If we ever do get through corona virus. What is everyones opinions of what will happen with house prices?Will the market crash and burn or will the supply and demand factor keep it propped up? Or will the government open it back up to overseas investors to prop up the economy / pay back all the stimulus packages?

A mate put his house on the market today, reality is there are people out there who need to buy and do have the money, what is interesting tyre kickers are not wasting agents / sellers time

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bazz61 said..
my 2 cents , the Lieberal gov will relax the restrictions on foreigners buying " used houses" the Chinese will flood in , saving the housing market , you can bet your last dollar that whole hi rises under construction now will be sold to the Chinese , and so the take over of western civilization by the yellow peril will continue .

"Saving" the housing market? Why does it need "saving"? What is wrong with it dropping 10%, or 30%? Owner occupiers still have a place to live, and some investors lose money....why does it matter? Investors in stocks lose money too, no investment is guaranteed.

It won't be even. Apartments where there's any oversupply will be a bloodbath. I'll make a big call, 50%.

Outter ring suburbs where people have just got their home and land package, it won't be pretty and if they have a job they'll be in negative equity for 5 years. Out in the arse end of town, living the dream.

I reckon the Gold Coast, so heavily reliant on tourism will get hammered.

Old money suburbs will do best in Sydney/Melb

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Harrow said..

bazz61 said..
my 2 cents , the Lieberal gov will relax the restrictions on foreigners buying " used houses" the Chinese will flood in , saving the housing market , you can bet your last dollar that whole hi rises under construction now will be sold to the Chinese , and so the take over of western civilization by the yellow peril will continue .

"Saving" the housing market? Why does it need "saving"? What is wrong with it dropping 10%, or 30%? Owner occupiers still have a place to live, and some investors lose money....why does it matter? Investors in stocks lose money too, no investment is guaranteed.

It's not about saving the housing market . It's about saving the banks ....or in reality kicking the can down the road. If property loses 30 % , bank fails could realistically happen unless they bail in

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Gboots said..

Harrow said..

bazz61 said..
my 2 cents , the Lieberal gov will relax the restrictions on foreigners buying " used houses" the Chinese will flood in , saving the housing market , you can bet your last dollar that whole hi rises under construction now will be sold to the Chinese , and so the take over of western civilization by the yellow peril will continue .

"Saving" the housing market? Why does it need "saving"? What is wrong with it dropping 10%, or 30%? Owner occupiers still have a place to live, and some investors lose money....why does it matter? Investors in stocks lose money too, no investment is guaranteed.

It's not about saving the housing market . It's about saving the banks ....or in reality kicking the can down the road. If property loses 30 % , bank fails could realistically happen unless they bail in

I wonder how long the banks can go without people making repayments.
if the 8 million renters stop paying things could get interesting

Yep, it's a house of cards that has massively contributed to the position we now find ourselves in (a bubble caused by speculation motivated by government policy), house prices will adjust downwards like everything else. Hopefully the government will avoid the temptation to allow foreign buyers to prop pricing up and cheaper housing will allow low wages; more local manufacturing and services; and a more sustainable economy.

^^^^ And negative gearing has only contributed to it more. It has to go. (I say this as someone that is best placed to benefit from negative gearing.)

But then you come back to the argument of does negative gearing encourage more rental units into the market, thus cheaper rent.

But realistically if the market is about to fold, changing policy wont help peoples lives.

Got to agree the Goldy will get smashed.

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Harrow said..
^^^^ And negative gearing has only contributed to it more. It has to go. (I say this as someone that is best placed to benefit from negative gearing.)

It is a classic human nature to take advantage of an opening - basically a very reasonable view - it is the community sponsoring the investors to block first home owners from owning a house...
If it was that g8 a business model then at best 1 house per personal tax return then stand on its own feet.. not as is...
Cheers
AP

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bjw said..
But then you come back to the argument of does negative gearing encourage more rental units into the market, thus cheaper rent.

It's a bogus argument. It's an investment strategy that is heavily biased towards those that are in the highest tax bracket. I don't believe it makes rent significantly cheaper. Rent can't rise above what people can afford to pay, so the cost of units would then have to drop to make the investment affordable for landlords. This then makes it easier for people to afford their own home. A new equilibrium will be reached, one that is much fairer for those on lower incomes that want to buy their own place. It's a classic case of the rich keeping the poor in their place, while the wealth continues to trickle up.

Just dumping the CGT discount would be a good start.

I read that non bank lenders have cancelled most loans including mortgages.
Does anyone know if the big 4 banks are still handing out mortgages?

Goldy is in a holding pattern atm. We are not seeing price drops yet!

Been to a couple of viewings and having spoken to the agents, the sellers seem rather urgent (lost high paying job in one case and business closed down in another) it seems the sellers are prepared to negotiate. However, one Agent still talking it UP.... but the other told us to make a cheeky offer.

I think the Air BNBers are going to get smashed here. It's a matter of time.

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Storm Ahead said..
I think the Air BNBers are going to get smashed here. It's a matter of time.

Good point, and there's a stack of them. I know people that rent several units, then sub-let them on AirBnB. Since they don't live there themselves, they're most likely to just terminate or default on the lease, leaving the landlord in the lurch.

I think property will drop but potentially less than stocks or cash (losing purchase power through inflation). But if you own the property at the end of the recession you'll be a lot richer than others.

My guess is there will be half as many real estate agents 3 years from now

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Harrow said..

Storm Ahead said..
I think the Air BNBers are going to get smashed here. It's a matter of time.

Good point, and there's a stack of them. I know people that rent several units, then sub-let them on AirBnB. Since they don't live there themselves, they're most likely to just terminate or default on the lease, leaving the landlord in the lurch.

Already are, apparently adverts for rentals are up as all the airbnb's are now having to rent to locals

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Little Jon said..

Harrow said..

Storm Ahead said..
I think the Air BNBers are going to get smashed here. It's a matter of time.

Good point, and there's a stack of them. I know people that rent several units, then sub-let them on AirBnB. Since they don't live there themselves, they're most likely to just terminate or default on the lease, leaving the landlord in the lurch.

Already are, apparently adverts for rentals are up as all the airbnb's are now having to rent to locals

Maybe they should hold on the Domestic tourism sector could boom

If you've got cash to pay for a house it might be a good time.
Historically w/ financial shocks, liquidity has been a problem and consequently getting a loan was problematic which in turn caused further declines of up to ~30%.
In NSW and Aus I think they will edge lower to maybe -20%, but finance will be a problem, and then inflation will start ramping up which will eventually feed in to property.

A lot of people have less than 30% equity. If prices fall more than that people can hand their properties back to the bank and be better off. The powers that be would most likely not entertain this possibility.

According to one of the RE agents I was speaking with, REA and Corelogic are apparently telling them that this won't last long and it will turn back on "like a tap".....What a load of BS.
Of course, I disputed this straight away, and stated that job hiring isn't an overnight process and manufacturing supply lines are now severed and will take time to re-establish. Also, jobkeeper and jobseeker allowances aren't going to get people mortgages. At best most who are now unemployed are on borrowed time, with the banks giving them 3 to 6 months grace period form their mortgage payments. They will then owe even more to the banks.

Australian property owners are highly indebted and this is going to make the situation worse. Unfortunately for them this is going to become a long and protracted affair. So far, they are deluding themselves, believing that things will return to the bubblishes normal.

A lot of people are going to get hurt. The blame squarely lies with the RBA, Government policies, Banks and REA vested interests.

edit: This looks like the denial phase.

Gold Coast early 80's boom bust period units devalued 50 % , eventually came back .

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psychojoe said..
A lot of people have less than 30% equity. If prices fall more than that people can hand their properties back to the bank and be better off. The powers that be would most likely not entertain this possibility.

You don't get out of mortgages here the way you do in the USA. If you sell up for less than the debt you still owe the bank the difference. Mortgage insurance might help out, but not every borrower carries it.

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Storm Ahead said..
Of course, I disputed this straight away, and stated that job hiring isn't an overnight process and manufacturing supply lines are now severed and will take time to re-establish.

I reckon jobs are going to be plentiful end of this year > next, bcos there's going to be a lot of repatriation, if the gov doesn't screw up the incentive...

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Mr Milk said..

psychojoe said..
A lot of people have less than 30% equity. If prices fall more than that people can hand their properties back to the bank and be better off. The powers that be would most likely not entertain this possibility.

You don't get out of mortgages here the way you do in the USA. If you sell up for less than the debt you still owe the bank the difference. Mortgage insurance might help out, but not every borrower carries it.

Mortgage insurance only covers the loss to the lender, not the borrower. So if you sell for less than the value of the loan you'll have an insurance company knocking on your door demanding the difference. The banks don't loose.

Imagine if you'd taken up the first homebuyers 5% deposit scheme recently, you'd staring down years of negative equity.......ouch!

Confidence in Australian property market suffers biggest monthly fall in 47 years: Westpac
APR 16, 2020

www.domain.com.au/news/confidence-in-australian-property-market-suffers-biggest-monthly-fall-in-47-years-westpac-949157/?utm_campaign=strap-masthead&utm_source=brisbane-times&utm_medium=link&utm_content=pos5&ref=pos1

I just received this from one of the RE agents.

If you're a QLD Landlord, you NEED to read this!

Your tenant/s will NOT have to pay back any rent. Put simply, a rent reduction negotiated with your tenant/s is a permanent rent waiver meaning you, as the landlord, will be out of pocket, with no means of recovering any unpaid rent in the future post COVID-19.

You CANNOT ask your tenant/s for any proof of financial hardship. Your tenant/s can request reduced rent due to COVID-19 without any proof. This potentially exposes you to false claims and exploitation of the proposed protections for those who genuinely need it.

Your Landlord Insurance will NOT cover you for rent in arrears*. The normal terms of your policy won't cover the rent reduction as this is a mutual agreement between you, as the landlord, and your tenant and you cannot follow the necessary rent default process as this is prohibited. (*Please contact your relevant insurer for individual policy conditions)

Your tenancy agreement WILL immediately extend by 6 months if it expires during the 6 month freeze on evictions. Tenants will be automatically entitled to a 6-month extension of the tenancy agreement meaning any protections may last up to 12-months.

Your tenant/s can REFUSE ENTRY for anything other than emergency repairs. Not only can your tenant refuse access, they don't have participate in virtual property inspections either. There's also no clarity as to whether prospective purchasers can inspect a property that is for sale.

Your tenant/s can BREAK A LEASE with only 7 days' notice. To make matters worse, you cannot recover any lost rent or costs associated with finding a new tenant as would normally apply.

Parliament sits to pass these protections on Wednesday, 22 April 2020.

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Mr Milk said..

psychojoe said..
A lot of people have less than 30% equity. If prices fall more than that people can hand their properties back to the bank and be better off. The powers that be would most likely not entertain this possibility.

You don't get out of mortgages here the way you do in the USA. If you sell up for less than the debt you still owe the bank the difference. Mortgage insurance might help out, but not every borrower carries it.

You sign a Personal Guarantee when you get a loan from a bank. There is no getting out of the debt irrespective of the value of the house.

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bazz61 said..
Gold Coast early 80's boom bust period units devalued 50 % , eventually came back .

Bazz the Gold Coast is never a good barometer or bench mark for property values or their cycles - its always been too volatile and is easy for 3rd parties to manipulate across its micro markets. Look at Capital cities for bench marking that is more closely tied to each economies health.
Supply, take-up and values have no real reflection on the health of the GC economy.

Update.

Red $$$ ready to flow to prop up the housing market ...

www.realestate.com.au/news/covid19-call-for-foreign-investors-to-be-encouraged-to-help-rebuild/?rsf=syn:news:nca:news:spa:strap

the buyout of Australia to continue ...

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bazz61 said..
Red $$$ ready to flow to prop up the housing market ...

www.realestate.com.au/news/covid19-call-for-foreign-investors-to-be-encouraged-to-help-rebuild/?rsf=syn:news:nca:news:spa:strap

the buyout of Australia to continue ...

Have you ever looked at the actual figures, not what you read on realestate.com.au or news.com.au? 'Red' money in particularly realestate has been on the decline since it's peak on '15-16 and has just had a tiny up-tick...hardly a flood. As a percentage of total foreign investment they rank a very lowly 9th on the list of our top investors if you look at the latest DFAT data. The USA account for 27% of our total foreign investment, China is 1.8%.....It's easy to cherry pick certain investments they make for a good headline but when you look into it seriously countries like the US s*#$ on them from a great height. Maybe this will change but not as it stands at the moment.