane Austen in books such as Pride and Prejudice.
“It’s moving back to the world of inherited wealth that comes from land or a house, to the sort of world we had in the 19th century.”

www.smh.com.au

Australians have made the wrong choice about housing for the past 40 years

Our love affair with property is literally destroying our way of life and that of future generations.
www.smh.com.au www.smh.com.au
People cannot afford to live where they need. Our banks’ business models are based on one asset class – housing. The Reserve Bank must make decisions about the entire economy hamstrung by the huge level of mortgage debt held by ordinary Australians.

We have an army of mum and dad landlords who churn through their properties as they chase a capital gain because of the structure of our tax system.
The young and poorly paid, who a generation ago could afford their own home, now hope for an inheritance or loan from their parents to get a slice of the property market.
At almost every point over the past 40 years, when given policy alternatives around housing, Australians collectively have made the wrong choice.
From local council chambers to the federal parliament, the wrong policy road has been taken.
Robert Menzies, and the state governments of the 1940s and 1950s, made Australia one of the great home-owning democracies through their public housing programs. But these have withered for decades.

It’s not just buying a house. Australian renters are, by any international comparison, poorly treated, be it from owning a pet to the length of tenure they might enjoy.
 
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Belli said:
I'm out of step with a lot of people as I view houses as a place to live and not an item from which to make money out of other people. I've never been interested in property as an investment.
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Probably a wise move in the current climate. As having had 3 rentals in recent times, 2 of which were a nightmare , with one being called a C18 which in insurance parlance is a house in the country being 18 inches high. Mongrel scum low life tennants burnt it to the the ground. Off loaded one and the other on the farm remains vaccated
 
Dona Ferentes said:
Yep, the inherent contradiction.... one's PPR should be classified as a "lifestyle option " and not a measure of wealth, but a lot of people treat it as part of their asset mix.
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I've made a few arguments to friends about that. They would mention house prices, etc., and asked why it would matter if its their residence? If it's a place to live then the market value shouldn't mean much. (It obviously effects council rates etc., but its resale value shouldn't matter.)

RE the article @sptrawler showed: if those numbers in reference to the GDP don't show a bubble or hyper inflated market, I don't know what does! I'm also not sure on the legality on capping the amount of property someone could own. Policies like negative gearing or CGT are probably better targets (limit them to 1 investment property but not applicable for other investment properties, or similar).
 
farmerge said:
Probably a wise move in the current climate. As having had 3 rentals in recent times, 2 of which were a nightmare , with one being called a C18 which in insurance parlance is a house in the country being 18 inches high. Mongrel scum low life tennants burnt it to the the ground. Off loaded one and the other on the farm remains vaccated
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It was our position about having any investment property no matter the climate applicable at the time.

Warr87 said:
I've made a few arguments to friends about that. They would mention house prices, etc., and asked why it would matter if its their residence? If it's a place to live then the market value shouldn't mean much. (It obviously effects council rates etc., but its resale value shouldn't matter.)
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It's embedded. FPs, accountants, financial institutions and the like always include your PPOR in any asset assessment. So it's not surprising really many blurt out "My property is worth...." I simply nod. I get the feeling though when I don't show outright enthusiasm and do cartwheels at their placement of value on a pile of bricks, they are slightly perplexed. The reality is I own my own home, I have no intention of buying theirs so their perceived value of their home is irrelevant to me.
 
Dona Ferentes said:
.... one's PPR should be classified as a "lifestyle option " and not a measure of wealth, but a lot of people treat it as part of their asset mix.
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from Jarad Dillian's column, The 10th Man. He's American, so I'll edit a bit...


"For personal finance purposes, I like to tell people that a house is not an investment. A house is negative carry. You’re paying the mortgage, you’re paying property taxes, you’re paying insurance, and you’re paying for maintenance, which averages around 1% of the value of the home each year. Stocks and bonds are positive carry, like most investments—you earn dividends and interest.

"But for some people, a house is the best investment they’ll ever have. The 30-year .. mortgage is kind of a forced savings program—it forces you to build equity in your house over time. Some people live in the same house for 30 years, have no savings and no investments outside of the home, but find they are living in a .. house that is completely paid off....

"Plus, housing prices do go up over time—around 4% annually, keeping up with inflation. That’s not as good as stocks, obviously, but there’s a lot less volatility. That’s one advantage to investing in your own home: You can’t look up the price on your phone every day and be influenced by the volatility. Okay, you can, but I recommend against it.....

"Anyway, housing is a great investment because people never look at the price, and they let it compound forever, unlike a stock, where they watch the price every day and get shaken out.

"So, for personal finance purposes, a house is not an investment—it physically depreciates and costs you a lot of money. But for investment purposes, it is, as people found out in the last couple of years...
 
Dona Ferentes said:
from Jarad Dillian's column, The 10th Man. He's American, so I'll edit a bit...


"For personal finance purposes, I like to tell people that a house is not an investment. A house is negative carry. You’re paying the mortgage, you’re paying property taxes, you’re paying insurance, and you’re paying for maintenance, which averages around 1% of the value of the home each year. Stocks and bonds are positive carry, like most investments—you earn dividends and interest.

"But for some people, a house is the best investment they’ll ever have. The 30-year .. mortgage is kind of a forced savings program—it forces you to build equity in your house over time. Some people live in the same house for 30 years, have no savings and no investments outside of the home, but find they are living in a .. house that is completely paid off....

"Plus, housing prices do go up over time—around 4% annually, keeping up with inflation. That’s not as good as stocks, obviously, but there’s a lot less volatility. That’s one advantage to investing in your own home: You can’t look up the price on your phone every day and be influenced by the volatility. Okay, you can, but I recommend against it.....

"Anyway, housing is a great investment because people never look at the price, and they let it compound forever, unlike a stock, where they watch the price every day and get shaken out.

"So, for personal finance purposes, a house is not an investment—it physically depreciates and costs you a lot of money. But for investment purposes, it is, as people found out in the last couple of years...
Click to expand...

I agree with that. It's a good way to put it too. Though I disagree that there is less volatility -- it's just not measured daily. Housing still fluctuates and still isn't guaranteed to increase in price.

This characterisation also makes sense if you do intend on living in the house forever. Doesn't appear to be the case these days as people will sell relatively quickly. How many actually stay in the one house for the entire mortgage duration?
 
Dona Ferentes said:
from Jarad Dillian's column, The 10th Man. He's American, so I'll edit a bit...


"For personal finance purposes, I like to tell people that a house is not an investment. A house is negative carry. You’re paying the mortgage, you’re paying property taxes, you’re paying insurance, and you’re paying for maintenance, which averages around 1% of the value of the home each year. Stocks and bonds are positive carry, like most investments—you earn dividends and interest.

"But for some people, a house is the best investment they’ll ever have. The 30-year .. mortgage is kind of a forced savings program—it forces you to build equity in your house over time. Some people live in the same house for 30 years, have no savings and no investments outside of the home, but find they are living in a .. house that is completely paid off....

"Plus, housing prices do go up over time—around 4% annually, keeping up with inflation. That’s not as good as stocks, obviously, but there’s a lot less volatility. That’s one advantage to investing in your own home: You can’t look up the price on your phone every day and be influenced by the volatility. Okay, you can, but I recommend against it.....

"Anyway, housing is a great investment because people never look at the price, and they let it compound forever, unlike a stock, where they watch the price every day and get shaken out.

"So, for personal finance purposes, a house is not an investment—it physically depreciates and costs you a lot of money. But for investment purposes, it is, as people found out in the last couple of years...
Click to expand...
It's all about location. Bought in prime locations, properties will appreciate over time.

I agree on lots of fronts here.....residentials on the whole are a poor investment. Percentage in rentals are low, lots of outgoings unlike commercial properties. However, residentials used for business purposes have value if takings are good. Plus most costs associated are tax deductable.......can be tricky for the not so savvy business mind......
 
Belli said:
Yes and No. The Court has determined they are entitled to $2.7m in compensation from the Queensland State Government.

www.abc.net.au

Gold Coast couple awarded $2.7 million in compensation over lost house

The Queensland state government has been ordered to pay compensation to a couple whose house was given back to the previous owner by a court, five years after it was sold.
www.abc.net.au www.abc.net.au
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I would say i disagree as they are unable to enforce it from what i read then. And to get a chance to get paid, they may have to get in the courts again..with what money and while they are booted out of their home with nothing...but a mortgage to pay...

I wish them well and hope the media circus will ensure these state bureaucrats just pay instead of opting to sink them in endless court procedures and appeals...
(Edited after looking for more information )
 
It sounds like the Govt has found yet another way of keeping the ponzi rolling on.

www.abc.net.au

Eligibility for Home Guarantee Scheme expanded to include, friends, siblings and guardians

Friends, siblings and family members will be able to jointly apply for federal government home buyer guarantees under several eligibility changes to come into effect from July 1 this year.
www.abc.net.au www.abc.net.au
From July 1 this year, friends, siblings and other family members will be able to jointly apply for the First Home Guarantee and Regional First Home Guarantee.

These schemes will also be available to non-first home buyers who have not owned a property in the past 10 years.

For both the First Home Guarantee and Regional First Home Guarantee schemes, the federal government acts as guarantor on up to 15 per cent of a loan. This enables eligible home buyers to purchase a home with as little as a 5 per cent deposit without paying lenders mortgage insurance.
The criteria for Family Home Guarantee applicants will also be expanded beyond just single natural or adoptive parents with dependents.

This change means the guarantee will become available to eligible borrowers who are single legal guardians of children, such as aunts, uncles and grandparents.

Under the Family Home Guarantee, the federal government acts as guarantor on up to 18 per cent of a loan. This enables eligible home buyers to purchase a home with as little as a 2 per cent deposit without paying lenders mortgage insurance.
"We know friends and family members are already teaming up to secure their own place to call home," Ms Collins said.

"Our actions will allow them to access vital assistance, just as couples have been able to previously."

The government says allowing non-first home owners who haven't owned a property for ten years to access the schemes will be beneficial to people who have fallen out of home ownership due to financial issues or relationship breakdowns.
 
sptrawler said:
It sounds like the Govt has found yet another way of keeping the ponzi rolling on.

www.abc.net.au

Eligibility for Home Guarantee Scheme expanded to include, friends, siblings and guardians

Friends, siblings and family members will be able to jointly apply for federal government home buyer guarantees under several eligibility changes to come into effect from July 1 this year.
www.abc.net.au www.abc.net.au
From July 1 this year, friends, siblings and other family members will be able to jointly apply for the First Home Guarantee and Regional First Home Guarantee.

These schemes will also be available to non-first home buyers who have not owned a property in the past 10 years.

For both the First Home Guarantee and Regional First Home Guarantee schemes, the federal government acts as guarantor on up to 15 per cent of a loan. This enables eligible home buyers to purchase a home with as little as a 5 per cent deposit without paying lenders mortgage insurance.
The criteria for Family Home Guarantee applicants will also be expanded beyond just single natural or adoptive parents with dependents.

This change means the guarantee will become available to eligible borrowers who are single legal guardians of children, such as aunts, uncles and grandparents.

Under the Family Home Guarantee, the federal government acts as guarantor on up to 18 per cent of a loan. This enables eligible home buyers to purchase a home with as little as a 2 per cent deposit without paying lenders mortgage insurance.
"We know friends and family members are already teaming up to secure their own place to call home," Ms Collins said.

"Our actions will allow them to access vital assistance, just as couples have been able to previously."

The government says allowing non-first home owners who haven't owned a property for ten years to access the schemes will be beneficial to people who have fallen out of home ownership due to financial issues or relationship breakdowns.
Click to expand...

I'm glad they're trying to do something, but like your initial comment: its just keeping the same thing rolling, isn't it? No mortgage lenders insurance .... great. But people are still going to be leveraged to the hilt. That's when changes in interest rates really effect people ....


If a large part of the issue is supply vs demand, then why are they increasing the demand? They need to increase the supply ... not a quick feat. Why not add greater incentives for new houses. Or new developments. Maybe they already do? (I'm actually unsure.) Either way, this seems doomed to perpetuate the same issue and is unlikely to make things more affordable—its just making it easier to leverage.

It baffles me that an asset class that has all the hallmarks of an overinflated asset, that is in a bubble, that they continue to inflate said bubble...
 
Warr87 said:
I'm glad they're trying to do something, but like your initial comment: its just keeping the same thing rolling, isn't it? No mortgage lenders insurance .... great. But people are still going to be leveraged to the hilt. That's when changes in interest rates really effect people ....


If a large part of the issue is supply vs demand, then why are they increasing the demand? They need to increase the supply ... not a quick feat. Why not add greater incentives for new houses. Or new developments. Maybe they already do? (I'm actually unsure.) Either way, this seems doomed to perpetuate the same issue and is unlikely to make things more affordable—its just making it easier to leverage.

It baffles me that an asset class that has all the hallmarks of an overinflated asset, that is in a bubble, that they continue to inflate said bubble...
Click to expand...
700,000 migrants will keep the prices bouyant, clever really, it certainly doesn't look good for Aussie youth IMO, a lot of competition is on the horizon and coming from poorer countries their expectations will be a lot lower.
It definitely looks like the recession we aren't going to have, but a lifestyle change may be on the horizon. :2twocents
 

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