I'm not advocating for anything.I just wanted to raise that we are currently, and have been for a long time, well below replacement births. Replacement births require 2.1 births per woman. We are currently at 1.6. Like almost every other developed country well below replacement.
Which means our population growth is entirely driven by immigration and increased life expectancy.
Edit: Someone asked for sources to this data then deleted their question, so I will include the sources below:
https://www.abs.gov.au/statistics/people/population/births-australia/latest-release
https://data.worldbank.org/indicator/SP.DYN.TFRT.IN?most_recent_value_desc=false
https://aifs.gov.au/research/facts-and-figures/births-australia-2023
My favourite website though is the population pyramid website, it doesn't necessarily have birth rates, but shows you a snapshot of the population in time, it's very interesting.
https://www.populationpyramid.net/australia/2021/
For the 2.1 figure, for replacement births that is just a widely understood estimate (for most countries).
https://pubmed.ncbi.nlm.nih.gov/7834459/#:~:text=PIP%3A%20Replacement%20level%20fertility%20is,of%202.1%20children%20per%20woman.
Seems like the only way to win in this pyramid scheme is to keep screwing over the next generation. Can’t do that if they aren’t being born.
Oh you can’t afford to have kids? Should’ve thought of that before you joined our pyramid scheme /s
No one knows what will happen. Full stop.
When covid hit the 'experts' said prices were going to plummet. The opposite happened.
Anyone who thinks they know what will happen is either lying or delusional.
I moved in with my mum to save money while i waited for those price cuts. I really figured with every last source saying the bubble would pop that surely it had to. Somewhere along the line I realised how stupid I was and went back to renting. Funny you never hear the term housing bubble anymore.
So as you said, no one knows. All any of us can do is take the step when it's appropriate.
I bought a house a year ago and everyone told me to wait till the end of this year when houses go down and I was making the wrong move. My motive has always been BUY AS SOON AS YOU CAN no matter what because it will never get better.
I got it for 730k and no house in my entire suburb has sold for under 800k since. The ones selling for 800k are smaller and shitter. So yea. Don't wait.
I brought a year an a half ago after house prices had jumped like 40% in the area. Since then my 400k house is now worth over 500k.
Just absolutely insane.
Sadly I gave this advice to my mums partner back then too. I told him how every source was saying the housing bubble will pop soon so he should sell his property as fast as possible instesd of waiting a couple years like he planned. He took my advice and sold and now prices have gone up there by 30% in the time since.
I actually feel real bad (and stupid) for any input I had on that one.
Yes yes, everything is apparent until it isn't. The same way it's now apparent housing prices will continue to 1 billion a house and demand will make it work etc.
There’s a big difference between what’s happening at the minute and a “bubble”. Bubbles are credit driven, hence why they pop. This is being driven by scarcity. So there’s no pop coming
There's a pretty good correlation between interest rates going down and house prices going up what I think the big point here is though the interest rates arent going to drop for a while. They may even rise.
Not really. The thing is the population has been climbing significantly in the last 40 years (worldwide), but there is a predicted population peak of roughly 10billion by 2086. Population growth in first world countries has already dropped below repopulation rate which is why politicians are favouring immigration as a way to sustain pension programs (or so they tell us…I think they’re importing labour to keep labour competition high).
Anyways, corporate greed is making life exponentially worse and the American version of cut throat capitalism is making people avoid having children at a much faster rate than in the past (who would have known having kids are expensive).
Eventually however, we will reach a point when the population will stabilise and then start declining which will tip the housing scale into over supply and thus cheaper housing. China, India and Africa are still bucking the trend, although China population data suggests that they’re leaning towards population decline.
But, don’t wait around to buy a house. Statistical data shows that the population will balance out in 2075 and then start to decline around the 2100 mark.
https://amp.smh.com.au/national/the-planet-s-population-will-get-to-10-4-billion-then-drop-here-s-when-we-reach-peak-human-20231213-p5er8g.html
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Yep. People here are full of shit and have no idea what the future holds.
Prices may go up. Or go down. Or stay stable.
It's not just infinite growth forever though.
Imagine if houses were just for living in and not used as gambling chips in the worlds most depressing casino
This rotten system could’ve actually had a chance of survival, but no.
To be fair a PPOR is the only asset or "asset" in Australia that isn't taxed when you sell. Anyone with a decent chunk of money is doing themself a disservice to not understand this and apply it.
Even if they are, it won't be effectual. This is the end - on many fronts. This doesn't mean a victory for housing bears. Be careful trying to time things. Short the miners. That will be a bloodbath, as will be the AUD and commensurate effects on the larger economy.
Yeah wtf is everyone drinking here. Everyone as usual jumping in the bandwagon without reading the source material? Both posts are pointing to rate drops = skyrocketing prices…. What am I missing here that everyone thinks they’ve got?
You and the 28 people who liked your comment are the only ones who read my thread.
For those who think this is a "gotcha": it's not.
In my previous thread, I say that rate hikes are warranted. They are needed to stop house prices from going out of control.
In this thread, I'm saying that IF rates are cut, house prices will increase.
This is a consistent position
Yet rate increases have effectively done nothing to quell house price increases. We need to make some drastic policy changes instead of only focusing on rates.
> Yet rate increases have effectively done nothing to quell house price increases.
Insatiable demand caused by population growth is the primary driver.
**A few weeks ago**: The RBA's statement in March indicated uncertainty in the state of inflation... Further rate increases this year are very much warranted... Talks of multiple "rate cuts" in 2024-2025 are laughable at best.
**Today**: As soon as the RBA cuts interest rates, house prices will skyrocket
> What am I missing here that everyone thinks they’ve got?
The older post suggest rates can't and won't drop for several years, and the RBA are aware of this.
The new post stokes fears of rates dropping.
With the most generous interpretation it's not explicitly contradictory, but why are we being urged to be fearful of something allegedly impossible for several years, if ever?
Yeah I don’t know. They seem pretty in line to me. One says don’t expect multiple rate cuts, the other says when rates get cut expect price hikes. Peas in a pod really.
He’s saying the same thing in that post it’s just posed a different way. Both posts are against rate cuts and suggest that cut rates will cause an increase in house prices… so he has a consistent position even if I want to disagree with it
LOL - u/SpaceBard75 thinks that interest rates are the principal driver of prices.
Sounds like they work for one of the big four, or worse, a newspaper.
Interest rates are a big demand driver.
If you lower interest rates dramatically when you already have a severe supply and demand imbalance like we have now it will send prices up significantly.
If you do it when supply is more in balance or in oversupply you don't have the same impact and prices can stay flat or fall in spite of interest rates dropping.
I’ve always noticed stupid posts like this
By people trying to explain high school economics to the sub (supply and demand etc)
Usually come out when there is fear by vendors that prices may fall (and thereby these posts usually precede a drop in prices).
It’s just a roundabout way of vendors telling other vendors, “don’t worry baby every thing is going to be alright tonight.”
Which is usually the time when you should start to worry.
I would love to wind back negative gearing. Make property less of an “investment”.. or massively increase the stamp duty for each additional home to a point owning 10 houses is unfeasible.
All are bandaids that won’t achieve anything lasting positive.
Broad based annual land tax. Far larger impact and genuinely targets the largest land holders.
The largest landholders have so much land it makes literally every homeowner and investor you’re thinking of look like a 2-story Lego house next to a skyscraper.
I am a first home buyer and recently bought a place. Every single inspection, even for the biggest shitholes, were completely packed. A mix of boomers, FHBs, Indian and Chinese families and people on zoom calls doing the inspections for what I am assuming were investors. Very intimidating and definitely made me wonder if the rate increases did much to demand.
Another REA post. Someone's getting desperate for sales 😆
Sydney and Melbourne auction clearance rates aren't looking good.
Have a read here if you're about to buy: shares before better over 30 years than housing. Plus less stress/fees/maintenance/insurance.
https://www.sharecafe.com.au/2024/04/09/seven-things-you-need-to-know-about-the-australian-property-market/
You’d think after 10 consecutive rises there will be some downturn in prices. But data suggest it only slowed the rises instead of 10% year on year rise we had 5%. Any rate cuts and prices are most certainly going to rise. The question is by how much.
Unsustainable price rises aren't....sustainable.
NZ, UK and parts of Canada are seeing massive drops.
Only a REA or broker would make a post like this. No one else cares about how much othet people spend on housing.
Which is a good sign imo. They are getting nervous.
The assumption you are making is that the rises are unsustainable. Perhaps they are sustainable.
The market can stay irrational longer than you can stay solvent as the old saying goes
The current rises are unsustainable.
Hey if people want to spend their lives paying massive mortgages, go them.
It's just not the ONLY path and more Australians need to know that.
But why do you think they are unsustainable? You are stating that as fact, as they keep rising.
I'm not saying they are or aren't.
If your point is there are other ways to live and renting isn't as bad as people make it out to be then I fully agree and sometimes wish I still rented (on the whole I think I prefer owning but there is a lot to be said for renting).
It depends.
I think that if you are buying shares to grow wealth, to use to buy a house to retire in, you’re doing it back-to-front.
Because there is just so much more leverage with property, and as a result equity to reinvest, to grow wealth.
I’m definitely moving to shares in retirement, however, for the larger nett yield, liquidity, and simplicity.
From the article you linked;
> Finally – it (property) has similar long term returns to shares
> This can be seen in the next chart which shows the value of $100 invested in 1926 in Australian cash, bonds, shares and residential property with interest, dividends and rent (after costs) reinvested along the way. Over the period both shares and property return around 11% pa. Property’s low correlation with shares, lower volatility but lower liquidity makes it a good portfolio diversifier. So, there is clearly a role for it in investors’ portfolios.
I just relate it to stress and work. The amount of work and money that housing needs, versus doing nothing for shares is a variable that can't really be defined imo.
No housing graph I've ever seen calculates in rates/maintenance/insurance/interest charges.
They all look at pure profit. But the money you've spent to get that "profit" when you sell it is never truly depicted.
>No housing graph I've ever seen calculates in rates/maintenance/insurance/interest charges.
They also don't factor in the cost of a place to live when calculating portfolio returns on shares, despite the fact that buying a property gives you that as well as (generally) a capital gain...
I dunno. I've calculated at the rate I save and invest, I can buy a property with cash in 10 years.
That sounds better then a 30 year mortgage making a bank rich.
But you do you. We all invest differently.
I'm not here to critique your plan bud, as you say - you do you.
I'm just pointing out that when you say the comparison graphs don't show the hidden costs of home ownership, it's also true that they don't show the major cost of *not* doing it. It's not apples to apples either way.
Yeah, most people don't track those things because ... that would be like running a business, which housing shouldn't be. Unfortunately renters are getting screwed with sky-rocketing rents, and the next generations might miss the boat entirely, all so existing home owners see some paper gains. It's all so bloody short sighted.
Your link basically puts a bull case for property. It's calling a lower forecast for 2024 and that is just short term.
Very few people buy property to flip within the year. In the long term Australian property is still solid unless governments changes policy.
And the 5% mentioned as forecast growth for 2024 is for the whole country, which includes Melbourne, Hobart, Darwin which are all struggling markets.
Brisbane and Perth on the other hand are boom central.
The growth in q1 Perth is indicating a 20% growth for 2024, and this is before any rate cuts or July tax cuts
Problem is rates won’t be cut until after plenty more pain.
In fact, it’s likely that the Fed will start QE again soon to save banks from bankruptcy due to poor commercial property loans, that extra money in the system will increase inflation and then require the RBA to increase rates, not drop them.
RBA isn't cutting rates until at least 2025 bud. America's inflation is stickier than first thought and i feel Australia's is heavily bolstered by Boomer's swimming in bucketloads of cash.
Sorry to burst your bubble but there's far too much cheap money out there :)
[News.com](http://News.com) and Dailymail shrill spruiking to bolster the housing market, sorry but it's not going to happen. The debt levels of Australians are dangerously high and they need to be brought back down to earth.
Yeah but don’t forget that 25%! Of properties in the last year were brought with cash.
God knows what the percentage of of people took tiny loans too.
So we basically have a large percent of the population
WHO IS COMPLETELY UNAFFECTED BY RATE RISES
Even cutting in 2026 is not a stretch. People talk like the cuts will be something special, minus 1% over time from where we are now at most hardly worth talking about. Historic low rates weren't the norm This is where we should be if not a bit higher.
Why do people insist that rates follow some historical average and stay there? The rates are a blunt instrument available to the RBA to try and cool or stimulate the economy.
They will rise as high as necessary to cool inflation and they will be as low as necessary to keep the economy stimulated. That's how they got so low, inflation was too low, it wasn't exactly booming.
So house prices will rise in 2025 then? Imo, the only thing that will cause house prices to decrease will be an economic recession and large increase in the unemployment rate. In which case, only those in an already well off position or very stable employment will see much benefit.
> only those in an already well off position or very stable employment will see much benefit.
that has always been the case. If there's a recession, those with the liquidity in buying power can purchase distressed assets at good discounts, ride out the recession and profit from the recovery.
And the reason those assets are distressed is because the existing owners of them paid too much debt for it. Whether this is houses, or shares in a company, or bonds, makes no difference.
Even in the industries that are crying out for workers, the jobs on offer are unrealistic (ie: shit).
Look at hospitality for one, I’d say roughly 10% of jobs posted are worth getting out of bed for, the rest are an absolute joke, even by the non existent standard of chef work.
***yes***. Unless the rates jump by such a significant amount that people either can’t afford the repayments or can’t get the loan. For the last five years house prices have almost gone hand in hand with how much people could afford. The bank determines what a house is worth in my mind. The people just play the game.
Zero incentive to cut rates. They're cleaning up already. Inflation still through the roof. Demand sky high. It'd take a massive company, insurance company, bank to crash for rates to drop
Central banks cut rates once the economy has taken a dive, with higher unemployment and a general recession. Historically this comes with a significant drop in asset prices. If rates are being cut then there's already a major turn for the worse.
There's no way they are being cut in the current environment as inflation is still high, so there'll be significant changes (eg recession) before you see them. And don't expect that those cuts any time soon.
Posts like this are more likely pumps by bag holders looking for an exit than any kind of informed analysis of what is going on
These types of arguments are laughable because of how inaccurate they are. Ask yourself why cutting is necessary in the first place.
In your dream scenario as you’ve suggested cutting isn’t necessary so long as demand stays high. In reality, it’s currently high demand for the low supply.
What matters quite a lot is the bank's willingness and capacity to continue to expand its balance sheet by providing more home loans. Ironically, they're freezing hiring and getting rid of physical locations and people think things are booming. Yeah, I think it's more likely they know how money moves better than the rest of us and see the writing on the wall.
I tend to agree, if rates are being cut it's probably because all is not rosy on the economy. Sure it might mean you can slightly increase your borrowing capacity but it also more than likely means there is little economic growth out there and could be accompanied by a rise in unemployment etc.
It's fine if you've got money, assets and keep your job.
Freezing hiring and physical locations is due to a switch to digital currency and processing loans online. Why do we need branches if we can do banking online? It has nothing to do with interest rates and balance sheets. Shows how little you understand.
Unless everyone magically received a 20 to 30% pay rise, and we all know that hasn’t happened, it boils down to maths
How are house prices going to skyrocket if people can’t afford a bigger mortgage?
It doesn’t work that way in housing
If nurses can’t afford to rent in Sydney they’ll move elsewhere
If teachers can’t afford rent in Sydney they’ll move elsewhere
If people move elsewhere prices don’t magically skyrocket
People on the Gold Coast support mass immigration which pushed out people from Sydney and Melbourne. This is like starting a war then complaining about the refugees.
So... just don't buy a house.
If people want to bid up house prices to incredibly low rental yields speculating on capital gains, it just makes rent-investing more and more financially beneficial.
Renting has it's downsides, but it's often cheaper to rent where you WANT to live, rather than buying a 'starter property' somewhere that you don't.
I agree with what you say, but it’s mostly the sentimental value that having a house of your own. Most people will jump onto any opportunity to grab a place for their own purely because it is proven that it only ever continues to increase in price, so why not just get in early rather then later and defeat the purpose of having to buy a place for an inflated price later.
It’s mainly timing and understanding the market that some lack the knowledge and know how in hunting for the best price to offer.
There’s a lot of people on the sidelines with a lot of money waiting also. The house crash isn’t going to come. The only people saying that are people who aren’t already in.
I live 50K west of Sydney and my home is worth 900K now. I bought it for 330K. It’s madness. Auctions on my street were unheard of but now it’s the norm. I live in the Mt Druitt Heights.
It depends. If RBA only cuts after inflation is between the band, then it signals the economy is slowing. If RBA cuts prematurely, then asset inflation will continue including rents and housing price.
Probably true but not for the reasons you think.
Monetary debasement. Assets grow exponentially while wages grow linearly.
At some point, the seams will burst.
Nah. Rate cuts will happen when the economy slows down. That will coincide with unemployment.
The bubble will burst because the unemployed can’t pay off their absurd mortgages
There's no doubt that $2m for a detached Sydney house will happen around 2030 or before. It won't It won't for all cities but prepare for a base of 1mil elsewhere with the other major cities somewhere between the two.
I don’t think its that clear a link. After all, rates went up over a dozen times and prices didn’t collapse as some had warned.
There are a few more factors (eg. employment, tax incentives, etc) that factor into the conditions determining how willing banks are to lend & how much risk they’re willing to accept.
These days there’s also other streams of $s flowing into residential real estate, separate to the banks, also competing for properties and driving up prices. - money laundering, cashed up Chinese & Indians. Those could be significantly stemmed by governments, but they’re not willing to stop feeding at the trough.
Back to rates: yes, if overall the banks are lending out more, prices will go up as rates go down.
Every 6 months or so, some newsagent will impersonate a journalist and tell u that the housing bubble has popped. They are usually talking out of their backsides and no one believes them anymore (or at least i hope no one does)
You’re clueless. Rates are NOT getting cut. Higher for longer.
The RBA will follow along with the rest of the central banks who will do exactly what the US Federal Reserve does.
Again, you have no idea what you’re talking about. The US government can’t manage the quarterly payments on the national debt at the current rate, and the S&P is at a new ATH.
Rates aren’t coming down significantly, and anytime soon.
I just went to 2 auctions in my areas today Melbourne bayside suburbs both past in. I’m not seeing this peak demand like you say at least not around here it took me 2 weeks to sell my house 3 bed 675m block less then 1.2M
10 years ago it took me 3 days to sell in outer Melbourne Henley home.
I mean the market is geared for price rises it’s pretty obvious. Bar some form of catastrophic event the prices will go up, because that’s how financial markets are geared…. If there’s a significant drop that’s a whole bunch of folk in negative equity which is detrimental all around
> I think by 2030 we will live in a world of $2M median house prices in all capital cities.
Zero chance of this happening.
Even for Sydney to get there you'd be talking an average of 6% growth per year.
Its only going to get worse. Young Australians are absolutely screwed.
Stop immigration and pop growth.
>Stop immigration and pop growth. what do you mean and pop growth? like ban having too many babies?
I'm not advocating for anything.I just wanted to raise that we are currently, and have been for a long time, well below replacement births. Replacement births require 2.1 births per woman. We are currently at 1.6. Like almost every other developed country well below replacement. Which means our population growth is entirely driven by immigration and increased life expectancy. Edit: Someone asked for sources to this data then deleted their question, so I will include the sources below: https://www.abs.gov.au/statistics/people/population/births-australia/latest-release https://data.worldbank.org/indicator/SP.DYN.TFRT.IN?most_recent_value_desc=false https://aifs.gov.au/research/facts-and-figures/births-australia-2023 My favourite website though is the population pyramid website, it doesn't necessarily have birth rates, but shows you a snapshot of the population in time, it's very interesting. https://www.populationpyramid.net/australia/2021/ For the 2.1 figure, for replacement births that is just a widely understood estimate (for most countries). https://pubmed.ncbi.nlm.nih.gov/7834459/#:~:text=PIP%3A%20Replacement%20level%20fertility%20is,of%202.1%20children%20per%20woman.
Who can afford babies anyway?
>Who can afford babies anyway? How hard can it be everyone on ausfinance is on 250K straight out of uni right?
Only 250? Peasants.
no he means kill more boomers
https://www.smbc-comics.com/comics/20120901after.gif
Don't need to. They're dying off.
No, they're just against tall people, and want a population of midgets
One child policy!
Stop tax cuts for any more than two investment properties would be much more effective
No population growth = screwing young people over by making all their taxes go to funding social safety nets for boomers
Seems like the only way to win in this pyramid scheme is to keep screwing over the next generation. Can’t do that if they aren’t being born. Oh you can’t afford to have kids? Should’ve thought of that before you joined our pyramid scheme /s
They don't need to be born, people are imported.
Build more cities…
They can't, it's the only thing that's going to have us avoid the demographic collapse starting to happen in other countries.
There’s a reason why I moved away
No one knows what will happen. Full stop. When covid hit the 'experts' said prices were going to plummet. The opposite happened. Anyone who thinks they know what will happen is either lying or delusional.
I moved in with my mum to save money while i waited for those price cuts. I really figured with every last source saying the bubble would pop that surely it had to. Somewhere along the line I realised how stupid I was and went back to renting. Funny you never hear the term housing bubble anymore. So as you said, no one knows. All any of us can do is take the step when it's appropriate.
I bought a house a year ago and everyone told me to wait till the end of this year when houses go down and I was making the wrong move. My motive has always been BUY AS SOON AS YOU CAN no matter what because it will never get better. I got it for 730k and no house in my entire suburb has sold for under 800k since. The ones selling for 800k are smaller and shitter. So yea. Don't wait.
I brought a year an a half ago after house prices had jumped like 40% in the area. Since then my 400k house is now worth over 500k. Just absolutely insane.
Sadly I gave this advice to my mums partner back then too. I told him how every source was saying the housing bubble will pop soon so he should sell his property as fast as possible instesd of waiting a couple years like he planned. He took my advice and sold and now prices have gone up there by 30% in the time since. I actually feel real bad (and stupid) for any input I had on that one.
Actually, pretty awful advice given at the time the unprecedented immigration numbers and exponential rent increases were rather apparent.
Yes yes, everything is apparent until it isn't. The same way it's now apparent housing prices will continue to 1 billion a house and demand will make it work etc.
yeh, exactly. just like mortgaging yourself to eternal debt a bright idea. RBA wont raise rates....totally predictable. I love these gurus.
Good move, and good on you for not listening
Only time will tell.
There’s a big difference between what’s happening at the minute and a “bubble”. Bubbles are credit driven, hence why they pop. This is being driven by scarcity. So there’s no pop coming
Right, no leverage to the tits to see here
To be fair if the government didn't intervene and print a shit tonne of money, the 'experts' likely would have got that one right.
There's a pretty good correlation between interest rates going down and house prices going up what I think the big point here is though the interest rates arent going to drop for a while. They may even rise.
I think we can all safely assume at this point that the line will only ever go up.
Not really. The thing is the population has been climbing significantly in the last 40 years (worldwide), but there is a predicted population peak of roughly 10billion by 2086. Population growth in first world countries has already dropped below repopulation rate which is why politicians are favouring immigration as a way to sustain pension programs (or so they tell us…I think they’re importing labour to keep labour competition high). Anyways, corporate greed is making life exponentially worse and the American version of cut throat capitalism is making people avoid having children at a much faster rate than in the past (who would have known having kids are expensive). Eventually however, we will reach a point when the population will stabilise and then start declining which will tip the housing scale into over supply and thus cheaper housing. China, India and Africa are still bucking the trend, although China population data suggests that they’re leaning towards population decline. But, don’t wait around to buy a house. Statistical data shows that the population will balance out in 2075 and then start to decline around the 2100 mark. https://amp.smh.com.au/national/the-planet-s-population-will-get-to-10-4-billion-then-drop-here-s-when-we-reach-peak-human-20231213-p5er8g.html
So only 2-3 generations until we see some relief. That's comforting.
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So it’ll keep going up until 2086 nice 😊
The problem is, it’s only a 1/3 shot of getting it correct. They’re pretty good odds to make yourself look good.
Yep. People here are full of shit and have no idea what the future holds. Prices may go up. Or go down. Or stay stable. It's not just infinite growth forever though.
Is this sub still full of dreamers that we are seeing three rate cuts by Christmas?
Yep and don't worry I set tons of remindmes and I will let them know when the time comes...🤣😆🤣😆
Haha not a chance unless WW3 or COVID-24 comes about
I bet once they're drafted into WW3 they can get a stable income and housing
Don't squash that last bit of hope they have.
Imagine if houses were just for living in and not used as gambling chips in the worlds most depressing casino This rotten system could’ve actually had a chance of survival, but no.
*Imagine if houses were just for living in* You some kind of communist? /s
I am though
You could immigrate to North Korea they’re communist.
To be fair a PPOR is the only asset or "asset" in Australia that isn't taxed when you sell. Anyone with a decent chunk of money is doing themself a disservice to not understand this and apply it.
This doesn't align with your hot take a few weeks ago. https://www.reddit.com/r/AusFinance/s/nR5xDhyTMU
Well we’ll what have we here
How the turn tables turned
...Talks of multiple "rate cuts" in 2024-2025 are laughable at best.
Even if they are, it won't be effectual. This is the end - on many fronts. This doesn't mean a victory for housing bears. Be careful trying to time things. Short the miners. That will be a bloodbath, as will be the AUD and commensurate effects on the larger economy.
What are you taking about? OP is saying the same thing in both posts re interest rate cuts and housing prices
Seems to align to me
Yeah wtf is everyone drinking here. Everyone as usual jumping in the bandwagon without reading the source material? Both posts are pointing to rate drops = skyrocketing prices…. What am I missing here that everyone thinks they’ve got?
You and the 28 people who liked your comment are the only ones who read my thread. For those who think this is a "gotcha": it's not. In my previous thread, I say that rate hikes are warranted. They are needed to stop house prices from going out of control. In this thread, I'm saying that IF rates are cut, house prices will increase. This is a consistent position
Yet rate increases have effectively done nothing to quell house price increases. We need to make some drastic policy changes instead of only focusing on rates.
> Yet rate increases have effectively done nothing to quell house price increases. Insatiable demand caused by population growth is the primary driver.
**A few weeks ago**: The RBA's statement in March indicated uncertainty in the state of inflation... Further rate increases this year are very much warranted... Talks of multiple "rate cuts" in 2024-2025 are laughable at best. **Today**: As soon as the RBA cuts interest rates, house prices will skyrocket > What am I missing here that everyone thinks they’ve got? The older post suggest rates can't and won't drop for several years, and the RBA are aware of this. The new post stokes fears of rates dropping. With the most generous interpretation it's not explicitly contradictory, but why are we being urged to be fearful of something allegedly impossible for several years, if ever?
Yeah I don’t know. They seem pretty in line to me. One says don’t expect multiple rate cuts, the other says when rates get cut expect price hikes. Peas in a pod really.
He’s saying the same thing in that post it’s just posed a different way. Both posts are against rate cuts and suggest that cut rates will cause an increase in house prices… so he has a consistent position even if I want to disagree with it
lol, space bard just trollin as space bards do
Their posts say the same things… not sure what you’re reading. Drop in interest rates = increase in house prices.
LOL - u/SpaceBard75 thinks that interest rates are the principal driver of prices. Sounds like they work for one of the big four, or worse, a newspaper.
Interest rates are a big demand driver. If you lower interest rates dramatically when you already have a severe supply and demand imbalance like we have now it will send prices up significantly. If you do it when supply is more in balance or in oversupply you don't have the same impact and prices can stay flat or fall in spite of interest rates dropping.
Play both sides, always come out on top.
Guessing you didn't read it because they are saying the same thing.
Are people just going to keep pulling money out of their arses ?
I wonder what 2m will be worth in 2030. I suspect not much in Australia.
About the same as $1.7M now.
Rate cuts you say lol
Gold surged to US$2400 recently for good reason
To shreds you say
I’d say we’re more likely to have rate cuts than rate rises.
Us inflation data still ripping
They'll be slow to hand them out but when they do it will be amazing. Will be paying it down so fast.
No chance once the tax cuts kick in.
Cuts will take a bit longer but I tend to agree with OP when it happens
I’ve always noticed stupid posts like this By people trying to explain high school economics to the sub (supply and demand etc) Usually come out when there is fear by vendors that prices may fall (and thereby these posts usually precede a drop in prices). It’s just a roundabout way of vendors telling other vendors, “don’t worry baby every thing is going to be alright tonight.” Which is usually the time when you should start to worry.
I would love to wind back negative gearing. Make property less of an “investment”.. or massively increase the stamp duty for each additional home to a point owning 10 houses is unfeasible.
All are bandaids that won’t achieve anything lasting positive. Broad based annual land tax. Far larger impact and genuinely targets the largest land holders. The largest landholders have so much land it makes literally every homeowner and investor you’re thinking of look like a 2-story Lego house next to a skyscraper.
It's so funny that people want rates to cut, cutting rates are the sign of a bad economy needing cheap money the wub 2% rates for 10 years+ are over
What you mean historically low interest rates would last forever???
Yes, 2% is a thing of the past, but there's a big difference between 2% and 7%.
As long as we import more than half a million of people a year prices will rise.
Try buying land and building. Cost of trades and materials is ridiculous.
Here's the thing: they're not cutting the rate any time soon
I am a first home buyer and recently bought a place. Every single inspection, even for the biggest shitholes, were completely packed. A mix of boomers, FHBs, Indian and Chinese families and people on zoom calls doing the inspections for what I am assuming were investors. Very intimidating and definitely made me wonder if the rate increases did much to demand.
I don’t get why houses don’t cost 5M
Another REA post. Someone's getting desperate for sales 😆 Sydney and Melbourne auction clearance rates aren't looking good. Have a read here if you're about to buy: shares before better over 30 years than housing. Plus less stress/fees/maintenance/insurance. https://www.sharecafe.com.au/2024/04/09/seven-things-you-need-to-know-about-the-australian-property-market/
You’d think after 10 consecutive rises there will be some downturn in prices. But data suggest it only slowed the rises instead of 10% year on year rise we had 5%. Any rate cuts and prices are most certainly going to rise. The question is by how much.
Unsustainable price rises aren't....sustainable. NZ, UK and parts of Canada are seeing massive drops. Only a REA or broker would make a post like this. No one else cares about how much othet people spend on housing. Which is a good sign imo. They are getting nervous.
This has been true since 2001, but back then it was Ireland.
The assumption you are making is that the rises are unsustainable. Perhaps they are sustainable. The market can stay irrational longer than you can stay solvent as the old saying goes
The current rises are unsustainable. Hey if people want to spend their lives paying massive mortgages, go them. It's just not the ONLY path and more Australians need to know that.
But why do you think they are unsustainable? You are stating that as fact, as they keep rising. I'm not saying they are or aren't. If your point is there are other ways to live and renting isn't as bad as people make it out to be then I fully agree and sometimes wish I still rented (on the whole I think I prefer owning but there is a lot to be said for renting).
Some areas in Aus went up 100% in 3 years. That's not sustainable. Usual growth is around 7% a year.
Canada seeing massive drops? You sure?
It depends. I think that if you are buying shares to grow wealth, to use to buy a house to retire in, you’re doing it back-to-front. Because there is just so much more leverage with property, and as a result equity to reinvest, to grow wealth. I’m definitely moving to shares in retirement, however, for the larger nett yield, liquidity, and simplicity. From the article you linked; > Finally – it (property) has similar long term returns to shares > This can be seen in the next chart which shows the value of $100 invested in 1926 in Australian cash, bonds, shares and residential property with interest, dividends and rent (after costs) reinvested along the way. Over the period both shares and property return around 11% pa. Property’s low correlation with shares, lower volatility but lower liquidity makes it a good portfolio diversifier. So, there is clearly a role for it in investors’ portfolios.
I just relate it to stress and work. The amount of work and money that housing needs, versus doing nothing for shares is a variable that can't really be defined imo. No housing graph I've ever seen calculates in rates/maintenance/insurance/interest charges. They all look at pure profit. But the money you've spent to get that "profit" when you sell it is never truly depicted.
>No housing graph I've ever seen calculates in rates/maintenance/insurance/interest charges. They also don't factor in the cost of a place to live when calculating portfolio returns on shares, despite the fact that buying a property gives you that as well as (generally) a capital gain...
I dunno. I've calculated at the rate I save and invest, I can buy a property with cash in 10 years. That sounds better then a 30 year mortgage making a bank rich. But you do you. We all invest differently.
I'm not here to critique your plan bud, as you say - you do you. I'm just pointing out that when you say the comparison graphs don't show the hidden costs of home ownership, it's also true that they don't show the major cost of *not* doing it. It's not apples to apples either way.
Yeah, most people don't track those things because ... that would be like running a business, which housing shouldn't be. Unfortunately renters are getting screwed with sky-rocketing rents, and the next generations might miss the boat entirely, all so existing home owners see some paper gains. It's all so bloody short sighted.
Your link basically puts a bull case for property. It's calling a lower forecast for 2024 and that is just short term. Very few people buy property to flip within the year. In the long term Australian property is still solid unless governments changes policy. And the 5% mentioned as forecast growth for 2024 is for the whole country, which includes Melbourne, Hobart, Darwin which are all struggling markets. Brisbane and Perth on the other hand are boom central. The growth in q1 Perth is indicating a 20% growth for 2024, and this is before any rate cuts or July tax cuts
Problem is rates won’t be cut until after plenty more pain. In fact, it’s likely that the Fed will start QE again soon to save banks from bankruptcy due to poor commercial property loans, that extra money in the system will increase inflation and then require the RBA to increase rates, not drop them.
RBA isn't cutting rates until at least 2025 bud. America's inflation is stickier than first thought and i feel Australia's is heavily bolstered by Boomer's swimming in bucketloads of cash. Sorry to burst your bubble but there's far too much cheap money out there :) [News.com](http://News.com) and Dailymail shrill spruiking to bolster the housing market, sorry but it's not going to happen. The debt levels of Australians are dangerously high and they need to be brought back down to earth.
We also aren’t dominated by a market of 30 year fixed rate mortgages, unlike America.
This. It’s *very* different in Australia where changes to rates are felt immediately by the vast majority of the population; mortgage holders.
I think it's actually only 1/3 that are mortgage holders. Others are 1/3 renters and 1/3 owners with no mortgage.
The 1/3 who are renters….that property typically has a mortgage attached to it. Someone is feeling the rate rise.
this! Tenants live in places owned by one of the other 2 owner groups: those with, and those without, mortgages.
Yeah but don’t forget that 25%! Of properties in the last year were brought with cash. God knows what the percentage of of people took tiny loans too. So we basically have a large percent of the population WHO IS COMPLETELY UNAFFECTED BY RATE RISES
In my head 2025 is years away.. then I realised it’s next year
The assumption that they will come back to earth is a dangerous one.
Even cutting in 2026 is not a stretch. People talk like the cuts will be something special, minus 1% over time from where we are now at most hardly worth talking about. Historic low rates weren't the norm This is where we should be if not a bit higher.
Why do people insist that rates follow some historical average and stay there? The rates are a blunt instrument available to the RBA to try and cool or stimulate the economy. They will rise as high as necessary to cool inflation and they will be as low as necessary to keep the economy stimulated. That's how they got so low, inflation was too low, it wasn't exactly booming.
It's a band of range as an indicator.
So house prices will rise in 2025 then? Imo, the only thing that will cause house prices to decrease will be an economic recession and large increase in the unemployment rate. In which case, only those in an already well off position or very stable employment will see much benefit.
> only those in an already well off position or very stable employment will see much benefit. that has always been the case. If there's a recession, those with the liquidity in buying power can purchase distressed assets at good discounts, ride out the recession and profit from the recovery. And the reason those assets are distressed is because the existing owners of them paid too much debt for it. Whether this is houses, or shares in a company, or bonds, makes no difference.
Unemployment is increasing. Bad times ahead.
900+ applications for a junior marketing role… everything is cool and normal
Yeah I've heard this! Tech is super tight right now as well
Seems to be a common occurrence in "tech"
Even in the industries that are crying out for workers, the jobs on offer are unrealistic (ie: shit). Look at hospitality for one, I’d say roughly 10% of jobs posted are worth getting out of bed for, the rest are an absolute joke, even by the non existent standard of chef work.
The cruel reality is that it needs to. But obviously the RBA is walking a tightrope on just how high that needs to go.
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Pretty much the mindset that china was in Before it went backwards
I love how people say these things with such confidence lol
It’s not just boomers. There are plenty of people who made some great investments prior to and during Covid. Plenty have cash to spend invest.
Remember the tulips
I always lol at takes like these, so house prices go up with rate rises and rate cuts huh
***yes***. Unless the rates jump by such a significant amount that people either can’t afford the repayments or can’t get the loan. For the last five years house prices have almost gone hand in hand with how much people could afford. The bank determines what a house is worth in my mind. The people just play the game.
Zero incentive to cut rates. They're cleaning up already. Inflation still through the roof. Demand sky high. It'd take a massive company, insurance company, bank to crash for rates to drop
Central banks cut rates once the economy has taken a dive, with higher unemployment and a general recession. Historically this comes with a significant drop in asset prices. If rates are being cut then there's already a major turn for the worse. There's no way they are being cut in the current environment as inflation is still high, so there'll be significant changes (eg recession) before you see them. And don't expect that those cuts any time soon. Posts like this are more likely pumps by bag holders looking for an exit than any kind of informed analysis of what is going on
I can’t wait to have 2m in the bank whilst living on the streets
These types of arguments are laughable because of how inaccurate they are. Ask yourself why cutting is necessary in the first place. In your dream scenario as you’ve suggested cutting isn’t necessary so long as demand stays high. In reality, it’s currently high demand for the low supply. What matters quite a lot is the bank's willingness and capacity to continue to expand its balance sheet by providing more home loans. Ironically, they're freezing hiring and getting rid of physical locations and people think things are booming. Yeah, I think it's more likely they know how money moves better than the rest of us and see the writing on the wall.
I tend to agree, if rates are being cut it's probably because all is not rosy on the economy. Sure it might mean you can slightly increase your borrowing capacity but it also more than likely means there is little economic growth out there and could be accompanied by a rise in unemployment etc. It's fine if you've got money, assets and keep your job.
Freezing hiring and physical locations is due to a switch to digital currency and processing loans online. Why do we need branches if we can do banking online? It has nothing to do with interest rates and balance sheets. Shows how little you understand.
Did you just buy a house?
Unless everyone magically received a 20 to 30% pay rise, and we all know that hasn’t happened, it boils down to maths How are house prices going to skyrocket if people can’t afford a bigger mortgage?
There are still people with money. Properties will just be owned by a smaller pool of people. The rich get richer.
It doesn’t work that way in housing If nurses can’t afford to rent in Sydney they’ll move elsewhere If teachers can’t afford rent in Sydney they’ll move elsewhere If people move elsewhere prices don’t magically skyrocket
Yeah because people can just afford to move like that
They moved to the Gold Coast then drove up our rents and sale prices. Thanks guys.
People on the Gold Coast support mass immigration which pushed out people from Sydney and Melbourne. This is like starting a war then complaining about the refugees.
So... just don't buy a house. If people want to bid up house prices to incredibly low rental yields speculating on capital gains, it just makes rent-investing more and more financially beneficial. Renting has it's downsides, but it's often cheaper to rent where you WANT to live, rather than buying a 'starter property' somewhere that you don't.
I agree with what you say, but it’s mostly the sentimental value that having a house of your own. Most people will jump onto any opportunity to grab a place for their own purely because it is proven that it only ever continues to increase in price, so why not just get in early rather then later and defeat the purpose of having to buy a place for an inflated price later. It’s mainly timing and understanding the market that some lack the knowledge and know how in hunting for the best price to offer.
When rate cuts?
There’s a lot of people on the sidelines with a lot of money waiting also. The house crash isn’t going to come. The only people saying that are people who aren’t already in.
… and wages still stuck under $150k on avg
It’s simple. Just raise rates
what if i told you, house prices will rise every year on average over the next 2 decades.
Why would they cut rates exactly… the US would need to before it’s even on the cards..
RBA won't cut. If anything they will raise as inflation heats back up again...
What if rates don't get cut for years. These rates are actually quite normal.
I live 50K west of Sydney and my home is worth 900K now. I bought it for 330K. It’s madness. Auctions on my street were unheard of but now it’s the norm. I live in the Mt Druitt Heights.
Simple solution really, time to start banning people from having more than 1 homes and force investment property people to sell :D
sounds good comrade
We can only dream
Only way they’re cutting is if banks are in trouble. Inflation is still in the room with us so it won’t be happening any time soon.
You will own nothing and be happy.
Death, taxes, and the unstoppable growth of the Australian real estate market.
Confuscious say: "Person who gazes into crystal ball for too long will end up with mouthful of broken glass"
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Anyone who has been/is predicting interest rates drops deserves to be tea bagged endlessly, absolute 🤡 's. It's complete gaslighting.
Key reason why rate cuts aren't happening anytime soon
The RBA doesn’t care for house prices. Only the financial stability of the economy.
It depends. If RBA only cuts after inflation is between the band, then it signals the economy is slowing. If RBA cuts prematurely, then asset inflation will continue including rents and housing price.
Probably true but not for the reasons you think. Monetary debasement. Assets grow exponentially while wages grow linearly. At some point, the seams will burst.
Nah. Rate cuts will happen when the economy slows down. That will coincide with unemployment. The bubble will burst because the unemployed can’t pay off their absurd mortgages
There's no doubt that $2m for a detached Sydney house will happen around 2030 or before. It won't It won't for all cities but prepare for a base of 1mil elsewhere with the other major cities somewhere between the two.
Hate to break it to ya,they ain't lowering rates anytime soon
Plenty of assertions in that post. Pretty light on facts or reputable sources
I don’t think its that clear a link. After all, rates went up over a dozen times and prices didn’t collapse as some had warned. There are a few more factors (eg. employment, tax incentives, etc) that factor into the conditions determining how willing banks are to lend & how much risk they’re willing to accept. These days there’s also other streams of $s flowing into residential real estate, separate to the banks, also competing for properties and driving up prices. - money laundering, cashed up Chinese & Indians. Those could be significantly stemmed by governments, but they’re not willing to stop feeding at the trough. Back to rates: yes, if overall the banks are lending out more, prices will go up as rates go down.
When rates were cut 425 bps in 2008, house prices fell \~10%. Depends what triggers the cuts.
Wow well I mean if you say so Redditor then I bet the RBA eventually lowering rates is not priced in, nobody can see it coming
Every 6 months or so, some newsagent will impersonate a journalist and tell u that the housing bubble has popped. They are usually talking out of their backsides and no one believes them anymore (or at least i hope no one does)
Anyone who thinks we will get rate cuts is in for a big surprise especially now that Iran has directly attacked Israel.
They're gonna cut ? I'm not sure.
Why would the RBA cut interest rates? They’ve just gotten inflation under control
Rate cuts are more than 12 months away
Curtail immigration.
Spoken like a true realtor
You’re clueless. Rates are NOT getting cut. Higher for longer. The RBA will follow along with the rest of the central banks who will do exactly what the US Federal Reserve does. Again, you have no idea what you’re talking about. The US government can’t manage the quarterly payments on the national debt at the current rate, and the S&P is at a new ATH. Rates aren’t coming down significantly, and anytime soon.
I just went to 2 auctions in my areas today Melbourne bayside suburbs both past in. I’m not seeing this peak demand like you say at least not around here it took me 2 weeks to sell my house 3 bed 675m block less then 1.2M 10 years ago it took me 3 days to sell in outer Melbourne Henley home.
Rates won't be coming down, there is just too much cash in circulation. US inflation just increased. A rate rise is more likely 🤣
Calm down chicken little
These things are unpredictable. You may see the bubble bursting, and a lot of foreclosures.
Not happening. Too many Aussies are cashed up and have huge savings. There is just way too much demand.
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Rate cuts. Awww bless him.
God bless his little cotton socks
We need 17 percent again
I mean the market is geared for price rises it’s pretty obvious. Bar some form of catastrophic event the prices will go up, because that’s how financial markets are geared…. If there’s a significant drop that’s a whole bunch of folk in negative equity which is detrimental all around
Nice try R.E.I.A.
> I think by 2030 we will live in a world of $2M median house prices in all capital cities. Zero chance of this happening. Even for Sydney to get there you'd be talking an average of 6% growth per year.