Australia housing bubble

[Mont5.0]

Originally Posted by MITCHAY

I was cold called again today by LJ Hooker. Just said nah mate not interested when they said do you want to know whats sold in your area.

WTF? I have the internet and can see that for myself and have no use for you if I'm not selling. I knew what my neighbours paid in rent before they moved in

Oh yeah still have to get onto my broker about a rate cut but wondering if it will be better to wait for the June rate rise before I do.

ive been cold called before id even moved in...

[Sprintey]

I'm going to go out on a limb and say it's time. Correction time.
Reason being, the central banks of UK, Canada, US, NZ, us and probably EU/Japan/Koreas etc etc are all moving as one, raising the rates. RBA meets on Tuesday and it's expected either 0.25% or 0.40%. Fed has stopped QE and is now doing QT. NZ is at 2% already. How far they chase inflation is another matter, but I reckon enough damage has been done to correct Aussie RE. And that's before all the other baloney going on in the world.

* A caveat: Syd/Melb can be correcting, but other bits of Oz still going up as they follow later on in the cycle of rises and falls. Seen that before.

[Sprintey]

and as a corollary of that, now that ALP is fresh in government, it will be Labor's Fault.

(Hardly! But timing is timing...)

[zilo]

Australia is different, housing will not crash, we are different.

Too many people have big mortgages the govt cannot put rates up.

trust me.....

[hackney]

Originally Posted by zilo

Australia is different, housing will not crash, we are different.

Too many people have big mortgages the govt cannot put rates up.

trust me.....

trust me‘I am idiot’.

[MITCHAY]

Well 0.25 tomorrow is a given I would think, but could be as high as 0.40 to 0.50 depending on some economists.

I literally only got my letter after the last one dated 18 May effective 11 July so likely to have another increase before the last one takes effect

[hackney]

With the exception for house prices, I am not convinced Australia’s monetary policy will really do much for inflation if the drivers are foreign supply & not domestic demand,but since this is the one accepted lever, the RBA will be asked to perform surgery with a sledgehammer.

[Citroënbender]

…And it still won’t work!

[b0son]

Originally Posted by hackney

With the exception for house prices, I am not convinced Australia’s monetary policy will really do much for inflation if the drivers are foreign supply & not domestic demand,but since this is the one accepted lever, the RBA will be asked to perform surgery with a sledgehammer.

Depends on the market segment. 'Lifestyle' spending is very high, consequently the cost of those goods is absurd. Anything to do with travel, camping, 4wd, has gone through the roof. There's a market that's going to see a major correction. And it will be a great time to pick up a cheap caravan in the next year or two, absolute glut.

[MITCHAY]

Any discretionary spending will in theory cop it.

[Sprintey]

Originally Posted by b0son

Depends on the market segment. 'Lifestyle' spending is very high, consequently the cost of those goods is absurd. Anything to do with travel, camping, 4wd, has gone through the roof. There's a market that's going to see a major correction. And it will be a great time to pick up a cheap caravan in the next year or two, absolute glut.

Have a look at charts of companies like ARB - the massive covid stimulus, the hangover...

[Sprintey]

Originally Posted by hackney

With the exception for house prices, I am not convinced Australia’s monetary policy will really do much for inflation if the drivers are foreign supply & not domestic demand,but since this is the one accepted lever, the RBA will be asked to perform surgery with a sledgehammer.

In 1980 Paul Volcker, head of the US Fed, had to chase interest rates higher than inflation (peaked at 20% I think!!!) in order to overcome it. Consider that for a moment...

[Polyal]

I cant believe employees are expecting business to keep up with inflation rates and wage increase...what?

Sure using a little bit of CPI each year is typical in private but you cant expect government or employers to go up and down with inflation/rates if it is going to vary widely which it will...

When rates where >10% did wage rates go up the same? I could be wrong but I doubt it, time to cut into your budget.

[hackney]

Further to this feed, every borrower taking out a mortgage was given their loan on the basis of mortgage rates being around 5.5% OR higher(this is fact btw).Every borrower was made aware of that & would have signed the documents without duress.Banks are/have been factoring in a higher rate rise when writing loans.Again that is fact.People who complain that they are going to find it ‘tough’,they would be well aware what was down the track.They & they alone have nothing to complain about.

[Burnout]

Multi Quote can't add the last few pages............

Some of us can recall 17% Interest Rates, all driven by "external & internal monetary issues". If you have Cash hang on to it. If you don't the ride can or will become very difficult.

[hackney]

Originally Posted by Burnout

Multi Quote can't add the last few pages............

Some of us can recall 17% Interest Rates, all driven by "external & internal monetary issues". If you have Cash hang on to it. If you don't the ride can or will become very difficult.

Remember it very well.Had money invested @ the time.Did very well thank you.Had no mortgage either, one of the lucky ones @ the time

[T3rminator]

I think those wishing for a "crash" will be disappointed. Rate rises controlled by the RBA are not designed to crash the housing market. If you look at historical crashes, that goes for any asset classes not just housing, its usually an unexpected event that triggers it e.g. subprime in the US. RBA rises are not an unexpected event.

Not one with an economics background, I find it odd that, for years we've been encouraged to spend spend spend to support the economy. Going out and spending lots of money on goods was a good thing. But now, we are going to get "punished" for it

[hackney]

Originally Posted by T3rminator

I think those wishing for a "crash" will be disappointed. Rate rises controlled by the RBA are not designed to crash the housing market. If you look at historical crashes, that goes for any asset classes not just housing, its usually an unexpected event that triggers it e.g. subprime in the US. RBA rises are not an unexpected event.

Not one with an economics background, I find it odd that, for years we've been encouraged to spend spend spend to support the economy. Going out and spending lots of money on goods was a good thing. But now, we are going to get "punished" for it

What will happen is more of a plateau effect.Just a slight correction in the market.It is already happening,the market is pulling back ever so slightly.

[Polyal]

Originally Posted by hackney

What will happen is more of a plateau effect.Just a slight correction in the market.It is already happening,the market is pulling back ever so slightly.

I agree, id prefer to see the decline be prolonged but no one wants to see people get hurt but things cant keep going on the same trajectory.

I also get frustrated when the media portray the gov as being in control of all this, Year 10 economics tells me that rates go up to settle the economy or other factors. All of this is bigger than labour/Lib's etc although there policies can alter the path a little.

We need rates at a happy medium otherwise it makes it harder for pensioners etc as well with investments. Imagine replying on term deposits etc of late...

[Sprintey]

Loving this plateau talk...

https://en.wikipedia.org/wiki/Irving_Fisher

...stock prices had "reached what looks like a permanently high plateau." - said in 1929, 9 days before the crash!

Human psychology tends to repeat the same emotions, manias, hopes again and again and again...

https://www.youtube.com/watch?v=F0IWHxvswLk

[Sprintey]

This is a great book, a classic, highly recommended.

https://www.penguin.com.au/books/the...-9780241468081

for the tldrs:

https://www.youtube.com/watch?v=wNob5VAcj_A

Come take a trip with a former generation as they delude themselves into amazing riches and ruin...

[FTE217]

This is life, swings and roundabouts, what goes around comes around......
Some prosper some fall, synical yes but hasn't that been since the world began.

[FoxtrotGolfXray 5.0]

50 basis point rise. A fair bit more than what most were forecasting. Highest cash rate since September 2019 and the first back-to-back rate rise in 12 years.

Interesting times ahead, that's for sure.

[Polyal]

They can only go one direction from where they are...LOL

[hackney]

Originally Posted by FoxtrotGolfXray 5.0

50 basis point rise. A fair bit more than what most were forecasting. Highest cash rate since September 2019 and the first back-to-back rate rise in 12 years.

Interesting times ahead, that's for sure.

Bring it on!

[b0son]

Originally Posted by Sprintey

Loving this plateau talk...

Yep, seems a bit optimistic. We had a near 10% drop in Sydney prices before 2020 on the back of a slight tightening of lending, not any reduction of affordability. Multiple rate rises for the next year or more, and a 10% drop seems as close to a plateau as you'll get this time around.

Even so, if you're playing the long game, what does it matter. I'm still ploughing cash into my ETFs with the market on the way down. It will more than rebound by the time I start drawing it. Long term investors will sit tight, and with rents soaring, they can well afford to.

[zilo]

Originally Posted by hackney

Further to this feed, every borrower taking out a mortgage was given their loan on the basis of mortgage rates being around 5.5% OR higher(this is fact btw)

Nope.

[FTE217]

The most recent Consumer Price Index data by the Australian Bureau of Statistics showed annual inflation reached 5.1% in the first three months of 2022.

However, this was driven by price rises in ‘non-discretionary’ or essential household items, which surged 6.6% over the year – more than twice the rate of discretionary inflation (2.7%)2

[hackney]

Originally Posted by zilo

Nope.

Yes(fact).Don’t believe me?Research you fool.All banks do this, & have been doing this since last year(fact yet again.)

[Yellow_Festiva]

Originally Posted by hackney

Yes(fact).Don’t believe me?Research you fool.All banks do this, & have been doing this since last year(fact yet again.)

While they may have a contingency for rates 3 or 3.5% above the standard rate as a buffer that is all good and well if the application was true and honest.

And many got around that by not giving a true indication of their financial position.

I know my last loan application was as dodgy as all hell, but that was the only way to get it passed - go figure.