Australia housing bubble

[Romulus]

Originally Posted by T3rminator

So, what was the gist of what was said? Whats the prediction?

Those with LVR's greater than 90% who signed up over the last 18 months with record low interest rates face the highest chance of losing their properties and the shirts on their back. Cash rate is going from 0.1% to likely 3% by years end. That's 2.9% increase, what does that amount to on a $500k mortgage over 30 years on a monthly basis? $805 pm extra repayments. Good luck with that!

Financial literacy amongst the population is low. Very low. I read a home owner with a $1.5m property who's value had dropped $200k asking if their loan also dropped $200k. Why don't people understand their loans are full recourse?

Folks like Martin North and Tony Locantro have been predicting property values coming down since the pandemic started. They've been wrong for nearly 2.5 years, but their being wrong is about to become right.

[T3rminator]

Originally Posted by Romulus

Folks like Martin North and Tony Locantro have been predicting property values coming down since the pandemic started. They've been wrong for nearly 2.5 years, but their being wrong is about to become right.

Tony Locantro...now that's a name I haven't heard for a while. One worth following. Made a mate of mine very rich at a very young age getting him on IGO, and retired as a 30 something year old.

[Romulus]

Originally Posted by zilo

If you consider factual reporting as doom and gloom then I guess the answer is yes to that question.

As for someone giving you the recipe for making a fortune I hear housing is the go...doubles every 7 years...true..trust me.

My share portfolio has dropped 40% over the last 12 months (on paper only, I've not sold and continue to hold any buy more) - that seems to be an acceptable risk level to those I speak to with mortgages and those who don't invest in the markets. Mention increased interest rates and reduced property values and people have a coronary. The perception is house prices can only go in one direction - up. People are about to get a healthy dose of reality.

[Romulus]

Originally Posted by T3rminator

Tony Locantro...now that's a name I haven't heard for a while. One worth following. Made a mate of mine very rich at a very young age getting him on IGO, and retired as a 30 something year old.

Yeah Tony was involved with Sandfire Resources IPO. Imagine having 500k of shares @ 15c riding it all the way to their highs. You'd become a multi-millionaire

[BENT_8]

Originally Posted by Romulus

Those with LVR's greater than 90% who signed up over the last 18 months with record low interest rates face the highest chance of losing their properties and the shirts on their back.

Not necessarily, depends whether they went all in and bought/borrowed the maximum they could.
Our Daughter and us both have LVR's of 90% but as the actual loans are small, a 3% rate rise is quite manageable.
She is single and can afford it on her own, she also has a spare room with ensuite that she can rent to a friend if she wants to free up money at any stage.

[zilo]

Originally Posted by T3rminator

Tony Locantro...now that's a name I haven't heard for a while. One worth following. Made a mate of mine very rich at a very young age getting him on IGO, and retired as a 30 something year old.

LOL...nah...he gave up waiting for property prices in Perth to tank.
In one of his videos he admits to paying too much but shrugs his shoulders and says he ha the money to buy now and life is not a dress rehaearsal, its the one and only live show. Gotta love the guy.

[DTFRMONT]

Have noticed that the market has started to slow where I am (eastern suburbs Melbourne). A house in my street went for auction on the weekend, no bids. Nice house, but there were some issues such as no garage & only a small living area despite having 6 bedrooms. Agent also said that Chinese buyers were turned off as it had bad Feng Shui as it was on a T-intersection. Word is that some homes are still getting strong prices, but at $1 million plus, people are starting to get picky, and are bypassing places missing things such as garages, or where they will have to spend substantial money to get the place to how they want it. No longer a FOMO market.

With the Japanese situation, totally different demographics from here as mentioned. There is a rapidly ageing population, their country towns are full of abandoned homes. Migration isn't at the levels it is here, although the Government there has started to allow guest workers to come in. As anyone who's been there will know, a lot of the staff at places such as Starbucks & KFC are Filipino, and I've seen people from the sub-continent working at a Family Mart. The 'guest worker' program also isn't a pathway to permament migration that it is here. Most of the 'western' Japanese travel Youtubers have married locals, which has allowed them to remain there.

[T3rminator]

Another 50 basis point just announced. Can anyone with an economic background explain how lifting rates is going to help with this current inflation?

The big contributors are petrol, gas and electricity, and food prices, we are told these are all due to overseas events, so how is removing cash from mums and dads going to help?

Originally Posted by DTFRMONT

Have noticed that the market has started to slow where I am (eastern suburbs Melbourne). A house in my street went for auction on the weekend, no bids. Nice house, but there were some issues such as no garage & only a small living area despite having 6 bedrooms. Agent also said that Chinese buyers were turned off as it had bad Feng Shui as it was on a T-intersection. Word is that some homes are still getting strong prices, but at $1 million plus, people are starting to get picky, and are bypassing places missing things such as garages, or where they will have to spend substantial money to get the place to how they want it. No longer a FOMO market.

With the Japanese situation, totally different demographics from here as mentioned. There is a rapidly ageing population, their country towns are full of abandoned homes. Migration isn't at the levels it is here, although the Government there has started to allow guest workers to come in. As anyone who's been there will know, a lot of the staff at places such as Starbucks & KFC are Filipino, and I've seen people from the sub-continent working at a Family Mart. The 'guest worker' program also isn't a pathway to permament migration that it is here. Most of the 'western' Japanese travel Youtubers have married locals, which has allowed them to remain there.

Apparently last weekend's clearance rate was pretty dismal. Adelaide was the only place where property was still going up, had a clearance rate of about 70%+. NSW and QLD had the lowest of the major cities. Melb third. Tassie had a clearance rate of 0% . But that is just one weekend's data.

Are chinese buyers still buying the ~$1m residential properties? Thought data showed that investments from the Chinese had fallen off a cliff. You still hear about them from time to time because there is the odd $20m+ type purchases, but that won't affect your every day buyers.

[DTFRMONT]

Originally Posted by T3rminator

.

Are chinese buyers still buying the ~$1m residential properties? Thought data showed that investments from the Chinese had fallen off a cliff. You still hear about them from time to time because there is the odd $20m+ type purchases, but that won't affect your every day buyers.

They're still around. Don't forget that even though it's currently not an easy task for Mainland Chinese to leave China, there's currently a fair bit of outwards migration from Hong Kong, as well as the the returning expats.

[BENT_8]

Originally Posted by T3rminator

Another 50 basis point just announced. Can anyone with an economic background explain how lifting rates is going to help with this current inflation?

The big contributors are petrol, gas and electricity, and food prices, we are told these are all due to overseas events, so how is removing cash from mums and dads .

Have you been to the shops lately?
The first 2 rate rises did nothing to curb spending, people are throwing cash around without a worry in the world.
There is a real denial of where things are headed for many as pulling in inflation is a foreign concept when you've spent a decade doing the opposite on cheap credit.

[Citroënbender]

I’ve not noticed much restraint in spending either. Maybe shorter queues at the petrol station and people putting in less than a full tank.

Secondhand building materials are apparently gold-plated now, if you look at asking prices for rubbish online. $600 for a secondhand aluminium standard sliding+fixed door set?

I wonder if people will countenance shared housing as a different proposal to the usual assumptions of undergraduate squalor?

[Sprintey]

Originally Posted by T3rminator

Another 50 basis point just announced. Can anyone with an economic background explain how lifting rates is going to help with this current inflation?

Don't have it as a background, but by raising the RBA keeps up with overseas central banks... even though still far behind them. Back in the day Aus bonds yielded about 2% more than US, to attract capital to Aus, which needs to attract overseas capital, Now we are behind the US.
If they get too far behind, AUD gets hammered. If AUD gets hammered, everything we import adds to the inflation shock: think especially, fuels and oils.
So we have to raise, relatively speaking.

[zilo]

Originally Posted by DTFRMONT

With the Japanese situation, totally different demographics from here as mentioned. There is a rapidly ageing population, their country towns are full of abandoned homes. .

yep...30 years later that is the case,
but their downturn started before they had an ageing population and abandoned homes and has not recovered, because prices were sky high when the rot set in.

[T3rminator]

Originally Posted by BENT_8

Have you been to the shops lately?
The first 2 rate rises did nothing to curb spending, people are throwing cash around without a worry in the world.

https://www.abs.gov.au/statistics/ec...tors-to-change

The top 3 increases have been food, transport and education. A close fourth is housing, followed by health. Clothing and footwear went backwards, so you could argue the rate rises might be starting to have some impact. (EDIT: just realised its March qtr data, so before rate rise)

Which of the top 5 will raising interest rates help bring down? Housing obvious....but others are all essentials, cutting health and education will just create more problems down the track. We are told food and transport is outside of our control.

[MITCHAY]

It looks like another 0.5 whack coming in August is likely.

My mum is trying to offload her investment property so she can sell her house and downsize but it has just been a **** show so far but hopefully soon

[zilo]

Originally Posted by MITCHAY

It looks like another 0.5 whack coming in August is likely.

Some are predicting 0.75 rise...

[MITCHAY]

Originally Posted by zilo

Some are predicting 0.75 rise...

Yep was reading about a potential 0.75 as a possibility on the back of stronger than expected employment numbers.

August rate rise will be 0.5 minimum. Take that to the bank

[Romulus]

I remember interest rates between 6-7% around 2009-2015. No big deal. The RBA should just increase rates 1% in August and 1% in September to bring rates back to their normal level.

[John 13]

Originally Posted by zilo

If you consider factual reporting as doom and gloom then I guess the answer is yes to that question.

As for someone giving you the recipe for making a fortune I hear housing is the go...doubles every 7 years...true..trust me.

Very likely true. largely fuelled by 'the housing led recovery' (remember that). Somewhat spares the national economy, uses private credit/debt (borrowing) rather than public borrowing/debt. Also very good for the big four banks, endless asset growth and our spending of any savings reduces their (the banks) liabilities.
Like to see members opinion re. a manufacturing led recovery, particularly for consumables and single use stuff. Maybe just a dream and not possible with our FREE trade agreements and relatively small domestic market.

[Yellow_Festiva]

Originally Posted by MITCHAY

Yep was reading about a potential 0.75 as a possibility on the back of stronger than expected employment numbers.



August rate rise will be 0.5 minimum. Take that to the bank

When is our fuel excise discount getting canned?

I'm thinking it will be between .3 and .5% . 75 basis points seems too much of a kick in the guts in 1 hit.

Having said that, banks are jacking up their fixed rates well above the predictions so anything is possible.

In 18 - 24 months there will be billions of $ in loans coming out of sub 2.5% fixed rates. These people will be going to around 5-6% overnight..

Now that will be an interesting situation to observe....

Sent from my SM-G973F using Tapatalk

[Polyal]

Originally Posted by John 13

Very likely true. largely fuelled by 'the housing led recovery' (remember that). Somewhat spares the national economy, uses private credit/debt (borrowing) rather than public borrowing/debt. Also very good for the big four banks, endless asset growth and our spending of any savings reduces their (the banks) liabilities.
Like to see members opinion re. a manufacturing led recovery, particularly for consumables and single use stuff. Maybe just a dream and not possible with our FREE trade agreements and relatively small domestic market.

Id prefer to see decent infrastructure projects (which do happen) but ones that also benefit out lying cities.

IMO, I wouldn't spend a cent on the large cities anymore, we need people out of them or stop having it so we "have" to go to them. They are now big enough to look after themselves.

Private housing should not be touched by GovCo...ever, seems there has been a lull in public housing that that should be the focus as more people "fee the pinch.

And that doesnt mean ghetto's.

[Syndrome]

The RBA are clueless

They created this asset bubble by flooding the market with cheap credit since 2009

Now they are about to pop the same asset bubble.

This is going to hurt................

[Romulus]

Originally Posted by Syndrome

The RBA are clueless

They created this asset bubble by flooding the market with cheap credit since 2009

Now they are about to pop the same asset bubble.

This is going to hurt................

The previous Federal government is just as much as fault with its idiotic FHB grant boosts, causing financially illiterate folk to enter the money with a 1-5% deposit, those who probably never saved a penny in their lives. People thinking they're getting a $50-60k allowance for 'free' didn't have an ultimate transactional cost?

As mentioned by Yellow Fiesta interesting times ahead with those on sub 2% fixed and variable rate loans entering the market at what will be a 10 year cash rate high according to 3 of the 4 major banks.

[Charliewool]

The homes that are being passed in, or VB ( in Melbourne) appear to be the 1mill-2mill.
Lower valued homes (500-800k) are retaining or actually rising… And selling like hotcakes.
I’d suggest those heavily financed in the plus 1mill bracket are panicking and looking to cut and run and buy smaller?… So, again the first home buyers the losers?

[Citroënbender]

Sounds plausible. Especially the panicking - get an impression there’s a lot of emotion getting ahead of analysis in the minds of people affected by the rate rises.

Will families start having a lodger, to make up the difference in repayments? What about companies offering to contract for a space in your yard to stand a relocatable dwelling? At the moment everyone seems determined to suffer as nuclear families, rather than embraced shared costs.

[zilo]

The best part will be the smug young tradies who have never experienced a downturn,

You know the ones....brand new HiLux or Ranger..permed hair and blue heeler in the tray...reckon they are worth a thousand bucks a day.

Bring it on I say...

[BENT_8]

With rentals in huge demand and rent soaring there will still be plenty of activity in the entry level buyers market as its now cheaper to pay a mortgage even with a LVR above 90% than rent the equivalent property.

[fordomatic]

Originally Posted by BENT_8

With rentals in huge demand and rent soaring there will still be plenty of activity in the entry level buyers market as its now cheaper to pay a mortgage even with a LVR above 90% than rent the equivalent property.

My rent on one of my investments just got put up an extra 35% on the previous tennants, couldn't believe it. Real estate said i'd achieve 40% if i wanted.

I don't think the rise in rent will see more people buy. Most the people renting can't get a loan to buy a house, hence why they are renting. Even with a sizeable deposit, you wont get a loan easily, even if your rent is more per week, that doesnt even come into the banks decision to approve or not.

[GasoLane]

Originally Posted by fordomatic

My rent on one of my investments just got put up an extra 35% on the previous tennants, couldn't believe it. Real estate said i'd achieve 40% if i wanted.

I don't think the rise in rent will see more people buy. Most the people renting can't get a loan to buy a house, hence why they are renting. Even with a sizeable deposit, you wont get a loan easily, even if your rent is more per week, that doesnt even come into the banks decision to approve or not.

With everything else going up it's good to see that Agents are helping renters

Do the agents charge a flat fee for looking after it or is it a percentage of the rent?

[fordomatic]

Originally Posted by GasoLane

With everything else going up it's good to see that Agents are helping renters

Do the agents charge a flat fee for looking after it or is it a percentage of the rent?

The agent charges 5.8% including GST, so it's definately in their interest to get more rent.

I looked at rent in that area and I could have easily got more, im happy though. Remember this is all business mate, you don't make friends in business. Agents are there to make money, not help people, it's just reality.