House prices to drop 20%, repayments to rise by 40% are you worried?

Trying2SaveABuck on 16/06/2022 - 16:16

"House prices could fall by a whopping 20 per cent across Australia in the next 18 months, experts have warned."

“In our view, this surge in fixed rate expiries is likely to see many borrowers face a 40 per cent increase in repayments and drive a significant increase in refinancing activity,”

Source: https://www.news.com.au/finance/economy/interest-rates/house…

To all my fellow mortgage suffers it seems we are in for a fair amount of pain with some experts expecting repayments to raise by 40% and prices are believed to drop by up to 20% in the next 18 months

So for those who dont mind sharing are you stressed about the near term future? or do you have a a large buffer? how will it impact your life?

Note: this can be a serious topic for people and for those that are feeling more then 'just' a bit stressed and having 'negative' thoughts please dont hesitate to contact lifeline for support
https://www.lifeline.org.au/get-help/information-and-support…

Poll Options

  • 22
    I have a home loan i am Stressed about the future
  • 179
    I have a home loan I am not Stressed about the future
  • 64
    I do not have a home loan
Financial

Comments

  • [Deactivated] on 16/06/2022 - 16:18
    +1

    To all my fellow mortgage suffers it seems we are in for a fair amount of pain with some experts expecting repayments to raise by 40% and prices are believed to drop by up to 20% in the next 18 months

    See you in 18 months time

    So for those who dont mind sharing are you stressed about the near term future? or do you have a a large buffer? how will it impact your life?

    No not stressed at all. If you are brainless and go for huge loans or your spending is massive beyond your means, other than that no need to worry about anything. I paid my mortgage when it was 4.5% with single income. Now my wife also working.

    • Trying2SaveABuck on 16/06/2022 - 16:53

      i 'personally' wouldn't say im stressed, i'd prefer the money to go into offset opposed to higher interest repayments….

      but there are people who would be leveraged pretty high, they arent 'brainless' they were told by the chief of the RBA interest rates would not rise till 2024 which i know it not biding but might of put them in a more difficult position considering 2024 is 18 months away and all of a sudden they are looking at paying significantly more in both cost of living and home loan interest…

      I do feel for anyone who has purchased a house in the past ~12 months and gone to their max borrowing capacity as they are often fellow millennial who were just trying to get themselves a 'roof' over their head.

      • IanC on 18/06/2022 - 14:50

        Re brainless…. people were not mislead by the RBA.
        In a recent interview the learned Dr denied giving any fixed promise about the future of rates which is totally true.
        He did say no rise till 2024 but that opinion
        was qualified that the economy would stay much the same.
        The only problem is the poor guy who gets north of $900000 a year forgot to tell anybody about that qualification till last week.
        You can't blame him that he forgot about the qualification.

  • Jason Genova on 16/06/2022 - 16:19
    +35

    really? you use "news.com.au" as your source. lol

    whatever they sensationalize and report, do the exact opposite. garbage journalism

    • GG57 on 16/06/2022 - 16:28
      +9

      The title "Finance Editor" appears to be related to picking quotes from various press releases with little evident analysis.

      • altomic on 16/06/2022 - 21:39

        "Finance Editor scours expert sources to give you the truth" -news.com.au

        • kipps on 17/06/2022 - 06:38
          +6

          “Finance Editor cherry picks varied opinions to find and report only the most provocative headlines to keep you worried”

  • big1964 on 16/06/2022 - 16:23
    +2

    The heat is going out of the housing market yes but how far it will fall will be anyone’s guess!!

  • cheekymonkey97 on 16/06/2022 - 16:27
    +14

    My rates would have to hit 10% before I start feeling worried. Do I feel annoyed? Yes, that money is better in my pockets than the bank's.

  • hothed on 16/06/2022 - 16:28

    Why is the cost of a house going to fall?

    The cost of land is increasing and the number of blocks for sale is decreasing (scarcity of land ground growth centres), the cost of labour to build is increasing, the cost of materials are increasing. The demand is increasing (significant flooding in QLD).

    I dont think house prices will fall, they may stop growing but i doubt they will go backwards.

    • sjj89 on 16/06/2022 - 18:56
      +3

      Existing properties are artificially inflated across the country.
      We’re about to see a huge influx of property put up for sale (it’s already beginning) and supply will outgrow demand quite quickly as the increase in interest rates will hold potential buyers back.
      Plus potential buyers will be sitting back and waiting for prices to perceivably bottom out.

      • FlyingMiffy on 18/06/2022 - 13:51

        Might be seasonal but I've been watching the market for a while and there's actually been a noticeable reduction in listing. The other worth noting though, is more of those that are listed is going private sale rather than auction.

        • sjj89 on 18/06/2022 - 19:15

          Good friend of mine is a real estate photographer.
          His work taking photos of investment properties has increased 5 fold since the 75 point interest rate decision.
          And this is in Adelaide

    • Sleeqb7 on 17/06/2022 - 09:40

      I think SE-QLD may be a little bit of an outlier at the moment. Lots of migration from southern states, flooding ruining areas, the growth and infrastructure projects caused by the Olympics, all making a perfect storm where demand will take longer to stagnate that it has elsewhere.

      However I believe that it will indeed fall, albeit maybe not by as much or as soon as will be seen in other parts of Australia.

  • godofpizza on 16/06/2022 - 16:29
    +2

    isn't that going put off sellers from listing their properties on the market, thus reducing stock?

    • sjj89 on 16/06/2022 - 18:57
      +1

      Small property investors are already beginning to list properties

    • Quantumcat on 17/06/2022 - 11:14
      +1

      With the interest rates going up more will be forced to even though plenty will be less inclined to sell

  • onetwothreefour on 16/06/2022 - 16:35
    +2

    I bought my house 6 years ago and the value has gone up more than 20% in that time. My original interest rate was 4.19%. With the money I have in my offset account I am only paying about $100 a month in interest so even if my current interest rate tripled I wouldn't be worried, annoyed, but not worried.

    • Michael1983 on 16/06/2022 - 17:18

      Same here, bought a place 3 years ago.. Interest is only around $300 a month and the value went up around 30%. Low rates with banks like Ubank allowed to have some buffer and go ahead with repayments quite considerably. Back in 2019 the rate was 2.89 then went down to 1.99 and now sitting at 2.14… Even if it goes to 4-5% - well, not good, but it is not the end of the world.

  • wei13 on 16/06/2022 - 16:36
    +5
    • Predictions have been consistently wrong / changed over the last 2 years.
    • If you are an investor and you didn't plan for investments to possibly go down then you shouldn't be investing.
    • If you are a home owner, you need to pay for place to live anyways and you are not paying rent.
    • If you did your mortgage application honestly (and without significant negative life events happening), there would be built in buffer for rate rises already.
    • There will be some who will honestly face unforeseen difficulty, but those would be the minority.
    • News outlets need people to live in fear and sense of crisis. Some will complain either way whether house prices go up or down.
  • rektrading on 16/06/2022 - 16:41

    "House prices could fall by a whopping 20 per cent across Australia in the next 18 months, experts have warned."

    How to buy cheap assets?

    1. Pay MSM to 💩 post the market.
    2. Wait for weak 🙌 to panic sell.
    3. Buy at a discount.
    4. Rent it out to weak 🙌 that sold.
    5. Pay MSM pamp the price.
    6. Wait for 10Y to 18Y.
    7. Sell ATH to the next generation.
    8. 🔃
    • Archi on 16/06/2022 - 16:48
      +2

      so does that mean you are madly pumping more money into crypto?

      • rektrading on 16/06/2022 - 16:50
        +1

        I'm waiting for #Bitcoin to test and possibly break 2017/18. I'll buy to the bottom and then wait for it to go back up.

      • rektrading on 16/06/2022 - 16:51

        History shows that every market 🔃 the same thing at their time frame.

      • TheBilly on 16/06/2022 - 17:50
        +1

        Honestly why not, its undergone like 13 boom/bust cycles… I've personally played two. How is this one any different.

        • El-Rhi on 16/06/2022 - 19:39
          +2

          Quantitative tightening (central banks removing liquidity from the system) has never happened to this extent and will take a lot of air out of speculative assets such as crypto. If you’re waiting for the next up cycle, you might be waiting a while…

  • trustnoone on 16/06/2022 - 16:53
    +3

    I actually want to buy a place (first home), so I have no idea what I should/shouldn't be doing now lol. Feels kinda cr@p then I essentially have to hope people are stressing so I can get a cheaper home :/.

    House prices to drop 20%, repayments to rise by 40% are you worried?

    IMO I think these numbers are huge (though I could be very wrong) so I don't think it will go that far "on average", this might be like the extreme case (like a house that was sold for obviously more then it was worth, during peak pandemic when houses went up)

    • rektrading on 16/06/2022 - 17:01
      +1

      Feels kinda cr@p then I essentially have to hope people are stressing so I can get a cheaper home :/.

      There is nothing to feel 💩 about. Buying and selling assets isn't personal.

      People who let their emotions control them FOMO ATH and sell at the bottom. Don't be like them.

    • Some Human on 16/06/2022 - 20:06
      +1

      You should be saving as hard as you can.

  • TheMindsetTraveller on 16/06/2022 - 16:59
    +3

    Let's say a house was $1m, it went up to $2m. Then there is a 20% reduction, it is still $1.6m in my books.

  • ihbh on 16/06/2022 - 17:10
    +1

    repayments to rise by 40%

    coming off historical low base

  • Michael1983 on 16/06/2022 - 17:15
    +3

    I'm not going to sell my property in next 15 years, and the mortgage rate I can afford is up to 6-7% … Don't borrow much and less stress you are going to have.

  • Drakesy on 16/06/2022 - 17:48
    +3

    New research from home loans marketplace Joust and Digital Finance Analytics (DFA) show approximately 42.2 per cent of mortgaged households were currently deemed to be in financial stress in March 2022.
    Here

    This was back in March before the rate hikes
    I think there's a fair few of us with our heads barely above water (maybe not on Ozbargain as we're relatively frugal but elsewhere….)

  • TheBilly on 16/06/2022 - 17:48
    +6

    In all honesty, doesn't phase me even if I loose the house. Going to die anyway, at what point do you just keep stressing about what could potentially happen. Yes rates might rise, you might have an accident tomorrow, you might loose your job, get sick, get robbed, property might crash, insert some other negative thing… Something is always going to happen, so why always be stressed. It's like a human condition where even if we have nothing to worry about, we'll find something to worry about because we just want to worry all the time.

    • this is us on 16/06/2022 - 20:08

      That's quite insightful.

  • WreckTangle on 16/06/2022 - 19:06

    Lol

  • bobbified on 16/06/2022 - 19:15

    I just checked my figures. I might start to stress when the interest rate goes to 45%.

  • ECE on 16/06/2022 - 19:25

    No house, no problem 💪🏿

    • Quantumcat on 16/06/2022 - 19:34
      +6

      Rents will increase too

  • loropy9 on 16/06/2022 - 19:35
    +4

    Remember how in the beginning of covid these same economic geniuses predicted the house prices falling by 40% next year.
    The construction materials have gone up on average 30%. Now add a 40% house price falls and see how that works out.
    Sydney house prices will never ever crash and burn. They are being propped up by the richards.

  • Duckie2hh on 16/06/2022 - 20:21
    +1

    Fear mongering at its best

    • lachhelix on 18/06/2022 - 13:09

      Shits me to tears

  • Tiredman on 16/06/2022 - 21:00

    Drop 20%? Time to buy.

  • JIMB0 on 16/06/2022 - 21:13
    +4

    So they'll go back to last year's prices.

  • brendanm on 16/06/2022 - 21:18
    +6

    99% of these "experts" couldn't predict a piss up in a brewery.

  • mskeggs on 16/06/2022 - 23:16
    +9

    If house prices fell 20% they would still be massively overvalued historically.
    High real estate prices are a cancer on our country. If they drop and do not increase for 100 years we would be incredibly wealthy as a nation as we were able to direct surplus wealth into productive investment, not just pushing up house prices.

  • StonedWizard on 16/06/2022 - 23:33
    +1

    Another thing to consider, are people going to be able to refinance when the time comes.

    When interest rates drop to below 2% many people were able to get into the housing market due to the lower repayments being calculated.

    If rates go back up to 3 - 4% these same people may not be able to refinance the amount remaining.

    Worse, if they’re on an interest only loan.

  • [Deactivated] on 17/06/2022 - 08:18

    will hit the fan next year when all the fixed mortgages come off the cheap rates.
    8% + incoming

  • Sleeqb7 on 17/06/2022 - 09:48

    Yeah look, I have enough buffer that the mortgage rates would need to have tripled from what they were a couple of months ago before it's a concern. I wouldn't be in financial hardship, but it means less OzBargin spending on things I don't need.

    • Trying2SaveABuck on 17/06/2022 - 09:50

      but it means less OzBargin spending on things I don't need.

      well that is just unacceptable!

      Spending money on useless crap we dont need is an Australia tradition!

  • Tomhaigh1 on 17/06/2022 - 09:51

    The magic tool which Australian government has is "Super fund". They will assist the buyers, and the property owner to access super fund similar to covid time, until the big economies(USA, Europe, China, India etc) recover.
    Overall long term, the general public will be f**** will loose.

    • rektrading on 17/06/2022 - 10:42

      The feds giving people access to the money in their pension funds is fair.

      It's after all their money and they've got the right to do whatever they want with it.

      • Tomhaigh1 on 17/06/2022 - 10:52

        sure, they should also give that access(without penalty) when market is up, or they should be clear that super funds are to save our ass during recession and no relation to *pension.

  • MrMarket on 17/06/2022 - 10:03

    can handle rate rise up to 25%
    paid off most of my debt in the last 2 years by offload inflated asset price
    sit and watch and snapped up again when opportunity arise

    rise and repeat for next cycle, this is cycle number 3, same strategy same game play

    • xavster on 18/06/2022 - 16:50

      Don't know why you're getting negged.

      Buy low, sell high is the simplest and most direct strategy in value investing.

  • brad1-8tsi on 17/06/2022 - 12:13

    OP:
    You didn't factor significant interest rate rises from historic lows into your long term budgeting? I have no sympathy.

    The decrease in property values shouldn't matter. It's the roof over your head that counts, not the value.

  • payless69 on 17/06/2022 - 16:02
    -1

    I did NOT vote for Albo so my conciseness is crystal clear!!!
    Cant wait to release another book in the Dummies series, fastest growth ever!

  • Toffees on 18/06/2022 - 12:27

    I know some young people who have recently borrowed the maximum banks would loan so they're going to be hit pretty hard when their fixed terms are up. They'll probably survive though, just won't have much disposable income

  • MrCAMEL on 18/06/2022 - 12:50
    +2

    You know, people who have debt. Take money off them through higher rates. People who have money, give them more money through higher rates. It's all a big rort by some big guys looking at a computer screen and deciding to press a different number and see what happens!

  • digitalbath on 18/06/2022 - 13:31

    It is what it is. I doubt interest Rates will get so high that I need to worry about my income.
    But it would be nice if they didn’t rise.

  • DiscoJango on 18/06/2022 - 13:36
    +1

    covid? nah everyones over that

    amber vs johnny? nah that case is over

    petrol prices? lets try and keep that one quite

    i know, lets spread some fear and panic about interest rates, yes!!!!

  • mitt on 18/06/2022 - 13:56

    I have a big chunk of change sitting in my offset, ready & waiting to buy somebody else's broken dreams as my first investment property.

    Fall baby fall.

  • arescarti42 on 18/06/2022 - 14:40
    +1

    Makes little difference to me personally, however I'm generally concerned by the impact of rising interest rates on the economy.

    A 2.5% cash rate by the end of the year will cause historic falls in house prices (15-20% over a few years) and send the economy grinding to a halt.

    My biggest concern is that current market pricing (4%+ cash rate by the middle of next year) eventuates, which will cause 30-50% falls in house prices, and a severe recession.

  • Brick Tamland on 18/06/2022 - 15:07
    +3

    Not worried at all. Interest rates are still very cheap, even if it goes up a few more times.

    The only people that need to worry are those who have borrowed to the hilt and property investors who have somehow have accumulated 83 properties by the time they were 26.

  • cashless on 18/06/2022 - 16:50
    +1

    Source: https://www.news.com.au/finance/economy/interest-rates/house…

    Stopped reading at this point

  • xavster on 18/06/2022 - 16:54

    Poll seem to suggest most people are well prepared to ride out normalisation of interest rates. Although given this is ozbargain, most people here are financially prudent so our sample is somewhat skewed.

  • AustriaBargain on 18/06/2022 - 17:04

    If you can't afford the payments on your investment properties you could just cut your losses and sell them. I don't know why property investors think the government owes them anything with regards to their leveraged up to their ears properties. If you can't afford them then you should sell them!

    • rektrading on 21/06/2022 - 16:48
      +1

      May be pass the cost onto the tenants?

  • Archi on 21/06/2022 - 09:02

    sell one to pay off the others.

    • AustriaBargain on 21/06/2022 - 16:50

      Robbing the Peter Street apartment to pay for the Paul Lane house?

      • Archi on 21/06/2022 - 20:38

        Paul Lane houses

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