Society/Culture Australian Property Prices to Crash?

[HirdyLannister]

The only way housing crashes in this country is if the government does a complete U turn on housing investment, and that simply won't happen until boomers are all dead and the new majority of voters are like you.

I've seen you mention this afew times about boomers dying and things will change but I'm not quite sure it will.

When boomers die their children who couldn't afford a house will now be able too with inheritance. Those same people who hated not owning a house will change their tune because they want to see their house grow in value.

 

[greyhound punter]

completely incorrect but there's no talking sense to you.

good luck with whatever you do.

There are plenty of things to base investments on that grow over time. S&P, ASX, housing, even different superannuation's. All have corrections/downturns but over time they 100% always go up.

It is far better to look at past performance, than throw a dart like you are doing rofl. You havent said what will cause the supposed crash you think will happen. You are just saying it will happen. Wtf logic is that?

What will cause the crash will be perennially higher interest rates, and unsustainable debt loads under leverage.

A friend of mine is ditching his rental properties for this exact reason. His yields are pitiful and it ain't worth the hassle.

 

[HirdsTheWord]

What will cause the crash will be perennially higher interest rates, and unsustainable debt loads under leverage.

A friend of mine is ditching his rental properties for this exact reason. His yields are pitiful and it ain't worth the hassle.

lol. No.

• Only 30% of people have a mortgage, the rest dont.
• OCR is going to go back down soon, we are at peak now.
• Out of that 30% not everyone is mortgaged to the brink of destruction. the FAR majority of people dont borrow anywhere near their max loan amount, thus can sustain higher rates.
• Your friend is ditching his rentals because he probably got them on a very low rate and can't afford to keep it. Thats his problem, unfortunately not everyone is a good investor.

If rates are going to cause the crash, why is Sydney up almost 10% from the bottom all whilst rates are rising?

You are calling for a crash and have absolutely no idea what will cause it rofl. You are just yelling at clouds.

 

[greyhound punter]

lol. No.

• Only 30% of people have a mortgage, the rest dont.
• OCR is going to go back down soon, we are at peak now.
• Out of that 30% not everyone is mortgaged to the brink of destruction. the FAR majority of people dont borrow anywhere near their max loan amount, thus can sustain higher rates.
• Your friend is ditching his rentals because he probably got them on a very low rate and can't afford to keep it. Thats his problem, unfortunately not everyone is a good investor.

No we aren't. It ain't going down anytime.....

 

[HirdsTheWord]

No we aren't. It ain't going down anytime.....

You might want to familiarise yourself with the RBA rate tracker.

RBA Rate Tracker

RBA Rate Tracker

www.asx.com.au

You will notice that the market is no longer forecasting increases, and the sentiment has shifted to chances of rate decreases. As the months tick on the chances to decrease will increase and increase and increase as CPI continues to drop faster than anticipated.

This graph used to say 4.5 peak. Its literally dropped .5 in a month.......You might want to save this on your browser.

Again, you do you. But you have literally no idea what you are talking about.

Like i said before, you are a young and jaded. I get your frustration, but you are calling for a crash is just numpty stuff.

 

[Madas]

wtf are you talking about?

Housing just dropped an avg 15% in value and the government did nothing to stop it.

I think you have watched the Big Short one too many times.

I think Punter might have also been watching too many of those “ Property is going to Crash “ click bait You Tube videos.

It’s easy to put on the Nostradamus hat and say “ oh property is going to go down ………. Sometime “ of course it will , always has
But in the near future it just can’t

 

[HirdsTheWord]

I think Punter might have also been watching too many of those “ Property is going to Crash “ click bait You Tube videos.

It’s easy to put on the Nostradamus hat and say “ oh property is going to go down ………. Sometime “ of course it will , always has
But in the near future it just can’t

i feel for him tbh.

But calling for a crash based on nothing but a "i want it to, so i can buy" is just dumb.

Young people should be pissed off about the property market. The only way housing affordability is going to get better is if young people vote for it. We need for investment in housing to be severely restricted. Thats the only way anything's going to meaningfully change.

 

[Madas]

i feel for him tbh.

But calling for a crash based on nothing but a "i want it to, so i can buy" is just dumb.

Young people should be pissed off about the property market. The only way housing affordability is going to get better is if young people vote for it. We need for investment in housing to be severely restricted. Thats the only way anything's going to meaningfully change.

Yeh I agree

It’s a bad situation and is going to take years to fix if ever

Interest rates can’t keep going up , they will strangle the economy so that won’t happen, it might and currently is shaking out some speculators and people who are in over their heads but that’s a minor proportion.

Changing investment laws won’t correct anything quickly , in fact it could have the opposite effect if the laws are grandfathered where people scramble to buy an investment property before laws are changed

The other quick lever that government could pull is to bring in some legislation about short term rentals

This actually would make an immediate difference to stock supplies and in reality the fallout to those landlords is minimal as they can still long term rent .
I can’t see the government being brave enough to implement this but it would work and from a voters perspective I think they will gain the votes of the young.

But for clarity this doesn’t fix housing affordability, it just creates a bit more stock in the long term rental or purchase market providing a bit of a release of pressure.

The long game is to increase housing stock whilst carefully managing the migration intake via drip feed, not open flood gates .

It doesn’t look like the government are doing this so the problem is going to perpetuate.

 

[peetoo]

You’d need demographics like Italy or Japan for it to happen. Crash

Not to say it might happen after all the boomers die off

 

[greyhound punter]

You might want to familiarise yourself with the RBA rate tracker.

RBA Rate Tracker

RBA Rate Tracker

www.asx.com.au

You will notice that the market is no longer forecasting increases, and the sentiment has shifted to chances of rate decreases. As the months tick on the chances to decrease will increase and increase and increase as CPI continues to drop faster than anticipated.

This graph used to say 4.5 peak. Its literally dropped .5 in a month.......You might want to save this on your browser.

Again, you do you. But you have literally no idea what you are talking about.

Like i said before, you are a young and jaded. I get your frustration, but you are calling for a crash is just numpty stuff.

I don't necessarily disagree with the idea that rate cuts are more likely in the near future than increases. Although I disagree with the probability assigned by the market.

But that is the beauty of markets. One can trade their opinions.

I maintain that there is still upside risk to inflation in the near term. I note that there are serious concerns overseas at the moment in this regard.

I said previously, I expect house rises to rise in the short term, but on falling volume. Speculators will look to offload their properties into any strength and break for the exit...ideally for a break even trade. Hence why I mentioned earlier, from a technical chartists point of view, this market behaviour is described as a "double top".

The first leg down in any traceable security rarely breaks the back of the market. Often it will take 2 or 3 retests of the top before bulls finally capitulate.

Many people, whether investors or speculators, are holding on at the moment because they believe the rba will cut soon and we are returning to 0% interest rates.

Under these circumstances, many could rustle up an extra 1000 dollars a month to pay the mortgage. Whether that is a uber driving on the weekends, or borrowing money from their folks...it isn't an insurmountable hurdle if you believe relief is around the corner.

The primary role of interest rates is to control inflation. It isn't despite popular belief, to stimulate the economy. You can have high inflation and a poor economy. Indeed, history is littered with such examples. Leading to the term, "stagflation".

So, if you think the rba will cut rates if the economy tanks....you better think again.

 

[HirdsTheWord]

I don't necessarily disagree with the idea that rate cuts are more likely in the near future than increases. Although I disagree with the probability assigned by the market.

But that is the beauty of markets. One can trade their opinions.

I maintain that there is still upside risk to inflation in the near term. I note that there are serious concerns overseas at the moment in this regard.

I said previously, I expect house rises to rise in the short term, but on falling volume. Speculators will look to offload their properties into any strength and break for the exit...ideally for a break even trade. Hence why I mentioned earlier, from a technical chartists point of view, this market behaviour is described as a "double top".

The first leg down in any traceable security rarely breaks the back of the market. Often it will take 2 or 3 retests of the top before bulls finally capitulate.

Many people, whether investors or speculators, are holding on at the moment because they believe the rba will cut soon and we are returning to 0% interest rates.

Under these circumstances, many could rustle up an extra 1000 dollars a month to pay the mortgage. Whether that is a uber driving on the weekends, or borrowing money from their folks...it isn't an insurmountable hurdle if you believe relief is around the corner.

The primary role of interest rates is to control inflation. It isn't despite popular belief, to stimulate the economy. You can have high inflation and a poor economy. Indeed, history is littered with such examples. Leading to the term, "stagflation".

So, if you think the rba will cut rates if the economy tanks....you better think again.

dont have time anymore to tell you in all the ways you are wrong so I'll leave it there.

good luck to you.

 

[greyhound punter]

You’d need demographics like Italy or Japan for it to happen. Crash

Not to say it might happen after all the boomers die off

Not at all. You just need participants to realise that property is not a one way bet.

As my mate is finding out, the rental returns he is getting do not justify the market value of his property, that is even before fees,insurance, rates etc.

Maybe when interest rates were at 0%. A yield of 2 or 3% suddenly looks attractive. But when risk free term deposits are offering 5.5%, suddenly that rental yield under the current circumstances looks shithouse.

 

[greyhound punter]

dont have time anymore to tell you in all the ways you are wrong so I'll leave it there.

good luck to you.

I am probably wrong, it is just an opinion. But if I'm wrong, and property goes up another 10 or 20 or 30%....fine, I am happy renting.

But if I'm right, those people who back over extended to get in the market, then they are bankrupted and rightly so.

You wouldn't fly in a plane if there was a 1 in 100 chance of it crashing would you?

Good luck to you.

 

[greyhound punter]

I think Punter might have also been watching too many of those “ Property is going to Crash “ click bait You Tube videos.

It’s easy to put on the Nostradamus hat and say “ oh property is going to go down ………. Sometime “ of course it will , always has
But in the near future it just can’t

Loving these belly laughs.

It is easy to spot those mortaged to the hilt.

 

[peetoo]

Not at all. You just need participants to realise that property is not a one way bet.

As my mate is finding out, the rental returns he is getting do not justify the market value of his property, that is even before fees,insurance, rates etc.

Maybe when interest rates were at 0%. A yield of 2 or 3% suddenly looks attractive. But when risk free term deposits are offering 5.5%, suddenly that rental yield under the current circumstances looks shithouse.

‘Your mate’

Also the property industry loves to have people talking about it. It’s at least 80% crapola
Ch 7 tonight ‘huge rush to downsize’ only desperate or idiots do it in a downswing

 

[Seeds]

Yeh I agree

It’s a bad situation and is going to take years to fix if ever

Interest rates can’t keep going up , they will strangle the economy so that won’t happen, it might and currently is shaking out some speculators and people who are in over their heads but that’s a minor proportion.

Changing investment laws won’t correct anything quickly , in fact it could have the opposite effect if the laws are grandfathered where people scramble to buy an investment property before laws are changed

The other quick lever that government could pull is to bring in some legislation about short term rentals

This actually would make an immediate difference to stock supplies and in reality the fallout to those landlords is minimal as they can still long term rent .
I can’t see the government being brave enough to implement this but it would work and from a voters perspective I think they will gain the votes of the young.

But for clarity this doesn’t fix housing affordability, it just creates a bit more stock in the long term rental or purchase market providing a bit of a release of pressure.

The long game is to increase housing stock whilst carefully managing the migration intake via drip feed, not open flood gates .

It doesn’t look like the government are doing this so the problem is going to perpetuate.

You are wrong on immigration. Immigration can create short term issues for housing but in the long run it helps lower housing prices all else equal. Why? because the proportion of immigrants who are construction workers are higher then domestic residents.

we also desperately require lots of working age immigrants to help fund the pension system otherwise it will collapse.

 

[Seeds]

Yeh I agree

It’s a bad situation and is going to take years to fix if ever

Interest rates can’t keep going up , they will strangle the economy so that won’t happen, it might and currently is shaking out some speculators and people who are in over their heads but that’s a minor proportion.

Changing investment laws won’t correct anything quickly , in fact it could have the opposite effect if the laws are grandfathered where people scramble to buy an investment property before laws are changed

The other quick lever that government could pull is to bring in some legislation about short term rentals

This actually would make an immediate difference to stock supplies and in reality the fallout to those landlords is minimal as they can still long term rent .
I can’t see the government being brave enough to implement this but it would work and from a voters perspective I think they will gain the votes of the young.

But for clarity this doesn’t fix housing affordability, it just creates a bit more stock in the long term rental or purchase market providing a bit of a release of pressure.

The long game is to increase housing stock whilst carefully managing the migration intake via drip feed, not open flood gates .

It doesn’t look like the government are doing this so the problem is going to perpetuate.

Why cant interest rates keep going up? UnEmployment is low. Interest rates are higher in other countries. the australian ones have gone up too slowly and its causing issues for our exchange rate.

 

[Madas]

I don't necessarily disagree with the idea that rate cuts are more likely in the near future than increases. Although I disagree with the probability assigned by the market.

But that is the beauty of markets. One can trade their opinions.

I maintain that there is still upside risk to inflation in the near term. I note that there are serious concerns overseas at the moment in this regard.

I said previously, I expect house rises to rise in the short term, but on falling volume. Speculators will look to offload their properties into any strength and break for the exit...ideally for a break even trade. Hence why I mentioned earlier, from a technical chartists point of view, this market behaviour is described as a "double top".

The first leg down in any traceable security rarely breaks the back of the market. Often it will take 2 or 3 retests of the top before bulls finally capitulate.

Many people, whether investors or speculators, are holding on at the moment because they believe the rba will cut soon and we are returning to 0% interest rates.

Under these circumstances, many could rustle up an extra 1000 dollars a month to pay the mortgage. Whether that is a uber driving on the weekends, or borrowing money from their folks...it isn't an insurmountable hurdle if you believe relief is around the corner.

The primary role of interest rates is to control inflation. It isn't despite popular belief, to stimulate the economy. You can have high inflation and a poor economy. Indeed, history is littered with such examples. Leading to the term, "stagflation".

So, if you think the rba will cut rates if the economy tanks....you better think again.

There is a lot of wording here

All I can say is for every one person you mention are going to sell off due to pressure on their repayments, there are probably 5 waiting to snap up that property

I’m not having a go but for someone who purports to know a lot about the market you are conveniently dismissing the key driver …….DEMAND .

 

[Madas]

Why cant interest rates keep going up? UnEmployment is low. Interest rates are higher in other countries. the australian ones have gone up too slowly and its causing issues for our exchange rate.

Because the last time they put interests rate up too high in the late eighties early 90’s they broke the economy and sent plenty of people to the wall

Don’t see it happening again to that extent

What people are forgetting here is that we live in a very rich country
As much as we focus on what would the people on lower incomes do if this happens and that happens we forget that there are a tonne of people with way too much coin who will buy whatever is available

 

[Madas]

You are wrong on immigration. Immigration can create short term issues for housing but in the long run it helps lower housing prices all else equal. Why? because the proportion of immigrants who are construction workers are higher then domestic residents.

we also desperately require lots of working age immigrants to help fund the pension system otherwise it will collapse.

Bring ‘em on

I’ll employ 3 of them right now
But guess what

There is nowhere for them to live

 

[Madas]

Loving these belly laughs.

It is easy to spot those mortaged to the hilt.

Are you implying I’m one of them ?

If so you are so, so wrong

 

[Kwality]

What happened in 2000, 2010, or 2015 has nothing to do with what will happen in the future.
At the same time, just because something hasn't happened - does not mean it won't. Nassim Taleb has written extensively of both of these fallacies that so many people fall into the trap of believing.

1) The valuation of property is one area where i see systemic risk. For example, if one house on a 12 house street is sold for an all-time high, then it is common for that price to set the market for similar houses in the area (or on the street). People will say, "my house has gone up 10% or 20%, indeed, banks will let owners borrow money against this 'paper value' increase. In reality, if all those property owners put their house on the market to cash in their gains, then the price would crater. Of course, all houses going on sale at the same time would be unlikely, unless of course, in the most dire of circumstances. Nevertheless, it is an illustration of systemic risk and the danger of the 'mark to market' metric.

2) The current Sydney median house price sits at $1.3 million. A fairly modest 10% year-on-year increase from now, would in 10 years mean the median price sits @ $3.5 million dollars. And that is MEDIAN. If you believe that will happen, at a time when real wage growth is cratering, good luck to you.

3) The immigration argument has some merit in the sense that increasing rents could well see banks happy to lend more to investors. However, it should be seen for what it is, the government throwing a hail mary to 'save' the property market - probably to allow the big end of town to cash out their gains before the fun begins - and the same big end of town will buy back their sold properties at 50 cents on the dollar in the years ahead. In reality, immigration will fall off a cliff if the economy goes into recession, as it has done at other times in history across the world during economic downturns. Furthermore, immigrants aren't going to come here if the current rental crisis continues to deteriorate.

This government 'hail mary' should embolden the housing bears - in the same way as the Bank Of England's desperate intraday interest rate rises back on Black Wednesday in September 1992, in an ultimately futile attempt to crush short sellers of the pound, only served to embolden even more short selling of the pound until the bank of england eventually capitulated in their attempt to save the pound.

4) The first leg down in any market, after such a run-up, is never the leg that will break the market's back. Many people will 'buy the dip' and what not. From a technical chartist's point of view, such market behaviour has lead to names such as "double tops" or "double bottoms".

5) At the moment, the number of transactions in the market is low - especially compared to the recent history over the last 10 years - any price gains in this environment are likely to be fairly weak. As a housing bear, what i am looking for is increasing sales in conjunction with falling prices. Until that moment, housing bulls can rest easy.

The individual capital city markets are not the same.

 

[Number37]

The long game is to increase housing stock whilst carefully managing the migration intake via drip feed, not open flood gates .

That is straight out of the Property Council's hymn book.
It's nonsense.
The only time demand has outstripped supply was when the population increased rapidly during the mid 2000's.

 

[peetoo]

The individual capital city markets are not the same.

Of course. And there have been legitimate localised crashes linked to boom and bust employment

 

[Madas]

That is straight out of the Property Council's hymn book.
It's nonsense.
The only time demand has outstripped supply was when the population increased rapidly during the mid 2000's.


View attachment 1793733

And why did it increase do rapidly?

My guess , probably migration .

Ftr I didn’t say it was the be all and end all reason
Look at the context of all my posts
I’ve always maintained it’s a variety of factors

Immigration is one they can do something about because it’s not a basket case of complexity unlike the other myriad of reasons why we are in this mess