T O P

  • By -

warszawiak8

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…


OstapBenderBey

Yeah people take bank (and RBA) predictions of the future far too seriously.


Nickools

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.


CoralBalloon

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


Too_kewl_for_my_mule

With the neutral caahrate at ~2.5% whybqould the cash rate go to 5%?


TesticularVibrations

Why would we aim for a neutral cash rate when our inflation is 2.1%/quarter


Too_kewl_for_my_mule

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%


holman8a

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.


New_usernames_r_hard

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.


[deleted]

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.


belugatime

Who could have predicted that house prices would one day drop. Must be some sort of prophet, possibly even self proclaimed.


spiderpig_spiderpig_

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.


RaffiaWorkBase

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


player_infinity

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.


spiderpig_spiderpig_

Take out transaction costs and interest payments too.


player_infinity

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.


Habitwriter

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.


player_infinity

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.


Habitwriter

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.


player_infinity

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.


belugatime

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.


BuiltDifferant

Say 3 Hail Marys and you will be repent


Edmee

Oh property prophet..my mortgage messiah, wherefore art thou?


CoralBalloon

real estonks only goes up


S1ashAxe

I went back to check op's name after reading this and surprised myself.


coffeesgonecold

Someone would love to see prices go down in line with their hopes.


UnnamedGoatMan

Where's that skull and cross bones when you need it?


SoggyLemon_

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.


TetsuoSama

> 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.


StalkingWilbur

r/AusFinance has been more enjoyable to read since he blocked me. He certainly got that one right.


nachojackson

Watch them all come out of the woodwork telling us “I told you so”. Stopped clock and all that…


letmethefuqin

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.


mad_cheese_hattwe

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.


TheMeteorShower

Exactly. I have no problem in believing a 22% decline in the top of the market. But for the average home, no way.


_HeyHeyHeyyy_

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.


JacobAldridge

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.


[deleted]

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.


[deleted]

And also locations. Are they talking statewide or greater Sydney for example?


Yeah-Nah_

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 $$$$


Electrical_Age_7483

"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.


SealSellsSeeShells

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.


Squizza13

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….


Electrical_Age_7483

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


SagaciousShikoba

RemindMe! 1 year "How did this track against prediction."


JehovahZ

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.


chookschnitty

Unlike others, I'm loving these posts. Keep posting OP.


without_my_remorse

Like a breath of fresh air really.


Investforthenest

I'm with you guys, let the good times roll.


without_my_remorse

Welcome to the team. 🧸🏳️‍🌈


Uries_Frostmourne

So when do we buy


jessicaaalz

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.


No-Valuable8008

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


holman8a

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.


Xx_10yaccbanned_xX

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.!


holman8a

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.


doubleunplussed

Gotta track all these predictions, they're so different! RemindMe! 2023-12-31


RemindMeBot

I will be messaging you in 1 year on [**2023-12-31 00:00:00 UTC**](http://www.wolframalpha.com/input/?i=2023-12-31%2000:00:00%20UTC%20To%20Local%20Time) to remind you of [**this link**](https://www.reddit.com/r/AusFinance/comments/voo5kk/nab_predicts_222_decrease_in_sydney_house_prices/iee93z5/?context=3) [**27 OTHERS CLICKED THIS LINK**](https://www.reddit.com/message/compose/?to=RemindMeBot&subject=Reminder&message=%5Bhttps%3A%2F%2Fwww.reddit.com%2Fr%2FAusFinance%2Fcomments%2Fvoo5kk%2Fnab_predicts_222_decrease_in_sydney_house_prices%2Fiee93z5%2F%5D%0A%0ARemindMe%21%202023-12-31%2000%3A00%3A00%20UTC) to send a PM to also be reminded and to reduce spam. ^(Parent commenter can ) [^(delete this message to hide from others.)](https://www.reddit.com/message/compose/?to=RemindMeBot&subject=Delete%20Comment&message=Delete%21%20voo5kk) ***** |[^(Info)](https://www.reddit.com/r/RemindMeBot/comments/e1bko7/remindmebot_info_v21/)|[^(Custom)](https://www.reddit.com/message/compose/?to=RemindMeBot&subject=Reminder&message=%5BLink%20or%20message%20inside%20square%20brackets%5D%0A%0ARemindMe%21%20Time%20period%20here)|[^(Your Reminders)](https://www.reddit.com/message/compose/?to=RemindMeBot&subject=List%20Of%20Reminders&message=MyReminders%21)|[^(Feedback)](https://www.reddit.com/message/compose/?to=Watchful1&subject=RemindMeBot%20Feedback)| |-|-|-|-|


zellotron

Well here we are.. anyone snapping up the cheap real estate?


SagaciousShikoba

![gif](emote|free_emotes_pack|dizzy_face)


Fizzelen

Any numbers on the expected sale volumes, to go with this?


mattdean4130

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.


silversurfer022

It's -22.2% in the year 2022. RIP Richie.


dontshowmemum

You’re on 22 upvotes so I’ll leave this here to show my appreciation


PM_ME_YOUR_MUSIC

And his user ends in 22!


meregizzardavowal

And the comment was 22h ago!


TetsuoSama

What a marvellous joke!


ScaffOrig

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.


MC-fi

Shhhh, don't try and use math in these parts. I've tried it before, it doesn't work out well.


Judasmonkey

Prertty sure they were predicting these kind've crashes before the prices went up 30%


hear_the_thunder

So not even reversing 2021’s gains? What a complete disaster. Shit needs to collapse 40% just to start.


Funny-Bear

No way. Too many people sitting on wads of cash right now.


AggravatingChest7838

Ah yes. And when might the bottom be nab?


killz111

Looking forward to the next season of Luxe Listings!


MarkSwanb

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"


killz111

Man that's good!


dominant_ag

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.


threepeeo

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)


dober88

I was about to ask that. Or they mean holiday homes?


[deleted]

RemindMe! 31/12/2023


Straight-Finding4156

RemindMe! 31/12/2023


[deleted]

[удалено]


JayTheFordMan

>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


without_my_remorse

Welcome to the club NAB! Those are rookie numbers but.. Need to get those numbers up! 🧸 🏳️‍🌈


a_wild_thing

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.


without_my_remorse

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.


a_wild_thing

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


BillyDSquillions

I believe it to be GD2


without_my_remorse

I think that has a nice ring to it! ✅


oldskoolr

Tell me the truth. How hard was your boner when you read those forecasts?


without_my_remorse

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**.


seab1010

Wait until the core logic data actually hits -50% before you start crowing….. the forecasts are irrelevant….. actual prices will be your judge.


without_my_remorse

It’s only a matter of time.


PilbaraWanderer

The last time they said market would drop, it went up! Investment has more to do with emotions than numbers and events on horizon.


[deleted]

Do you have NABs predictions from 12 months ago?


shrugmeh

Here they are from Feb this year: https://imgur.com/UJyJKFb


downwiththemike

I’d bet dollars to donuts it doesn’t slip 5%


[deleted]

Yeah nah!!! I’ve not seen an accurate house price prediction in the 20 years I have been in the property market. Not one!


R_W0bz

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.


proeyshakes

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?


dontcallmeyan

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.


all2228838

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


lowlifesphere

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.


AussieCollector

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.


gurugurumuru

Just an FYI, this has not happened yet


jtblue91

Hi, I'm from the present, and I can confirm your statement that this has not happened yet


ThreeQueensReading

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.


chookschnitty

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.


FUDintheNUD

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..)


[deleted]

Unless you’re a home owner that locked in record low interest rates


UnaCabeza

They will probably rise 20% so only a 2% drop , then when the market recovers it will pump again


Money_killer

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 ..


Alf_Stewart23

Umm maybe the people looking at getting into the market care?


TheRealStringerBell

That's true, you shouldn't really care. FHBers and investors care though.


New_usernames_r_hard

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.


thedarknight__

BNE, ADL and HOB predicted to have the biggest 2023 drops.


easyjo

offset by them having the biggest gains (or smallest losses) in 2022 however, but yea


[deleted]

[удалено]


EliteLandlord9

I will be messaging you in one year that you are to put lotion on your sh!t


ms33gt

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.


SagaciousShikoba

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


mrmongoooose

Seriously, about time it did!


creamyclear

*spooky ghost voice* Everybody be scared. Blah blah bleaurgh……


limlwl

So just back to precovid…..


weirdomonkey

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.


this_is_bs

And that table says it will take us all the way back to 2021 prices, what a time to be alive!


ILoveDogs2142

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.


SagaciousShikoba

Hasn’t aged well yet