- Banned
- #101
Most rentals i see are yielding less than a garden variety savings account....and that is before costs are accounted for.....doesn't strike me as a particularly sound investment?
Society/Culture The housing crisis. How is it fixed?
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Most rentals i see are yielding less than a garden variety savings account....and that is before costs are accounted for.....doesn't strike me as a particularly sound investment?
- Mar 19, 2020
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Huh?
- Nov 10, 2022
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Dabbling? For a roof over your family’s head?
- Banned
- #104
More with regards to people doubling down, taking equity out of property and using that to buy another property and so on and so forth.
- Banned
- #105
Seriously. You just have to listen to most politicians talk to know that they didn't get to where they did on brains. Come on, most of them can barely string a coherent sentence together.
If politicians are loading up on property, I'm more than happy taking the other side of a risk free bet knowing that 2026 is fast approaching.
My old man was a pit trader in the day, years ago now. So I know a thing or two about markets and sentiment.
I think Aussie property is primed for a bust. The entire market has been distorted, land markets are so high no one can dare start a business to make a quid. The only growth is from public spending and public sector jobs.
This bubble is gigantic and it will be absolute carnage when she pops. The government of the day won't know what to do. Ipswich, west of Brisbane, is currently trading at price levels comparable and higher than Melbourne.
I mean look around. Look at the data. This is going to be yuge. Absolute carnage incoming. Scary in fact. We won't know what hit us.
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There already are losers all the time. And those doing smsf into property too. Ever heard of diversity?
People have been saying this since I bought my first house in 2014. That was really 'expensive' then and the 'bubble' was about to burst
The doomsdayers would have been much better off buying rather than waiting for the 'crash'
In Perth it's just a ludicrous shortage of stock, you get 30+ people at first home opens looking at any old garbage. Then sold in less than a week.
Stuff like mining slowing down will help but we are a fair way from even a regular market let alone an over supply and bubble to crash.
Stuff like mining slowing down will help but we are a fair way from even a regular market let alone an over supply and bubble to crash.
- Banned
- #109
Economics 101. Every shortage is followed by a glut. Always.
Australias population grew by 660k people
Whilst we didn't build enough houses
It will take more building with less population growth to cause any 'glut'. We can rule out population growth slowing while they currently import 3x more people than we have deaths. This increases demand as I'm sure an economics101 major like yourself would see
There'll be a plateau of prices but no 'crash' and definitely no 'glut' of supply. We'd need a competent government and building industry for that
Very basic googling so the dates are a bit haphazard on the screenshots but there's literally nothing backing up your claims there.
We're increasing demand for housing every single day (& cannot serve the current demand let alone it getting worse), and the problem continues to get worse. You're claiming the complete opposite of reality
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- Banned
- #111
We have built an enormous amount of houses for our population - we have something like the 4th highest rate of home building in the developed world.
The issue is demand - totally from the latest out of control round of immigration.
But here is the kicker - that immigration figure will fall off a cliff when the economy starts to tank - people aren't going to stay here and pay off their negative equity out of the goodness of their hearts! They are going to break for the border.
The absurdity of our bubble rivals that of Japan in the late 80s, early 90s.
New owner-occupier credit is growing at 19% p.a, but investor credit is growing at 36% p.a!!!! In no other advanced economy would those figures occur. None. Zilch. Zero.
Mark my words.
Our banking system will be in flames when this is all over.
The issue is demand - totally from the latest out of control round of immigration.
But here is the kicker - that immigration figure will fall off a cliff when the economy starts to tank - people aren't going to stay here and pay off their negative equity out of the goodness of their hearts! They are going to break for the border.
The absurdity of our bubble rivals that of Japan in the late 80s, early 90s.
New owner-occupier credit is growing at 19% p.a, but investor credit is growing at 36% p.a!!!! In no other advanced economy would those figures occur. None. Zilch. Zero.
Mark my words.
Our banking system will be in flames when this is all over.
Im not going to mock or related.
Outside of mining towns - can you provide say 3 examples of housing markets that have declined by 50% or more in recent memory in Australia? Im genuinely interested, I cant think of any (outside of mining towns), unless we go back to the 1890s and Great Depression
thanks
- Banned
- #113
I can't really to be honest - perhaps Gladstone in Central Queensland - in the early 2010s, although it probably scrapes in as a mining town. However, i remember distinctly the region being in a rental crisis with heaps of families priced out and sleeping in tents and caravan parks. Then there was a big shake out and property prices dropped a few years later.
I guess, the issue i am trying to get across, first and foremost, is that it is ignorant, and i respectfully add, foolish, to say just because something hasn't happened yet, to then say, "it can't happen". And that is assuming that we ignore the numerous episodes around the world of property prices dropping by 50% or more for whatever reason. Whether it was Japan in the late 80s/early 90s. Or Canada in the late 80s. Or Spain or Ireland in 2008.
Just about every "black swan" event that shakes financial markets or brings down banks - just about every episode would be described as "unprecedented" by ignorant economists or "unable to be foreseen".
Even if we just take the period since the pandemic - the growth in property prices has lost the plot - 80% gains in some regions in nearly 4 years even. There is no way that growth can be explained by sound fundamentals - it is entirely explained by speculative activity and risk taking.
Time will tell - and I hope I'm wrong, but I feel the 18 year real estate cycle will rear its head and have its way with us.
Thankyou for your reply. I agree in one respect, any economist worth his salt will acknowledge exogenous events, such as for example corona virus, resulting in for example negative population growth in australia.... the first time ever outside world wars. In many respects i agree housing has bubble like asset pricing, but, in my view, a decline of say 50 percent nationally would require an event such as global environmental catastrophe.... then we have bigger problems than house values
- Banned
- #115
Essentially, a housing bubble reaches a point where both mortgage holders, and renters, start paying an ever increasing amount of their take home pay purely to keeping a roof over their head - that leaves less pay to spend on other facets of the economy - going out to a restaurant for example.
That eventually leads to job losses in the private sector as "for profit" businesses have to close their doors - that is exactly what we are seeing at the moment.
I'm sorry to say, we aren't fixing this housing bubble without a crash of historic proportions - a crash that wipes out banks - requiring systemic bailouts. That is where we are in the cycle. It takes on average 18 years from top to bottom - but we are approaching that point where something is going to break.
And as Quint says in Jaws, "it ain't going to be pleasant".
This is going to be a historic crash. Mark my words.
In the medium, to long term, i see this as a good thing - we need this correction and we need to reset towards more productive enterprises rather than simply trading houses between each other - it never works in the long run - and it leads to brutal downturns. Buckle up folks.
I'm not saying that a crash will never happen, but I have been hearing this argument since the year 2000.
Even I expected for a couple of down turns since then but didn't materialize. There was some economist who was so sure a crash was going to happen he famously sold his house and lost a bet to walk all the way to Mt Kosciziuzko. A crash may happen, but to continuously predict a crash to happen and then to turn around and say "I told you so" is akin to a broken clock is even correct twice a day.
The one thing I have learned is that nobody can predict the property market.
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- Banned
- #117
Fred Harrison is the only economist I know of who predicted the 1990 downturn and the 2008 GFC.
He says what is coming will surpass the 2008 GFC. Make of that what you will.
As i mentioned in my first post, i will not ridicule or challenge. My view, there are elements of reality in what outline, the issue i guess for me is statements in isolation.
You need to consider wealth, not just income, also consider the composition of households as a total ith a mortgage and who are genuinely in mortgage stress long term. There is no such thing as markets being timed ie you 18 year cycle... happy to explain if you wish.
I agree with you, the ratio of income to dwelling value is silly at the moment, my strong view, price growth will flatten ,slight decline and maintain over a medium term horizon. Lets hope housing becomes more for housing than an investment class
FruitTingles
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I think bank of mum and dad also means the 20% deposit barrier is not what it once was leading to more competition and price rises.
- Banned
- #120
Perhaps. But it just leads to more systemic risk.
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Sydney and Melbourne seem to be among the world property markets international investors like.
It’s not great for people hoping to buy housing in those markets, but it is a factor.
It’s not great for people hoping to buy housing in those markets, but it is a factor.
Many more investors have been leaving the Melbourne market than those entering for the last few years.
That is one of the big reasons Melbourne house prices have been stagnant while most of the other states have been increasing massively. The other big reason is interstate migration (more people leaving Melbourne to live in other states rather than the other way around).
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Try to move more government and business sectors to rural/regional areas where there are vacancies
They can city have a smaller scaled city presence but have their man HQ in rural and regional cities
They can city have a smaller scaled city presence but have their man HQ in rural and regional cities
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That just happens as a vote grab. It’s not efficient
and the sheer volume required would cause more problems for the regional centres
