https://www.news.com.au/finance/economy/australian-economy/a…
Check above out. Looking like there will be a lot of house bargains in the next few years.
Australian Housing Market Could See a Historic Crash
Punisher on 09/11/2020 - 08:09
Comments
It's the same mentality as doomsday cults.
Everytime their "armageddon" doesn't happen, their followers double down their faith. The psychology between the two are the same.
Both groups believe that with every guess, the probability of being correct increases. Also, the followers have already acquired some form of cost because of their belief. To abandon it now is to walk away with nothing to show for it and to admit being wrong.
The key is, it's also a guess that everything will be fine. RBA lowering interest rates at historic lows, also wanting aussie doller to drop, is not a good sign of a booming economy.
You forgot to list your economic credentials.
University of Rupert?Both will reduce real wages, increase cost of living and lower quality of life.
Good for the economy
Bad for the people living in the economy
The ultimate example of this is religious people waiting for judgement day, miracles, salvation etc. It never happens but facing the music requires them challenging their entire belief system, and which for most is something they were raised into. It's easier to just keep hoping for eternity.
Hahahahahah oh that's great!
Actually housing going to go through another boom as Oz is one of the few Covid 19 free locations in the world .
As we speak the demand to try come here is unprecedented .We actually have 1 million empty homes. Even if just 10% of that goes to market next year, it will be a buyers market. So get your cash ready and offer low.
How many of them are 1bd/studio student accommodation?
Yes
hey, i be happy if they dropped to more reasonable price in Sydney
Pretty flaky logic, those empty homes are either dog box apartments or country/outer suburb houses. Most places where the majority of people would choose to live are either occupied or waiting to be occupied.
The apartment market is already crashing, can get 20% drops from pre-covid market value in most inner-city areas, and it's only going to be getting worse over the next year. But houses and land in popular suburbs, no chance.
I'm a first home buyer in Canberra and bought off plan in July. Since then houses have gone up and if I had waited until now I would have to make compromises on what I got. Glad I got a seperate title house !
@Nyclix: I'm from Canberra as well mate, and have a nice big mortgage on my house here.
Can I ask what gave you the confidence to buy in the current market?
It makes no sense to me how Canberra's market continues to go up like it has. As a property owner I love it, but it defies logic.
Even through COVID prices have gone up!The Australian property market imo is way overbaked.
A lot of people negging some of the negative comments above clearly don't see there is HUGE risk at present.Our property prices (compared to our incomes) are unsustainable. One of the worst ratios in the world.
And that's why in nearly all major Australian markets (excl. ACT) there are signs of softening to the point where the Government is now winding back lending rules to try and get some more heat in the market by providing easier money for purchasers.In every other property crisis, interest rates have been used to correct negative sentiment.
But what happens when there is no more interest to use?
What happens after you make it as easy as possible to get money, only for the market to still be softening?I'm not a doomsday prepper. I'm not trying to talk down the market. I'm a concerned property owner that realises (here in ACT at least), there has been NO easing/correction/recession in property prices for a very long time.
I don't trust news.com.au for anything in most cases, but in this instance it's not as outlandish as some might think that a property correction of sorts could be very well something unavoidable… and most worryingly uncorrectable.
That's the part I'm more concerned about. Not any market correction (which is part of the normal property cycle), but no lever to pull us out of the drop when it occurs :(.
@UFO: In Canberra, land is released at a steady and calculated rate to keep house prices stable / going up steadily. That doesn't happen in Sydney / Melbourne as there's no extra land to release
@Quantumcat: There is on the outskirts. Farmland turning into new suburbs. Suburban sprawl getting ridiculous in Sydney.
@UFO: I was initially looking at buying and then covid hit so I held off a little and I noticed there wasn't a drop in house prices at all, instead it kept going up. I think since we have such a large percentage of workers being in the public service with relative job security + high salaries combined with less people selling and people unable to travel, people have begun looking to buy. Anything decent gets snapped up here fairly fast. My jobs safe and I'm not concerned at all about my choice to buy. Sure it could come down a little but in the long term you can't lose in Canberra. Better than paying someone else's rent off !
@Nyclix: has pretty much always been that way in Canberra for the last decade or so. The government is incredibly bad at releasing land here so the demand outstrips the supply. Make sure you Calculate in our ever increasing Canberra rates in your purchase price when comparing too rent as well. Buying is great for freedom to do whatever you want with the house, but often it is NOT a better deal than renting (assuming you are investing the money you save not spending it).
@gromit: My repayments on a 3 bedroom 2 bathroom 2 garage house are $100 more than me renting a room with someone for $250. Rates shouldn't be that high as it's a seperate title townhouse on a 157m2 block. It's also 7.6 EER with double glazing and 2.2kw solar so I should be set.
@Nyclix: rates are still going to be $100+ a month at a minimum. add in maintenance etc and that is going to be a decent hike ontop of those repayments. Not suggesting it isn't still a good deal but you should be careful to compare all the costs. Many get burnt by forgetting to include rates and maintenance in their calculations.
Too bad you can't get here though…
Every week it is either 'House prices continue to rise by as much as 20%', or 'House prices are going to crash by as much as 20%.
See this article from mid October (Queensland)
https://www.realestate.com.au/news/covid-property-boom-could…
easy articles to generate clicks.
corrupt & parisan media
from my current house buying experience there are plenty of buyers at the moment so i do not think this is a real reflection of the market.
Its catching the government fhb incentives, but once that dries up and force sales happens. It will be all regrets for the ones who have recently bought.
I agree, we are trying to buy entry level in Sydney's (less desirable) Western suburbs and we are seeing 30-40 groups arrive at open homes. We have also seen properties frequently sell for 50-250k over asking over the last 3 months
Yeah i was wondering what was going on… apparently the market is dying
Properties selling a lot over asking is more of a testament to how dodgy real estate agents are, than the strength of the market.
I agree, for the good houses. We're looking in South Western Sydney and are seeing 30-40 groups through in good properties that well looked after or modern and renovated, and they will sell within one week and for or more than the asking price (however, not that much more than the asking price, usually around the $20-50k mark). However, the properties that require work or are old, will only have 4-5 groups through and they tend to sit on the market and not sell, or sell below the asking price.
We've had a few agents tell us that people are struggling to get finance at the moment and have seen a few sales fall over because of this, now sure how far to read into this. Most of the properties we're seeing also happen to be investors offloading their assets, now sure how far to read into this either…
Having said that, I'm hoping for this crash to happen. It would be nice to be able to afford to buy somewhere that's less than an hour commute to work…
Pent up demand. You'll have to wait a few months to see what the real situation is.
80-85% auction clearance rate in ACT most weekends. I signed a contract to build off the plan in July and I wouldn't be surprised if it's already gone up 5-8%. Definitely a lot of competition and less properties on the market.
Similar position to you, I'm trying to buy my first home here on the Gold Coast and they're being snapped up fast. Often under contract within days of being listed and selling for well over the listed price
I could win powerball this week too. If I fire sale my house today and buy as many as tickets possible then I could get 4000% return in one week.
Post it as a deal!
What? This same crash that’s been touted to happen for the last 20 years?
Wake me when it starts to happen…
boring
i'm more interested in the kmart mum article below it
they have stock of the best air fryer ever!What about the aldi 5 litre one for $79
Gold is king right now, then buy property after when it crashes. :)
All about timing the market.
what's your address?
Bitcoin
Why do you think the central bank lowered the interest rates at historic lows? It is because the economy is tanking. Time your investments well.
‘Central bank’ - spot the crypto conspiracy nut.
Huh? I'm not agreeing with what op is saying but you realise central bank is just a commonly used synonym for reserve bank?
Don't know why people are negging you. This is a legitimate thing, lower interest rates indicate a weak economy. I feel too many people believe the gov and rba will be able to keep chucking stimulus at it until the cows come home.
It's a true but by lowering interest rates, housing affordability becomes a more feasible option which alleviates the weaker economy and protects housing prices from dropping. As above, the buyer market is more competitive now then before.
Only as long as the RBA keeps the interest rates low.
The only problem is the interest rates are being kept low to stimulate spending on discretionary items. Yes it's saving people money but really at the end of the day current home owners (investors and home owners) are the ones that are going to gain from this as people are still happy to leverage the same proportion of their income no matter what the interest rate is, keeping prices stable or even pushing them up with every cut.
Though, i do agree that America's crash won't be experienced here because their laws allow you to walk away from your mortgage and it effectively becomes the banks problem, hence the forced sales.
A slow decline/stabilisation is probably more likely. Just look at Perth ~30% drop over the last 4/5 years, not a crash per say but definitely a controlled downhill decline.
Well said. With low interest rates in the offing, people with money look for alternative investment opportunities beyond banks and government bonds.
One such investment is real estate. This pushes up demand and thus prices. With wages mostly stagnant, housing becomes less and less affordable to ordinary workers.
You really can't win. It's impossible for the foreseeable future to have both declining real estate prices AND low interest rates.
For a certain value of "affordable" which is "can make the monthly repayments" not "costs a reasonable amount all up". I can buy a lamborghini but that doesn't make it an affordable car.
the economy is tanking
The economy and property prices are barely linked at all in this country.
I have been hearing this for decades. I have friends who actually believe this and now they're about 2mil behind if they were to buy in the same area. They're out of the market.
Australia still has a pretty cool trick up it's sleeve if the market starts dropping excessively - open the gates to rich asian immigrants.
As I have pointed out. It will crash first before going up. So be ready with your cash. And munch on the distressed properties on sale. Till covid is sorted those crazy rich asian is at bay. And they are applying the same mantra as what I'm saying. Waiting for the crash, then take advantafe of the lows. Thats how they become crazy rich asians in the first place.
I am sure the market will slow and possibly drop a few percentage but crash?
Not whilst there are so many options available.
The time to buy with cash is now. Find a motivated vendor and you can get a substantial discount if you go unconditional on finance.
Australia has not had a recession "for decades", well we're in one now.. as much as everyone, including the RBA want to deny. Just because we've had an unprecedented string of good luck for 30+ years (the longest period of economic growth for any nation in earth's history), it doesn't mean the inevitable crash won't happen, in fact it makes it far more likely. By every historic and international standard Australia's market is at least 50% over-priced when incomes and rents are taken into account.
You really think the rich asian immigrants aren't angry and will turn on Australia? They been prevented from travelling, their kids have been ripped off by uni's and accommodation providers, the federal government abandoned them in the middle of the pandemic with zero support (telling them to "go home" when flights were all being cancelled), plus the increasing trade boycotts from China (coal, wine, wheat), then the COVID ChinaVirus racism and yeah, Australia is not high on "rich asians migrants" destination list at the moment… even if they could get in here.
Theres about 15 closed down shops in the high street where I live. Not a good sign for the economy and the property market. Widen your eyes. We still have jobkeeper till March. How long can the cash strap govt be able to hold these together. Plus a very unhappy China, putting restrictions on our exports.
We still have jobkeeper till March.
Where do you think that money is coming from?
Government is printing cash. When that happens, inflation follows.
With the decreased value of our dollar, guess what happens, the dollar figure of commodities and property goes up.
You can sell before your property price decreases but your cash will also devalue. If inflation happens and the property price remains unaffected, or worse still increases, you're royally screwed.
The link between inflation and rampant currency-printing is virtually non-existent in developed countries. Look at Japan: they've furiously been printing yen for decades now, racking up astronomical government debt, yet inflation is either minimal or negative.
Australia can keep printing money till the cows come home. Inflation isn't coming back.
Australia can keep printing money till the cows come home. Inflation isn't coming back.
It may just be me but I think my sarcasm radar is broken.
The link between inflation and rampant currency-printing is virtually non-existent in developed countries.
Welcome (partially) to the wonderful offset effects of global trade.
Japan has a permanent trade account surplus. Australia has a permanent trade account deficit. As long as Japanese companies keep exporting, and keep parking their profits in government bonds, there's no reason for the yen to crash notwithstanding the large budget deficits that the Japanese government keeps running.
The AUD depends on the carry trade (not much reason for that with rates so low) as well as the fact that Australia imports so many migrants, who bring their capital with them. The Americans can run a permanent trade account deficit on account of the fact that they print the world's reserve currency and that therefore there is a permanent appetite for US-denominated assets. Australia doesn't have that advantage.
If Australia returns to normal, importing migrants at a steady clip, then maybe they can keep things going for a few more years. But their may not be the political appetite to do that, given how many people are already out of work here.
No idea of whether property will decline precipitously. But the people who believe, no matter what, that it can't happen, are fools.
They aren't literally printing cash, they're buying bonds with… nothing.
This manipulates our dollar lower and helps us export commodites.
It also props up (inflates) asset bubbles.The banks are first to benefit from this,as they are the ones selling the bonds back to the gov. at an inflated price.
It doesn't look like much of this is trickling down to the man in the street, since we don't seem to have broad based inflation.
What is your source for saying the government is cash strapped? Credit is cheap and they are employing QE. It's raining funny money.
Living in Sydney nine years ago I sold my house on the north shore for $1.5m. New owners spent $150,000 on it since purchasing. It is now on the market for offers over $3m.
In July this year sold another home near Parramatta for $700,000 in a week with two people fighting over it.
Both my daughters live in the lower blue mountains west of Sydney. There is little to no stock in either of their suburbs. What there is sells in a week.
Right now one suburb has two for sale with three sold in the last fortnight. The other has five for sale and five sold in the last fortnight
Two to three years ago 'property experts' were calling a 40% fall in house prices.
It's amazing how many people are apparently amazed at the law of supply and demand.
No one is selling at the moment, prices are booming in regional areas as there is almost nothing coming to market, last I checked listings were down 20 or so % compared to last year so if a place comes up in a good area or something that has been well renovated it goes for way above market in less than a week.
A major crash in 2021 in all market would be a great buying opportunity, but not so much in the property market.
A broad, sweeping statement like that doesn't work. There needs to be more specific data.
From casual observation in Sydney metro, apartments might drop decently as there's so many new blocks being built.
But townhouses, houses or anything else with a land allocation? Nope.
They're not even though. It's like no one here reads anything other than "news". Property developers and planners are coming out saying there's half as many apartment projects in the pipeline as usual.
Developers respond to the market pretty quickly and shelve projects if they aren't gonna make bank. Thinner profit margins than you might think on apartments. Have a look around and you'll see halfway finished or bearing completion developments advertising cut-rate mortgage deals and deposit matching schemes etc.
Apartments are donezo for a while, but the price will remain relatively steady because the new entries will decrease. Less demand and less supply, price will stay steady ish, though with decreases and increases in places as per usual.
If you read this topic and only read the OP comments - I don't know if anyone else can relate, but it reminds me of my mates when we were all in our 20's and they were all addicted to the pokies. They had all sorts of wild theories and ideas and were so convinced about everything they did or said. When a specific type of tune was playing, when some symbols came up in a specific order, when they sat on a specific dragon machine at a certain time, if they hit the buttons in a certain combination … They truly believed they were onto something big and were going to hit the jack pot.
Lol
I'm so sorry to hear you were the victim of gambling harm and I 100% agree with your point. To some extent the property market is akin to gambling. It is a risk that hooks people in with the prospect of making money on a whim and luck, disregarding the fact that there are so many factors at play including social/media, political/legislative, economic determinants that make the outcome manipulated outside the control of the individual.
The property market has become speculative, making a game of profitability out of something that should be a basic human necessity.
but it reminds me of my mates
they were all addicted to the pokies
Thank you for your sympathetic words.
But just to clarify I've never gambled a dollar in my life, it's not my thing as I don't believe in the concept of 'chance' and making quick easy money, I also believe gambling is unethical. On a side note I wouldn't necessarily call my friends victims, they are idiots that made bad choices, but not victims.
Sorry I misread the 'we' part.
I obviously don't know their circumstances but tbh what you described above does suggest they were victims. Poker machines are designed to addict exactly in the way you've described above. The graphics, the audio everything has been designed to get patrons hooked when the system is rigged against them. You should watch Ka'ching, it's a doco that talks about this.
The harm doesn't happen because their stupid, it happens because the system was designed to work exactly in that way and take advantage of the desperate and vulnerable. It's why there are more money lost in outer suburban areas.
I obviously don't know their circumstances but tbh what you described above does suggest they were victims. Poker machines are designed to addict exactly in the way you've described above. The graphics, the audio everything has been designed to get patrons hooked when the system is rigged against them. You should watch Ka'ching, it's a doco that talks about this.
I don't disagree, I'm not a fan of any form of gambling and would love to see something like that banned
in other news, the weather will be changing …
correct. it will crash lower at night
If you genuinely believe this to be true, will you be selling your properties now and buy back in when prices have crashed?
OP would take a massive CGT hit. It would be better to wait on the sidelines with fiat or equity and buy when the market dip.
Unfortunately for prospective first home owners/fortunately for investors home prices aren't likely to exhibit a crash as the market is now largely fixed by the government.
However the RBA has backed themselves into a corner this time, immigration is at record lows and wages growth has stagnated. There's only so long you can run an economy thats had its disposable income taken away from it.
Also the government will likely rig the system until the next election when it finally falls off a cliff, or we end up going through some serious inflation.
The Government policies along with the RBA low interest rates means people will borrow more and therefore keep prices inflated, it could go down, but I really doubt it will as the economy would then recover.
Remember that net migration is going to be down and it often takes migrants 3-5 years to save enough equity to buy property for themselves. If any negative movement or stagnation is to be noted, I feel we will see it in 2 years time or so, not next year, meanwhile more stock might be coming up along with the near term market being propped up by low rates + Gov policies. Not that dire of an outlook imo.
Net migration is lower but for how long? 2020, maybe until end of 2021, do you really think its going to be that much of an upset that we are going to lose 4-5 years of migration. We have some of the most strict migration criteria in the world, all the government would need to do is increase the cap, and lower the entry requirements and it will flood back up.
I think people need to stop believing the headlines on the difference between a small price drop vs a housing crash
The Australian housing market is somehow very resilient.
Even in Perth we are seeing prices go up, rentals are shooting up as well.
Perth i believe is approaching it's recovery after falling ~30% over 4 years. Sydney and Melbourne imho are yet to correct.
A few days later you'll probably find another journalist will say it is on the way up… this is just another opinion piece dressed as journalism.
Sounds like OP is looking to spruik the OzB housing market, like what the journos are doing.
I think there'll definitely be some bargains in the apartment / retail office space, and some areas that have been artificially inflated by migration potentially, but on the whole a whole of market crash is very unlikely.
The gap between rich and poor is widening. For every person suffering mortgage stress there's an investor, a buyer propped up with a government incentive or a fresh overseas arrival ready to snap it up.
People are lining up to like into the country the moment the borders open. Our retail, construction and education sectors depend on high migration and you can rest assured the government will be opening the doors to get them and their bank accounts in the door as soon as physically possible. Covid isn't going to stop it - throw them a couple of weeks quarantine and they'll be ready to go.
If you're in a position to buy now and are chasing a desirable area and are holding off to get a bargain when the market crashes you're going to end up disappointed.
People are lining up to like into the country the moment the borders open
Real rich people are lining up to move to tax havens. We might get some well to do people but I would suggest we're getting a lot of skilled economic migrants.
If you're in a position to buy now and are chasing a desirable area and are holding off to get a bargain when the market crashes you're going to end up disappointed.
Desirable areas are either minorities who like the area's schools or high income earners flipping expensive property amongst themselves.
There is a certain amount heard mentality with property. I never hear people "buy what you can afford" but "buy as much as the bank will lend you."
If it didn't happen during a Once-In-A-100-Year recession, it'll never happen.
The Banks would rather publicly flail themselves raw than let the housing market crash - why do you think the RBA keeps decreasing the interest rate?
House prices up. Interest rates have crashed. You are right.
The banks are making provisions for bad debts.
Australian Housing Market Could See a Historic Crash
and Donald Trump won the election…
2016
#fakenews
covfefe
A friend who inherited $150,000 cash sent me a similar article in 2008.
His plan was to wait in cash for Melbourne housing to crash and he would then buy.
Fast forward 12 years and he is still renting, waiting for the crash. Meanwhile the Melbourne median house price has skyrocketed.
All Ordinaries Accumulation Index says if he invested that money 10 years ago it'd have doubled by now. The calculator says past performance isn't a guanratee of future returns, but he could still be ahead even after paying rent. Maybe even more ahead than buying a house.
Still way behind. Buying a house in a leveraged investment, House has gone up much more than 150k
So $150k doubled is 300k minus at least 100k in rent over 10 years = 200k . Where are the houses for 200k? I don’t understand how you say he could have been ahead by investing rather then buying a house
Another problem with this argument is that the capital growth in a principle place of residence is capital gains tax (CGT) exempt. The capital growth on the shares you describe is subject to CGT which could eat up as much as 50% of the gain (holding period <12 months) or 25% of gains (holding period >12 months) depending on marginal income tax rates.
Apparently this happen in every few months, https://www.news.com.au/search?q=house+market+crash