Australia housing bubble

[buggerlugs]

Originally Posted by T3rminator

Missed my prediction by a measly 6 months. Will an eventual long term 1 to 2, or even 3% rate rise ***** the bubble?

Reserve Bank opts for standard 25-basis-point interest rate hike as first in likely string of rises
https://www.abc.net.au/news/2022-05-...ints/101033156

Holy Moly, how will we all survive if it goes to 3%

[T3rminator]

Originally Posted by buggerlugs

Holy Moly, how will we all survive if it goes to 3%

3% base rate probably means 4 to 5% for consumer. Oh well, back to negative gearing.

[MITCHAY]

Well if it was not this month, it was certain in June. They also went with 0.25 instead of predicted 0.15.

I'm prepared though because I've been paying way more then minimum payment for ages and have been putting the rates cuts back in as extra repayments and then some on top.

[Ben73]

Finally! Just a few more months until this bubble bursts. It''s been ready to burst every few years for the past 30 years.

The prices will probably decrease a little for a year or so then they will just go up again. Yeah I'll go with that.

[Yellow_Festiva]

Originally Posted by danzvtil

My god, all I’ve heard reported all day is the poor saps who will be RUINED by this increase and the govt needs to do something about it, if you can’t afford this increase, then you’re in for a crap couple of years.
Incidentally my home loan provider (credit union) called me 2 weeks ago for a loan heath check, and offered straight up to drop my rate by 1.75% to offer a buffer, they are anticipating 5 rises in the next couple of years.

I think crap is an understatement... I would hate to know what the average mortgage in Sydney or Melbourne is?

I think there will be lots of defaults and fire sales where the vendor will come out breaking even or losing just a little.

Reading an article regarding the rate decision...

"RBA’s shock move" and "Australia reacts to bombshell move" and "Rate hikes ‘not going to stop’"

Nothing shocking or bombshellish about today's decision... It's been predicted and pondered for months.

As has been the fact many more rate rises are on the way.

I do feel sorry for people that may come out second best when things go belly up however if they are young they will recover and hopefully learn from this.

Watching bidding going 20-30% over reserves, buying dumps for huge premiums, applying for dodgy loans etc... Hope they don't think the government will bail them out. We are broke enough as it is.

[Yellow_Festiva]

Originally Posted by MITCHAY

Well if it was not this month, it was certain in June. They also went with 0.25 instead of predicted 0.15.

I'm prepared though because I've been paying way more then minimum payment for ages and have been putting the rates cuts back in as extra repayments and then some on top.

The next one is predicted to be .4% to get the figure to .75%

Then 3 more after that till December.

Just got another email of another price drop for a property on my watchlist.

At least I may get a little more than the 1% I'm averaging with my savings.

[zilo]

Originally Posted by Yellow_Festiva

.... Places are getting listed now at prices that I would have considered a bargain several months ago.

Just sit back and wait a while...if 0.25% gets this rection, 0.5% will be a laugh a minute....and 1.00000%? Heaven forbid...

[Giant Cranium]

Originally Posted by danzvtil

My god, all I’ve heard reported all day is the poor saps who will be RUINED by this increase and the govt needs to do something about it, if you can’t afford this increase, then you’re in for a crap couple of years.
Incidentally my home loan provider (credit union) called me 2 weeks ago for a loan heath check, and offered straight up to drop my rate by 1.75% to offer a buffer, they are anticipating 5 rises in the next couple of years.

1.75%. What was you rate before the drop. That’s a massive discount

[whynot]

Originally Posted by MITCHAY

Well if it was not this month, it was certain in June. They also went with 0.25 instead of predicted 0.15.

I'm prepared though because I've been paying way more then minimum payment for ages and have been putting the rates cuts back in as extra repayments and then some on top.

A very sensible move, and a lot of others have been doing exactly the same thing.

Article in the ABC web site had this interesting titbit;

While the average borrower has a buffer of around 45 months (at current interest rates), the median (or typical) borrower is around 21 months ahead, up from 10 months at the start of the pandemic.

When we started out, interest rates were 17.5%. Somehow, we survived. Mind you, without a lot of "necessities" that seem to be required these days.

[b0son]

Originally Posted by whynot

When we started out, interest rates were 17.5%. Somehow, we survived. Mind you, without a lot of "necessities" that seem to be required these days.

Those rates fell to less than one third in 2.5 years. And that house was purchased on 2-3x the annual income, now its closer to 7x. Wages were rising around 5%pa over the same period. Wage inflation has been falling steadily for over the last 15 years.

Apples and oranges. I'll take early 90s any day.

[T3rminator]

Originally Posted by whynot

Article in the ABC web site had this interesting titbit;

When we started out, interest rates were 17.5%. Somehow, we survived. Mind you, without a lot of "necessities" that seem to be required these days.

45 months buffer, is that in actual extra repayments? Or are they taking the balance of offset accounts as the "buffer"?

[MITCHAY]

I take the buffer to mean the amount of minimum payments in cash and/or redraw. Total / monthly minimum monthly payments = months buffer. Not sure if this is correct though.

[hackney]

Originally Posted by buggerlugs

Holy Moly, how will we all survive if it goes to 3%

They need to go up.People bought homes when money was cheap to purchase, a lot way over committed, thinking rates would not go up until 2024-25.You need to factor in @ least 2% above what you are paying. A lot of people are going to be in a real world of pain in the coming twelve months.People who have fixed their rates will @ least have breathing space, but once these come to an end, it is going to get very interesting.Prices of homes will not ‘crash’, more like they will plateau.Interesting times ahead.

[Itsme]

Originally Posted by hackney

They need to go up.People bought homes when money was cheap to purchase, a lot way over committed, thinking rates would not go up until 2024-25.You need to factor in @ least 2% above what you are paying. A lot of people are going to be in a real world of pain in the coming twelve months.People who have fixed their rates will @ least have breathing space, but once these come to an end, it is going to get very interesting.Prices of homes will not ‘crash’, more like they will plateau.Interesting times ahead.

I agree the "age of entitlement" is over, now its time for a reality check.

Cheers

[danzvtil]

Originally Posted by Giant Cranium

1.75%. What was you rate before the drop. That’s a massive discount

It was 4.05%the last time I refinanced was 6 years ago, and I set it and forgot it.

[MITCHAY]

Originally Posted by danzvtil

It was 4.05%the last time I refinanced was 6 years ago, and I set it and forgot it.

The lazy tax mate

Every time I have asked for it, I have got the new business rate except once (last time) though a small discount.

My old broker can't take my business unless I increase my loan or change lenders and well I may just do that depending on what happens.

I'm at 2.52 and now you're better than me but lost a bit during that time so not so surprised they dropped it by 1.75% because they know you can do better.

[Yellow_Festiva]

Originally Posted by Itsme

I agree the "age of entitlement" is over, now its time for a reality check.

Cheers

You mean that kitchens will finally start to be used in houses and units.

[Itsme]

Originally Posted by Yellow_Festiva

You mean that kitchens will finally start to be used in houses and units.

[hackney]

Originally Posted by Itsme

I agree the "age of entitlement" is over, now its time for a reality check.

Cheers

Absolutely, people who have purchased cheap money, will be now complaining how tough it is going to get.I can well remember when it was around 17%.All I can say, is welcome to the real world.A lot do not know what it is to do it tough.It’s going to be a rough ride for many.

[hackney]

Originally Posted by Yellow_Festiva

You mean that kitchens will finally start to be used in houses and units.

In a lot of East European countries, kitchens actually are not included in new dwellings.That is the new owners responsibility.

[BENT_8]

Certainly interesting times indeed for those who went all in.

From our perspective, we are so glad that we've decided to first build in the metro area and to a tight budget as the buy in outlay has been much less meaning there is plenty of room in our disposable income for interest rate rises in the near future.
Had we gone ahead with our initial intention to move out of the metropolitan area and spent 2x as much on a forever home in a country town we'd be very nervous about where that would leave us.

As I've mentioned before, our Daughter and us are building a couple of townhouses in the same development that our Son built in 2 years ago, they are entry level homes.
Our Son paid $223k 2 years ago, since then due to demand and materials costs thats pushed out to $263k for ours of same design with slightly better specs.
With what we've saved by buying entry level we've been able to tick all the upgrade boxes on things like ducted refrigerated AC, upgraded kitchen appliances and materials, better lighting and other fittings throughout that will set it apart from all the others around us.
We we're informed last month that the final stage has been released and has seen another significant jump in price so combined with Adelaide's continued bucking of the recent downturn trend found in the Eastern cities, we've already gained a significant % in value before the foundations have set.

As we went through Homestart in the end due to my Wife's Workcover situation we wont be subject to rate rises initially as Homestart already have a higher rate and simply adjust loan life to compensate so they dont miss out, with that in mind we decided to go variable, live in it for 1 to 2 years and then refinance with a big lender as we'll have a reasonable level of equity in it and the shift from Homestart repayments to bank will actually see a savings regardless of rates at the time.
As it is we'll be saving $100pw to go from a rental to a purchase after factoring in building insurance and land rates and all we'll be losing is 2 bedrooms we dont need anymore and a garden that I wont need to maintain.

Our long term plans have taken a complete 180, instead of viewing our current build as one day soon being an investment rental, we've decided to use it as our metropolitan base for work commitments Monday to Friday and then in a couple of years we'll build or buy in a well serviced country region where our parents will live and pay the mortgage and be somewhere we can head off to on the weekends to escape the rat race and they are fully onboard and excited at the prospect.
Best of both worlds.

[Syndrome]

Cheap credit causing asset bubbles have historically NEVER caused any economic problems.

/end sarc

[Itsme]

Originally Posted by hackney

Absolutely, people who have purchased cheap money, will be now complaining how tough it is going to get.I can well remember when it was around 17%.All I can say, is welcome to the real world.A lot do not know what it is to do it tough.It’s going to be a rough ride for many.

And that is if you had a bank loan, building society loans peaked around 18.5% when I signed up in 82 for my loan. In those days it was frightening with those interest rates.

[Yellow_Festiva]

Originally Posted by hackney

In a lot of East European countries, kitchens actually are not included in new dwellings.That is the new owners responsibility.

Yep - being of European ancestry I recall visiting relo's in Italy and saying how crap the fit and finish of the kitchen was.

They explained that their old unit had a different layout and that it was the best they could do when they moved.

They were shocked to discover that we down under don't take our kitchens with us when we move

[zilo]

Originally Posted by Yellow_Festiva

Y

They were shocked to discover that we down under don't take our kitchens with us when we move

All I see is millenials gutting the kitchens in the houses they buy.

Just look at how many perfectly good second hand kitchens are for sale on gumtree and farcebook.

They do bathrooms as well....it really is rife consumerism.

[oldel]

Originally Posted by Itsme

And that is if you had a bank loan, building society loans peaked around 18.5% when I signed up in 82 for my loan. In those days it was frightening with those interest rates.

LOL, houses were under 50k back then here (on a 20k annual wage so again LOL). Houses could only go up in value, rates could only go down, wages could only go up. Safe as houses and nothing to worry about back then unless you lost your steady job.
These days job less steady, rates can only go up and houses overpriced. Can only get worse.
But back then could only get better.

Clowns have been running the economy over the past decade. Printing money, borrowing like mad because forced historic low interest rates, throwing money around etc.
Interest shouldn't have been so low, it's propped up the housing bubble, reckless gov spending and inflation has come to bite us all.
It's like the ponzi scheme is unravelling, those that bought in late are going to suffer, but they were sold lies based on a gov wanting the construction industry busy and their house prices to never fall.

There's been difficult decisions made in the past, no one likes GST or restructuring, so we didn't like howard's high interest rates, keatings refroms/reccession or howards gst, but they had to happen.
Recently though it's all 3 year terms with most of it pandering and campaigning for re-election and not wanting to make hard decisions for the future (besides nuke subs)

[hackney]

Originally Posted by Yellow_Festiva

Yep - being of European ancestry I recall visiting relo's in Italy and saying how crap the fit and finish of the kitchen was.

They explained that their old unit had a different layout and that it was the best they could do when they moved.

They were shocked to discover that we down under don't take our kitchens with us when we move

It’s a really weird thing them taking their kitchens with them, cannot work out why.Makes absolutely no sense.

[MITCHAY]

AMP took some time but they have now upped the rates.

So looks like no increase for me which is good when I was already paying more anyway but I now paying -0.02 discount by default.

To clarify the cheapest variable rate is 2.54 and I'm already on 2.52. Since it has already been passed on, gonna try get a discount again

[MITCHAY]

I spoke too soon, the ****s upped my rate to 2.77. I'm sending a furious email to my broker soon

[T3rminator]

Originally Posted by MITCHAY

I spoke too soon, the ****s upped my rate to 2.77. I'm sending a furious email to my broker soon

2.24 fixed I owe my broker a few rounds.