The future of Australian property prices

[sptrawler]

Aussies turning bullish on property price? Well there's a surprise, haha.

I am actually in two minds on this.

To me, house prices in this country do not make any economic sense whatsoever; and haven't done since about the mid noughties. Apart from a few niche markets (hopefully one of those is where I have my ppor), I just can't see the economic sense of house prices rising any further "in real terms". And then there is the mortgage cliff, recession and all that sort of thing.

However there is the spectre of inflation, lack of supply, immigration, and the absurd increase of head costs on new property. There could equally be some version of a crack up boom in house prices as well.

Question I always ask myself when considering any trade investment, what is the upside, what is the downside?

I certainly wouldn't gear up into property at the moment, but I do have a lazy few hundred grand in cash that I am trying to find a home for. Popped a few offers in here and there but either expectations are unreasonable or we get outbid.

Hmmmmm

Aussies turn bullish on house prices

Westpac’s latest consumer sentiment report suggests that Australians have turned bullish on the housing market. Despite ongoing interest rate rises from the Reserve Bank of Australia (RBA), house price expectations have soared, suggesting stronger price growth (chart from IFM Investors chief...

www.macrobusiness.com.au

Well the Govt has basically given the real estate sector the thumbs up, no reduction in tax incentives, broadening the access to the first home buyers grants and brining in 700,000 new buyers and their families, why wouldn't the ponzi keep going?

Meanwhile the narrative will keep blaming the baby boomers and everyone in the kingdom is happy, except for those who can't save a deposit to get a seat at the roulette table. ?

 

[greggles]

Aussies turning bullish on property price? Well there's a surprise, haha.

I am actually in two minds on this.

To me, house prices in this country do not make any economic sense whatsoever; and haven't done since about the mid noughties. Apart from a few niche markets (hopefully one of those is where I have my ppor), I just can't see the economic sense of house prices rising any further "in real terms". And then there is the mortgage cliff, recession and all that sort of thing.

However there is the spectre of inflation, lack of supply, immigration, and the absurd increase of head costs on new property. There could equally be some version of a crack up boom in house prices as well.

Question I always ask myself when considering any trade investment, what is the upside, what is the downside?

I certainly wouldn't gear up into property at the moment, but I do have a lazy few hundred grand in cash that I am trying to find a home for. Popped a few offers in here and there but either expectations are unreasonable or we get outbid.

Hmmmmm

Aussies turn bullish on house prices

Westpac’s latest consumer sentiment report suggests that Australians have turned bullish on the housing market. Despite ongoing interest rate rises from the Reserve Bank of Australia (RBA), house price expectations have soared, suggesting stronger price growth (chart from IFM Investors chief...

www.macrobusiness.com.au

One of the primary drivers of Australian real estate prices in the last decade has been the huge increases in construction costs. I did some online home and contents insurance quotes recently and the "replacement cost" calculator estimated that it would cost $800,000 to replace a four bedroom, two bathroom house of approximately 250m2 in size. I know that insurance companies tend to over estimate and some of that would have been the removal of the existing destroyed house, but lets say the replacement cost is actually $550,000. Add in the price of land of say $450,000 and you have $1,000,000 just to build a four bedroom two bathroom house on an average block.

Yes, blocks are getting smaller and builders are cutting corners on costs, but the replacement cost of real estate assets in Australia is very high compared to other countries and I can't see them going down anytime soon. I can see them stabilising for a while due to a possible decrease in the cost of building materials such as steel, but not going down. So this is effectively a floor on residential real estate prices, and with supply tight it will take people selling at less than replacement cost to really drive prices down. This will normally only happen in a prolonged economic downturn.

 

[sptrawler]

Why would you prick the bubble that just keeps on giving. ?

Property jackpot: Roxy flips mansion for $9m profit​

A local family has snapped up the former celebrity PR agent’s family home in Vaucluse, helping her turn a $6.6m buy into a $16m property in four short years.

 

[sptrawler]

Well it looks like the NZ RBA has knocked some common sense into the housing sector over there, the amount of debt that buyers are prepared to take on has plummeted and with it so has house prices.
It's a shame it isn't allowed to happen in Sydney, Melbourne, I guess there are too many with vested interests here.
Then again the politicians here might ask the RBA to be more aggressive and cause a contraction. ?

Reserve Bank de-risks housing market

The latest lending figures from the Reserve Bank of New Zealand shows that new mortgage borrowers are borrowing far smaller sums relative to their incomes than they did during the pandemic. Overall, the debt-to-income (DTI) ratios of new borrowers in March 2023 were the lowest since the Reserve...

www.macrobusiness.com.au

As illustrated in the next chart, only 11% of new mortgage originated in March 2023 were at DTI ratios of six or above.

That’s down more than two-thirds from the 36% of mortgages taken out at those same high DTIs in November 2021 at the peak of the market:

A variety of factors have likely driven the sharp decline in DTI ratios.

The Reserve Bank has lifted official interest rates by 5.0% since late 2021.

In turn, house prices have collapsed by around 17.5% across New Zealand, thereby requiring less money to be borrowed:

 

[sptrawler]

Jeez this tells you Sydney's got a serious problem, way too much money guaranteed to make money, ridiculous is the correct word for it. If people were doing on the stock market, there would be something done about it.

‘Ridiculous’: Willoughby bungalow fetches $4.83 million at auction

The single-level home, renovated six years ago, was sold to a developer who beat parents bidding with their adult daughter.

www.smh.com.au

A single-level Willoughby house that traded for $2.35 million in 2015 sold again for $4.83 million at auction on Saturday, leaving onlookers shaking their heads in disbelief.
Bidding opened at $3.7 million. Bids quickly jumped in varying increments ranging from $5000 to $50,000. Two bidders pulled out when the battle reached $4.5 million, which was $200,000 above the reserve.

A trio comprised of parents and their adult daughter continued to bid rapidly against a developer, who eventually secured the renovated property for $4.83 million for a knockdown project.

 

[Warr87]

Jeez this tells you Sydney's got a serious problem, way too much money guaranteed to make money, ridiculous is the correct word for it. If people were doing on the stock market, there would be something done about it.

‘Ridiculous’: Willoughby bungalow fetches $4.83 million at auction

The single-level home, renovated six years ago, was sold to a developer who beat parents bidding with their adult daughter.

www.smh.com.au

A single-level Willoughby house that traded for $2.35 million in 2015 sold again for $4.83 million at auction on Saturday, leaving onlookers shaking their heads in disbelief.
Bidding opened at $3.7 million. Bids quickly jumped in varying increments ranging from $5000 to $50,000. Two bidders pulled out when the battle reached $4.5 million, which was $200,000 above the reserve.

A trio comprised of parents and their adult daughter continued to bid rapidly against a developer, who eventually secured the renovated property for $4.83 million for a knockdown project.

I find it crazy that there were parents looking to spend that on their daughter for her house ... i mean, nice to help out but thats one hell of a gift. Spending almost 6mil on a 'knockdown project' is also crazy.

Good 'ole Sydney lol.

 

[farmerge]

I find it crazy that there were parents looking to spend that on their daughter for her house ... i mean, nice to help out but thats one hell of a gift. Spending almost 6mil on a 'knockdown project' is also crazy.

Good 'ole Sydney lol.

What a way to learn how to stand on your own 2 feet and value what you have strived for through blood, sweat and tears.
Obviously there such a thing as a free meal. !!!!!

 

[farmerge]

Well it looks like the NZ RBA has knocked some common sense into the housing sector over there, the amount of debt that buyers are prepared to take on has plummeted and with it so has house prices.
It's a shame it isn't allowed to happen in Sydney, Melbourne, I guess there are too many with vested interests here.
Then again the politicians here might ask the RBA to be more aggressive and cause a contraction. ?

Reserve Bank de-risks housing market

The latest lending figures from the Reserve Bank of New Zealand shows that new mortgage borrowers are borrowing far smaller sums relative to their incomes than they did during the pandemic. Overall, the debt-to-income (DTI) ratios of new borrowers in March 2023 were the lowest since the Reserve...

www.macrobusiness.com.au

As illustrated in the next chart, only 11% of new mortgage originated in March 2023 were at DTI ratios of six or above.

That’s down more than two-thirds from the 36% of mortgages taken out at those same high DTIs in November 2021 at the peak of the market:

A variety of factors have likely driven the sharp decline in DTI ratios.

The Reserve Bank has lifted official interest rates by 5.0% since late 2021.

In turn, house prices have collapsed by around 17.5% across New Zealand, thereby requiring less money to be borrowed:

I know in a couple of areas around here smallish properties are only on the market for a very short time before the SOLD sticker is plastered across the sign.
The higher interest rates don't seem to be a factor for those buying in for the "tree change" lifestyle.
only bide well fo the larger acrages if and when they come onto the market

 

[IvoryWolf]

It appears that lots of people still have plenty of cash to splash around, I suppose? Great to see such abundance in the world! Gives the RBA more excuses to bring on more interest rate rises, I guess?

 

[qldfrog]

It appears that lots of people still have plenty of cash to splash around, I suppose? Great to see such abundance in the world! Gives the RBA more excuses to bring on more interest rate rises, I guess?

Different people affected..savers now able to get some returns and low expenses, tradies able to jump quotes Highers..and city people moving to the country

 

[farmerge]

Different people affected..savers now able to get some returns and low expenses, tradies able to jump quotes Highers..and city people moving to the country

I know that my quotes aren't being knocked back. The only retort is when can you start. Almost embarrassing some of the quotes I've put in recently. There is where I am working truckloads of moolah around at the moment.

 

[Dona Ferentes]

"To get projects approved  developers must be sophisticated, full of patience and be cashed up. In general, one said, developers are having to allocate a greater proportion of the total build cost to planning matters, than they did five years ago.

"In some cases, it’s affecting the viability of projects. Planning costs are “overall significantly higher given the process is more complex than years ago [and] a greater number of consultants are required,” .

“Smaller projects are impacted greater as they can’t absorb additional costs, combined with the possibility of going to the Land and Environment Court,” he said. “At the same time, we need to consider interest rate rises, building cost increases and market shifts ... which all need to be factored in.”

[For example, with some] recent Land and Environment Court approved projects, the total planning cost varied between 2 and 8 per cent of the total development cost. But court action often added another 40 per cent to the planning costs...."

... getting bogged down in the appeals process can stretch it out. As can any 'lease variation'. Around my suburb, (older, with some pretty rundown places and abandoned retail/ pub sites) places sit empty for years. Must chew up the dollars AND DRIVE UP COSTS.

 

[Warr87]

Why are so many cases going to court? i'm finding it hard to believe that costs are so high because of this tbh. sounds more like yahoo's just doing stuff and getting called out for it. if you plan properly, from the beginning, then there are less variations later on. in my experience, if you ask your regulator, council, fed department, about meeting their standards and what you're doing they'll give you advice. they would be doing a lot of this, so its also a bit of a piss-take to think that they 'just can't get it right'. maybe they shouldn't be developers if they find planning projects so hard ....

 

[basilio]

This analysis from the ATO highlights why and how the property market has become the favoured vehicle for generating wealth.

All good for the 19,895 people who own 6 plus investment properties. But this focus on pushing up property values to reward investors has destroyed the opportunity for the majority of home buyers buy their own home.

A quarter of Australia’s property investments held by 1% of taxpayers, data reveals​

Exclusive: Taxation office figures also show a clear majority of those investors are over the age of 50

• Follow our Australia news live blog for the latest updates
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Mostafa Rachwani and Antoun Issa
Sat 3 Jun 2023 16.00 EDTLast modified on Sat 3 Jun 2023 20.28 EDT


Only 1% of Australian taxpayers own nearly a quarter of all property investments across the country, amid concerns over escalating rates of wealth concentration.

Data provided by the Australian Taxation Office has revealed the extent of that concentration, with more than 7% of property investors – or 215,321 people – accounting for 25% of all property investments.

That 7% also have three or more interests in investment properties across the country, with 1% of investors – or just 19,895 people – currently holding six or more investment interests.

A quarter of Australia’s property investments held by 1% of taxpayers, data reveals

Exclusive: Taxation office figures also show a clear majority of those investors are over the age of 50

www.theguardian.com

 

[Knobby22]

This analysis from the ATO highlights why and how the property market has become the favoured vehicle for generating wealth.

All good for the 19,895 people who own 6 plus investment properties. But this focus on pushing up property values to reward investors has destroyed the opportunity for the majority of home buyers buy their own home.

A quarter of Australia’s property investments held by 1% of taxpayers, data reveals​

Exclusive: Taxation office figures also show a clear majority of those investors are over the age of 50

• Follow our Australia news live blog for the latest updates
• Get our morning and afternoon news emails, free app or daily news podcast

Mostafa Rachwani and Antoun Issa
Sat 3 Jun 2023 16.00 EDTLast modified on Sat 3 Jun 2023 20.28 EDT


Only 1% of Australian taxpayers own nearly a quarter of all property investments across the country, amid concerns over escalating rates of wealth concentration.

Data provided by the Australian Taxation Office has revealed the extent of that concentration, with more than 7% of property investors – or 215,321 people – accounting for 25% of all property investments.

That 7% also have three or more interests in investment properties across the country, with 1% of investors – or just 19,895 people – currently holding six or more investment interests.

A quarter of Australia’s property investments held by 1% of taxpayers, data reveals

Exclusive: Taxation office figures also show a clear majority of those investors are over the age of 50

www.theguardian.com

I have no problem with investing in property but it should be new property to increase supply. A few changes to the taxation system could get the investors working for Australia.

 

[sptrawler]

The problem with the East Coast property market and getting the ponzi under control, is highlighted in these two headlines today IMO.
The rich get richer and the poor get poorer, as usual and unless the Government brings in some structural reform to how the top end of town property is taxed, it will just keep getting worse IMO.

A quarter of homes ‘are bought mortgage-free’​

Roughly 25 per cent of all sales in the eastern states last year were made without a mortgage, according to property data.

Recession fears for Australia as interest bills skyrocket​

Households are eating into their savings and have cut back spending on non-essentials to 2021 lockdown levels to cope with mortgage interest bills.

Here is another article on the issue: Maybe a levy like Singapore introduced, on foreign buyers, would be a nice easy start? I guess there is always a problem, when those who make the rules, benefit from the rules. ?

The elite suburbs where buyers pay in cash

Broadbeach, Toorak and Mosman lead for cash purchases of residential property in an east coast housing market where one in four homes is acquired loan-free.

www.afr.com

Broadbeach, Toorak and Mosman lead the country for cash purchases of residential property in an east coast housing market where one-quarter of all transactions are bought loan-free, new PEXA data shows.

The Gold Coast suburb topped the list in calendar 2022 with $1.33 billion worth of cash sales, followed by Melbourne’s inner-eastern Toorak ($893 million) and Sydney’s lower north shore suburb of Mosman ($725 million), figures from the e-conveyancing platform show.

 

[Belli]

If you cannot even build a letter box properly, what hope do buyers have?

Serious defects in Sydney unit blocks linked to family of property developers as owners wait to move in

Former Dyldam bosses Fayad Fayad and Remon Fayad, and their father Sam Fayad, are behind apartment blocks across Sydney slapped with sanctions from the NSW Building Commissioner.

www.abc.net.au

 

[farmerge]

The problem with the East Coast property market and getting the ponzi under control, is highlighted in these two headlines today IMO.
The rich get richer and the poor get poorer, as usual and unless the Government brings in some structural reform to how the top end of town property is taxed, it will just keep getting worse IMO.

A quarter of homes ‘are bought mortgage-free’​

Roughly 25 per cent of all sales in the eastern states last year were made without a mortgage, according to property data.

Recession fears for Australia as interest bills skyrocket​

Households are eating into their savings and have cut back spending on non-essentials to 2021 lockdown levels to cope with mortgage interest bills.

Here is another article on the issue: Maybe a levy like Singapore introduced, on foreign buyers, would be a nice easy start? I guess there is always a problem, when those who make the rules, benefit from the rules. ?

The elite suburbs where buyers pay in cash

Broadbeach, Toorak and Mosman lead for cash purchases of residential property in an east coast housing market where one in four homes is acquired loan-free.

www.afr.com

Broadbeach, Toorak and Mosman lead the country for cash purchases of residential property in an east coast housing market where one-quarter of all transactions are bought loan-free, new PEXA data shows.

The Gold Coast suburb topped the list in calendar 2022 with $1.33 billion worth of cash sales, followed by Melbourne’s inner-eastern Toorak ($893 million) and Sydney’s lower north shore suburb of Mosman ($725 million), figures from the e-conveyancing platform show.

Just been looking around recently at acrege properties coming onto the market.
The For Sale sign goes up and a few days later Under Offer or Sold is plastered across it.
These are hobby farms of up to about 50 acres with the odd larger one in the mix also.
Obviously tree changers cashed up and wanting a greener lifestyle.

 

[Belli]

A lot of the information on property prices seem to me to be broad based. However, I feel it's pockets in regions and city areas.

This pocket is probably worth zero right now. From the first picture alone, you can see the render falling off. Wonder how many of these disasters are dotted around various cities in Australia? Sydney appears to have a lot of them.

‘Like the Jenolan Caves’: Toplace residents detail nightmare of defect-riddled blocks

Residents of the Botany apartment complex have described a building with tiles laid over tiles, cupboards without shelves, a missing driveway and water streaming into wardrobes.

www.smh.com.au

 

[Belli]

I don't normally react to sob stories, however this is one where I do have a high level of sympathy for those impacted. They have been left to hang out to dry and it's wrong. Although it is Sydney-centric, I have no doubt essentially zilch adherence building standards and construction applies in other areas including Canberra. I have heard some terrible about construction issues in this neck of the woods including new builds. I honestly do not know the solution to rectification of the defects in places which are now uninhabitable. Normally, and understandably, we as a group do not like digging into our own back pockets to bail these individuals out but it may come to that if the State & Territory Governments face up to the reality they have completely failed these people.

The game of 'Russian roulette' facing Sydney apartment buyers

As the NSW government pushes for more housing density in Sydney, questions about the quality of new apartment buildings have re-emerged after major developer Toplace went into administration.

www.abc.net.au