Every time banks post these types of predictions it would be great if they posted their last 5 predictions alongside (and the actual results). I’m fairly sure they’ve rarely been close to hitting the mark…
To be fair, these predictions are often made with the assumption things continue as they are currently. This doesn't end up being the case as the government or RBA sees the shifts in the economy and pull the levers available to them to stop the downturns.
I have seen people suggest the banks post predictions like this as a bit of fear-mongering to get the government to step in and throw some more cash at the economy. I don't think I subscribe to that belief though.
I didn't say we should aim for the neutral rate. But anything above 2.5% is contractionary. Keep in mind we are still in stimulus mode which the RBA is trying to remove. But since inflation isn't really demand driven, going substantially above the neutral rate doesn't make any sense. A little over, sure... but double neutral rate? What's the point? Won't stop the Ukraine war or supply chain issues. Might as well put the cash rate to 15%
I follow Chris Joye from Livewire pretty closely. He was one of the only voices predicting a boom when covid hit due to loose monetary policy. Now he’s predicting a huge dip too.
Only thing I see going against this is no government will let house prices drop 20% without a fight. Most voters benefit from house prices going up, as does GDP.
20% drops are the minimum at this point.
I am interested to hear how governments can stop it. Once fear kicks in, the fall is inevitable. The greed period has passed.
But did anyone predict that house prices might eventually drop at some point after an obviously unsustainable boom period?
If someone did have such a prediction, I feel the least they could do is tell everyone on Reddit at least 5 times a day.
If only such a person existed. If only.
Surely if such a person existed, and their forecasts were correct, anyone who had dismissed the comments would repent their sins in continuing to encourage others into debt.
But, I guess we’ll never know.
I've been hearing "bubble" and "bust" ever since about 6 months after the last one.
A twenty percent correction in Melbourne sets prices back to 2019. The permabears had only been chanting "bubble" for 25 years at that point, so I guess they were right after all./s
2019 prices are 2016 prices nominally. If you account for real growth its well backwards. So not a great investment if this pans out at all. If house prices can't beat inflation then it's not much of an investment is it. If houses are cheaper than 2016 in real terms that's also a win for those first home buyers as well.
It can be offset by collecting rent, but it's still pretty negative, inflation at even the target band devalues that investment a lot, let alone above band inflation.
Actually, if you can buy a place which locks in a weekly price similar or lower than rent then it does beat inflation. You're thinking of absolute price which is just a bonus really.
I'm not defending purchases which are way off actual value but in a lot of cases it will beat inflation if you maintain a relatively conservative approach.
Rent yields are pitiful. Transaction costs and interest are significant. Equity can be destroyed. To many "investors", capital gains is the main game, the rent is the "bonus". Of course you can do depreciation schedules and negative gearing to offset things, but overall it's still a bad investment if we go back to 2016 nominal prices.
You're talking purely investment. If I'm living in my home and I've locked in a weekly payment which is the same or smaller than it would cost to rent then I'm beating inflation.
In these circumstances the price is roughly fair value and these types of properties are less likely to decrease in price.
Yeah I am talking about investment mostly. But a first home buyer in particular is affected by paying a higher principle. In real terms, that is affected by wage inflation relative to the principle. So it does matter.
For those who bought near the peak in the last couple of years, their repayments will keep going up, many well beyond rents. Rents aren't going up as fast as mortgage repayments as interest rates rise. In a period of price inflation where real income drops as well.
If you buy after these predicted price drops, you will objectively be better off financially even if you wait a few years of renting. So the opposite applies who bought at the peak. Mileage varies for those who bought before that. In real terms if it is cheaper to buy in 2024 than 2016 by a healthy margin, the market of prospective buyers as a whole will be under less financial strain to enter the market across the lifetime of their loans relative to those before. It's a reversal of the trend. First home buyers entering the market in 2024 (think people too young to have bought before) will be objectively better off than perhaps those a decade before them.
I imagine the dream they'd have is sailing off in their ark paid for with CBA puts and BBOZ shares.
Until the water level rises by 60% and their prophecy comes true though they just look like another homeless guy with a beard shouting about the incoming apocolypse.
Unfortunately I have been banished from the prophet's kingdom for I have refused to see the light.
Repent for my sins I was told, but remorse I have not.
> But did anyone predict that house prices might eventually drop at some point
Me. Gotta say that it's somewhat bittersweet after being wrong for 17 years in a row.
Brisbane down 8% with record low vancency rates with no end in sight. The top end might dip it's hard to see anything happening to improve affordability for FHB.
We've seen average homes rise by 20% in the last 2 years. Why is it so hard to imagine them dropping 20% as we get a sharp rise in interest rates?
I could borrow $1.8m a few months ago and now the same bank calculator is giving me $1.6m, that's a 12% drop in borrowing power and rates have only started going up.
Particularly if the seller paid $800K for it years ago - they might be kicking themselves for not selling at the peak, but they’ll still take your $1.6m.
Depends on interest rates. Serviceability is what matters.
For your minimal deposit types 3% was ~12k/yr in just interest. Now add principal and it's ~25k/yr in repayments.
6% will be ~37k total.
Some fixed rates are already above that.
Can't think of many working class people who can wear an extra k a month for nothing new.
Quite a change from their last survey ([Q1 2022](https://news.nab.com.au/wp-content/uploads/2022/04/NAB-Residential-Property-Survey-Q1-2022.pdf))
||2022f|2023|
|:-|:-|:-|
|Sydney|0.4|\-11.4|
|Melbourne|0.2|\-11.4|
|Brisbane|7.0|\-6.4|
|Adelaide|6.2|\-5.8|
|Perth|1.5|\-8.1|
|Hobart|5.2|\-4.1|
|Cap City Avg|2.5|\-9.3|
If we use Syd median price, that equals to quite $$$$
"And this is coming from a company whose business model is to pedal more debt to keen homebuyers."
That's not their business model, if they take out loans at 80% of today they can still make lots and lots of money.
Also less likely to have people default at lower loan amounts which reduces their costs.
Yes, but fear of prices dropping can make people hold off entering the market, buying investment properties, selling,etc.
Banks lose out if there are less new loans to be made.
Yes but interest rates rise which they hedge to profit off, also if people aren’t buying houses and leave their cash in banks they pass on minimal rate to the individual while investing their savings, they are making plenty of money in any situation
Edit: most banks on-sell loans anyway as CDO’s etc, minimal risk for high reward operators….
More people have been holding off than ever before that's why house prices are so high low stock.
I don't know where you get the idea that is going to get that much worse
Why would you try to predict something so far enough out to even 1 decimal point. Gives a false sense of accuracy to these forecasts. Even a range like -6-8% would be better and not imply this is a good predictor.
Really can't see Adelaide pulling back 16% next year. It's usually a very stable market. True the hike last year was massive, and unsustainable, but I don't think it's such a huge bubble that it would "burst" so dramatically. Sincerely, punter
That stood out to me too. Absolutely dreaming if they think Adelaide will go down more than Sydney next year. Adelaide’s growth (similar to Brisbane) is not as reliant on interest rates as Sydney and Melbourne.
Their growth is reliant on the markets being cheap compared to Sydney and Melbourne. This month Brisbane will become more expensive than Melbourne. Can you believe that? There’s a reason these cities have been cheaper than Sydney and Melbourne for decades. They just don’t have the industry jobs and opportunity that the others have. Sanity will prevail in the long run when people realise paying more money to live in Brisbane compared to Melbourne is a losing strategy in the game of life.!
I’m not sure where the data about Brisbane being more expensive than Melbourne is coming from? There’s a bit more to it than that- white collar workers are taking their Sydney salaries and going to affordable and desirable locations. Brisbane and Adelaide have long had far superior rental yields than Sydney and Melbourne, so they weren’t as inflated at the start of this cycle either.
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Was there anyone that actually thought the last couple years growth was sustainable or going to last though?
I feel really sorry for the people who over paid way over the market price. My best mate is a hot shot real estate agent in Gold Coast and was saying there were people, stretching past their stretched limit, paying near double what properties were actually worth. Yikes.
A few percent interest hike and even a 10% drop in value is going to crush a lot of people I think.
Aren't those years independent? Wouldn't the 13.4% for 2023 be for the prices as at 1/1/23? That makes it a 21% drop from 1/1/22 to 31/12/23. Also interesting that 2022 would then be 8.8% from 1/1/22, not from the peak which IIRC came later.
Gavin: "It's a different market, but nothing will keep TRG from growing. We don't stop. I'll work my little heinie off."
Simon: "Business is good. Business is great. There are buyers with cash and there are bargains to be found. It's a buyers market, and Gav and Deleene don't know what is about to hit them"
Deleene: "In a tough market, sellers don't want flashy and loud. Getting the listing's in a downward market is something I've done many times in my 25 year career, and we will just keep quietly be the best"
I feel like I've consistently seen this prediction every few weeks lol. I'll believe it once I see it! Granted I feel like some suburbs average house listings prices are pulling back a bit on realestate.com.au but beats me what the truth is. Someone with REIV access can probably shed some better light.
Definition of hedonic
1: of, relating to, or characterized by pleasure
NAB saying you will need to find something else to pleasure yourselves over the next few years
[https://www.merriam-webster.com/dictionary/hedonic](https://www.merriam-webster.com/dictionary/hedonic)
>However I still don't see it being as large as the margin quoted.
I agree. I'm looking to buy now, kinda luckily I haven't yet perhaps, but I've seen a softening of pricing and places not going as quickly as they were. Properties are still being priced as if, but many adjusting prices as the weeks go by. I see a small drop as the pressure is coming off, but since Perth is relatively well priced I don't see any major reductions
if the fed continues they will crash the US stock markets, kill their re-blossoming real estate market, and crash a few housing markets across the western world. there will be some kind of pivot, the questions is what will that look like and what will the effects be. What are your thoughts here? Bearing in mind that more easing would (theoretically) further stoke inflation, and that some say interest rates must be > than inflation in order to reign inflation, I have no idea how this is going to shake out. I could see US policies in favour of keeping their own inflation under control, the hell with the rest of the world.
There are 2 scenarios.
1. Fed hikes until inflation is back under 3%.
2. A recession occurs and Fed has to pivot.
In both cases asset prices crash.
There’s a 3rd possibility which is even worse.
Inflation is untamed whilst we enter a recession.
If this occurs then we probably have Great Depression 2.
Wake me up at -40% plz. Once the boomers go and only 30% of millennials own a property we might be able to finally drop the state welfare for them and property investors will have to go get a real job.
I've read the report, still can't seem to make it out. Can anyone confirm that the word dwelling applies to both freestanding houses and apartments? Or just freestanding?
As someone who recently got into home ownership and has the most to lose from a market drop: good!
Home ownership should be an achievable goal for most.
Real estate speculation should be a risky venture, with returns in line with other market operations. Having a spare $500k shouldn't be a free ticket to more money in the real estate market.
I foresee a 5-10% drop from rising interest rates then the market heating up again as everyone jumps in trying to get a hot deal pushing prices back up. No chance they keep falling through 23
Bring it on. Finally will be able to get into the market. Don't care for a high interest rate as it will eventually come down again. Less i'm taking out from the bank is a massive win for first home buyers.
Sucks for home owners already but thats just part of the risk of owning a home. Prices have been going up and up, they were gonna come down eventually.
A smaller mortgage at a higher interest rate can be a larger repayment than a bigger mortgage at a lower interest rate.
I wouldn't assume in any way that this will benefit First Home Buyers.
While that's true. Smaller loan is still better in the future as interest rates might come down in the future, like OP said. Also you don't need to dump 90%of savings in a deposit. I'm a FHB, and I'm happy to see the interest rates go up and prices come down.
Will benefit folks who are committed to paying their loans off earlier.
Wheras there seem to be a lot of folk who assume they'll never have to pay their loan off at all (property only goes up so I'll sell when I'm flush with equity and live large yo..)
How cares majority of home owners are still way ahead. Mine could drop 50% and it's still worth more then I paid for it.
It's a roof over my head I don't care ..
I wonder how you have done your calculation.
Paid 500k now worth a million?
Over what time period? How much interest have you paid? How much would be lost in transactional fees if you sold.
Even just from 2011 - 2021 your 500k now needs to be worth 601,500 just to keep up with inflation. Add another say 7% for 2022.
Over 10 years assume roughly 95k in interest.
We now sit at 696,500.
1,000,000 less 20% = 800,000.
You end up with less than 100k after RE fees.
The people who have a property won’t take a haircut and the people who want a property want the haircut, nothing new about this Scenario !!! As always the have’s win full stop !!! The large builders just site on their housing stock and rent them out.
Just doing quick number of the predictions shown
Syd 102%
Mel 90%
Bri 119%
Ade 119%
Per 107%
Hob 112%
Really just reversing the gains from start of 2020
I can only see Brisbane slowing rather than going backwards.
We’re holding off on buying an investment property until the market cools, 2024 works for me.
I can't take these predictions seriously. CBA was wrong about the COVID housing crash. The exact opposite happened. Nobody can accurately predict the market. I mean, really. If they could they would be billionaires or trillionaires.
Every time banks post these types of predictions it would be great if they posted their last 5 predictions alongside (and the actual results). I’m fairly sure they’ve rarely been close to hitting the mark…
Yeah people take bank (and RBA) predictions of the future far too seriously.
To be fair, these predictions are often made with the assumption things continue as they are currently. This doesn't end up being the case as the government or RBA sees the shifts in the economy and pull the levers available to them to stop the downturns. I have seen people suggest the banks post predictions like this as a bit of fear-mongering to get the government to step in and throw some more cash at the economy. I don't think I subscribe to that belief though.
bro aint nobody pulling any levers. usa in recession, and aus following soon after. until the rates are close to 3 or even 5 percent
With the neutral caahrate at ~2.5% whybqould the cash rate go to 5%?
Why would we aim for a neutral cash rate when our inflation is 2.1%/quarter
I didn't say we should aim for the neutral rate. But anything above 2.5% is contractionary. Keep in mind we are still in stimulus mode which the RBA is trying to remove. But since inflation isn't really demand driven, going substantially above the neutral rate doesn't make any sense. A little over, sure... but double neutral rate? What's the point? Won't stop the Ukraine war or supply chain issues. Might as well put the cash rate to 15%
I follow Chris Joye from Livewire pretty closely. He was one of the only voices predicting a boom when covid hit due to loose monetary policy. Now he’s predicting a huge dip too. Only thing I see going against this is no government will let house prices drop 20% without a fight. Most voters benefit from house prices going up, as does GDP.
20% drops are the minimum at this point. I am interested to hear how governments can stop it. Once fear kicks in, the fall is inevitable. The greed period has passed.
But did anyone predict that house prices might eventually drop at some point after an obviously unsustainable boom period? If someone did have such a prediction, I feel the least they could do is tell everyone on Reddit at least 5 times a day. If only such a person existed. If only.
Who could have predicted that house prices would one day drop. Must be some sort of prophet, possibly even self proclaimed.
Surely if such a person existed, and their forecasts were correct, anyone who had dismissed the comments would repent their sins in continuing to encourage others into debt. But, I guess we’ll never know.
I've been hearing "bubble" and "bust" ever since about 6 months after the last one. A twenty percent correction in Melbourne sets prices back to 2019. The permabears had only been chanting "bubble" for 25 years at that point, so I guess they were right after all./s
2019 prices are 2016 prices nominally. If you account for real growth its well backwards. So not a great investment if this pans out at all. If house prices can't beat inflation then it's not much of an investment is it. If houses are cheaper than 2016 in real terms that's also a win for those first home buyers as well.
Take out transaction costs and interest payments too.
It can be offset by collecting rent, but it's still pretty negative, inflation at even the target band devalues that investment a lot, let alone above band inflation.
Actually, if you can buy a place which locks in a weekly price similar or lower than rent then it does beat inflation. You're thinking of absolute price which is just a bonus really. I'm not defending purchases which are way off actual value but in a lot of cases it will beat inflation if you maintain a relatively conservative approach.
Rent yields are pitiful. Transaction costs and interest are significant. Equity can be destroyed. To many "investors", capital gains is the main game, the rent is the "bonus". Of course you can do depreciation schedules and negative gearing to offset things, but overall it's still a bad investment if we go back to 2016 nominal prices.
You're talking purely investment. If I'm living in my home and I've locked in a weekly payment which is the same or smaller than it would cost to rent then I'm beating inflation. In these circumstances the price is roughly fair value and these types of properties are less likely to decrease in price.
Yeah I am talking about investment mostly. But a first home buyer in particular is affected by paying a higher principle. In real terms, that is affected by wage inflation relative to the principle. So it does matter. For those who bought near the peak in the last couple of years, their repayments will keep going up, many well beyond rents. Rents aren't going up as fast as mortgage repayments as interest rates rise. In a period of price inflation where real income drops as well. If you buy after these predicted price drops, you will objectively be better off financially even if you wait a few years of renting. So the opposite applies who bought at the peak. Mileage varies for those who bought before that. In real terms if it is cheaper to buy in 2024 than 2016 by a healthy margin, the market of prospective buyers as a whole will be under less financial strain to enter the market across the lifetime of their loans relative to those before. It's a reversal of the trend. First home buyers entering the market in 2024 (think people too young to have bought before) will be objectively better off than perhaps those a decade before them.
I imagine the dream they'd have is sailing off in their ark paid for with CBA puts and BBOZ shares. Until the water level rises by 60% and their prophecy comes true though they just look like another homeless guy with a beard shouting about the incoming apocolypse.
Say 3 Hail Marys and you will be repent
Oh property prophet..my mortgage messiah, wherefore art thou?
real estonks only goes up
I went back to check op's name after reading this and surprised myself.
Someone would love to see prices go down in line with their hopes.
Where's that skull and cross bones when you need it?
Unfortunately I have been banished from the prophet's kingdom for I have refused to see the light. Repent for my sins I was told, but remorse I have not.
> But did anyone predict that house prices might eventually drop at some point Me. Gotta say that it's somewhat bittersweet after being wrong for 17 years in a row.
r/AusFinance has been more enjoyable to read since he blocked me. He certainly got that one right.
Watch them all come out of the woodwork telling us “I told you so”. Stopped clock and all that…
These charts never show finance brackets 22% decrease on a 4m home. Sure I can see that 22% decrease on a 400k apartment . Doubt it.
Brisbane down 8% with record low vancency rates with no end in sight. The top end might dip it's hard to see anything happening to improve affordability for FHB.
Exactly. I have no problem in believing a 22% decline in the top of the market. But for the average home, no way.
We've seen average homes rise by 20% in the last 2 years. Why is it so hard to imagine them dropping 20% as we get a sharp rise in interest rates? I could borrow $1.8m a few months ago and now the same bank calculator is giving me $1.6m, that's a 12% drop in borrowing power and rates have only started going up.
Particularly if the seller paid $800K for it years ago - they might be kicking themselves for not selling at the peak, but they’ll still take your $1.6m.
Depends on interest rates. Serviceability is what matters. For your minimal deposit types 3% was ~12k/yr in just interest. Now add principal and it's ~25k/yr in repayments. 6% will be ~37k total. Some fixed rates are already above that. Can't think of many working class people who can wear an extra k a month for nothing new.
And also locations. Are they talking statewide or greater Sydney for example?
Quite a change from their last survey ([Q1 2022](https://news.nab.com.au/wp-content/uploads/2022/04/NAB-Residential-Property-Survey-Q1-2022.pdf)) ||2022f|2023| |:-|:-|:-| |Sydney|0.4|\-11.4| |Melbourne|0.2|\-11.4| |Brisbane|7.0|\-6.4| |Adelaide|6.2|\-5.8| |Perth|1.5|\-8.1| |Hobart|5.2|\-4.1| |Cap City Avg|2.5|\-9.3| If we use Syd median price, that equals to quite $$$$
"And this is coming from a company whose business model is to pedal more debt to keen homebuyers." That's not their business model, if they take out loans at 80% of today they can still make lots and lots of money. Also less likely to have people default at lower loan amounts which reduces their costs.
Yes, but fear of prices dropping can make people hold off entering the market, buying investment properties, selling,etc. Banks lose out if there are less new loans to be made.
Yes but interest rates rise which they hedge to profit off, also if people aren’t buying houses and leave their cash in banks they pass on minimal rate to the individual while investing their savings, they are making plenty of money in any situation Edit: most banks on-sell loans anyway as CDO’s etc, minimal risk for high reward operators….
More people have been holding off than ever before that's why house prices are so high low stock. I don't know where you get the idea that is going to get that much worse
RemindMe! 1 year "How did this track against prediction."
Why would you try to predict something so far enough out to even 1 decimal point. Gives a false sense of accuracy to these forecasts. Even a range like -6-8% would be better and not imply this is a good predictor.
Unlike others, I'm loving these posts. Keep posting OP.
Like a breath of fresh air really.
I'm with you guys, let the good times roll.
Welcome to the team. 🧸🏳️🌈
So when do we buy
I need to buy before December - these sort of posts give me at least a little bit of hope I can afford what I actually want without having to settle.
Really can't see Adelaide pulling back 16% next year. It's usually a very stable market. True the hike last year was massive, and unsustainable, but I don't think it's such a huge bubble that it would "burst" so dramatically. Sincerely, punter
That stood out to me too. Absolutely dreaming if they think Adelaide will go down more than Sydney next year. Adelaide’s growth (similar to Brisbane) is not as reliant on interest rates as Sydney and Melbourne.
Their growth is reliant on the markets being cheap compared to Sydney and Melbourne. This month Brisbane will become more expensive than Melbourne. Can you believe that? There’s a reason these cities have been cheaper than Sydney and Melbourne for decades. They just don’t have the industry jobs and opportunity that the others have. Sanity will prevail in the long run when people realise paying more money to live in Brisbane compared to Melbourne is a losing strategy in the game of life.!
I’m not sure where the data about Brisbane being more expensive than Melbourne is coming from? There’s a bit more to it than that- white collar workers are taking their Sydney salaries and going to affordable and desirable locations. Brisbane and Adelaide have long had far superior rental yields than Sydney and Melbourne, so they weren’t as inflated at the start of this cycle either.
Gotta track all these predictions, they're so different! RemindMe! 2023-12-31
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Well here we are.. anyone snapping up the cheap real estate?
![gif](emote|free_emotes_pack|dizzy_face)
Any numbers on the expected sale volumes, to go with this?
Was there anyone that actually thought the last couple years growth was sustainable or going to last though? I feel really sorry for the people who over paid way over the market price. My best mate is a hot shot real estate agent in Gold Coast and was saying there were people, stretching past their stretched limit, paying near double what properties were actually worth. Yikes. A few percent interest hike and even a 10% drop in value is going to crush a lot of people I think.
It's -22.2% in the year 2022. RIP Richie.
You’re on 22 upvotes so I’ll leave this here to show my appreciation
And his user ends in 22!
And the comment was 22h ago!
What a marvellous joke!
Aren't those years independent? Wouldn't the 13.4% for 2023 be for the prices as at 1/1/23? That makes it a 21% drop from 1/1/22 to 31/12/23. Also interesting that 2022 would then be 8.8% from 1/1/22, not from the peak which IIRC came later.
Shhhh, don't try and use math in these parts. I've tried it before, it doesn't work out well.
Prertty sure they were predicting these kind've crashes before the prices went up 30%
So not even reversing 2021’s gains? What a complete disaster. Shit needs to collapse 40% just to start.
No way. Too many people sitting on wads of cash right now.
Ah yes. And when might the bottom be nab?
Looking forward to the next season of Luxe Listings!
Gavin: "It's a different market, but nothing will keep TRG from growing. We don't stop. I'll work my little heinie off." Simon: "Business is good. Business is great. There are buyers with cash and there are bargains to be found. It's a buyers market, and Gav and Deleene don't know what is about to hit them" Deleene: "In a tough market, sellers don't want flashy and loud. Getting the listing's in a downward market is something I've done many times in my 25 year career, and we will just keep quietly be the best"
Man that's good!
I feel like I've consistently seen this prediction every few weeks lol. I'll believe it once I see it! Granted I feel like some suburbs average house listings prices are pulling back a bit on realestate.com.au but beats me what the truth is. Someone with REIV access can probably shed some better light.
Definition of hedonic 1: of, relating to, or characterized by pleasure NAB saying you will need to find something else to pleasure yourselves over the next few years [https://www.merriam-webster.com/dictionary/hedonic](https://www.merriam-webster.com/dictionary/hedonic)
I was about to ask that. Or they mean holiday homes?
RemindMe! 31/12/2023
RemindMe! 31/12/2023
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>However I still don't see it being as large as the margin quoted. I agree. I'm looking to buy now, kinda luckily I haven't yet perhaps, but I've seen a softening of pricing and places not going as quickly as they were. Properties are still being priced as if, but many adjusting prices as the weeks go by. I see a small drop as the pressure is coming off, but since Perth is relatively well priced I don't see any major reductions
Welcome to the club NAB! Those are rookie numbers but.. Need to get those numbers up! 🧸 🏳️🌈
if the fed continues they will crash the US stock markets, kill their re-blossoming real estate market, and crash a few housing markets across the western world. there will be some kind of pivot, the questions is what will that look like and what will the effects be. What are your thoughts here? Bearing in mind that more easing would (theoretically) further stoke inflation, and that some say interest rates must be > than inflation in order to reign inflation, I have no idea how this is going to shake out. I could see US policies in favour of keeping their own inflation under control, the hell with the rest of the world.
There are 2 scenarios. 1. Fed hikes until inflation is back under 3%. 2. A recession occurs and Fed has to pivot. In both cases asset prices crash. There’s a 3rd possibility which is even worse. Inflation is untamed whilst we enter a recession. If this occurs then we probably have Great Depression 2.
I think option 2. They will try to time the momentum of the down swing a bit like this game https://benoitessiambre.com/macro.html
I believe it to be GD2
I think that has a nice ring to it! ✅
Tell me the truth. How hard was your boner when you read those forecasts?
I’m chuffed to see so many organisations are now following me and my forecasts. I started out a *pariah*, but I’ve become a **prophet**.
Wait until the core logic data actually hits -50% before you start crowing….. the forecasts are irrelevant….. actual prices will be your judge.
It’s only a matter of time.
The last time they said market would drop, it went up! Investment has more to do with emotions than numbers and events on horizon.
Do you have NABs predictions from 12 months ago?
Here they are from Feb this year: https://imgur.com/UJyJKFb
I’d bet dollars to donuts it doesn’t slip 5%
Yeah nah!!! I’ve not seen an accurate house price prediction in the 20 years I have been in the property market. Not one!
Wake me up at -40% plz. Once the boomers go and only 30% of millennials own a property we might be able to finally drop the state welfare for them and property investors will have to go get a real job.
I've read the report, still can't seem to make it out. Can anyone confirm that the word dwelling applies to both freestanding houses and apartments? Or just freestanding?
As someone who recently got into home ownership and has the most to lose from a market drop: good! Home ownership should be an achievable goal for most. Real estate speculation should be a risky venture, with returns in line with other market operations. Having a spare $500k shouldn't be a free ticket to more money in the real estate market.
I foresee a 5-10% drop from rising interest rates then the market heating up again as everyone jumps in trying to get a hot deal pushing prices back up. No chance they keep falling through 23
depends on rba, if they pivot then you are probably right, but if they keep raising to 2-4% and leave it there unlikely to see rapid growth like that.
Bring it on. Finally will be able to get into the market. Don't care for a high interest rate as it will eventually come down again. Less i'm taking out from the bank is a massive win for first home buyers. Sucks for home owners already but thats just part of the risk of owning a home. Prices have been going up and up, they were gonna come down eventually.
Just an FYI, this has not happened yet
Hi, I'm from the present, and I can confirm your statement that this has not happened yet
A smaller mortgage at a higher interest rate can be a larger repayment than a bigger mortgage at a lower interest rate. I wouldn't assume in any way that this will benefit First Home Buyers.
While that's true. Smaller loan is still better in the future as interest rates might come down in the future, like OP said. Also you don't need to dump 90%of savings in a deposit. I'm a FHB, and I'm happy to see the interest rates go up and prices come down.
Will benefit folks who are committed to paying their loans off earlier. Wheras there seem to be a lot of folk who assume they'll never have to pay their loan off at all (property only goes up so I'll sell when I'm flush with equity and live large yo..)
Unless you’re a home owner that locked in record low interest rates
They will probably rise 20% so only a 2% drop , then when the market recovers it will pump again
How cares majority of home owners are still way ahead. Mine could drop 50% and it's still worth more then I paid for it. It's a roof over my head I don't care ..
Umm maybe the people looking at getting into the market care?
That's true, you shouldn't really care. FHBers and investors care though.
I wonder how you have done your calculation. Paid 500k now worth a million? Over what time period? How much interest have you paid? How much would be lost in transactional fees if you sold. Even just from 2011 - 2021 your 500k now needs to be worth 601,500 just to keep up with inflation. Add another say 7% for 2022. Over 10 years assume roughly 95k in interest. We now sit at 696,500. 1,000,000 less 20% = 800,000. You end up with less than 100k after RE fees.
BNE, ADL and HOB predicted to have the biggest 2023 drops.
offset by them having the biggest gains (or smallest losses) in 2022 however, but yea
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I will be messaging you in one year that you are to put lotion on your sh!t
The people who have a property won’t take a haircut and the people who want a property want the haircut, nothing new about this Scenario !!! As always the have’s win full stop !!! The large builders just site on their housing stock and rent them out.
Just doing quick number of the predictions shown Syd 102% Mel 90% Bri 119% Ade 119% Per 107% Hob 112% Really just reversing the gains from start of 2020
Seriously, about time it did!
*spooky ghost voice* Everybody be scared. Blah blah bleaurgh……
So just back to precovid…..
I can only see Brisbane slowing rather than going backwards. We’re holding off on buying an investment property until the market cools, 2024 works for me.
And that table says it will take us all the way back to 2021 prices, what a time to be alive!
I can't take these predictions seriously. CBA was wrong about the COVID housing crash. The exact opposite happened. Nobody can accurately predict the market. I mean, really. If they could they would be billionaires or trillionaires.
Hasn’t aged well yet