Anyone Think House Prices Will Begin Falling?

Boogerman on 02/04/2021 - 09:05
Last edited 09/04/2021 - 13:50

I’m going to be contrarian
Mortgage moratoriums are over, Jobkeeper is over, Rental eviction moratoriums are over, Business rent payment deferments are over.
Rental vacancy rates in Melbourne & Sydney are at their highest in many years (Melbourne over 6%)
FOMO occurred due to the Liberal Party socialist handouts creating a false economy (while racking up both the biggest budget deficits & national debts in history). That false economy is now exposed

Evictions ramping up with worse to come, tenants groups warn
https://www.theage.com.au/national/victoria/evictions-rampin…

So, not sure where all this demand is coming from

Home & Garden

Comments

      • orangetrain on 02/04/2021 - 16:28
        +2

        TVs getting cheaper means inflation not going up!

        • serpserpserp on 02/04/2021 - 16:31

          TVs getting cheaper means inflation not going up!

          I thought TVs were more expensive since COVID!

  • serpserpserp on 02/04/2021 - 16:13
    +2

    Another day another house price thread.

  • capslock on 02/04/2021 - 17:06

    CBD apartment prices are falling so fast that I would like to know who are still buying or settling on those brand new apartments in the CBD. They would be facing huge paper losses from day one.

    • bargain huntress on 02/04/2021 - 20:10

      interesting

      just sydney and melbourne?

      how much falling are we talking?

      • derrida derider on 02/04/2021 - 21:35

        Around 8% in Melbourne in the past year, and still dropping. Rental vacancy rate is over 6% (usually its under 2%).
        It's the loss of Chinese students that's driving it.

        • Cluster on 03/04/2021 - 01:17
          +12

          The entire Sydney/Melbourne apartment bubble was built on Chinese buyers. Who else wants to live on the 20th floor with zero to one parking spaces? No one, except people who are accustomed to this being normal.

  • [Deactivated] on 02/04/2021 - 17:43
    +3

    Classic bubble. Yes, over the long term, home prices would be expected to go up. But the lack of supply right now, coupled with FOMO and unwarranted incentives from government, are fueling a classic bubble.

    Imagine that there are fewer properties, interest rates are at their lowest possible, and government incentives are greater than they've ever been. People are borrowing the very most they can possibly afford in the most panicked fearful state the frenzy can produce.

    And… then what? Prices should remain that high? Go higher?! Uh-uh, no. Something has to give.

    Either lending becomes stricter. Interest rates go up. Supply increases. Government handouts and stamp duty concessions are switched off. Any one of these things will reduce demand.

    What could the government possibly do to keep this insanity continuing? That's a serious question.

    • JimmyF on 02/04/2021 - 19:04
      +3

      We are in a FOMO loop…. OMG house prices went up $50k last month, we better buy. But low stock, means the have outbid all the other crazy bidders. So end up wat overpaying so they don't miss out. The following month, OMG house prices went up $50k again! Massive FOMO to get in, we already have 'lost' $50k by waiting.

      Once the cheap arse money stops, then lets see what happens.

    • Bystander on 02/04/2021 - 19:31
      +5

      What could the government possibly do to keep this insanity continuing? That's a serious question.

      Allow large volumes of wealthy foreigners (eg. HKer's) to emigrate to Australia.

      • derrida derider on 02/04/2021 - 21:37
        +1

        That certainly worked to create the buying frenzy for inner city apartments - as proven by how massively they have dropped in price since Chinese students were stopped.

      • netjock on 02/04/2021 - 22:17
        +1

        Rich foreigners can get a Portuguese visa for 500k Euros invested in real estate. Cheaper than Australia entry price.

        • Bystander on 03/04/2021 - 09:46
          -1

          Not everyone wants to move to Portugal.
          There's some extremely good reasons for choosing Australia first.

          • netjock on 03/04/2021 - 12:35
            +4

            @Bystander: Like freedom of movement between states, the rich culture and 180 towns and cities within 2 hours flight of any major capital city.

            The only thing goes for Australia is high house prices, there is nothing else we are world number one. Only reason why any one of our cities got on the most liveable list is because all the expats who vote gets their accomodation paid for by their companies.

  • JimmyF on 02/04/2021 - 19:02

    Please add a poll

  • djmm on 02/04/2021 - 19:55
    +6

    I'm typing this from a house

    • [Deactivated] on 03/04/2021 - 23:05
      -1

      Wow, I've been typing from a keyboard all along.

  • michaelTito on 02/04/2021 - 20:29
    -1

    Everytime house prices go up post like this appear left right and center.

  • Illyria on 02/04/2021 - 20:38
    +14

    Aus property prices are amonst the most unaffordable on Earth. It's been in a bubble by comparison to world metrics for about two decades and the only thing that has kept it inflated has been ongoing interest rate cuts. Consider:

    1 - no immigration to Australia for about a year, and no end in sight in this regard
    2 - negative population growth, as with many Western countries
    3 - increasing trade tensions with our biggest trading partner (China)
    4 - most importantly, NO MORE INTEREST CUTS POSSIBLE

    So with no new demand, interest rates only going up from here, only an idiot could see some fundamental reason for why property should be a compelling investment.

    That's not that say that it won't go up a bit further. The sheep have FOMO and will borrow bonkers money because the interest rates are low, like as if there might be no repercussions in the future. But there will be repercussions - interest rates only have one way to go from here - and that's when the property market will take its overdue tumble.

    For full disclosure, I'm from a property weatlthy family so it's none of what I say above is in my interest. But I find that most other people who own their own homes or, more often, own an investment property, get offended when facts are laid out like this. It's like telling cyrpto currency gamblers that Bitcoin in bull$hit - they get angry.

    • OzzyOzbourne on 02/04/2021 - 22:29
      -1

      Everything you say would make a recipe for price drops in any other country, but not here. It's too big to let it fail now.

    • Cluster on 03/04/2021 - 01:15
      -4

      A couple of points. As soon as you call people who disagree with you "sheep", you have basically lost the argument in trying to convince people you're right.

      No more interest rate cuts possible? That's not true. Right now you can lock in 1.75% for three years. That's well above the 0.1% bond buying the RBA is pumping into the market. If things turn sour for the Australian economy I wouldn't be surprised if the government got the RBA to directly finance home loans at sub 1%. Seems desperate and unlikely? Yes. But when millions of Australians are threatened with losing their homes anything and everything will be tried.

      Part of the solution for housing market FOMO is to tighten lending standards. Calculate repayments at 5% and reject anyone who can't cover them with 30% of their after tax income. Property bubble solved. Of course the government will have to deal with legions of poor first home buyers who are locked out of the market, but as long as they don't represent a significant part of the electorate the storm can be ridden out.

      • Bargain-er on 03/04/2021 - 07:23

        Not sure what calculations APRA had during 2018-2018. But 5% interest and 30% after tax capability seem too extreme which may backfired. No one would sell and no one could buy, market will grind to a halt. It will affect not only housing but other sectors too.

        • netjock on 03/04/2021 - 12:42
          -1

          The government needs house prices up so people would spend freely on made in China (including shiny cars like MIC Tesla model 3) to keep our Chinese masters happy.

          Theory a vibrant housing market makes a vibrant retail market has been going on for so long they can't change it. Just like house prices only go up. They just haven't tried doubling salaries every 7 years and watch our global competitiveness go down the drain.

    • diceman99 on 06/04/2021 - 14:40

      Maybe no more interest cuts possible, but Inflation has the same effect as an interest rate cut. Inflation set to sky rocket as you have pointed out.
      Less Productivity and Same demand = Inflation

  • dimes on 02/04/2021 - 20:47
    +7

    I've been waiting for a drop or a crash for a long time, but I've come to realise the people in power have too much at stake and will never allow this to happen. So they will do anything to keep kicking the can down the road, at the literal expense of those looking to get into the market.

    • boozler on 02/04/2021 - 21:44

      Keep waiting mate there's your problem in itself, you wait for something that may not happen in your lifetime. Here's a tip for you once you have a deposit and a pre-approved loan go all in, and don't be afraid. Not to boast, but this is how over the last15years I've accumulated a portfolio of properties just like the politicians.

      • Illyria on 03/04/2021 - 10:26
        +1

        Eyes shut + mind turned off + follow the herd = a recipe for how bubbles are created.

        There's a lot to be said for momentum trading but as I stated in a separate post above there is nowhere for interest rates to go but up. If you've ever played chess try to keep this fact in mind and think one step ahead.

        • john71 on 03/04/2021 - 23:25
          +1

          You forgot to use the term 'sheeple'!

      • Blue Cat on 05/04/2021 - 14:03
        +2

        go all in, and don't be afraid

        Sounds EXACTLY like that multi-level-marketing scammer who tried to explain to me a few days ago on a phonecall about something I already forgot.

        Nice try though.

  • OzzyOzbourne on 02/04/2021 - 22:26
    +3

    The government will not let prices drop, they will literally hand out cash to prop up the prices. So no, they will not drop appreciably.

    • Illyria on 03/04/2021 - 10:27
      +7

      The amount of comments saying that the government will step in to save the day, as if to admit "yeah property is unreasonably overvalued but we're confident of a bailout" has got to be the loudest alarm bell warning of a bubble that could possible exist.

      • netjock on 03/04/2021 - 12:48

        Government never bails out the little guy. You think JobKeeper is to help small business? It is to help banks and big companies continue to make profits and pay dividends. Can tell with JobSeeker. Companies don't vote. Imagine if they got a vote.

        Just need to check who is employer of politicians after they leave parliament. It sure isn't the small landlords association.

  • techlead on 02/04/2021 - 23:48

    No, I don't think house prices will fall. The government will not let it.

  • vid_ghost on 03/04/2021 - 00:29
    -3

    2026 will be the next big drop in house prices… It's all up hill from here sorry to say

    • JohnCandy on 03/04/2021 - 00:40

      Why do you predict 2026 to be the year prices will drop?

    • Bargain-er on 03/04/2021 - 07:26

      Only to drop to 1.8x whatever current price is? What's the reasonn behind that speculation?

  • Dr Cheapo on 03/04/2021 - 00:31
    +1

    Nah, no chance. Interest rates so low + economy recovering from covid. they will continue to go up for some time

  • miwahni on 03/04/2021 - 01:15

    ANZ economists predicting 17% rise in prices overall this year, while Christopher Joye from Coolabah Capital has been banging on about 20 - 30% rises over the next two years unless there is regulatory intervention. I'm betting it will happen, as in 2017 when there was a cap placed on the amount banks could lend on an IO basis. That, or lower LVRs, or other restrictions on investment lending.
    Having said that, it seems only to be the housing market that's overheated. Units are not doing so well. Any intervention though will be broad based and hurt units as well as houses. Not a good time to have your off-the-plan purchase from five years ago suddenly be ready to settle.

    • netjock on 03/04/2021 - 13:06

      ANZ is doing it to feather their own nest

      Remember start of pandemic the banks said 30% drop and the government put in not only JobKeeper but also RBA giving 0.1% term lending facility in available to the banks. The government basically bailed out the banks through the back door and a lot of corporate Australia through JobKeeper.

      Economists can't agree on 1 single number because you won't get your name out there. Christopher Joye is throwing darts and hoping to get lucky.

      If economists are right then how do you explain zero migration, continued housing completions, potential 100k jobs lost after JobKeeper ends and increase in house prices.

      A lot of economists are just there for the ride and drawing straight lines from this data point to last data point and it should land us at X in 12 months.

      • john71 on 03/04/2021 - 23:26

        Why listen to economists, scientists and other silly so-called 'experts' when we have social media?

        • netjock on 04/04/2021 - 14:54
          +2

          If you suddenly lump in Economists with "experts" then may the universe have mercy on our soul.

  • conza on 03/04/2021 - 09:09

    So the stimulus was absolutely necessary for us to survive through the period of no demand, but the rest of your premise is fair and something I've thought about as well.

    I think there's pent-up demand from people aged 25-40 who have been saving to buy a house but haven't been able to get in.

    It's too soon to say being only a couple of days after the jobkeeper has ended, I hope not, there will certainly have to be some businesses inside that grey area where they realise only after the payments stop that they can't continue, other businesses will either have done the numbers and be laying off people sooner, closing entirely, or of course other businesses are aware and believe they'll survive.

    So with that being said, how long until house prices start to fall? If they fall? Well hard to say isn't it, because we don't know the size of the grey area.

    If it's small enough there will be no impact at all, if it's large enough the impact should be felt in the next month or two, if it's in the middle, the impact may be marginal and appear more as a minor plateau.

    EDIT: To answer the question, no, not for a couple of months at least they won't start falling until late May and by how much is too difficult to be confident in.

  • BigBirdy on 03/04/2021 - 09:57
    +4

    The property market is doing the same as the share and crypto markets. They’re in a FOMO cycle, pushed along by low interest rates, and a fear to invest in the ‘real economy’ (ie entrepreneurial job producing business investment). All of it is totally unproductive, and the lack of growth in the ‘real economy’ reduces our standard of living. Flat wages anyone? It cannot go forever and, when it ends, those in late will be financially devastated. Don’t be them. It’s a casino economy.

    • netjock on 03/04/2021 - 13:00

      Don't have to be late in to be in trouble. Some people have low cash flows and they are just buying IP on top of generated equity from appreciation so their loans have gone up and so have their LVRs.

      I suspect there is a lot of those people lurking out there. They just aren't saying until foreclose happens.

  • Illyria on 03/04/2021 - 10:29
    +3

    The amount of comments in this thread saying that the government will step in to save the day, as if to readily admit "yeah property is unreasonably overvalued but we're confident of a bailout", has got to be the loudest alarm bell warning of a property bubble that one could possibly ask for. Interest rates are at a historic rock bottom with only one way to go from here, and that is UP. Anybody thinking that this will affect property prices positively when it does happen needs to think again.

    • netjock on 03/04/2021 - 12:53

      True. But most people invest in the hope that if they win they win big, if they lose get a bail out. It is basically Donald Trump school of business: I get lucky I make lots of money, I get it wrong I send all my sub contractors under and I walk away.

      Most tax payers have no idea where their tax payer funded bail outs are coming from.

  • CalmLemons on 03/04/2021 - 11:37

    Guys who own a house = no bubble

    Guys who don't own a house = bubble = wishful thinking

    Facts:

    Look at the black line, that has been a trend upwards for the last, 30 years as much as the graph covers?

    https://www.rba.gov.au/publications/bulletin/2015/sep/images…

    • netjock on 03/04/2021 - 12:56
      +2

      And we know the longer things go in a straight line the more likely it is to continue that way.

      I am surprised not more people run off the road after straight sections of freeway.

    • Illyria on 03/04/2021 - 16:14

      Interest rates have never been at rock bottom before so forget about history. Once they go up history changes. And they can only go up from here

    • RecklessMonkeys on 03/04/2021 - 22:47
      +4

      A Christmas turkey gets fatter for 364 consecutive days!

    • BartholemewH on 06/04/2021 - 22:28

      As a home owner, I respectfully disagree.

  • Dotaguy on 03/04/2021 - 13:19
    +3

    Tbh, I don't get the hysteria. I was thinking middle/early last year after we got thru the first roud of lockdowns here in Vic that house prices would skyrocket in 2021.

    People don't want to keep living in apartments, more people want more space with more work from home, RBA likely to keep interest rates low if not lower to keep economy going etc. I think in about June/July last year I was kind of sure, but not 100% there yet but by the time September swung around I was almost certain that house prices would go up drastically. Think back to the financial crisis in 2008, I wasn't in Aus at the time but even tho it impacted housing price values for a short while where I was eventually shit went through the roof again. If anything, I thought this would have even greater gains than back then because that was an actual problem in the financial system which causes the crash, covid's impact on the economy is entirely man-made so there's no reason why it shouldn't bounce back even stronger.

    • netjock on 04/04/2021 - 14:59
      -1

      People don't want to keep living in apartments

      Just how many Australians live in apartments.

      Melbourne CBD has a population of about 50k people and probably 90% of those are overseas students.

      Maybe people are just imagining stuff.

      more people want more space with more work from home

      Why you want more space WFH when office cubicles have only ever gotten smaller to make office space more productive?

      Think back to the financial crisis in 2008, I wasn't in Aus at the time but even tho it impacted housing price values for a short while where I was eventually shit went through the roof again

      Thanks to the CCP

      I thought this would have even greater gains than back then because that was an actual problem in the financial system which causes the crash, covid's impact on the economy is entirely man-made so there's no reason why it shouldn't bounce back even stronger.

      I think the financial crash is man made (watch the movie The Big Short). If you think someone caught a bat and made it have a cuddle with another species and then have a cuddle with a human (or it is just released from a lab) then I got a few magic beans to sell you.

      People just have zero common sense. It is literally like in the book where people were dancing at the foot of Mt Sinai worshipping a golden pig while the long bearded man went up the mountain to talk to a burning bush. In the end we'll all end up wondering the desert for 40 years just like the Japanese economy.

  • [Deactivated] on 03/04/2021 - 13:35
    +1

    other things to consider that contribute to the ever increasing house and land prices (units and flats and townhouses excluded):

    • building material price has increased a lot since back in the 1990's.
    • tradie labour costs have gone up a lot too
    • land price, you cant create more land near CBD
    • netjock on 04/04/2021 - 15:03

      building material price has increased a lot since back in the 1990's.

      Wood grows with water, soil and sunlight. Iron ore is there to be dug up. The cost increase is mostly labor and rent

      tradie labor costs have gone up a lot too

      They aren't being more productive, neither are they working longer hours. Suspect the cost of living has increased for trades people (plus building rules and regulations) which is driven mostly by cost of housing

      If you look at your take out meal, it has probably tripled. Cost of rain, sun and soil hasn't tripled, salaries probably doubled, rent has gone up. Most of the cost is rent and labor. Labor is driven by rent.

      If you really want to get caught in a financial hard place, boost the cost of housing. Everyone is just pushing increases to meet housing costs which keeps on inflating.

      You think if cost of housing goes up 22% the mortgage money appears by magic, it is either squeeze the tenant or squeeze the landlord. Interest rates have been squeezed to nothing.

  • croseks on 03/04/2021 - 14:02
    +4

    Why would house prices fall when the dollar has lost approx 20% of its value in 2020 alone?

    All assets are going up because the dollar is going down, it’s really as simple as that.

    Doesn’t matter about incomes or what people consider to be affordable or anything like that. Interest rates go down 1%, house prices go up 20%.

    Cash is trash and everyone knows it, which is why they are throwing everything they got into assets (Real Estate, stocks, gold, Bitcoin etc…)

    • CalmLemons on 03/04/2021 - 14:07
      +1

      I agree, and I sense a Ray Dalio follower here too :)

      Don't think a lot of people here are really finance followers.

      Whole world screaming save havens for money, and the trend is now into recovery sectors and away from high growth sectors. Save havens being real assets, e.g. property.

    • drprox on 03/04/2021 - 18:21

      Yep I keep telling people the best thing they can do is buy all the things. Inflation is coming so those holding assets be they houses, cars, pinball machines (haha). It's all going on up.

      I'm hedging my bets a bit, more index funds but keeping some in reserve in case it does somehow go to hell (doubtful).

    • Rescue 26 on 04/04/2021 - 13:05
      +1

      "Why would house prices fall when the dollar has lost approx 20% of its value in 2020 alone?"

      Huh? The AUD was worth US 70 cents on 1 Jan 2020 and US 77 cents on 31 Dec 2020. Where are you seeing a 20% fall?

      • tomleonhart on 04/04/2021 - 14:19
        +1

        The US dollar is the world reserve currency. 20%+ of all US dollar has ever been created was created last year.

        So yes AUD to USD remains the same but USD has lost around 20% of its value.
        That’s probably where the 20% coming from.

        https://fred.stlouisfed.org/series/M1SL

        • netjock on 04/04/2021 - 15:05

          But my haircut isn't in US dollars, fruit and vegetables aren't in US dollars. Houses aren't in the US. Our salaries don't adjust to the US dollar.

          So why is everyone using Aussie houses to hedge US dollar? That is like buying a bottle of water in Egypt to satisfy my thirst in Melbourne and complaining about currency movements.

          • tomleonhart on 04/04/2021 - 19:27
            +1

            @netjock: It’s not just Aussie house, pretty much every single housing market in the developing/ developed world has gone up significantly over the last year.

            Now if you have an explanation for the increase of house price across the word and it has got nothing to do with the dilution of the US dollars, I’d love to hear it.

            • netjock on 05/04/2021 - 00:33

              @tomleonhart:

              Now if you have an explanation for the increase of house price across the word and it has got nothing to do with the dilution of the US dollars, I’d love to hear it.

              That is because you people don't have a good explanation for it. Because everyone has gone mad and drunk the kool aid. If you have $8k of disposable income a month and you were paying 6% interest rates, why would you pay $8k a month when interest rates are 2.5% and the difference being capital you've loaded into the principal because you bid up the asset. Then walk away feeling rich.

              That is like Woolworths shares are selling at $40 with a yield of 2.5% but because money is worth nothing I'll pay $400 a share and get 0.25% dividend and then walk away thinking I have a $400 asset when all you fudged with is one of the numbers in the formula to short change yourself.

              In this whole property game who is walking away with risk free profit. The government through stamp duty, they make so much they can afford to give everyone a 50% discount. It is even better than being an REA, stamp duty you don't have to work for.

              • tomleonhart on 05/04/2021 - 05:07

                @netjock: Ok I'll bite.

                In this whole property game who is walking away with risk free profit. The government through stamp duty, they make so much they can afford to give everyone a 50% discount. It is even better than being an REA, stamp duty you don't have to work for.

                And that's resulting in price increase how?

                That is like Woolworths shares are selling at $40 with a yield of 2.5% but because money is worth nothing I'll pay $400 a share and get 0.25% dividend and then walk away thinking I have a $400 asset when all you fudged with is one of the numbers in the formula to short change yourself.

                That makes no sense. If Woolworth is paying 2.5% dividend and the money supply is diluted by 20%, it will only go up by 20%.thus decrease the dividend yield down to 2% which is still much better than bank interest rate. Of course it's not a given, only certain asset will money flood to and WOW isn't one of them yet.

                That is because you people don't have a good explanation for it. Because everyone has gone mad and drunk the kool aid. If you have $8k of disposable income a month and you were paying 6% interest rates, why would you pay $8k a month when interest rates are 2.5% and the difference being capital you've loaded into the principal because you bid up the asset. Then walk away feeling rich.

                This I don't disagree with you on, since I believe cheap credit thanks to the dilution of money supply are the reason for price going up, not real demand. Another point is that AUD in itself in term of M1 increased by 20% since March 2020. Why? Because AUD is pegged to the USD, USD is devalued by 20%, so is the AUD if the RBA wants to keep the AUD/USD to remains competitive.

                • netjock on 05/04/2021 - 14:07

                  @tomleonhart: How is money dilution coming? Everyone seems to think everyone's bank account went up 20%

                  The money's gone to the banks and you need to credit worthy for them to lend to you. Here is the problem: even if the banks lend to you don't go out paying extra 20% for stuff.

                  You can buy Woolworth's shares on margin and they will lend 65%+ but you don't see share prices go nuts.

                  AUD is not pegged to the USD. Call up the RBA and see if they agree with you? A peg means exchange rate controls and intervention by the central bank dictated by the government. I suggest you talk to our CCP overlords about how USD pegs work because they have one.

                  If what you have said is what most people believe in then yes it explains house prices.

    • netjock on 04/04/2021 - 15:04

      Which dollar?

  • HeyHeyHeyIsItADeal on 03/04/2021 - 15:29

    didnt everyone say this during covid and now they've increased in prices a fair bit?

  • Herbse on 03/04/2021 - 16:13

    Meh. What's the worst that could happen?

    Everyone with a house is loving it. Everyone without one is waiting for the crash.

  • smartazz104 on 03/04/2021 - 16:24

    This is a society that will congratulate you and splash your face on the front page of whatever trash rag you might choose to read, if you own multiple houses; even better if you are under 40.

  • Thatsgold on 03/04/2021 - 17:38
    +8

    Where the fking fk are people getting all this money to keep on buying…
    Here i am, trying to not go broke AF

    • LFO on 03/04/2021 - 20:19
      +1

      It is called MORTGAGES

      Money is cheap, lenders lend, mortgages grow.

    • Snoozer on 06/04/2021 - 15:25

      Once you have your foot in the door you can simply leverage the equity to keep on buying.

    • squashy on 07/04/2021 - 10:59

      Username didn't check out

  • Name on 03/04/2021 - 18:42
    +2

    My speculation is that prices will correct to what they were about 2 years ago, but that correction won't come for another year or two. I don't think we'll see the same 30/40% drop like you did in America a while back as our system of debt is different. Not as easy to walk away from responsibilities.

    I also don't think job keeper is as big an influence as what people think it was. I knew a few people that ended up on it, but those people went and got other jobs or their employer has returned to normal or they were scamming by claiming covid and doing cash in hand work instead. It's hard not to cherry pick examples, but I think overall it helped get people through and it's just going back to normal for the vast majority of people.

    The only time I see a correction and massive defaults occurring will be when interest rates start to go up.

    • Brick Tamland on 03/04/2021 - 19:13
      +1

      The only time I see a correction and massive defaults occurring will be when interest rates start to go up.

      This and when banks start reigning in how much they lend out. To me it seems like people are borrowing the maximum they can to get into the market which is driving up prices. The only thing that will stop this is a tightening of lending criteria and interest rate raises. Even if this happens I don't see prices going down, flat lining maybe.

  • imperialchef on 03/04/2021 - 19:21
    +1

    I think a correction may occur after the RBA raises interest rates in 2023+, but as people have mentioned there are many ways to keep propping up the market. Funding housing using super and immigration will increase from Hong Kong, Europe and US where there has been mass instability. Australia has held up extremely well during the pandemic and I think all eyes are on us for the people who are cashed up and ready for a change. I do not really foresee the market falling 30% plus, COVID-19 didn't even break us and I am pretty sure nothing will. TLDR small correction possible max 20% but mainly will stabilize and keep going up in the long term.

    • virhlpool on 04/04/2021 - 11:15
      +3

      I doubt if our job market on per capita basis is anywhere as strong as the US or Europe, never was. This is particularly true for professional, office jobs. I doubt if many office goers will leave their lucrative job markets back home and come here to struggle to find right work in their areas of expertise.

  • drfuzzy on 03/04/2021 - 19:30

    No

  • DiscoJango on 03/04/2021 - 20:16

    Ah, the sheep who read a news.com.au article and believe every word.

  • LFO on 03/04/2021 - 20:17
    +1

    Anyone Think House Prices Will Begin Falling?

    Quick answer is: definitively YES !

    Elaborated answer is: it is not very clear WHEN prices will begin to fall and WHY will that happen.

  • Yoo05 on 03/04/2021 - 21:51

    It’s a mix of few things, low interest rates, first home buyers advertising everywhere, low supply.
    Developers are restricting land releases and creating more competition amongst buyers, where they can release 500 lots they only do 10.
    One buys other 10 will rush as they don’t won’t to be left out( typical society).
    Everyone has different circumstances, there is no Roth or wrong time, depends on your own situation.

  • OzFrugie on 03/04/2021 - 22:09

    For some people who think since we currenly have record low rates, there is no chance it will get lower hence the only direction from here is rate increase, why do you think and are confident that it will be the case?
    Official rba rate is now at 0.1, but surely they can still even cut it lower eg. 0.05 or 0% or even negative like in EU?
    Perhaps its unlikely but they also said QE was unlikely in AU before, and here we are..RBA been doing QE since nov.. so never say never?

    During covid when rba cut rate to 0.25% I heard ppl in forum saying exactly the same thing.. rate cannot go lower from here, the only way is up, yet rba cut it again in nov to 0.1%

    I am not asking for heated argument here, but just want to get some knowledge on why some people think this way and seems very confident.
    I know the bond yield for 10 yo is trending up .. is that the reason why people think this way?
    Can't central banks control that yield like they've been doing in the past? Is this time different.?

    • RecklessMonkeys on 03/04/2021 - 23:12

      Good questions.
      Would you be happy to receive back less than the principle amount that you lend to someone?

      QE is robbing from the poor and giving to the rich. When inflation become too much for the real economy to bear, rates will rise. Flipping houses and constantly bailing out scumbag bankers is not creating genuine wealth.

      I recall reading years ago, one critique of our [Labor] government was that they had too little debt (without which QE could not operate) . This is plainly ridiculous, but anyway we got plenty of debt now!

      So yeah, will they try every trick in the book to keep this going? Yes.
      Can it go on for ever? No.

      What happens then? It will be bad. Very bad.

      • OzFrugie on 04/04/2021 - 01:40

        I agree with ur sentiment where it seems that govt all around the world just kick the cans further down the road. The question is how long that road is or if the road ends at all…
        Yes, richer gets richer and poor continues to suffer sadly.

        I read somewhere that in denmark there are already banks offering negative rate home loans. Not sure how exactly it works but it proves that it's not unprecedented and can work in real life, not just some theory or fantasy.

        Lets look at US.. afaik they have been printing money via QE since gfc.. so around 13 years now.
        If there was no covid, there was likely no crash in the market.
        I heard that property market there is also hot, well really it looks like developed world market just continue to go higher, detached from the economy, due to the cheap money via low rates and free money via printing money/QE..
        For 13 years of QE, did US experience high inflation? I honestly didnt hear it (correct me if I am wrong). All it did was making assets go higher..
        Inflation number feels funny to me in real life.
        In AU, they have been less than 2 pct of years yet in real life, things are actually more expensive, so how does that work?!
        Is the number manipulated or something by central banks so that they can have excuse to keep rates low and continue with the party for the rich??

        Seems like for the poor and little guys like myself, the only way to change our fortune is to take risks and join them… and hoping when you do that, the music doesn't stop too soon, or doesnt stop at all in our lifetime…

        • RecklessMonkeys on 04/04/2021 - 09:55

          If you look at Japan, where QE originated, young people are crammed into Tokyo shoebox apartments called Ququri. Inflation comes in various guises.

          Globalisation has probably kept a lid on inflation by mobilising labour, and keeping wages down. It's coming apart at the seams.

          You're right, we're all sucked into this one way or another.
          I would just urge people not to become debt slaves.

        • sangohan on 05/04/2021 - 00:03

          [inflation] have been less than 2 pct of years yet in real life, things are actually more expensive, so how does that work?!

          I think taking the CPI to be gospel isn't the right way to analyze the situation. CPI considers technological advancement to be deflationary - after all, for the same price you can get a phone that is 10x better than 5 yrs ago. So the inflation measures removes this improvement, by adding a hedonic adjustment to the prices.

          For things that didn't improve this way, i think the prices did become more expensive thanjust 2%. Things that cannot be scaled using tech, such as education, child care, and to some extend, groceries.

    • croseks on 07/04/2021 - 08:15

      Nominally mortgage rates are <2% but the real rates are already negative when you take into account inflation.

      All those who think rates can’t go lower, they already are negative and will continue to go lower. We live in a debt based monetary system that requires more and more debt to cover initial interest repayments.

      Central bank digital currencies are designed exactly for this purpose (negative rates), this is the future, not sure for how long but the next decade is already decided.

  • dufflover on 03/04/2021 - 22:22
    +1

    All I know is the crocodile tears people cry when they see local businesses and whatever else close all consumer-based businesses, particularly with COVID, all the while buying property to join the capital gains bandwagon and lowering their monthly disposable incomes they said they would've spent on said businesses.

  • Jalif on 03/04/2021 - 22:37
    +1

    Of course not.
    There a hundreds of thousands of people who've moved back to Australia and need places to live, and many brought money with them.

    • capslock on 03/04/2021 - 22:53

      But these people have left their overseas jobs, are now unemployed and won't be able to get a loan. Do they all have $1.1m in cash to buy a median Sydney house?

      • Cluster on 04/04/2021 - 11:04

        How many Australians have $1.1M in cash to buy a house? I would be surprised if it's much above 1%.

        People take out loans and leverage up to their eyeballs, hoping that they get to keep their job for the first few years and that house prices keep going up. Its worked for us since Federation, and probably won't stop.

      • duchy on 04/04/2021 - 14:04

        Many can now WFH. Australia is in large part a service based society.

        • netjock on 05/04/2021 - 00:43
          +2

          You try working London or New York hours from Sydney or Melbourne.

      • netjock on 05/04/2021 - 00:47
        +1

        It is the stuff that RE institutes pedal to increase prices.

        Like everyone who comes to Australia is rich but not rich enough to move to New York, Miami, LA, London, Paris, Barcelona, Madrid, Milan, Rome, Berlin. Social security is probably even better in some Nordic states.

        You need to debate the caliber of students who come to study at best 50th ranked university in the world with majority of Australian universities outside of the top 100. They must be the gullible ones that are buying property.

        • duchy on 06/04/2021 - 10:27

          https://www.topuniversities.com/student-info/choosing-univer…

          5 universities in top 50 with ANU ranked 31.

          Even better ranking if you look at MBA programs.

          I think Australia is doing quite well…

          • netjock on 06/04/2021 - 11:28

            @duchy:

            5 universities in top 50 with ANU ranked 31.

            Depends on who you ask. Times says Melbourne is ranked 31st and non within Top 50

            Now you just need to look at who is in those 31 ranking above. IF I was 18 and I could afford it and get into a university why would I not go to any of the US schools within the 31 above? Especially if you consider London has probably 5 top schools plus Oxford and Cambridge. It is a much better party town then Melbourne or Canberra.

            Even better ranking if you look at MBA programs.

            As reflected by the number of actual Australian CEOs globally. If you pay $100k for MBA program (costs more than that at Melbourne Uni) then I don't think you are going to talk it down to $0. MBAs are a false economy. Trust me I've got one from a top 10 global university. If you are an engineer and been told you won't get a management job unless you get an MBA then do it. Otherwise it is just bragging rights and a lot of people in Australia don't like smart people, neither do they like people who have worked overseas.

            The only things we find an achievement in this country is rent seeking profits. We just like to flog off our agricultural land to whoever (Japanese, NZ or latest China) then complain about other people buying it up. The same thing with housing, pat on the back for sitting on a lot of it as it appreciated but we don't like foreigners buying it up because we want to buy it for a lower price and give us a pat on the back when it goes up again.

            Just wait until all the kids grow up and leave the country because they can't afford to live here and people retire to Thailand or Bali. Leave old people in old houses taken care of by imported laborers like in Japan.

  • jaimex2 on 03/04/2021 - 22:39

    No.

    Interest rates are low, high income earners weren't affected by the pandemic and lending laws are about to be relaxed.

    We have a backlog of buyers who couldn't buy during lockdowns and every cashed up foreigner will be coming here to live, especially those in Hong Kong.

    What you're seeing now is a warm up to what's up come.

    • netjock on 05/04/2021 - 00:44
      +1

      every cashed up foreigner will be coming here to live

      Immigration at 0. Wishful thinking. You really took that bait from the press.

      • jaimex2 on 05/04/2021 - 20:26

        Immigration will ramp right up once vaccination rates reach target and its not going to be pretty once the flood doors open.

        Also nothing is stopping them from buying via proxy right now. Real estate agents are selling on just pics alone in some areas.

        • netjock on 05/04/2021 - 23:04

          The current vaccines only stop serious illness not infection and passing it on. Good luck opening the borders.

          People who buy sight unseen are just fools. Lucky we got enough fools who come here and end up having to do Uber in BMW x5s and Couriers in Porsche SUVs.

Login or Join to leave a comment
Login Join