Australia housing bubble

[GO FURTHER]

A good article on why Australia’s property prices will continue to rise with no bubble to burst.

https://www.realestate.com.au/news/australias-property-prices-will-continue-to-rise

The key points;

1. Our capital cities are probably among the nicest places in the world to live.

2. Expats are coming back with millions of dollars to either settle or invest in Australia.
They are happy to pay over the odds because they’ve got cash.

3. People are realising that they can borrow at 2%, rather than have savings in the bank earning next to zero.
They might make 8 per cent to 12 per cent long term capital gain.

4. Australians have found plenty of extra pocket money during the pandemic.
As a nation we normally spend $65 billion a year on overseas travel, but that didn’t get spent.

5. Large scale investment funds had relocated hundreds of millions of dollars away from cash and bonds, instead preferring to park their funds in property.

6. When the borders open, millions of people are just waiting to come here and invest money. We’re now the envy of the world.

7. International students and other foreign workers are a huge part of our economy and they’ve been non-existent for close to two years.
They’ll come back with a vengeance.

8. Given that Australia lost hundreds of thousands of workers in the wake of Covid, and the country is facing a $500 billion plus debt thanks to the pandemic, the government will need to increase the number of migrants to play financial catch up.
Putting additional demand onto a property market that is already struggling with supply.

(Not in article) but... With China's recent crack down on their elite and rich and what appears to be a return to a nationalistic communism, there will be thousands of wealthy Chinese business people wanting to get their money out of China.
Australia is a safe bet. They will continue to buy up properties here.

Let's not also forget those Taiwan elites and wealthy worried over impending war.

[T3rminator]

Originally Posted by GO FURTHER

A good article on why Australia’s property prices will continue to rise with no bubble to burst.

https://www.realestate.com.au/news/australias-property-prices-will-continue-to-rise

The key points;

1. Our capital cities are probably among the nicest places in the world to live.

2. Expats are coming back with millions of dollars to either settle or invest in Australia.
They are happy to pay over the odds because they’ve got cash.

3. People are realising that they can borrow at 2%, rather than have savings in the bank earning next to zero.
They might make 8 per cent to 12 per cent long term capital gain.

4. Australians have found plenty of extra pocket money during the pandemic.
As a nation we normally spend $65 billion a year on overseas travel, but that didn’t get spent.

5. Large scale investment funds had relocated hundreds of millions of dollars away from cash and bonds, instead preferring to park their funds in property.

6. When the borders open, millions of people are just waiting to come here and invest money. We’re now the envy of the world.

7. International students and other foreign workers are a huge part of our economy and they’ve been non-existent for close to two years.
They’ll come back with a vengeance.

8. Given that Australia lost hundreds of thousands of workers in the wake of Covid, and the country is facing a $500 billion plus debt thanks to the pandemic, the government will need to increase the number of migrants to play financial catch up.
Putting additional demand onto a property market that is already struggling with supply.

(Not in article) but... With China's recent crack down on their elite and rich and what appears to be a return to a nationalistic communism, there will be thousands of wealthy Chinese business people wanting to get their money out of China.
Australia is a safe bet. They will continue to buy up properties here.

Let's not also forget those Taiwan elites and wealthy worried over impending war.

GBP is also slowly rising against the AUD, which might help in the short term once international opens up.

Investors will be able to absorb any short term pain through negative gearing.

Can't see the chinese parking their cash here in droves any longer. Its too risky with the new foreign investment powers. As has been hinted in the pandora papers, UK (London) is the place to park the big $$$, and probably politically less risky.

[Polyal]

Originally Posted by GO FURTHER

A good article on why Australia’s property prices will continue to rise with no bubble to burst.

https://www.realestate.com.au/news/australias-property-prices-will-continue-to-rise

The key points;

1. Our capital cities are probably among the nicest places in the world to live.

2. Expats are coming back with millions of dollars to either settle or invest in Australia.
They are happy to pay over the odds because they’ve got cash.

3. People are realising that they can borrow at 2%, rather than have savings in the bank earning next to zero.
They might make 8 per cent to 12 per cent long term capital gain.

4. Australians have found plenty of extra pocket money during the pandemic.
As a nation we normally spend $65 billion a year on overseas travel, but that didn’t get spent.

5. Large scale investment funds had relocated hundreds of millions of dollars away from cash and bonds, instead preferring to park their funds in property.

6. When the borders open, millions of people are just waiting to come here and invest money. We’re now the envy of the world.

7. International students and other foreign workers are a huge part of our economy and they’ve been non-existent for close to two years.
They’ll come back with a vengeance.

8. Given that Australia lost hundreds of thousands of workers in the wake of Covid, and the country is facing a $500 billion plus debt thanks to the pandemic, the government will need to increase the number of migrants to play financial catch up.
Putting additional demand onto a property market that is already struggling with supply.

(Not in article) but... With China's recent crack down on their elite and rich and what appears to be a return to a nationalistic communism, there will be thousands of wealthy Chinese business people wanting to get their money out of China.
Australia is a safe bet. They will continue to buy up properties here.

Let's not also forget those Taiwan elites and wealthy worried over impending war.

An article form a realestate website spruking the positivity of the market...no way.

Pain is coming and I hope it hits the higher end, prices have gone stupid, 20% gain for what? because everyone is watching Netflix and accumulating debt?

[GO FURTHER]

Originally Posted by Polyal

Pain is coming and I hope it hits the higher end, prices have gone stupid, 20% gain for what? because everyone is watching Netflix and accumulating debt?

Can you please expand on what "pain is coming"?

Thanks

[T3rminator]

Also heard that APRA was concerned with the income to borrowings ratio hence the move to tighten lending. Apparently we were approaching 6x income borrowings. So someone earning 100k is borrowing 600k. Am not a finance guy, but that doesn't sound that ridiculous? APRA being overly cautious? Not a bad thing I suppose if that is the case.

[zilo]

Originally Posted by GO FURTHER

Can you please expand on what "pain is coming"?

Thanks

The obvious facts are...


Interest rates are a function of inflation....increases will lead to mortgage stress pain.

Inflation rate is currently being disguised...

by CPI not including items that have significantly added to costs of living.


2020 declared CPI 3.8% is double the mortgage rate 2%...that is bizarre.

[.:4:.]

2 houses near mine recently sold. Both on the main road. The nice house, smaller block about 650 square metres, went for 890k to an owner occupier. The scumhole shack next door, the place the council has recieved multiple complaints about, it sold for 1.35 million. It did sell to a developer and is approved for 8 town houses. So its all land value. Its a 1031 square metre block so reasonably large for a suburban block. So what i can see happening, is those 8 shoebox's go in, sell for say 800k+ and bump up the market value of my property.

[fordomatic]

When this thread started 4 years ago there were people saying pain is coming, in that time one of my assets i've owned for 10 years went up 60%. When i bought my two assets 10 years ago all my mates told me I was dumb and the bubble will pop. Both those assets are worth double what I paid. I'm still here waiting...................

[pottery beige]

Originally Posted by fordomatic

When this thread started 4 years ago there were people saying pain is coming, in that time one of my assets i've owned for 10 years went up 60%. When i bought my two assets 10 years ago all my mates told me I was dumb and the bubble will pop. Both those assets are worth double what I paid. I'm still here waiting...................

i giggles at the butt hurts in this thread

[hayseed]

Originally Posted by fordomatic

When this thread started 4 years ago there were people saying pain is coming, in that time one of my assets i've owned for 10 years went up 60%. When i bought my two assets 10 years ago all my mates told me I was dumb and the bubble will pop. Both those assets are worth double what I paid. I'm still here waiting...................

Exactly, It's Time in the market, NOT Timing the Market. that Gets you Capital Gain..

[Bossxr8]

I paid 480 to build my house just over 2 years ago. Appraised at 700+ now. Houses in my area sell within a week or 2. It's insane just how much demand there is atm. So many people just want to get the hell out of melbourne.

Real estate agents flooding the mailbox trying to get people to sell nearly everyday.

[Polyal]

Originally Posted by Bossxr8

I paid 480 to build my house just over 2 years ago. Appraised at 700+ now. Houses in my area sell within a week or 2. It's insane just how much demand there is atm. So many people just want to get the hell out of melbourne.

Real estate agents flooding the mailbox trying to get people to sell nearly everyday.

Yeap, everything is out of whack at the moment. I honestly thought CV19 would have been the nail in the coffin but it seems Govco is happy to hand people $500+ a week to sit at home...so the crash that should have happened didnt again. Australia's bail out policy is a joke, thousands loss their jobs yet everyone keeps their assets...something has to give at some point.

Yet the people that hunker down and dont jump in like sheep continue to get pushed out because they dont want to over extend themselves? Seems rather backwards.

Originally Posted by Bossxr8

Supply and demand rules here. Highly disagree that any pain is coming. Of course there will be minor bumps along the road, but anyone betting on a crash is kidding themselves.

Right now yes, but I could argue almost every point in that realestate.com post but it will get OT quickly.

Open the borders and get things going again, raise the rates, raise the taxes to pay for all the bail outs and see how we go.

On the flip side I agree, the bubble has not popped, when I have no idea but while supply and demand cant be ignored the market is manipulated to the extreme.....no other industry seems to get the concessions this does...freezing people having repro's etc...no mortgage periods etc come on...there is no risk...buy buy buy!

[FTE217]

It is funny in the big picture......
Fordos post says it all.
For years i have generally been a very conservative will I won't i guy.
Thankfully my wife pushed me off the edge.
I had gone on about the crash to come ever since the GFC around '09 - maybe it was just great timing but just prior to the GFC we re shaped our business and everything seemed to fall into place and went ahead like mad.
Then we talked about buying an investment prop, nah what if, and can we cope is me.
I learnt the quick and dead is very true, how many times do you see or hear of someone they have done this, built up that.
No matter the time the time is now, sit back and wait you've just added another $50/100k + you could have saved couple months ago.
IF there is a drop one day, it won't be a crash but a small correction thats my head space now.

[290GTP]

It's crazy in the Shoalhaven ATM , just like everywhere else I suppose.

An average 4 bedder just around the corner from me, went on the market last week at $1.1 million. 3 days later It's under contract, so I'm assuming they got very close to that. Less than 6 months ago a similar style house about 4 doors away sold for 920k.

There's no stock available, as soon as something half decent hits the market its snapped up.

[Citroënbender]

I see much of it as a knock-on. Where I am in Sydney is Chinese funded; would dearly love to see proper forensic accounting on this circus. The Aussies cash out and that’s driving other areas up. I’m on a quarter acre and we used to joke about selling for $12M but think the risk of that being taken seriously is only a few years off… 🤬

Even my acreage at the ****-end of Ganmain is creeping up and I’m starting to consider whether it would be better converted into residential fringe at Moama or similar. That sucks in a way, because I wanted big space on the unloved edge of a Riverina town and it’s no longer that.

[Yellow_Festiva]

Originally Posted by 290GTP

There's no stock available, as soon as something half decent hits the market its snapped up.

I'm still looking at buying. Want something in the lower Blue Mountains just outside of Sydney.

Properties are under contract within days. I've given up looking to be honest as I think I'm forcing myself to find 'anything' rather than something I like.

I'm changing my mind every week in terms of what I'm looking for. After missing out on several properties I was going to buy a unit as a short term solution but I can't see myself throwing half a million $ at an older 2br unit just to then move again in a year or 2 and renting it out or selling.

Will sit back and watch the world go by. I think once borders open and lending rules get a little harder we will get a better indication of where the market is heading.

I'll keep an eye on listings none the less but will stick to renting where I am till I find a decent block of land to build on or a house I'm happy to move right into.

Too many variables to predict where the market is heading. Not expecting a big drop, not expecting double digit increases either.

I've noticed that more properties are being listed at a price rather than auction, and that places for auction are selling before the day.

There is not much available at the moment so will wait and see.

[blueoval]

well Im in the process of building another house within the next 12 months. Going by some of the predictions here, Im hoping I will sell my current house for some of this inflation people are experiencing and own the new house outright.

[GO FURTHER]

For those who believe the bubble is going to burst soon...

Consider this... There has not been a crash in Australian house prices in the major cities for the last 50 years.

During that time Australia has weathered:

• High mortgage interest rates of up to 17.50% in 1990
• Higher unemployment rates than we have currently
• Higher inflation than we have today
• The recession of 1990
• The GFC in 2007
• The current Covid Pandemic.

Still house property prices continued to rise, despite the above factors.

There may have been some slight corrections in the housing market along the way, but nothing major, causing people to jump out of buildings.

So why do people all of a sudden think it is going to crash now?

What do they think will create the perfect storm?

[b0son]

Originally Posted by GO FURTHER

For those who believe the bubble is going to burst soon...

Consider this... There has not been a crash in Australian house prices in the major cities for the last 50 years.

Well, if you're going to say bubble, then it's really only appropriate to look at the last 20 years when it has actually been a bubble (we never had prices so out of step with income before that, so little reason they would crash).

The two big events that should have precipitated a crash, the GFC and the pandemic, didnt. The GFC, we were relatively unscathed because of a combination of substantial stimulus and booming resources, so unemployment never shot up.

When the pandemic hit, there was unprecedented financial stimulus, larger than the GFC. Lower income workers who were stood down actually had an increase in income on the support payments. The eviction moratoriums and mortgage holidays insulated that portion of the market from the pandemic's impacts, there were a number of stimulus schemes directed at the property market.

So yes, the property market hasn't had a crash, but we've been spending more and more government funds to make sure it doesn't. How confident are you we can just keep money-printing our way out of these messes?

[MITCHAY]

I think that while we have lower immigration rates there is still demand. And demand is higher than supply, rates are cheap, and people have stashed a lot of cash of the last two years.

[blueoval]

interesting forecast

https://propertyupdate.com.au/proper...cycle-continue

[FTE217]

It is interesting being we've brought up the '07 GFC for the climb UP in everything since then has been alot steeper than pre GFC.
Have a good geeze through some of the graphs below
https://australiandebtclock.com.au/

Despite that who's confident ?
I thought just the same post GFC, if we can say we're in a bubble since then its been a huge ride, who knows when its going to stop/pop but sitting on the fence wondering what if or when ? hey thats the gamble just don't over extend yourself - hopefully you keep healthy or avoid any other hiccup you'll work around the down slide whenever it occurs I guess.

[buggerlugs]

https://www.abc.net.au/news/2021-11-...nder/100584112

[T3rminator]

I'm calling it now. Tomorrow's RBA meeting will result in a 0.25 points rise.

[Yellow_Festiva]

Originally Posted by T3rminator

I'm calling it now. Tomorrow's RBA meeting will result in a 0.25 points rise.

Too early. Well before 2024 as previously stated but I'm thinking we will see movement mid 2022.

[MITCHAY]

Originally Posted by T3rminator

I'm calling it now. Tomorrow's RBA meeting will result in a 0.25 points rise.

Yeah nah mate. No way they will put rates up this month. There are concerns about inflation but not this month.

[Citroënbender]

When’s that feral election? I know the RBA is supposed to be impartial but suspect if they demonstrate too much autonomy right now, they might feel a government breathing down their collar…

[hayseed]

Originally Posted by T3rminator

I'm calling it now. Tomorrow's RBA meeting will result in a 0.25 points rise.

I've got $10 that says; Not until after the Federal Election early next year..

[oldel]

Originally Posted by T3rminator

I'm calling it now. Tomorrow's RBA meeting will result in a 0.25 points rise.

Nah, this isn't like a regular meeting in the past where they actually do anything straight away. This is about them previously saying they wouldn't do anything until 2024, and revising that and saying they might do something in 2023 instead.

(Next year they'll have a meeting and despite saying today they wouldn't do anything until 2023, they'll again revise that and say they might do something in 2022 instead.)

IE, they said in the past they aren't going to do anything about rates (back when they were worried about recession and stagflation). Now they have to slowly walk that back without causings alarms by gradually saying they are preparing to lift rates sooner than expected. But it won't be for a year or two.
They're just warning people to expect something in the future, and sooner than expected.

[T3rminator]

The "courageous" call didn't come off..... Banks have spent the last 6 or so months moving customers to fixed or part fixed rates. I still reckon there will be an increase, within the next qtr.

https://www.theage.com.au/politics/f...02-p5957g.html

"The official line that a rate rise would not occur until 2024 was missing from Dr Lowe’s statement on Tuesday."