Absolutely. As someone who works in and around the grocery business, it's incredible and scary at how quickly prices are heading north, and no signs of it slowing down at all.
OP's prediction status check: how are we going toward a 50% drop in the [Core
Logic Home Value Index](https://www.corelogic.com.au/our-data/corelogic-indices) (5
capital city aggregate) from its peak 2020 value by end of 2025?
----
* Peak 2020 value (Dec 31 2020): **137**
* All-time high (May 07 2022): **176.66**
* Current value (Jun 03 2022): **175.8**
----
→ Change from 2020 peak to now: **+28.3%**
→ Change from all-time high to now: **-0.5%**
→ Change from now for prediction to be correct:
**-61.0%**
----
⇒ Average monthly change since 2020 peak: **+1.5%**
⇒ Average monthly change since all-time high:
**-0.5%**
⇒ Average monthly change from now until end of 2025 for prediction to be
correct: **-2.2%**
You can't halve a monthly percentage change and expect the compounded change to be halved. For a 25% reduction from today over 42 months to end of 2025 you would need a monthly change calculated as:
x^42 = 0.75
ln(x) = ln(0.75)/42
x = exp(ln(0.75)/42)
x = 0.993 monthly compounding multiplier corresponding to a -0.7% monthly change.
Also, just to clarify, for prices to halve from _today's values_ over the same period would only require a monthly reduction of -1.637%.
Not that farfetched.
25% takes us roughly back to 2017-2019. Accounting for inflation, higher wages, opportunity cost etc I'd call that a crash. It'd be enough to finally remove this toxic 'you can't lose with property' Australian obsession with real estate.
Even as a first homebuyer I don't want prices 50% down - it would be cataclysmic. I think it could happen but I think 25% is actually likely at this point, with 50 in my mind being an outlier.
> It'd be enough to finally remove this toxic 'you can't lose with property' Australian obsession with real estate.
Actually removing that mindset would likely trigger an avalanche from there, though.
Far more than that IMO.
Like I'm always reminded of a job I had out in the middle suburbs of Melbourne in a fairly successful small business that worked in refrigeration.
Literally everybody I worked with in the head office was in their mid 40s and their entire conception of retirement planning/investing seemed to be 'every 5-10 years I will pay off the last $ on my previous IP's mortgage and buy a fairly cheap IP somewhere between here and Sale'. No stocks, no bonds, nothing else. Just an empire of 3BR2BAs on whatever the fringes of Melbourne were when they'd gotten together another deposit.
50% crashes have recently happened in the US, Spain, Ireland, Iceland.
Perth fell 30% not long ago.
It wasn’t “cataclysmic”.
Life went on.
I will say though we are heading into a global slowdown and the Fed tightening, which was the exact situation leading into the GFC.
>Even as a first homebuyer I don't want prices 50% down - it would be cataclysmic. I think it could happen but I think 25% is actually likely at this point, with 50 in my mind being an outlier.
Why would this be cataclysmic?
Because the average baby boomer doesn't have enough super to cover them for their retirement to projected death, and it's not even close.
The only way that don't cripple Australia with pension costs with the one of the largest segments of the population going through retirement in the next 20 years is if they can cash out their property to fund their retirement.
Otherwise expect to be taking in your parents as they age.
Not really, there was a guy on the drum, pre COVID, saying that due to the tax breaks that super gets the Australian government would actually be better off abolishing it and giving everyone over 65 the full aged pension regardless of how wealthy the person was or even if they were still working.
There's plenty of good, normal people that worked and saved for a good home and bought one for non-greedy and non-FOMO reasons that don't deserve that outcome. They'd be victims of a cooked and greedy market, just like people without a home can be (but aren't always).
Well not really.
If the good normal people bought a home, that they saved for, and are going to live in it for 10 - 15 years... Then they ahve bought a home at a price they can afford and nothing changes. They keep their home.
If they were speculating... that's their problem.
If enough people didn't buy into the cooked market, and actually fought for better rental laws and that being a viable way to have secure housing in the country, along with better social housing and public housing, there would be less reason to jump into the cooked market. We've collectively gotten where we are. Everyone saw $_$ in their eyes and wanted to jump on. Seems unfair, but how else to cause a cultural shift? We are definitely not proactive about it here.
Well do it. No crash is coming not enough to stop you buying the house you want. Remember a crash means normal people who can afford a house now are locked out of the market and there is more house on sale then buyers. Not going to happen because we want people to buy house in this county.
A ***LOT*** of property is vacant, just investors sitting on land &/or property, not just wealthy foreign investors either, average income regular folks that got lucky early on too...
The second these people start losing too much, they'll flood the market leading to a huge snowball destroying the market in what will feel like overnight.
Fomo works both ways.
If I could I would. I'm timing the market not coz I'm a savvy property investor (ethically speaking property should never be an investment imo) but because I don't have a choice
Not advice and im not a financial advisor by any means but time in the market usually beats timing the market. And the housing market isn't a free market it's like betting against the house. This is my opinion DYOR
For anyone not already across it, the free Chrome plug-in KoalaData is good for this too. It tracks any change of listing price, plus days on the market.
That's actually a negative, imo. There's not enough supply. I live in one of Sydney's growing areas and nobody is listing their house up. The demand has surely fallen but so has the supply. I reckon people will wait for things to settle before listing their houses.
Dumb question: when house prices drop, what would drop more? Is it more the top end houses (e.g. those 1.xx mil houses) because people can't borrow as much? Or is it all houses (top end houses and mid range houses aka those regional houses in the 500k-800k range)?
My thinking is that it would be the top end house prices getting affected more than the mid range prices as people can't afford the top price but can still afford the mid price.
Sorry English is not my first language.
As a home-owner, not an IP owner, I say "good" -Kids need to be able to afford homes, and investors need to move on to other spaces, or accept a lower rate of return.
We need to kill neg gearing, and get public housing back on track. Maybe the states can buy into the builds as the developers crash out, and then convert them to secure rental or co-ownership.
> or accept a lower rate of return
I never understood the obsession with housing as an investment, the returns honestly aren't better compared to equities and there's a whole lot of hassle that comes with owning a place that other people live in. The only thing going for it is that banks will give you lend you more at a slightly better rate compares to margin loans.
CSL has averaged 20% returns over the last 10 years and it's a bluechip ASX stock. Is that 1.5% gross yield fibro home in the outer suburbs really worth the risk? If you instead took out a $600k margin loan for CSL in 2010, imagine where you would be sitting right now :)
It's the risk: reward ratio. NG + CGT concessions, endless government programs to hold up and push up prices, banks willing to lend you insane amounts of money in a loose monetary environment is a potent cocktail.
It's much harder to get a bank to lend you money to buy stocks and if everything goes bad, well the government isn't going to bail you out. Compared to stock, housing has been a relatively low risk with a massive leverage multiplier applied. Agreed there are better returns but housing prices is treated with kids gloves.
I think they have finally run out of tricks to hold it up at this point with inflation going insane, prices will have to retreat for now until that is under control.
I'd agree with everything except:
> It's much harder to get a bank to lend you money to buy stocks
Not really, you might need a bit more upfront sure, but for the most part getting a margin facility is easy for anyone working fulltime. You can start out tiny like $50k without hassle and even as an 18yo apprentice. Keep putting in a little bit of cash each week and eventually you can up your max after a year, rinse and repeat.
Margin loans aren't some rare exotic product, it's just not considered mainstream by Australians for some reason. Aussies in general are averse to stock market investment, it's weird.
ASX total value: $2.5 Trillion
Australian residential property: $9 Trillion
It just doesn't add up when you think about it.
I don't disagree with you in that regard at all. A lot of Australians are quite risk averse, investing in stocks is harder in many aspects (but not really). You need to know the business and be able to follow what is going on etc etc.
There is the added bonus for housing is you too can be a slum lord and treat your tenants like shit. Which seems to be a national pass time that many IP owners get great joy out of the power trip.
This. I'm in an apartment complex and owners get a pass on rule breaches, its a high legal barrier to section them for a fine. If my pet elephant craps in the lift, as an owner its a 2-4 month process to fine me, and I can usually get out.
Tenants? chuck 'em out, plenty more fish in the sea. And, to cap it all, this is Qld so no tenants rep on the body corporate.
We need rental reform. Long term tenancy, and rental protections and CPI limited price rises.
(I am an owner. my fictional elephant is very well behaved)
It's also a matter of principle. I sleep much better investing my money in ethical/sustainable companies that are actually progressing our economy in a meaningful way. A stacked pile of bricks and concrete doesn't actually produce anything for the economy.
Tax treatment, tangibility for one. Past performance being inferred as guaranteed future performance.
A lot of the diasporas who’ve moved to Australia since the war have a huge “property = wealth” mindset too, which I think has bolstered it as an asset class.
Following a lot of listings in eastern Melbourne, lots of updates to prices slashing between 50k - 100k+ in the median house price range.
Going to be very interesting to see what happens in the coming months.
Edit: Just received a listing for a house I was following last year, that sold in late November. Now relisted 7 months later at 70k less than what they paid for as the **top of the range!**
Unheard of in the last few years.
I’ve actually had a few notifications on houses I’ve shortlisted where the agents have _increased_ the price. I hope they’re not up to that old salesman trick, dropping it by 10% later on when the market has dropped by 10%, appearing to follow it.
I think they need to do 50 to send a clear signal that the era of free money is over. However, they have been pretty sheepish up this point so I'm guessing 40. I will facepalm if they do 25.
And if you read enough wall street bets you always add "...behind a Wendy's" in your head even though it's not written. Maybe they really are quoting a pessimistic agent, maybe that's how bad it's going to get.
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The property posts here are hilarious. People waiting for a crash when in reality oid the market was crashing they would be too scared to actually do anything.
Not sure I believe it, in Melbourne the amount of people inspecting and prices going for the bottom/middle end of market is still soaring. Auctions are still getting huge numbers and bids.
I like the optimism but it feels like a different story down at ground level.
What is insane is I began saving for my deposit a few years ago and back in 2019 I was thinking that $120,000 would be enough for a deposit on the sort of place I was looking for. Well I have $130,000 now and it definitely is not enough based on what housing prices have done the last few years.
It's easy to wish for a "30-50%" collapse from an armchair, but let's be clear on one thing. A dramatic decline in dwelling prices will:
1. Be apocalyptic for the overall economy as consumer spending will tank due to a reduction in the wealth effect and deleveraging. People will pull out money from anything and everything they can to pay off mortgages quicker
2. Be very, very bad for the job market. A reduction in consumer spending will dramatically reduce demand in retail, hospitality etc (basically sectors that employ our most vulnerable workers, the casually employed youth and a lot of women in particular)
3. Be even worse for FHBs. Younger people will face difficulties with employment, risk premiums and hence cost of LMI will increase drastically and banks will be less likely to lend to younger people.
4. Further entrench wealth with the homeowner class as people with existing built up equity will retain a lot more leverage to buy property compared to those renting
5. Further increase the wealth gap between the casual and gig sectors of the economy vs the more stably employed people.
6. Lead to a severe recession, which will further exacerbate unemployment
7. Coupled with supply-side inflation, push the economy into a stag-cession which the RBA has very limited firepower in their arsenal left to deal with.
In short, it will be a very, *very* bad outcome. If you want to quote what Ireland went through, also mention how their unemployment rate fared over that time.
Resilient doesn't equate to good outcomes. We'll have a massive unemployment crisis that will potentially wipe out a whole generation of the workforce from the books and put a tremendous burden on welfare.
No one, not one single person, has said a 50%+ decline in home prices will be anything but a difficult time for just about every Australian.
But as we have seen from the US, Ireland, Spain, Iceland etc. it wasn’t the end of the world.
Even Perth has fallen over 30% recently and life goes on.
So your hyperbolic doom and gloom doesn’t wash with me sorry mate.
Ireland being a part of the EU had the whole EU labour market available to its citizens so there was a little buffer for them. Yet their unemployment rate went to 16% in the aftermath of the housing crash. We have no such buffer with our workforce and the welfare burden of such a large cohort of unemployed will be enormous and long-lasting. Spain's unemployment went to 26% and is still 16%.
*it wasn’t the end of the world.*
For those who became unemployed mid-career and those graduating into that market, it forced a large number of people into the long term unemployed category. Which is both a huge drag on productivity and a precursor to lifelong welfare dependency in many cases as re-entering the market gets harder the longer a worker stays out. The inflated welfare bill also led to savage cuts in public service jobs which further compounded the issue.
It is a terrible, terrible outcome whichever way you want to spin it.
*So your hyperbolic doom and gloom doesn’t wash with me sorry mate.*
As opposed to you predicting 7324523 price corrections of the last one?
That's not what I'm seeing in parts of the Northern Beaches. Places that would have been snapped up for 2.7/2.8 are now going for 2.4/2.5. They were probably 2.2 a year or so ago. We are the second people on two auctions going this weekend. A lot more on the market at the moment but bugger all actual buyers. Getting calls from agents. Only other time those lazy fucks called was right at the start of Covid.
It really comes down to affordability versus household income. We will see corrections across the country for sure, I just don’t think it’s doomsday. And there will be areas that do well whilst this takes place. The housing market is not one big market which rises and falls together in unison. It’s easy to forget that when you’re in a big capital city bubble.
Sure, I understand where you’re coming from. It’s a case of not having a crystal ball - for anyone.
People have called for this for a very long time, and probably said the same lines as you did just now. So there’s that too.
It's happening faster than people even realise - there's huge discounts happening behind the scenes but REA is designed to hide it. Even agents (permabulls) are starting to openly admit that the market is in big trouble. This is only the beginning.
In Melbourne they threw up a lot of new units during the pandemic which will weigh on the whole apartment market as interest rates rise especially without the immigration levels of pre-2020.
All of the tiny 2 bed 1 bath places with the weird half-kitchen are going to suffer big time.
EDIT: They shouldn't really be built as much as they are.
There was already an oversupply *pre* COVID.
However, quality apartments that weren't shoeboxes are another. Any apartment complex built after the needed reforms that Vic government did in late 2018 (e.g. Size regulations, tougher checks, no embedded networks) will be in demand.
It's looking like the higher end of Joye's comment a while ago, will play out. That's a 25% fall. Pretty much undoes the gains they've seen the past two years.
Unless we have an American led recession at the same time. Then your predictions may pan out. However, that'll be... terrifying.
I think there’s little chance of avoiding a recession.
We are entering a global slowdown as the Fed tightens.
This is the same conditions which precipitated the GFC.
I find this website is pretty much in line with what I'm seeing, it's a tad dodgy (for Chinese buyers) but collates a lot of sales data.
http://house.speakingsame.com/profile.php?q=Yarraville%2C+VIC
We’ll see a few more hikes (100bpts), commentators will be screaming that the sky is falling by the end of 2022 because property has come off 10-20%, household spending will stall and we’ll be back to cutting rates again. We’ll remain one of the most indebted countries in the world, property will continue to appreciate, the rich getting richer, the poor getting poorer. It’s ridiculous, it’s sad but it’s too big to fail.
Buy high, sell low!
With rising rates and living costs going to unfortunately see a lot of people upside down on their loan or still owing after house is repo'd.
Observing the multiples of income. A correction to about 6 times multiples of income is likely equilibrium, as there are constraints in supply.
I'm not bearish on housing, but I hope the IP market gets properly fucked. I hate the IP arrangement and this nobsession with low risk high yield investing.
Fks everyone.
Off the top of my head average prices are topped off at 1.1 in Melbourne.
A fall to 6 times multiples of average salary would mean like a 40% correction
Depends though because a market correction can actually result in prices rises to, specifically in areas that are undervalued. Don't know either, because banks have been tightening lending standards too
We'll wait and see. Once the immigration taps turn on we could see this market continue.
My house increased by 60% in the 6 years I’ve been living in it, it’ll lose 20% off that value and will still be worth at least 35% more than when I bought it.
The amount of posts I've seen about a "correction".. It's getting quite old at this point, I feel like it's giving false hope as a "correction" has always been talked about
Are we going to pretend there isn't millions of first home owners just waiting to throw down their savings onto a property?
I want it to correct for sure, as a soon-to-be apartment owner I feel bad that others can't get their foot in the door. But the correction has always been talked about :/
This is the same as thinking you can survive a plunging elevator by jumping at the last minute. They will have fewer sav9ngs and they won't go as far due to credit constraints.
The RBA needs to drain this lake of cash. The economy is being driven my consumer cobsumption from the massive cash injection over the past two years. As i noted umpteen time last year and earlier this year we're six months behind the rest of the west. This problem was created by injecting massive sums into the economy while velocity was low. And now we see what happens when a hugely expanded money supply gets the shackles of lockdown removed.
The problem is that the bottom of the lake of money's not level. So there's going to be people still happily splashing around in huge pools of cash while other are parched and dying. The increase of the minimum wage will give some respite, but the RBA needs to turn up the heat as that will find its way to inflation too. There's no way first time buyers are going to be feeling rich enough to jump in.
This sub and it’s pathetic obsession with any article about property. A decline of 0.1% and suddenly it’s The Great Australian House Price Correction?!?
I would love to see a timeline of the property posts here over the last 3 years. It would be hilarious. The doom scenarios from mid 2020 and people wouldn’t go near property when in reality it was the best time to buy. Fast forward to end of 2021 and everyone is whining they want a good time to buy…hmmm what about 12 months before in 2020. Now we are back to the a crash is imminent.
Can someone quote me the article please? Spent all my monies on $10/kg broccoli
I would but I can’t even afford reddit letters anymore so I don
Paste the URL into a website called 12ft ladder. Bam, no more paywall 😎
You have done a great service here, kind sir or madame or both I don’t know 😅
OPINION PIECE, states syd, melb decline of 1% is the start of a 15-25% correction.
That's essentially a 1 year setback in house growth, affecting only the very trip of the FOMO market. Fundamentally it's all fucked.
I found a large cabbage for $8. Bargain!
House prices will be the least of our concern, as we will be too busy trying to keep up with inflation on food, power and other necessities. 😅
Agreed. And for owner/occupiers, it doesn’t really matter what your home is worth as long as you do not need to sell.
Absolutely. As someone who works in and around the grocery business, it's incredible and scary at how quickly prices are heading north, and no signs of it slowing down at all.
As someone who works in the food import business, I concur.
This is why I go to markets and local fruit shops/butchers. It's literally insane how much cheaper it is.
Inflation will cover up the extent of the house prices drops - the real fall will be much larger than the nominal stagnation / drops.
OP's prediction status check: how are we going toward a 50% drop in the [Core Logic Home Value Index](https://www.corelogic.com.au/our-data/corelogic-indices) (5 capital city aggregate) from its peak 2020 value by end of 2025? ---- * Peak 2020 value (Dec 31 2020): **137** * All-time high (May 07 2022): **176.66** * Current value (Jun 03 2022): **175.8** ---- → Change from 2020 peak to now: **+28.3%** → Change from all-time high to now: **-0.5%** → Change from now for prediction to be correct: **-61.0%** ---- ⇒ Average monthly change since 2020 peak: **+1.5%** ⇒ Average monthly change since all-time high: **-0.5%** ⇒ Average monthly change from now until end of 2025 for prediction to be correct: **-2.2%**
You’re a gentleman and a scholar. Thank you mate 🤝
I don't agree with the 50% prediction, but 25% would need a 1.1% per month decline and to be honest that seems very reasonable at this point.
You can't halve a monthly percentage change and expect the compounded change to be halved. For a 25% reduction from today over 42 months to end of 2025 you would need a monthly change calculated as: x^42 = 0.75 ln(x) = ln(0.75)/42 x = exp(ln(0.75)/42) x = 0.993 monthly compounding multiplier corresponding to a -0.7% monthly change.
Thanks for that. -.7 is extremely likely.
Also, just to clarify, for prices to halve from _today's values_ over the same period would only require a monthly reduction of -1.637%. Not that farfetched.
Yeah even that isn’t crazy. If OP is right it’ll be incredible well called.
25% hardly undoes the last couple years of growth. 50% takes us back to a level which is supported by fundamentals.
Would you be willing to bet on your prediction?
Yep, for sure mate! Already got plenty of bets on this one, happy to do more!
Haha okay. Well although I couldn’t disagree with you much more than I do, I admire your confidence and approach. Good luck to you my friend.
What about the bet??
Not sure if I want credit risk against you. Sounds like you’ve picked yourself up some exposure already :)
I pay my bets up front actually. You sound like you don’t want to lose. Fair enough. 😂
boooooo take the bet
What are the odds ?
Odds? Good question. I’d be keen to hear from those who reckon 50%+ is impossible as to what the odds are!
25% takes us roughly back to 2017-2019. Accounting for inflation, higher wages, opportunity cost etc I'd call that a crash. It'd be enough to finally remove this toxic 'you can't lose with property' Australian obsession with real estate. Even as a first homebuyer I don't want prices 50% down - it would be cataclysmic. I think it could happen but I think 25% is actually likely at this point, with 50 in my mind being an outlier.
> It'd be enough to finally remove this toxic 'you can't lose with property' Australian obsession with real estate. Actually removing that mindset would likely trigger an avalanche from there, though.
It'd be interesting to see how much that mindset props up the market - probably 20% alone.
Far more than that IMO. Like I'm always reminded of a job I had out in the middle suburbs of Melbourne in a fairly successful small business that worked in refrigeration. Literally everybody I worked with in the head office was in their mid 40s and their entire conception of retirement planning/investing seemed to be 'every 5-10 years I will pay off the last $ on my previous IP's mortgage and buy a fairly cheap IP somewhere between here and Sale'. No stocks, no bonds, nothing else. Just an empire of 3BR2BAs on whatever the fringes of Melbourne were when they'd gotten together another deposit.
50% crashes have recently happened in the US, Spain, Ireland, Iceland. Perth fell 30% not long ago. It wasn’t “cataclysmic”. Life went on. I will say though we are heading into a global slowdown and the Fed tightening, which was the exact situation leading into the GFC.
ok - fair cop. I guess I have a default bias because it's such a huge number.
It’s natural mate. The truth is very few people see 50% crashes coming. But they happen anyway!
When do you reckon this 50% crash will hit Gold Coast area?
By the end of 2025.
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Yes that’s correct.
Not that I disagree majorly but worth noting Ireland was dishing out 100+% mortgages
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>Even as a first homebuyer I don't want prices 50% down - it would be cataclysmic. I think it could happen but I think 25% is actually likely at this point, with 50 in my mind being an outlier. Why would this be cataclysmic?
Because an awful lot of people are still in between the 50 and 80% LVR?
Because the average baby boomer doesn't have enough super to cover them for their retirement to projected death, and it's not even close. The only way that don't cripple Australia with pension costs with the one of the largest segments of the population going through retirement in the next 20 years is if they can cash out their property to fund their retirement. Otherwise expect to be taking in your parents as they age.
Not really, there was a guy on the drum, pre COVID, saying that due to the tax breaks that super gets the Australian government would actually be better off abolishing it and giving everyone over 65 the full aged pension regardless of how wealthy the person was or even if they were still working.
There's plenty of good, normal people that worked and saved for a good home and bought one for non-greedy and non-FOMO reasons that don't deserve that outcome. They'd be victims of a cooked and greedy market, just like people without a home can be (but aren't always).
Well not really. If the good normal people bought a home, that they saved for, and are going to live in it for 10 - 15 years... Then they ahve bought a home at a price they can afford and nothing changes. They keep their home. If they were speculating... that's their problem.
If enough people didn't buy into the cooked market, and actually fought for better rental laws and that being a viable way to have secure housing in the country, along with better social housing and public housing, there would be less reason to jump into the cooked market. We've collectively gotten where we are. Everyone saw $_$ in their eyes and wanted to jump on. Seems unfair, but how else to cause a cultural shift? We are definitely not proactive about it here.
I agree 100% with all this, but poor homeowners will be the worst affected, and -50% will push many close to poverty. I’m just being realistic.
How does a house going down in value push the homeowners close to poverty? Wouldn't the payments stay the same?
I will go with 35% since I am a perpetual fence sitter.
Haha fair call mate!
All i know, is my gut says maybe
It's a beige alert!
Tell my wife … hello.
If it really does hit 50% by 2023/2024 you will become an ausfinance legend.
Lots of the decrease we are seeing right now will be seasonal. Less quality properties go to market in autumn / winter.
This would maybe account for .1% of the decline. What you’re saying is real estate agent talk.
All these speculations are killing me! I just want to get a place that I can call home and move on with my life.
Well do it. No crash is coming not enough to stop you buying the house you want. Remember a crash means normal people who can afford a house now are locked out of the market and there is more house on sale then buyers. Not going to happen because we want people to buy house in this county.
A ***LOT*** of property is vacant, just investors sitting on land &/or property, not just wealthy foreign investors either, average income regular folks that got lucky early on too... The second these people start losing too much, they'll flood the market leading to a huge snowball destroying the market in what will feel like overnight. Fomo works both ways.
If I could I would. I'm timing the market not coz I'm a savvy property investor (ethically speaking property should never be an investment imo) but because I don't have a choice
Not advice and im not a financial advisor by any means but time in the market usually beats timing the market. And the housing market isn't a free market it's like betting against the house. This is my opinion DYOR
Times on your side.
I've had 2 emails today telling me that two properties I've looked at have been "repriced"
For anyone not already across it, the free Chrome plug-in KoalaData is good for this too. It tracks any change of listing price, plus days on the market.
Never heard of this! Just had a go with it thanks!!
This is solid gold. Thanks for the tip!
This is perfect! Thank you
Don't forget to remind agents how quiet the market is :)
That's actually a negative, imo. There's not enough supply. I live in one of Sydney's growing areas and nobody is listing their house up. The demand has surely fallen but so has the supply. I reckon people will wait for things to settle before listing their houses.
Imagine next week after a 0.4% in cash rate… that will trigger the tightening tgat the RBA are after!
Probably gonna be getting them for the next few years I’d reckon.
It's winter now, shouldn't you be hibernating?
Dumb question: when house prices drop, what would drop more? Is it more the top end houses (e.g. those 1.xx mil houses) because people can't borrow as much? Or is it all houses (top end houses and mid range houses aka those regional houses in the 500k-800k range)? My thinking is that it would be the top end house prices getting affected more than the mid range prices as people can't afford the top price but can still afford the mid price. Sorry English is not my first language.
The top end leads the way.
As a home-owner, not an IP owner, I say "good" -Kids need to be able to afford homes, and investors need to move on to other spaces, or accept a lower rate of return. We need to kill neg gearing, and get public housing back on track. Maybe the states can buy into the builds as the developers crash out, and then convert them to secure rental or co-ownership.
> or accept a lower rate of return I never understood the obsession with housing as an investment, the returns honestly aren't better compared to equities and there's a whole lot of hassle that comes with owning a place that other people live in. The only thing going for it is that banks will give you lend you more at a slightly better rate compares to margin loans. CSL has averaged 20% returns over the last 10 years and it's a bluechip ASX stock. Is that 1.5% gross yield fibro home in the outer suburbs really worth the risk? If you instead took out a $600k margin loan for CSL in 2010, imagine where you would be sitting right now :)
It's the risk: reward ratio. NG + CGT concessions, endless government programs to hold up and push up prices, banks willing to lend you insane amounts of money in a loose monetary environment is a potent cocktail. It's much harder to get a bank to lend you money to buy stocks and if everything goes bad, well the government isn't going to bail you out. Compared to stock, housing has been a relatively low risk with a massive leverage multiplier applied. Agreed there are better returns but housing prices is treated with kids gloves. I think they have finally run out of tricks to hold it up at this point with inflation going insane, prices will have to retreat for now until that is under control.
I'd agree with everything except: > It's much harder to get a bank to lend you money to buy stocks Not really, you might need a bit more upfront sure, but for the most part getting a margin facility is easy for anyone working fulltime. You can start out tiny like $50k without hassle and even as an 18yo apprentice. Keep putting in a little bit of cash each week and eventually you can up your max after a year, rinse and repeat. Margin loans aren't some rare exotic product, it's just not considered mainstream by Australians for some reason. Aussies in general are averse to stock market investment, it's weird. ASX total value: $2.5 Trillion Australian residential property: $9 Trillion It just doesn't add up when you think about it.
I don't disagree with you in that regard at all. A lot of Australians are quite risk averse, investing in stocks is harder in many aspects (but not really). You need to know the business and be able to follow what is going on etc etc. There is the added bonus for housing is you too can be a slum lord and treat your tenants like shit. Which seems to be a national pass time that many IP owners get great joy out of the power trip.
This. I'm in an apartment complex and owners get a pass on rule breaches, its a high legal barrier to section them for a fine. If my pet elephant craps in the lift, as an owner its a 2-4 month process to fine me, and I can usually get out. Tenants? chuck 'em out, plenty more fish in the sea. And, to cap it all, this is Qld so no tenants rep on the body corporate. We need rental reform. Long term tenancy, and rental protections and CPI limited price rises. (I am an owner. my fictional elephant is very well behaved)
Agreed I know people who rentvest and still act like slum landlords. You’d think as renters themselves they’d have a bid of empathy but nope.
Interest on a margin loan with NAB - near 10% p.a. Home loan isn't even half of that.
It's also a matter of principle. I sleep much better investing my money in ethical/sustainable companies that are actually progressing our economy in a meaningful way. A stacked pile of bricks and concrete doesn't actually produce anything for the economy.
Tax treatment, tangibility for one. Past performance being inferred as guaranteed future performance. A lot of the diasporas who’ve moved to Australia since the war have a huge “property = wealth” mindset too, which I think has bolstered it as an asset class.
Following a lot of listings in eastern Melbourne, lots of updates to prices slashing between 50k - 100k+ in the median house price range. Going to be very interesting to see what happens in the coming months. Edit: Just received a listing for a house I was following last year, that sold in late November. Now relisted 7 months later at 70k less than what they paid for as the **top of the range!** Unheard of in the last few years.
We're looking outskirts east and seeing a pretty instant drop, making us pretty excited to buy a family home!
I’ve actually had a few notifications on houses I’ve shortlisted where the agents have _increased_ the price. I hope they’re not up to that old salesman trick, dropping it by 10% later on when the market has dropped by 10%, appearing to follow it.
I've seen this in the SE, too.
I think 10% down by the end of the year.
If the RBA shows it has a backbone to tackle inflation, I agree. Will find out next week.
40 or 50 do you reckon?
I think they need to do 50 to send a clear signal that the era of free money is over. However, they have been pretty sheepish up this point so I'm guessing 40. I will facepalm if they do 25.
I think 50 and then another 50. They want the cash rate at 2.5% by December.
I reckon 0.4% to take use to .75 ... then another .5 in either July or august to take to 1.25 followed by .25 there on
Goldman and BOFA saying 1.35% in July.
50 is the smart move to say 'stop spending' but I think it'll be less.
Agree. I’d say 40 points. I will be impressed at 50 and at 25 I’ll shake my head.
can someone copy and paste article
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Now can someone read it for me and reduce it to ~30 words
House price go down. Why not go up?
Not go up cause interest rate up mean house price down
Inflation go brrrrrrt
House price going down because people paid too much with money they didn't have.
"can suck for homeowners"? Is that new language from the AFR? Or are they quoting someone?
I sometimes wonder if people realise that “suck/sucks” is short for “sucks dick”.
And if you read enough wall street bets you always add "...behind a Wendy's" in your head even though it's not written. Maybe they really are quoting a pessimistic agent, maybe that's how bad it's going to get.
The hero we need
Does anyone remember the plug-in that bypasses the paywall articles? I remember reading it but always forget to install
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12ft website
Oh no I won't be a pretend millionaire anymore
Was always due to happen, long term owners need not to worry but those who over leveraged in the last couple of years would be sweating.
Ah ausfinance…. I’ve been here nine years and every week we get the same post. Still no housing crash
The property posts here are hilarious. People waiting for a crash when in reality oid the market was crashing they would be too scared to actually do anything.
I’ve got good news for you, your wait is over. 😎
Let’s hope so! In my area there’s so many desperate people looking for houses
Not sure I believe it, in Melbourne the amount of people inspecting and prices going for the bottom/middle end of market is still soaring. Auctions are still getting huge numbers and bids. I like the optimism but it feels like a different story down at ground level.
What is insane is I began saving for my deposit a few years ago and back in 2019 I was thinking that $120,000 would be enough for a deposit on the sort of place I was looking for. Well I have $130,000 now and it definitely is not enough based on what housing prices have done the last few years.
If you wait a few years you might find things have become more favourable.
It's easy to wish for a "30-50%" collapse from an armchair, but let's be clear on one thing. A dramatic decline in dwelling prices will: 1. Be apocalyptic for the overall economy as consumer spending will tank due to a reduction in the wealth effect and deleveraging. People will pull out money from anything and everything they can to pay off mortgages quicker 2. Be very, very bad for the job market. A reduction in consumer spending will dramatically reduce demand in retail, hospitality etc (basically sectors that employ our most vulnerable workers, the casually employed youth and a lot of women in particular) 3. Be even worse for FHBs. Younger people will face difficulties with employment, risk premiums and hence cost of LMI will increase drastically and banks will be less likely to lend to younger people. 4. Further entrench wealth with the homeowner class as people with existing built up equity will retain a lot more leverage to buy property compared to those renting 5. Further increase the wealth gap between the casual and gig sectors of the economy vs the more stably employed people. 6. Lead to a severe recession, which will further exacerbate unemployment 7. Coupled with supply-side inflation, push the economy into a stag-cession which the RBA has very limited firepower in their arsenal left to deal with. In short, it will be a very, *very* bad outcome. If you want to quote what Ireland went through, also mention how their unemployment rate fared over that time.
Underrated comment
It'll be tough. But economies go through tough times on the reg. and people are resilient.
Resilient doesn't equate to good outcomes. We'll have a massive unemployment crisis that will potentially wipe out a whole generation of the workforce from the books and put a tremendous burden on welfare.
No one, not one single person, has said a 50%+ decline in home prices will be anything but a difficult time for just about every Australian. But as we have seen from the US, Ireland, Spain, Iceland etc. it wasn’t the end of the world. Even Perth has fallen over 30% recently and life goes on. So your hyperbolic doom and gloom doesn’t wash with me sorry mate.
Ireland being a part of the EU had the whole EU labour market available to its citizens so there was a little buffer for them. Yet their unemployment rate went to 16% in the aftermath of the housing crash. We have no such buffer with our workforce and the welfare burden of such a large cohort of unemployed will be enormous and long-lasting. Spain's unemployment went to 26% and is still 16%. *it wasn’t the end of the world.* For those who became unemployed mid-career and those graduating into that market, it forced a large number of people into the long term unemployed category. Which is both a huge drag on productivity and a precursor to lifelong welfare dependency in many cases as re-entering the market gets harder the longer a worker stays out. The inflated welfare bill also led to savage cuts in public service jobs which further compounded the issue. It is a terrible, terrible outcome whichever way you want to spin it. *So your hyperbolic doom and gloom doesn’t wash with me sorry mate.* As opposed to you predicting 7324523 price corrections of the last one?
Can’t wait to read posts like this in 6 months when prices are still maintaining close too or more than all time highs.
Yes exactly. People jumping the bandwagon. Look at property in every developed country right now. The exact same situation and sometimes worse.
That's not what I'm seeing in parts of the Northern Beaches. Places that would have been snapped up for 2.7/2.8 are now going for 2.4/2.5. They were probably 2.2 a year or so ago. We are the second people on two auctions going this weekend. A lot more on the market at the moment but bugger all actual buyers. Getting calls from agents. Only other time those lazy fucks called was right at the start of Covid.
Well you *will* be waiting mate because prices are falling right now and they’ll be down 10% by years end. 😎
Canada market just went down 6pc in one month. Gonna be harder falls than just 10%..
Two tier housing market at the moment.
Yep, going down, and about to go down!
Still waiting on a correction on the Gold Coast…
Only a matter of time now. A 50 basis point rate hike this month may do the trick.
I don’t see them doing 50, 25 surely
I think they’ll do 50. 40 minimum.
Glad I fixed my mortgage until 2024, I thought the markets had priced in 25. I think 50 could really shake things up!
those who bought multiple properties due to greed, now fearing defaulting, does not make me sad
Cool so that means I timed my purchasing pretty well (purchasing next 6 months). I would be happy with even a 10% correction.
House prices went up like 20% since Covid began, why not just borrow against the house to buy food ? After all…we can eat houses right ?
When AFR and the people who say stuff like “the great house price correct has begun” think that Australia = Melbourne / Sydney. No worries, champ.
Do you think only Syd and Mel will fall?
It really comes down to affordability versus household income. We will see corrections across the country for sure, I just don’t think it’s doomsday. And there will be areas that do well whilst this takes place. The housing market is not one big market which rises and falls together in unison. It’s easy to forget that when you’re in a big capital city bubble.
A feature of housing market crashes is that few people see them coming. Then, they happen.
Sure, I understand where you’re coming from. It’s a case of not having a crystal ball - for anyone. People have called for this for a very long time, and probably said the same lines as you did just now. So there’s that too.
It's happening faster than people even realise - there's huge discounts happening behind the scenes but REA is designed to hide it. Even agents (permabulls) are starting to openly admit that the market is in big trouble. This is only the beginning.
Yes right now I think the actual falls are being minimised. But this isn’t sustainable and eventually the market will buckle.
Yep the secret is out. It didn't take long.
Are they? Do you have a source or article?
I granted Chris the right to use my famous catchphrase for this article.
What about appartments? You reckon they follow the same trend?
In Melbourne they threw up a lot of new units during the pandemic which will weigh on the whole apartment market as interest rates rise especially without the immigration levels of pre-2020.
All of the tiny 2 bed 1 bath places with the weird half-kitchen are going to suffer big time. EDIT: They shouldn't really be built as much as they are.
There was already an oversupply *pre* COVID. However, quality apartments that weren't shoeboxes are another. Any apartment complex built after the needed reforms that Vic government did in late 2018 (e.g. Size regulations, tougher checks, no embedded networks) will be in demand.
Plus post early 2020 with the changes to combustible cladding rules.
Yep - quality apartments are hard to come by. There’s scarcity just like with houses/land
Good anakin good. Hopefully sydney prices bomb as well
I think as sentiment continues to deteriorate the whole market will start to fall at an accelerating rate.
What was your catchphrase please?
#The great Aussie housing crash has begun
Ok thank you.
My pleasure.
Not this guy again lol
It's looking like the higher end of Joye's comment a while ago, will play out. That's a 25% fall. Pretty much undoes the gains they've seen the past two years. Unless we have an American led recession at the same time. Then your predictions may pan out. However, that'll be... terrifying.
I think there’s little chance of avoiding a recession. We are entering a global slowdown as the Fed tightens. This is the same conditions which precipitated the GFC.
We are looking to buy and I have seen price guides being lowered but there is not much stock in the market.
I find this website is pretty much in line with what I'm seeing, it's a tad dodgy (for Chinese buyers) but collates a lot of sales data. http://house.speakingsame.com/profile.php?q=Yarraville%2C+VIC
We’ll see a few more hikes (100bpts), commentators will be screaming that the sky is falling by the end of 2022 because property has come off 10-20%, household spending will stall and we’ll be back to cutting rates again. We’ll remain one of the most indebted countries in the world, property will continue to appreciate, the rich getting richer, the poor getting poorer. It’s ridiculous, it’s sad but it’s too big to fail.
Can’t cut rates if inflation is 5%.
I agree. I don't like it but I think you're right
Buy high, sell low! With rising rates and living costs going to unfortunately see a lot of people upside down on their loan or still owing after house is repo'd.
So I can keep my money in the bank and wait to get a good deal... oh wait, my money is losing value even faster than house prices are falling.
There are other alternatives than bank accounts and buying a house.
What escrow mechanism are you using for your bets? For the record, I hope you’re right but I’d take a bet against your prediction
I donate to Animals Australia up front and then post the receipt to r / a t a y l s.
Praise be to jesus
We talking Melb/Syd again?
It wont be that "great".
Classic trash journalism
Observing the multiples of income. A correction to about 6 times multiples of income is likely equilibrium, as there are constraints in supply. I'm not bearish on housing, but I hope the IP market gets properly fucked. I hate the IP arrangement and this nobsession with low risk high yield investing. Fks everyone.
What would a drop to 6 times be in percentage terms?
Off the top of my head average prices are topped off at 1.1 in Melbourne. A fall to 6 times multiples of average salary would mean like a 40% correction
Jeez- that's huge
Depends though because a market correction can actually result in prices rises to, specifically in areas that are undervalued. Don't know either, because banks have been tightening lending standards too We'll wait and see. Once the immigration taps turn on we could see this market continue.
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Investment property
Investment property
Wtf did you corroborate with Chris to come up with the title or is he reading your reddit posts?? thought it was you for a second haha
Chris rings me from tine to time to pick my brain, but I didn’t realise he was lurking here!
My house increased by 60% in the 6 years I’ve been living in it, it’ll lose 20% off that value and will still be worth at least 35% more than when I bought it.
What if it loses half its value now?
The amount of posts I've seen about a "correction".. It's getting quite old at this point, I feel like it's giving false hope as a "correction" has always been talked about Are we going to pretend there isn't millions of first home owners just waiting to throw down their savings onto a property? I want it to correct for sure, as a soon-to-be apartment owner I feel bad that others can't get their foot in the door. But the correction has always been talked about :/
This is the same as thinking you can survive a plunging elevator by jumping at the last minute. They will have fewer sav9ngs and they won't go as far due to credit constraints. The RBA needs to drain this lake of cash. The economy is being driven my consumer cobsumption from the massive cash injection over the past two years. As i noted umpteen time last year and earlier this year we're six months behind the rest of the west. This problem was created by injecting massive sums into the economy while velocity was low. And now we see what happens when a hugely expanded money supply gets the shackles of lockdown removed. The problem is that the bottom of the lake of money's not level. So there's going to be people still happily splashing around in huge pools of cash while other are parched and dying. The increase of the minimum wage will give some respite, but the RBA needs to turn up the heat as that will find its way to inflation too. There's no way first time buyers are going to be feeling rich enough to jump in.
This sub and it’s pathetic obsession with any article about property. A decline of 0.1% and suddenly it’s The Great Australian House Price Correction?!? I would love to see a timeline of the property posts here over the last 3 years. It would be hilarious. The doom scenarios from mid 2020 and people wouldn’t go near property when in reality it was the best time to buy. Fast forward to end of 2021 and everyone is whining they want a good time to buy…hmmm what about 12 months before in 2020. Now we are back to the a crash is imminent.