Real estate price - impact on immigrants

If you already own your own home and you have a small or 0 mortgage and you have no intention of moving or selling then it really doesn't matter what the prices do. Here where we are, house prices dropped about 4 years ago. They've been creeping back up the last couple of years. Mini dips have been happening all over the place in many areas.

Where I live it seems to be mainly Chinese people buying.

They have a lot of money and no problem spending well over a million for a house in Eastern Suburbs of Melbourne.

Good for me in a way as I already own my home, but how can you capitalise on the high value.

If I was 100% sure a correction was imminent I would consider selling and renting for a few years.

Although rents are quite high also around here.

....and I'm sure most people didn't see it coming. I'm not sure whether Sydney's a bubble or not. Everyone says prices can never drop because there's such a shortage of supply - but surely there has always been an even greater shortage of supply in London and Tokyo, and both those cities had bubbles that burst nevertheless.

A lot didn't for sure. As here greed overcame judgement. London was not the financial centre that it is today but indeed accommodation in the way of rentals have always been in short supply in the more desirable London Boroughs at least.

Sydney is interesting in what the government will allow to keep prices highly inflated. Fear is a powerful ingredient in the real estate market as well. Buy now or live in regret for ever type of thing. Overseas investment (as London in my time Arabs, later Russians now everybody with a few bob) contributes as well as ridiculous tax incentives in operation here in Australia. Not forgetting the population Ponzi scheme in operation.

I suspect it will be the secondary cities especially Perth that will be hit rather hard being a largely one track economy. Whatever real estate is at record levels of unaffordability in Australia it is just that nobody knows the catalyst that will prick the bubble but it most certainly will.

If you already own your own home and you have a small or 0 mortgage and you have no intention of moving or selling then it really doesn't matter what the prices do.

Very true, but these days life is so unpredictable, many people can't be so cast-iron sure they'll never sell.

Where I live it seems to be mainly Chinese people buying.

They have a lot of money and no problem spending well over a million for a house in Eastern Suburbs of Melbourne.

Good for me in a way as I already own my home, but how can you capitalise on the high value.

 

If I was 100% sure a correction was imminent I would consider selling and renting for a few years.

Although rents are quite high also around here.

That's why it is called speculation. Nobody is sure when the bubble will be pricked. A house like a painting may be valued at x amount but unless auctioned and deeds exchange hands the so said value is somewhat pointless.

I hope the recent admitting by government that abuse has indeed taken place by foreigners and more intense checks on the same buying property, not entitled to which has been long known, is not just wall papering over the issue and the matter is tackled with urgency. Quite possibly a big hope but would win kudos from me towards government.

The existing rules around foreign buyers need to be enforced.

I think most of the buyers are residents. Some may be overseas buying for a student. Not sure but I've been to quite a few auctions and usually Asians bidding, but that doesn't mean they are foreign of course. They probably live here but seem to have a lot of money.

The government can't do too much. It is the free market.

People who own homes are happy I expect.

If my house is worth a million I feel like I am wealthy. Whether I really am is a moot point, but it feels good.

If the bubble bursts and my house goes down to $700K I am not going to be happy at all am I ?

Very true, but these days life is so unpredictable, many people can't be so cast-iron sure they'll never sell.

Also true. With the unpredictable nature of work and what have you. But I agree with Que Sera,Sera in the sense that a house should be a place to be lived in and not as a tool for speculation and value increases should hopefully cover inflation plus a little extra. Take away the speculative motive and make property what it was intended for. A roof over the head and place to raise a family in.

I doubt it will happen, but wouldn't mind getting a bit closer in to somewhere like Camberwell, Canterbury, Hawthorn or Kew.

Too expensive though.

Unless I can sell out at the top of the market, and then buy back in after a large correction.

Hmm.

Also true. With the unpredictable nature of work and what have you. But I agree with Que Sera,Sera in the sense that a house should be a place to be lived in and not as a tool for speculation and value increases should hopefully cover inflation plus a little extra. Take away the speculative motive and make property what it was intended for. A roof over the head and place to raise a family in.

True, but I think that when house prices are high, you have to take these things into account. If you buy in an inflated market you're going to get stung when it falls, regardless of your intentions. In that situation you may be wiser to rent.

The existing rules around foreign buyers need to be enforced.

I think most of the buyers are residents. Some may be overseas buying for a student. Not sure but I've been to quite a few auctions and usually Asians bidding, but that doesn't mean they are foreign of course. They probably live here but seem to have a lot of money.

 

The government can't do too much. It is the free market.

 

People who own homes are happy I expect.

If my house is worth a million I feel like I am wealthy. Whether I really am is a moot point, but it feels good.

If the bubble bursts and my house goes down to $700K I am not going to be happy at all am I ?

A good 10% are foreign overseas buyers. There are a lot of tricks being employed in order to get around the rules. Easily done. Get family, friends clan members etc to purchase on one's behalf in order to get around the new house rulings. The industry knows this has been going on for ages. Little will to react though.

No one is talking about immigrant buyers or students. Although there is a ruling with regards the time a non resident student can hold on to the property once departing Australia. That needs enforcement as well. The government can do a lot. Nothing is free as someone always pays the cost. Besides a free market does not entail the regulations being ignored or got round with ease.

Of course those that own their homes see lightened dollar signs and care little about who buys what as a place like Sydney gets further out of reach of locals. They cover themselves with the flag and call themselves patriots and can't tolerate a word said out of place about Australia. Laughable. Or it would be if wasn't so serious.

I and many others would be delighted if Sydney takes a hit and prices return to a fair margin compared to earnings. Greed is far too entrenched in large sections of society to be beneficial. Why work when can flip real estate to one another and tell ourselves how wonderful we are?

True, but I think that when house prices are high, you have to take these things into account. If you buy in an inflated market you're going to get stung when it falls, regardless of your intentions. In that situation you may be wiser to rent.

Definitely. I live in hope of a major correction and a return to sanity. I am scared though it will be messy. Banks have far too much tied up in housing (some 60%) Let alone those heavily leveraged.

It's not really only in Australia though. In the UK, London sucks up people, as that's where a lot of jobs/careers are. Same in other countries. It's a global problem. California has the 5th largest economy in the world. If you don't work on the biggest city you have to work in the top 3 or 4. It's where many industries are based.

 

It's just globalisation/capitalism/the modern world. Major cities attract so many. In my line of work, it's where all the career potential is (like it or not).

 

For this reason it can only get more expensive to live on these major cities.

There comes a point though where the average worker can't afford to rent or buy in these cities and the quality of life is so bad that it's not worth living there. What's the point of living in a nice vibrant City with plenty to do if you are spending so much on rent and mortgage that you have to stop in every night?

If the banks hadn't increased the payback period from 10 years to 25 then house prices wouldn't have increased the way they did as the banks wouldn't have been able to lend as much and lock you into a longer payback period. Another thing that's had a massive affect is the low interest rates around the world, a lot of people get sucked in to thinking they are going to stay low and get a shock when they go up.

Property prices just can't keep going up and up. We've seen dips, GFC's before and they will surely come again. London and Sydney will probably see some of the biggest falls, as they've seen some of the biggest increases.

^^^ When we bought our house in Sydney in the 80's, the interest rate was 16%!!!

If you got on the ladder at the right time it sounds like a decent investment.

We bought a house near Stockport when we first got married in for 22,000 pounds in 1988. Spent the next couple of years working on it, new kitchen, bathroom. learned to plaster myself, rewired the whole house, looked great when we finished it and sold it in 1992 for 50,000. Paid for us to emigrate.

We bought our house here at the end of 92 for $132,000. It's now worth about $700,000+. All through luck. We didn't buy either place because we were looking to make money, we didn't have any thoughts about emigrating when we got married. We bought the house we have now because we loved the suburb we are in a still do. If we sell it won't make us any better off as we will still have to have somewhere to live and everything else has gone up by just as much.

It always looks daunting, buying a house. I had a friend who came out here cashed up. He had lived in London for years, done well career wise, had a semi detached house in Windsor which he sold for $1.4 mill, was sick of the rat race though and emigrated with his wife and 2 kids (3 now), brought the money over here and bought a house 2 mins walk from a glorious beach for cash. He then went on a buying spree with property thinking he couldn't go wrong. GFC came along and nearly wiped him out. He lost everything and just managed to hang onto the house he had. He know has a mortgage of over $2mill on a property that's worth about $900,000, still has a couple of properties he couldn't get rid of and is stuck with for the time being.

Don't get too greedy is my motto. I will be glad when we've paid off our mortgage, which won't be too long.:cool:

That's one of the reasons we're moving back to the UK. I love living in Sydney but we want to be comfortable in our retirement. To buy a nice house in a nice suburb would take up all our capital and leave nothing to live on! We could move to the outer 'burbs but I see no point - all that's nice about Sydney is to be found in the expensive areas, that's why they're expensive.

 

My attitude would be different, I'm sure, if I had kids. Outer West suburbs that seem soulless and isolated to me are probably different if your focus is on kids' activities and mothers' clubs.

 

It's important to remember that house prices in other cities (except Canberra) are noticeably lower so if you can find work elsewhere, the sums still add up.

If you are retiring though there are heaps of glorious places in Aus that have fantastic housing fairly cheap.

^^^ When we bought our house in Sydney in the 80's, the interest rate was 16%!!!

We must have bought there just after you because interest rates were around 17.5%. I remember a friend saying we were silly because prices were inflated and we would be caught out big time when the bubble burst. 30 years later there has been no significant downward trend and the country has been through lots of ups and downs during that time.

You're probably right. We seriously considered going to Hobart instead of going back to the UK. Houses are half the price of Sydney, even in Hobart.

If our house was in Sydney you would be looking at somewhere like Manly, with a 5 minute walk to the beach. How much would a 4 bed detached property on a fairly big corner block in a quiet street be worth there? Just had a quick look on realestate.com and the only equivalent property I could see was $1.7mill. All the others were auction.

If you are retiring though there are heaps of glorious places in Aus that have fantastic housing fairly cheap.

..................... and that's why we sold in Sydney and moved to Tasmania when we retired. I would have loved to have come here years ago but lack of employment put paid to that little dream. Couldn't get down here fast enough once we stopped working. I even love the weather here :wink:

If our house was in Sydney you would be looking at somewhere like Manly, with a 5 minute walk to the beach. How much would a 4 bed detached property on a fairly big corner block in a quiet street be worth there? Just had a quick look on realestate.com and the only equivalent property I could see was $1.7mill. All the others were auction.

Don't know about Manly, but I live in Coogee just up the road from the beach. Coogee is 7k from the city.

I can tell you that what you are looking for in Coogee will set you back mid to high $2m. So a minimum of $2.5m.

^^^^ Huge prices!!! I don't know how people afford them.

Viewpoint: The disappearing property ladder

http://www.bbc.co.uk/news/magazine-31762127

Viewpoint: The disappearing property ladder

http://www.bbc.co.uk/news/magazine-31762127

That's a bit like here then.

I have friends in The Netherlands and Germany who rent. They go on overseas trips regularly, have a very comfortable lifestyle but have no interest in buying their own home. They live in very nice apartments and the rent is cheap compared to here.

http://qz.com/167887/germany-has-one-of-the-worlds-lowest-homeownership-rates/

Viewpoint: The disappearing property ladder

http://www.bbc.co.uk/news/magazine-31762127

She talks as though just because the phrase didn't get mentioned in the Times it didn't exist.:laugh: I'm sure I heard my parents talking about the property ladder when I was young and I'm 61 now.

There are some interesting points in her article.

1. She says we aren't building enough new houses. Well there seems to be enough for rich people to buy as investments so they can rent out at extortionate rental prices. Everyone seems to be living somewhere and there are always a few houses stood empty, for whatever reason.

2. Ten years ago 59% of 25 to 34 year-olds owned their own home in England - now it's 36%. What are they doing instead? They're renting from private landlords - 21% were doing that 10 years ago, now it's 48%.

By owning their own home she means they had a massive mortgage that they would be paying off over the next 25 years. Maybe people just wised up, saw their friends having to stay in and live on beans on toast and thought they would quit like to go out every now and then.

In the early 1970s, New Zealand's Prime Minister Norman Kirk laid out a political philosophy which still resonates today. People, he said, don't want much. They want: "Someone to love, somewhere to live, somewhere to work and something to hope for."

That might ahve been true in 1970. These days people also want mobile phones, internet access so they can update their facebook page several times a day, flat screen TV's in every room and they want it now. So they just get it on credit, which wasn't around in the 70's either.:rolleyes:

She talks as though just because the phrase didn't get mentioned in the Times it didn't exist.:laugh: I'm sure I heard my parents talking about the property ladder when I was young and I'm 61 now.

Still young, mate.:yes:

Cheers, Bobj.

If you are retiring though there are heaps of glorious places in Aus that have fantastic housing fairly cheap.

Why do people assume that when you retire, you're going to be happy in a quiet little town? Not everyone wants to do nothing when they retire. I love some of the NSW coastal towns for a short visit, but I'd go stir crazy if I had to live there. I need social dance nights, museums, theatre, arts festivals, etc etc so it's a big city for me whatever age I am. So for me it's a case of finding a more affordable city with all those amenities, not a town.