Australia housing bubble

[Mulva]

I'm not sure that they really under-quoted, just the market is stupidly hot in the area I am looking at (north eastern suburbs).

Agent seemed as genuinely surprised as I am at the price (it went for over $800k) - 3 months ago it would have gone for around $700k; 6-12 months back it would have gone for about $650k. Most places being advertised are no longer showing a price guide - they are just "Best offers by..." and you have to then sort by price to see what they fall between (and then add $100k to that).

Even the place I sold ended up going for more than $50k than the price that was my "too good to refuse" price. I don't think we underquoted; I think the buyer overpaid...but then again he now owns a house and I am renting while waiting for the "right place" to come along, and trying to work out how I can single-handed crash the market

[shedcoupe]

If I’d been told twenty years ago that now we’d be waving telephones at door entrances and that real estate would be going up 20 % a year with buyers being invited to offer significantly over the asking price I would’ve laughed at that madness.
But it’s real.

[zilo]

Originally Posted by shedcoupe

If I’d been told twenty years ago that now we’d be waving telephones at door entrances and that real estate would be going up 20 % a year with buyers being invited to offer significantly over the asking price I would’ve laughed at that madness.
But it’s real.

In a little while we will be saying...how in the hell did people think 1.9% mortgage rates would last?

[Yellow_Festiva]

Originally Posted by Mulva

I'm not sure that they really under-quoted, just the market is stupidly hot in the area I am looking at (north eastern suburbs).

Was it an auction or normal 'put in your offer' type of sale?

Sent from my SM-G973F using Tapatalk

[Mulva]

Was normal sale - PM coming your way

[shedcoupe]

Originally Posted by zilo

In a little while we will be saying...how in the hell did people think 1.9% mortgage rates would last?

Yeah but. The money printing has painted us into a corner.
The market can never be allowed to crash again, so amazing financial stunts cannot be incredible - they must be credible and seen to work.
So no deflation, no stagflation, no significant inflation and no credit squeeze.
It’s gunna be great !
Why should anyone think logically or have any concerns ?
The taps will flow beer, teenagers will be polite and helpful, the natural world won’t be damaged anymore, and wives will bring girls home for husbands to play with. Sensational ....

[Yellow_Festiva]

Originally Posted by Mulva

Was normal sale - PM coming your way

Thanks, PM received.

My thoughts are that is a place is say advertised for '$650-$700k' and I walked in and offered $700k the place should be sold.

Say the vendor gets several offers at or above then they should re-jig the range to say $720-$800k as a matter of courtesy.

They can adjust their prices on the listings quite easily.

I can be a little more lenient for an auction as a few cashed up bidders can fight it out and you won't know till the day but if I went to a place and the agent was expecting $100k above their top price range then I would be reporting them no matter the percentage.

But as someone said earlier - selling agents are perceived as untrustworthy, you wonder why

[lumen8]

Originally Posted by zilo

In a little while we will be saying...how in the hell did people think 1.9% mortgage rates would last?

Hmm im not so sure, low rates keep the prices high, hence keeps the loans big so that low interest is paid on bigger amounts, keeps the agents, stamp duty and council rates happy etc etc

The 'get in now before rates go up' crowd might just be playing the game... with the cash rate almost zero theres no wiggle room there to entice more people to jump in, so fear of rising rates will do it.

[Yellow_Festiva]

Originally Posted by Yellow_Festiva

The bubble has made selling agents arrogant...

I recently showed strong interest in 2 properties.

The first was due to go to auction. I put an offer in writing after the first open house. The offer also had very very generous settlement provisions in favour of the vendors worth perhaps several thousand dollars to them.

Never heard anything back other that a thanks for the offer.

It was sold 3 weeks later and prior to auction for $15k above my offer. What a joke...

I was tempted to slip a letter into their mailbox showing my offer and the fact had I been contacted for negotiation I would have gone well above and beyond their eventual selling price.

This agent called me back yesterday...

"Hello YF, we have you on our books as looking for a property, we have XYZ on sale and was wondering if you were still looking?"

After what I said to him I don't think he will be calling me back any time soon.

[T3rminator]

APRA has tightened lending rules. Heard on average it means $30k less for individuals and $45k for households. Is it going to make a difference?

Overseas interest rates are rising, it'll be here soon enough. Interesting times ahead....

https://www.abc.net.au/news/2021-10-...ules/100516758

[zilo]

Oh...oh...it's started.....biggest jump in 7 years In New Zealand rates

https://www.bbc.com/news/business-58812068

[GO FURTHER]

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

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

The key points;

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

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

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

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

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

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

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

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

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

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

[T3rminator]

Originally Posted by GO FURTHER

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

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

The key points;

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

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

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

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

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

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

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

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

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

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

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

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

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

[Polyal]

Originally Posted by GO FURTHER

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

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

The key points;

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

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

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

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

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

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

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

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

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

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

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

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

[GO FURTHER]

Originally Posted by Polyal

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

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

Thanks

[T3rminator]

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

[GO FURTHER]

Originally Posted by T3rminator

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

I think the motivation here is to try to cool the recent housing market price spiral.

[Citroënbender]

I remain utterly skeptical it will achieve anything other than pushing up the “entry costs” of genuine consumer house buyers.

As has been (again!) highlighted by the Panama Papers leak, there is no serious governmental interest, in drilling down to reveal who ultimately owns or funds what. Until we aspire to that knowledge, most of the home-owning nation are being played as puppets.

[.:4:.]

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

[GO FURTHER]

Originally Posted by Citroënbender

I remain utterly skeptical it will achieve anything other than pushing up the “entry costs” of genuine consumer house buyers.

I tend to agree.

By making it harder for your average Aussie battler to get a mortgage, will only make it easier for cashed up foreign investors to buy up.

[zilo]

Originally Posted by GO FURTHER

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

Thanks

The obvious facts are...


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

Inflation rate is currently being disguised...

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


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

[GO FURTHER]

Originally Posted by zilo

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

People say an increase in mortgage interest rates will dampen the housing market, and yes it will to some degree.

Mortgage stress will also certainly be felt by those that have over committed.

Yet, I remember, back in the 80's, I was paying 13% interest on my mortgage. That was tough.

Yes, house prices were a lot less, and it was easier to get a mortgage and get into the housing market, but wages were also much less as well.

There was no housing market crash even then with those high interest rates.

Inflation was also running high and the unemployment rate hit 8 percent.

In my opinion, I think it will take much more than a few points increase in lending rates from the low circa 2% to cause the bubble to bust.

[Bossxr8]

Originally Posted by Polyal

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

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

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

[b0son]

Originally Posted by Bossxr8

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

It depends entirely on inflation. If interest rates rise, there will be a world of hurt for so many homeowners who have committed at their limit.

Dont believe that an inflation tidal wave is building, have a look at producer price index data. Consumer price index tracks it pretty consistently.

[Bossxr8]

Originally Posted by b0son

It depends entirely on inflation. If interest rates rise, there will be a world of hurt for so many homeowners who have committed at their limit.

Dont believe that an inflation tidal wave is building, have a look at producer price index data. Consumer price index tracks it pretty consistently.

The RBA also indicated it won't move rates until they see wage increases. Good luck with that.

https://www.bloomberg.com/news/artic...iscal-tapering

The Reserve Bank of Australia highlighted the importance of stronger wages growth before considering any rise in interest rates, providing itself with a little extra room by emphasizing a traditionally lagging indicator.

“It was likely that wages growth would need to be sustainably above 3%,” the RBA said in minutes of its March policy meeting in Sydney Tuesday, noting overseas experience suggested Australia would need a tight labor market and considerable time for this to occur. “Wages growth would be unlikely to be consistent with the inflation target earlier than 2024.”

[fordomatic]

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

[Bossxr8]

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

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

[Polyal]

Originally Posted by Bossxr8

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

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

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

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

Originally Posted by Bossxr8

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

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

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

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

[FTE217]

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

[290GTP]

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

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

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