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
As much as I wish it would, I doubt, building development here's not as fast as it should be, if there was a block of units popping up every 6 months and homes started selling to developers then yes prices would fall.
But right now seeing a home next to a unit complex and stand out like a thumb it's hard to say, as it always just sky rockets up house prices.
For gods sake we have been hearing about this since 2009 ! I remember when they doubled the first home owners grant then , everyone said the market would crash when it was removed. It never happened . From then till now house prices have gone up over 50 - 100 % , even more in some area . While every year same story how the “market is going to crash”
Even now after nearly a whole year with corona and lockdown I don’t see any bargains anywhere . Prices have gone up in my area this yearOn another note , my father who bought a house in the late 80s and another in early 90s said there were people complaining houses were too expensive then !
Even now after nearly a whole year with corona and lockdown I don’t see any bargains anywhere . Prices have gone up in my area this year
Housing market is like share market, buy on the dip. The government and central bank is back stopping you.
There's no doubt that there is more fallout to come from the current crisis. Jobkeeper is supporting employment that won't exist. Many of those people will have mortgages they can't support in the future.
But I wouldn't be basing investment strategies on a news.com.au article that seems more interested in namechecking Margot Robbie than uncovering any actual facts.
Why would the rate that US prices fell before their crash relate to the rate that Aussie prices fell during a pandemic. They're pretty clearly different scenarios.
Agree, so many people here who think property price rise are inevitable because of the last 20 years.
While I think that the wide spread over confidence in Australia in property as an investment means that a massive crash is unlikely, there's clearly scope for a strong down turn. Prices did drop, and stock at least in Victoria is well down as restrictions and economic uncertainty made it a bad time to sell. Things are selling quickly, as their is pent up demand and little stock, not necessarily because the housing marketing is doing great.
In 6 months, it'll be interesting. With a vaccine, and jobseeker and jobkeeper extended a bit, it may be just a slight dip in prices that recover in 12. However, if a vaccine doenst come, and stimulus slows, we dont get education migration and tourism dollars, EU and US economies are likely going to stuffer long term from this as well, its certainly not crazy that our whole economy could tank and take houses with it. Ultimately, the arrogance in this thread is truly mind-blowing even if understandable that people are (rightly) sick of these tired beat up articles.
The issue is this: either home prices continue to rise, everybody profits, everybody is happy. Nobody's faith is shaken in what they believe is a rock-solid investment.
Or prices come down. Which has never really happened in recent history in Australia. And if that were to happen - the psychological shock of something occurring that has never happened before and which people never believed would happen - that might be profound.
Either prices will continue to edge up as they have done for so long. Or things could go very, very wrong. What do you bet on?
I mean prices have dropped and stayed stagnate for stretches. Markets in QLD and WA have seen big drops at various points in recent history.
The issue is this: either home prices continue to rise, everybody profits, everybody is happy. Nobody's faith is shaken in what they believe is a rock-solid investment.
For existing owners maybe everyone is happy, but not new entrants. Which is why the article linked above is so popular owners get sacred about their investment and young people wanting to buy get excited it might become more affordable.
Either prices will continue to edge up as they have done for so long. Or things could go very, very wrong. What do you bet on?
I think at some point, 1 year, 5 years, 50 years, we will either see a big drop, or a long (3-5 year period) with very little growth.
I do think it's a very interesting time. Personally, if a purchaser doesn't need to purchase immediately, i would wait 6-12 months. Maybe prices do go up, but itll likely be so incremental you wont be priced out, and a not unreasonable chance that they could drop if the economy suffers a big hit, as seems likely, particularly if you keep saving in the meantime. If you are an existing home owner and upgrading, then trading in the same market is relatively low risk so you wouldnt need to wait.
For most homeowners, a big drop isnt very meaningful unless you plan to sell in next 2-3 years. So for most people, no need to be concerned even if a drop happened. And if you would be effected, I still dont think it makes sense to sell now, as it also very likely the market wont drop.
I reckon i have read this same garbage every 3-6 months for the past 10 years.
If houses didnt crash during a nation wide lockdown in which 80% of the population where unable to work i dare say they aren't going to crash now.
Im going to predict to fix our deficit the govt is going to increase migration 10 fold to make us look good 'per capita' which will ultimately increase house prices but reduce our overall standard of living
Add into that the lowest interest rates ever and the government throwing more and more tax exemptions to investors and businesses.
make us look good 'per capita' which will ultimately increase house prices but reduce our overall standard of living
It isn't an economy until everyone is struggling to pay rent to landlord who is struggling to make ends meet paying off the ATO / banks.
pretty much
If a crash is not going to happen soon, we need think about rezoning laws and start building more housing and start ignoring NIMBYs. We need Land Value Tax based on valuation instead of stamp duty. Landlords benefits alot from keeping crime low to have welfare protection ensure tenant's can pay rent. They pay almost nothing, yet get so much. With the added benefit reducing housing costs and increase government income to go into things like health, public transport, etc.
The problem with land tax is it forces people to sell their house when they lose their job. How do you pay the land tax without income?
Also, some people rarely move house and therefore pay stamp duty just once. I know people who have lived in the same house for 40 years. That's smart. Government would surely love to tax them every year instead of a one off payment. Do you want to pay more tax?
How do people pay rent without income? If they want their house, they can sell up and move to somewhere cheaper, if they want location they can move into a smaller dwelling.
It's unfair and a economic rent to society when people can "afford" 1.5 million houses and investors owning multiple million dollar houses, and just get a free ride, then the government just hike taxes on people who work and businesses that work who earn a profit.
The people who benefit most from COVID welfare are Landlords. Landlords get so many special privileges zoning, negative gearing, rental subsidies (like in qld), welfare to tenants that pay rent and record low interest rates, yet provide nothing but a one time stamp duty, yet the government will hit the middle income up to 45% tax rate and hit business up for 25% tax, where those people who are paying 45% could be investing in their super or starting businesses.
The Henry Tax Review of 2010 commissioned by the federal government recommended that state governments replace stamp duty with land value tax. No one has implemented it.
ACT has implemented it, 20 year pan to phase out stamp duty and increase land tax/rates, other states and territories can copy that model
Problem is not to do with land. What can you do when people want to all live in the same place. You can see with social distancing, you know it is bad for you but people still want to crowd together for FOMO.
Every time the market threatens a crash the government moves mountains to keep it growing.
Hard to say what will happen when you throw into the mix low population growth, low interest rates, tax cuts, an uncertain economy etc.. though now that we know there is a highly effective vaccine, as of this morning, it is quite positive for the economy.
What I do expect to happen is that the price of land on the fringe of the big cities will eventually drop in price. It takes years to rezone and develop land, and developers expect a certain amount of population growth. They will need to lower their prices to compete for a reduced number of buyers. This will also affect the price of nearby established land/dwellings.
What I do expect to happen is that the price of land on the fringe of the big cities will eventually drop in price.
Not sure about other states, but I deal with the purchasing of land in the fringes of Sydney both for myself and sometimes clients. I can tell you there has been an undersupply of good and competitively priced blocks for a while now. While you can go on real estate and maybe see 50 for sale in a specific suburb, once you start enquiring the plot thickens. Some blocks have issues associated with them like easements, acoustics, fire etc, some are too expensive for what they are, some aren't registering for 1-2 years, a lot are only available in house and land packages etc. the list goes on. Once you get to a good block that is ready to buy and build on right now with no issues and a fair price, there may only be one or two out of that 50 that everyone is jumping all over. I feel prices will remain reasonably stable in the master planned land developments, there may be slight drops in the scattered smaller developments.
Understandably there is more pent up demand in Sydney, so we will find out of its enough to keep prices high before immigration starts to return at some serious scale.
Sydney is also a bit different in the sense that If you look at the geography of Sydney, with the ocean to the east and the mountains to the west, there is fundamentally minimal land available for future development in reasonable proximity to the city.
Government will find a way to keep the housing market going. Otherwise the tradies will be rolling into Canberra on their shiny Hilux and Ranger utes with forged hand tools at the ready to clobber whoever is in power.
Politicians are running scared of clogged up toilets and any appearance of soil under their shoes.
More like the politicians themselves have vested interests in keeping the prices pumped up. Most of them own multiple properties.
I'll see it to believe it. Property, especially inner city apartments are still flying off of the shelves in my area at least…
If you're going to post a comment like this, please at least give us some clue as to where you live (capital city is fine and I'm guessing inner suburbs not CBD).
Brisbane inner city riverside.
The barefoot investor has been saying this since like 2016 (or earlier!)
probably shouldn't listen to a guy with no shoes about financial advice.
The thing about experts predicting crashes and “always getting it wrong” is that we are usually operating on different assumptions. Experts generally operate on an assumption of infinite growth. They’ve built our economy on the premise that property is an investment and we expect a significant return on that investment. So to those experts, market stagnation (no drop), or even just a drop in the “projected” price, is a “total crash” even though prices are the same or higher. But to the average joe, who has watched periods of 10% year on year growth, its not like the balloon has actually popped. The market is just taking a nice deep breath before blowing it again.
The government will do everything in its power to ensure the market continues to grow. It’s just lacking a little steam with interest rates at near 0 and the foreign market being weak.
But there’s still so much steam. Even on this forum, with people predicting crashes, you have a huge glut of people timing their buy in. Which is to say: demand is insanely high. Prices aren’t even falling anymore.
Nothing props up a housing market that's about to crash every 4-6 months like telling people now's the time to rush in and but all the investment properties as we've seen a slight low and its only to the moon from here.
Australia is stupidly overpriced as it is for the product you get and the lack of quality of the build.The potential is there. Hasn't been as 'possible' since 2008.
When government stimulus stops is when we'll see the reality of the covid dump.
Conditions are ripe: stock market at all time high-whilst being propped up by the tech industry all on it's own. Most companies in all the major indexes are completely over valued and billions upon billions has been borrowed to purchase these inflated stocks.
When credit stops flowing, markets crash. The Fed are trying to help by reducing rates to almost zero, but eventually the system needs a reset.
I'm amazed at how many comments here are just laughing off the OP like he's some fear monger.
Those nervous laughs are understandable if you have a 1 or 2 million dollar mortgage and 4 kids etc..People said the same thing before the US crash.
Australia was lucky because we has super annuation and China relying on our exports.
China looks like they're trying to help us crash by bullying us into their terms now.I agree OP, it's definitely possible.
"I'm amazed at how many comments here are just laughing off the OP like he's some fear monger.
Those nervous laughs are understandable if you have a 1 or 2 million dollar mortgage and 4 kids etc.."The simple solution is don't have a 1 or 2 million dollar mortgage. If people are taking on debt up to their eyeballs and one illness or loss of job is enough to plunge them into severe stress, then they have taken on far too much debt. Far too many people do this and end up pushing up house prices in inner urban areas.
I have been watching the market in the inner west of Melbourne and the South East and houses are selling for more than asking price prior to Auction. What I am seeing in my albeit small subset is the complete opposite of this article. Maybe this could be pent up demand due to the real estate industry going on hiatus due to COVID restrictions.
No crash happening, quite the opposite. Friend put a house up for sale and they are being inundated with high offers.
Lending laws have been relaxed, Covid has actually helped as its forced more people to save while constraining supply even more.
"Lending laws have been relaxed" Nope, banks are more risk averse right now, most have moved out to min 90% mortgages if not more and they're even more concerned with people's job security due to COVID.
Covid has actually helped as its forced more people to save while constraining supply even more
25 years of no holidays because they thought COVID money is permanent. Never ceases to amaze me the vice that people will put themselves into for 25 - 30 years.
Yawn, not another doomsday news article.
Here in Brisbane, houses are selling like hotcakes.Not that I think it will happen since as mentioned it's been predicted for yonks now, but the sooner housing/property isn't some cash cow ponzi scheme the better.
stopped reading after news.com.au…
well all ive seen is house price rising in the past 3 months. there wa a post in april askign if they should buy or wait, the minority said buy now, the majority said wait. bad advice from the majority as prices have continued to rise in sydney.. rn it will continue to rise, when the f**k is this bubble coming coz im still waiting
People have been waiting for a crash since 2000.
Where art thou?
Even before that.
Before then ! My dad says some people in the early 90s refused to buy houses because they thought they were too expensive
In 2040, we will look back to today and wonder about those who held off buying when some property were still available in the six figures.
Hey man…quit reading bullshit from that crap website.
Brrrrrrrrrrrrrrrrrr
Brrrrrrrrrrrrrrrrrr
BrrrrrrrrrrrrrrrrrrGo the money printers
BrrrrrrrrrrrrrrrrrrrrrrrA trillion plus brrrrrrrrrrrrrrrrrrrrr
Brrrrrrrrrrrrrrrrrrr
Brrrrrrrrrrrrrrrrrrrrrrrrrrrrr4everrrrrrrrrrrCherry picked article which does not mention strict lending criteria and reasonable LVR limits in Australia.
strict lending criteria and reasonable LVR limits in Australia
LOL they said that about how rock solid mortgage backed securities were in 2008/9.
It is only reasonable in a normal recession (when you get bailed out by the central banks) but COVID could have been worse than great depression if the central banks and governments didn't come to the rescue.
I just think there are far too many factors here to expect any broad outcome, a few that come to mind:
- covid did not impact people equally
- people with higher incomes own more houses
- bailout bonanza from government
- banks don't like taking possession and selling homes like they used to
- apartments are not the same as a house/land
- did I mention historically low rates?
- our economic position relative to the world
🍿🍿🍿
Japan has 15 million empty houses! Houses, not homes. To be fair they are usually in need of major renovation, far from centres and new building laws make it hardly worth repairing. Yet the numbers of homeless in the cities keep growing. Italy has probably a million empty houses, some can be bought for a single Euro. China is full of "Ghost Cities" nobody wan'ts to live in. Even Spain has record numbers of vacant spaces, mostly commercial stuff but eventually somebody will convert it to homes. The destruction of the middle class has received a major boost with the outcome in the US. At the end of the day the solid bricks and mortar will still keep its value. I guess Sydney could be turned into another LaPaz. Build a cable car up the Blue Mountains and problem solved!
Homelessness could easily be solved if we just forcibly relocated the homeless in cities away from their support structures into dying rural towns with no jobs that they can't leave, and gave them dilapidated houses that haven't been touched in 20 years that'd take tens of thousands to bring up to baseline habitable
In theory this has been tried endless times, then the dogooders pop up and scream for more socialism. South Korea goes thru polulation decline in the Asian region, Most countries in Europe only grow because of endless immigration. England voted for Brexit, enough is enough!
China is full of "Ghost Cities" nobody wan'ts to live in. Even Spain has record numbers of vacant spaces, mostly commercial stuff but eventually somebody will convert it to homes.
I don't see these ghost cities called Shanghai and Beijing or Madrid and Barcelona. There is villages in Italy selling houses for 1 Euro but it isn't in Rome, Milan or Venice.
Australia has a lot of land nobody wants to live on but does that make buying a piece of land in the desert and sure fire winner.
Context is important.
Well context is everything I have so many mates who cry at me saying oh I lost a million on my Sydney home. ell one day there are emotions and people butter money there. After some Chinese investors proposed a huge resort just north of Cairns we had a chance to see the Vietnamese coast. It was a wake up call. We had never seen so many "skeleton" resorts from Halong Bay all the way to Saigon. Still the local paper managed to scam 100s of silly investors here. Spain has around 55% youth unemployment. But Volkswagen manages to produce some cars there, even PSA who bought Opel is somehow hangin in. Post virus Australia has better recovery chances.
You made a few good points.
For every winner there is a loser. If everyone is making money in the property market they everyone is probably a winner but also a loser because you are just keeping up.
Don't believe what you read in the papers. Most of the time it is feeding you what they want you to hear. Just like you wouldn't buy a property based on what is written in the ad and make your own inquiries.
Youth unemployment. Just because Spain has high youth employment it doesn't make it seem it is any better in Australia. We might have lower youth unemployment but we can make up the difference with high indigenous unemployment (I don't believe Spain has an aboriginal employment problem, but I stand to be corrected)
Context is everything.
In my area prices continue to skyrocket and everything seems to sell. A couple of 4br around the corner from me sold for $4.6M and $5.4M recently and a tiny little dilapidated 2br knockdown on a 278sqm block with no front or back yard or garage went at auction for $1.51M.
Property prices aren't dropping where people want to live.
K shaped recovery
1.51 for a 278m2 land … where do you live.. rosebay..lol
Rose Bay would be even more. This is an inner west suburb.
That's the going rate.
I just looked at a 4br house in the adjacent suburb. Nothing special and $3.07M
The prices are crazy expensive…but should sort have the idea given that here in the West houses have rocketed to over a mil. but the shocking thing is where is 5 mil or 15 mil.. they are being bought … there is still demand.
Makes me wonder what people do to be able to afford this.
@reshre8: I think a lot of it must be old money. I know a lot of people in the area and a lot of the families bought property in the 50s and 60s for nothing and the area became sought after. There's a bay and city views.
I have numerous investment properties from Double Bay to Rooty Hill and my income is extremely high but I'm wondering if a little house in the area is worth all that money to live in. No tax breaks or anything with the home you live in.
news.com.au, a quality source of information.
Sensationalist opinion pieces about what could happen.
I conceded that the government and banks will do whatever they can to stop a crash.
The issue is, with such a high property price, it increases social inequality. No disposable income also means no spending. Is it what we want as a country that a lot of productivity and equity go into real estate? My answer is no, but with one vote and no sight of a leader with long term vision what can I do?
Property appreciate if the easy way out for politicians.
Problem is everyone is sitting at home worried about meeting their next mortgage payment while sitting on 40% equity.
I am not sure the news article even makes sense. It starts off by saying that its arguable that we are different to the US housing market but then suggests we are different because we carry far more debt than Americans. However, we are different to America. In the subprime crash Americans walked away from their upside down non-recourse loans. This isn't possible in Australia so people are much less likely to walk away from their loans and will prioritise mortgage payments over everything else.
The only thing I don't understand is why government so obsessed with property prices. In the end it's a non producing asset, and as an investment often non-profitable.
It is easy money. Why make the effort to promote R&D when you can just sit there and collect money (particularly developers giving you cash)? There is no visionary leader.
wealth effect and vested interest. a housing crash would be disastrous for the economy as well as politically toxic, it's become too big to fail and govts will throw everything within its power to keep it afloat
No, it would be a reset.
Population is still in growth, people will still need somewhere to live. The market would find its true value.
Negative gearing is the most blatant transfer of wealth happening in the western world right now and the Australian public have been duped into thinking it's a good thing.
there un-creative
I don't think it will happen but i think it would be the best thing that could happen to the country, which has lost itself. The young people today don't have a hope of the Australian Dream which had been available for generations gone by.
If you are buying on a short term horizon and an investment property, yes, this is a worthwhile debate. Otherwise it’s a waste of time.
If you are buying in a good area, and especially if you are buying your primary place of residence which you expect to hold long term, worrying about where house prices will go is dumb. You won’t ever lose as long as you can afford to hold through any potential downturns. So basically be smart about leverage, think carefully about the suburb you choose and you won’t have any regrets.
The Perth market has been in the toilet for years. With record low interest rates, government incentives, and a tight rental market, we're expecting a historic BOOM
But how can that be? House prices never fall.
Yup, Perth is down 30%, a fine example of an overcooked market
I think the boom days that Perth experienced are a fair way off, we're not going to have an influx of people due to a mining boom anytime soon and with suppressed immigration i doubt we're going to find a huge amount of people buying.
The boom i feel is a thing of the past, a slow increased/stagnation is more likely.
the government and RBA have thrown almost everything into the housing market
Look, I wish it was true, housing here is a disaster and there's only one realistic way to resolve that: a massive fcuking crash.
Most data suggest that it's going the other way though.
I'm not sure how impoverishing millions of home-owners is a solution to Australia's putative housing 'disaster'. Any crash substantial enough to cause house prices to fall 30% or more implies an economic cataclysm for those working ordinary jobs.
Rich investors, however, would be delighted. They'd be snapping up properties left and right from distressed owners, all financed with virtually free loans from banks desperate to generate returns.
It's more relegating those who aren't one of the millions of home-owners to a life of renting off those already with investment properties, unable to break out.
Perth's down 30%, didn't require an economic cataclysm.
I feel those who were around when houses were 3 times the average wage are disconnected from the reality that today's people face, with 30 year+ mortgages the norm. Unfortunately this money has to come from somewhere, and with 0 wage growth it comes from disposable income and hence cash injections into the economy.This is not a sustainable way to run a nation.
A crash won't "impoverish" many owners, most of whom are sitting on huge untaxed capital gains - it will, however, make housing more affordable for those that are being impoverished through a life of high rents and no opportunity to own their own home.
If policy is adjusted appropriately to reduce the tax advantaged speculative gains on offer through housing investment then the rich investors will be much less delighted in housing; they can pump their money into stock market bubbles instead, as people don't live in stocks.
A news.com.au article?
I'll pass thanks.
If I get a dollar everytime I hear this, I will probably be able to buy a house in Sydney.
Yea…no.
Believe what journalists say at your own peril. The writer probably never owned a property and never will.
Not gonna happen. The endless queue of people/families wanting to get in will ensure that won't happen. It might drop 5%, 10% or even 15% but that's hardly a historic crash.
A Perth style crash of over 20% since 2014 and staying stagnant would be the best thing to happen to Australia if it happens to every other major cities as well.
Supply / Demand
- Living in Australia is popular
- Banks have strict lending criteria
- 9 months of subdued market demand due to external factors
- Historically low interest rates
- Covid19 vaccine just announced
Yeah…I don’t see a crash happening. If anything I would bet my money on the opposite.
CBA predicted 40% crash a few months ago. Didn’t happen.
Economists often get predictions wrong as there are way too many variables to account for.
Also - Who is PEXA? Never heard of them. I would rather use CoreLogic data to drive my investment decisions, thank you.
People don't want to hear geeky nonsense about supply and demand and economic fundamentals.
They want to hear that next year they'll be able to afford a penthouse overlooking the Sydney Opera House.
PEXA is electronic conveyancing.
Living in Australia is this dream we sell to people but the reality is very different
Seriously, you'd think people would get sick of writing these articles - they've been writing about the Australian Housing bubble for the last 40 years - still hasn't come yet.
nah the boomers running this country will never let this happen
boomers gonna boom shake shake shake the room!
murdoch media, pass.
I believe it was out of the 2008/2009 crash when they did an analysis of the journalistic articles on the housing market pre GFC and when articles talk about a crash it's unlikely to happen as the market had largely hedged itself. Crashes happen when there was the lowest proportion of journalistic articles spruiking a crash (i.e everyone had become complacent).
Well my house value went up 100K this year, so yeah.
did it by any chance go down by 200k during the previous 6 years?
Oh no! The Boomer generation is going to lose value on one of their many properties! I have no emotion for the generation that caused the GFC collapse out of their greed.
I don't really have an opinion on which way the market will go, but interesting to note the the Australian Financial Review is taking the opposite position today: https://www.afr.com/policy/economy/house-price-expectations-…
House price hopes, buyer confidence surge:
"The Reserve Bank's interest rate cut and quantitative easing measures, along with the first easing in Victoria's restrictions, have pushed nationwide consumer confidence and property-buying intentions to seven-year highs.
Expectations on property prices have also returned to within pre-COVID-19 levels.
… etc"No need to listen to the permabears, just buy.
Yeah, until Parliament has the balls to pass legislation providing for a net zero immigration policy, the removal of negative gearing and the banning of property investment, we will never experience a crash. Unless in some parallel universe the cash rate for some reason skyrockets to 20%.
I didn't read the article.
The Australian housing market will see a historic crash sometime. The headline is fact. It will happen sometime, maybe in a month, maybe in 200 years. Of course it will happen.
It is pointless trying to work out when, every man and his dog reckons they know when it is going to be. I don't read articles like this any more, they're all clickbait.
Your friend could’ve taken out a CDP using the equity and pay zero taxes. This allows the equity to continue to grow while your friend live off the CDP.