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AUS1111 said..
I'm not calling the bottom - that is very hard to do. It is ironic though, that when it is the bottom almost nobody will believe this to be the case as if they did - they would buy and prices would rise.

So the bottom of the market is specifically characterised as when the maximum proportion of market participants think prices have further to fall - and they'll be wrong. It's a nice irony.

The reverse applies at the top of the market - obviously.

Calling the bottom of the market? Easy. Realestate spruikers have done that for Perth for the last 8 years Maybe they will get it right eventually.

I think the bottom of the market is where people can get enough rent from their properties to cover their mortgages (a way to go yet) or the brakes come off the investment merry-go-round so that the capital gains are enough to push up prices again.

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AUS1111 said..I'm not calling the bottom...

Didn't allege you did....I asked who...since you stated it had apparently occurred....or maybe you were talking in general terms about bottoms....

One thing hat is certain is that there is a whole generation of Australians that will never be able to afford a house and land. Maybe they can get into a unit but the great Australian dream is out of reach for a vast majority of people in there 20's. I know that Brisbane's housing market was stable until the early 2000's and went silly around the same time as Howard's "first home buyers grant" was implemented. Or the home sellers grant as the estate agents called it. It's effect was inflationary and coupled with low interest rates and interest from NSW and Vic investors and financial refugees, the prices continued to grow exponentially. I myself took advantage of the grant but houses were getting snapped up before the estate agents had a chance to advertise them.

The house I ended up buying (2002) I got by going around to agents after dog shift and finding one just listed, not in the window yet. It was a crazy time and our house went up in value from $175,000 to $275,000 in the first 12 months. Unsustainable and illogical it seemed but onward they grew. The article below is depressing reading. How does a young person feel about what has happened to housing affordability? What happens to this generation when they spend their life renting and then retiring at the whim of the rental market with no major asset to fall back on?

www.news.com.au/national/new-report-reveals-top-five-capital-cities-remain-out-of-reach-for-homebuyers/news-story/071af2bd380ec6ed78dc28a6077a222e

^^ Spot on. IN any other sector of the economy, such inflationary stupidity would result in public outcry and catastrophic market failures and crashes, but because we keep allowing policy makers the leeway to empower investors with selfish interests above the interests of the whole of society, here we are - a totally unsustainable market on the verge of collapse and highly sensitive to even the treasurer sneezing.

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Adriano said..
^^ Spot on. IN any other sector of the economy, such inflationary stupidity would result in public outcry and catastrophic market failures and crashes, but because we keep allowing policy makers the leeway to empower investors with selfish interests above the interests of the whole of society, here we are - a totally unsustainable market on the verge of collapse and highly sensitive to even the treasurer sneezing.

Its even more curious in that now we have a potential Labor government that have talked about implementing changes to capital gains and negative gearing that should have been implemented more than 10 years ago. The irony is that if they implement them now, it will bring the property market down too much and cause widespread problems for the economy (* I know you may have a different opinion).

If these restrictions/limitations had been brought in ages ago we wouldn't have this concentration of wealth in something that should just be primarily for housing not getting rich.

Imagine if all that wasted money was used for practical investment in new businesses here instead of making housing unaffordable.

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FormulaNova said..
Imagine if all that wasted money was used for practical investment in new businesses here instead of making housing unaffordable.

But don't you know, negative gearing brings affordable rent to those that can't afford to buy their own home.

There is so much potential bust in this market.
Only 3% buy and sell at the right time.
I have been through many busts and each one is greater than the last.
There will be great bargains for those who are cashed up and have the time to wait.
I think we will continue to edge lower and then go into a downward spiral.
The true is no one knows and no will be able to control it.
This will be a great opportunity for those who have patience.

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Adriano said..
^^ Spot on. IN any other sector of the economy, such inflationary stupidity would result in public outcry and catastrophic market failures and crashes, but because we keep allowing policy makers the leeway to empower investors with selfish interests above the interests of the whole of society, here we are - a totally unsustainable market on the verge of collapse and highly sensitive to even the treasurer sneezing.

I don't think expensive housing is unique to Australia, and I'm not sure how wide spread negative gearing is. Maybe the majority of people of any nation see land as a key to wealth and/or financial stability. There will always be the haves and have nots. Except in a socialist utopia where everyone is equal, and the leaders are more equal than others......

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Bundeenabuoy said..
There will be great bargains for those who are cashed up and have the time to wait.
I think we will continue to edge lower and then go into a downward spiral.

What happens to those cashed up if APRA decide to recapitalize the banks w/ depositor funds, or colloquially, they steal your savings?

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FlySurfer said..
What happens to those cashed up if APRA decide to recapitalize the banks w/ depositor funds, or colloquially, they steal your savings?

Can you explain this further? I don't understand.

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FlySurfer said..

Bundeenabuoy said..
There will be great bargains for those who are cashed up and have the time to wait.
I think we will continue to edge lower and then go into a downward spiral.

What happens to those cashed up if APRA decide to recapitalize the banks w/ depositor funds, or colloquially, they steal your savings?

they sell their houses and add to the crash???

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Harrow said..

FormulaNova said..
Imagine if all that wasted money was used for practical investment in new businesses here instead of making housing unaffordable.

But don't you know, negative gearing brings affordable rent to those that can't afford to buy their own home.

Cynicism aside, it does make rents cheaper for those that can't afford to buy their own home! But in a weird twisted way.

Without negative gearing, houses would only be worth what they could generate in rental income, so the prices would be lower..... oh, um, I guess that means that negative gearing just increases the price of existing homes.

If only negative gearing could be used to increase the stock of available housing but keep a lid on existing house prices... go figure. Imagine if a political party thought about that and came up with policies to do this.

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AUS1111 said..
Can you explain this further? I don't understand.

While technically I don't think they can take your deposit, and recap a bank, they can allow the bank to take your deposits to recap themselves. But also the actual wording in the legislation doesn't preclude them from forcing a bank to take your deposits... APRA just say, trust us, we won't.

www.legislation.gov.au/Details/C2018A00010/Html/Text
www.apra.gov.au/sites/default/files/increasing_the_loss-absorbing_capacity_of_adis_to_support_orderly_resolution.pdf
www.mortgagebusiness.com.au/breaking-news/11940-apra-endowed-with-new-crisis-powers


Did your bank send you updated T&Cs?

And the obligatory utube vid...

Every other day news.com.au is predicting/warning housing crash

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starboarder said..
Every other day news.com.au is predicting/warning0 k housing crash

gov gaurantes deposits up to 250 k

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JulianRoss said..There will always be the haves and have nots. Except in a socialist utopia where everyone is equal, and the leaders are more equal than others......

Like Norway, for instance?

Norway has a GNI/capita figure 56% higher than Australia and their cost of living is about 40% higher too so in essence, they are wealthier than us.

Basically destroys the capitalist myths regarding tax and public service expenditure.

Update: Has anyone seen the national sales figures for January? Worst falls since the 1993 recession.

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Adriano said..

JulianRoss said..There will always be the haves and have nots. Except in a socialist utopia where everyone is equal, and the leaders are more equal than others......

Like Norway, for instance?

Norway has a GNI/capita figure 56% higher than Australia and their cost of living is about 40% higher too so in essence, they are wealthier than us.

Basically destroys the capitalist myths regarding tax and public service expenditure.

Update: Has anyone seen the national sales figures for January? Worst falls since the 1993 recession.

Yep Norway. The backbone to their semi socialist system is built on an oil revenue funded sovereign wealth fund. Unlike our version it's big enough to provide welfare for the entire country not just our federal public servants. We could have done something similar but we decided to spend it all now and give tax cuts and then double down by racking up record debt.

Its out of our reach now but yeah Norway is a good example of how things might have gone here if we had pollies with real foresight and an electorate informed enough to vote them in. We have neither.

No rampant property speculation. No need.

Anyway no need to panic in Aussie property the RBA is here to save the day with 2 more rate cuts this year being priced in. That means we will have negative 2 to 3 % real interest rates after adjusting for inflation. Never seen in the history of our country.

We are in uncharted territory people so relying on history in calling a bottom will end up being pretty foolish this time around imho.

In Auckland and now Tauranga being on the most unaffordable cities in the world.
We generally lag behind you and don't have as extreme movement but politics doesn't get the right economic changes for the kiwis first home buyers who are competing with new new zealanders who get minimum lending rates.

I'm lucky that we have a great house within 1km of two beaches depending on wind directions or if we get waves.

Today I got some nice wave rides on my sup which takes out excessive whining that our kids need to be on high income jobs to buy a house.

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JulianRoss said..

I don't think expensive housing is unique to Australia, and I'm not sure how wide spread negative gearing is.

Negative gearing is unique to Australia. No other country in the world has negative gearing.

Nz has negative gearing but what you can claim for depreciation is ring fenced

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bazz61 said..

starboarder said..
Every other day news.com.au is predicting/warning0 k housing crash

gov gaurantes deposits up to 250 k

but I think it might now be for only one account per TFN, and even that sounds like they may be able to freeze it if they've got to save the banks

We are at the start of the normal mid cycle recession. Everything is ticking along just nicely. I can't see how the rba can reduce interest rates with the US rates normalising (as they do around about now in the cycle). Capital will flee the country. But hey these PhD financial witch doctors are capable of just about anything !

And oh yeh when the next crash does come, and it will, we are farqed this time round.

Agreed, there is only one way interest rates will go and that's up. It'll be a delicate balance between raising them to have something to drop in the next crash or not raising them because it will introduce financial hardship to those who are already massively geared

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eppo said..
We are at the start of the normal mid cycle recession. Everything is ticking along just nicely. I can't see how the rba can reduce interest rates with the US rates normalising (as they do around about now in the cycle). Capital will flee the country. But hey these PhD financial witch doctors are capable of just about anything !

And oh yeh when the next crash does come, and it will, we are farqed this time round.

So, what are your predictions? Its better to know what's going to happen instead of 'something is going to happen sometime'.

What precautions are you taking to ride it out?

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Paddles B'mere said..
Agreed, there is only one way interest rates will go and that's up. It'll be a delicate balance between raising them to have something to drop in the next crash or not raising them because it will introduce financial hardship to those who are already massively geared

We have had times in the past where our interest rates were not higher than elsewhere, surely?

What is the RBA going to do if they think that the economy is already very low and inflation is super low?

They'll leave the rates where they are in that case FN. I can't see rates falling, only staying still or going up but you're right it will all depend on inflation.

a real estate investor I deal with gave me this quote for the current climate

"Cash is King"

So, how about those Sydney house prices, huh! Tell me, is the rest of the world as obsessed with real estate as we are here?

^^^Probably. The gvmnts here have built it into the tax system thereby creating something that everyone with the ability to, jumped in as a way to ensure that they had something when retirement came. And reno shows fuel the same dreams 'cos those investments require a fair bit of regular wear and tear repair, let alone what renters do to them. It's all most of us have got. I guess we could always bitcoin our future away.

We're screwed.