Australian House Price Growth

[Parley]

Certainly no prospect of rate rises for the foreseeable future.

Inflation and wage growth is very low and the RBA only raises rates when inflation is a problem in the economy.

Edited November 14, 2017 by Parley

[Guest263228]

4 hours ago, Parley said:

Certainly no prospect of rate rises for the foreseeable future.

Inflation and wage growth is very low and the RBA only raises rates when inflation is a problem in the economy.

The rate rise will not be advertised and afraid you cannot say no interest rise in the foreseeable future as certain. As I wrote , Australia borrows in US dollars. If the overseas interest rate goes up Australia will have little choice but to raise.

Actually if housing was still in the inflation equation, interest rates would have gone up some years ago. But then already mentioned that. The housing market is certainly a mile stone around the RBA's neck. But they must share a large part of the blame.

[northshorepom]

On 14/11/2017 at 01:47, ScottieGirl said:

For prices to drop there need to be significantly more sellers than buyers. Since most people don't like selling in a buyers market they need to be forced sales.  This would require some sort of crisis that preciptates rate rises or a rise in unemployment. Even if rates were to rise 0.5% that still only brings them back to where they were in 2016.  People who bought prior to that would cope unless they lost their jobs. It may be tough but they won't lose their homes

Changes to stamp duty and negative gearing will reduce the number of investors buying but again they won't sell up unless it becomes unprofitable.

I don't see prices falling dramatically in Sydney or Melbourne, 5% maybe but not 20%. 

I disagree in terms of needing forced sales- fewer buyers has the same effect and this is already very clearly happening in Sydney

Lots of the investor buyers have disappeared, at Sydney’s house prices and rents it doesn’t make much sense to buy to rent unless you are confident you are going to make good capital gains, and that’s a confidence thing. These people are not buying any more

A colleague is trying to sell his house in Leichhardt currently, it’s probably dropped about 10% off the peak of the market about 6 months ago. Went to auctio last week, no registered bidders, almost no interest, none on the day. It’s quite a nice place too but parking is a drag and buyers can afford to be picky

 

[bristolman]

It's absolute madness, the much flaunted 'Aussie dream is getting further and further out of reach. It wasnt like this as little as 20 years ago then the madness started. 

[starlight7]

We have a pathetic government who sit on their hands.  They really don't care about the young ones and future generations but they will pay the price, that is for sure. The country will become unstable as people look at the whacko politicians outside the mainstream.

[Cegor]

For those that are planning on buying in the Brisbane area...and I'm no expert....just be careful not to over pay.

I've been following for a few months the housing listings in and around the Brisbane area. I saw a house a few months back brand new and from the pictures looked really nice...it was listed for $529,900. I set up a notification on Domain properties. I then saw it a couple of months ago at $512,900. once again same house. Last night I saw it listed at $499,900! all in a span of 5 months give or take.

has anyone noticed such drop in prices in the Brisbane area? For affordability reasons that is the area we are hoping to move. anyone has any thoughts on this? 

We won't be buying a house any time soon but we want to be informed on what is going on in Oz for future reference. Obviously things do change but it is good to plan. 

[bristolman]

29 minutes ago, Cegor said:

For those that are planning on buying in the Brisbane area...and I'm no expert....just be careful not to over pay.

I've been following for a few months the housing listings in and around the Brisbane area. I saw a house a few months back brand new and from the pictures looked really nice...it was listed for $529,900. I set up a notification on Domain properties. I then saw it a couple of months ago at $512,900. once again same house. Last night I saw it listed at $499,900! all in a span of 5 months give or take.

has anyone noticed such drop in prices in the Brisbane area? For affordability reasons that is the area we are hoping to move. anyone has any thoughts on this? 

We won't be buying a house any time soon but we want to be informed on what is going on in Oz for future reference. Obviously things do change but it is good to plan. 

We bought our first house on the south side in Brisbane around 16 years ago, we paid $115,000 at a time you could buy a house in a half decent area under 100k, 5 1/2 years ago we sold it for $380,000 from memory and it sold since for more than $450,000. I see prices going up and up and it's why Australia has just about the worst housing affordability in the world. I don't see any signs of downward pressure on housing to be honest. 

[Cegor]

@bristolman perhaps the one one is doing down in price due to it being brand new and from a builder, no? or maybe there are hidden costs that will end up being the original price of $529,9k

just wondering.

I don't quite understand the auction process but I'm sure we have time to figure it out. I really don't like that sort of set up as it is truly a bidding war....crazy!

[Gbye grey sky]

7 hours ago, Cegor said:

For those that are planning on buying in the Brisbane area...and I'm no expert....just be careful not to over pay.

I've been following for a few months the housing listings in and around the Brisbane area. I saw a house a few months back brand new and from the pictures looked really nice...it was listed for $529,900. I set up a notification on Domain properties. I then saw it a couple of months ago at $512,900. once again same house. Last night I saw it listed at $499,900! all in a span of 5 months give or take.

has anyone noticed such drop in prices in the Brisbane area? For affordability reasons that is the area we are hoping to move. anyone has any thoughts on this? 

We won't be buying a house any time soon but we want to be informed on what is going on in Oz for future reference. Obviously things do change but it is good to plan. 

We have only been here for a couple of years but the amount of development in that time is absolutely staggering with plans for tens of thousands of new homes in the pipeline.

Quite where all these people are going to come from to own or rent these homes I cannot imagine but for this reason alone I would expect there are ‘bargains’ to be had now and in the next few years.  Premium properties including waterfront will probably be immune to falls but newer developments further out from the city and inland are surely going to be in oversupply.

[Gbye grey sky]

On 14/11/2017 at 14:43, Parley said:

Certainly no prospect of rate rises for the foreseeable future.

Inflation and wage growth is very low and the RBA only raises rates when inflation is a problem in the economy.

Whilst that is true a mortgage is normally a 25-30 year expense and most people would be crippled if their repayments doubled or tripled 5 to 10 years from now as it is rare that their earnings would have done so over this time span.  Low interest rates may be permanent of course but, if not, they are going to be providing a false sense of security.

[Guest263228]

1 hour ago, Gbye grey sky said:

Whilst that is true a mortgage is normally a 25-30 year expense and most people would be crippled if their repayments doubled or tripled 5 to 10 years from now as it is rare that their earnings would have done so over this time span.  Low interest rates may be permanent of course but, if not, they are going to be providing a false sense of security.

Nothing is permanent  but rising rates has certainly made the situation precarious. All too many of course, were sold loans ill equipped to manage, (some through deceitful means, others through brokers hassling for business) in times of a rate rise, which will come, a considerable number will find difficulty.

Thrown to the wolves comes into mind.

[CaptainR]

On 11/11/2017 at 19:40, KurtH said:

I guess the question is when to buy. House prices have stalled in Sydney now. My wife and I are looking to buy but don't feel like now is the time to invest. Frankly (sorry to those who have just bought) we are hoping for a fall in prices. 20% would be nice.

We are sat waiting for the same, terrible to be waiting on other people’s misfortune but it just feels like a correction might happen next year. 

[Parley]

I wouldn't think of buying a home to live in as an investment.

If you find a house you love I would go ahead and buy it. If you are going to live there for more than 10 years it won't make much difference in the long run the price you paid today.

It is also a risk waiting. The market has softened a bit but that doesn't mean a full on correction is going to happen.

It could be a stabilising period and then rise again.

Trying to time a market is always difficult. I've been waiting for the US Sharemarket to correct and it won't do it.

[Parley]

Further indications from the RBA that interest rates will be remaining low for a long time

http://www.theage.com.au/business/the-economy/reserve-bank-governor-philip-lowe-blames-employers-for-low-wage-growth-20171121-gzq126.html

Actaully by world standards, our rates have been higher than many countries so it really is a worldwide phenomenon too.

[Guest263228]

47 minutes ago, Parley said:

Further indications from the RBA that interest rates will be remaining low for a long time

http://www.theage.com.au/business/the-economy/reserve-bank-governor-philip-lowe-blames-employers-for-low-wage-growth-20171121-gzq126.html

Actaully by world standards, our rates have been higher than many countries so it really is a worldwide phenomenon too.

The RBA does not advertise a rate rise. They have in the past warned about the eventuality. Just a hint of a rise would further raise the Australian dollar, which is unwanted in many quarters.

[Guest263228]

2 minutes ago, Pura Vida said:

The RBA does not advertise a rate rise. They have in the past warned about the eventuality. Just a hint of a rise would further raise the Australian dollar, which is unwanted in many quarters.

While our rates are higher than many countries, they have created havoc within society due to the record low within the housing industry and economy longer term as well.

[Parley]

43 minutes ago, Pura Vida said:

While our rates are higher than many countries, they have created havoc within society due to the record low within the housing industry and economy longer term as well.

That is only one part of the economy.

Businesses are not doing well. Retail is very slow.

Wage growth and inflation (apart from housing) is low.

so the RBA will not raise rates only because of housing because it may further weaken the other parts of the economy.

[Guest263228]

8 hours ago, Parley said:

That is only one part of the economy.

Businesses are not doing well. Retail is very slow.

Wage growth and inflation (apart from housing) is low.

so the RBA will not raise rates only because of housing because it may further weaken the other parts of the economy.

Housing is a major part of the economy. Some 60% of banking loans is ties up in unproductive housing.  Obviously the banks have preferred to loan for over priced housing, with expectations that the government (tax payers) will ride to the rescue come a major crash. Small business on the other hand, a more risky proposition.

Hopefully an enquiry will be agreed on to look into banking, but won't hold my breath under Turnbull.

RBA has been dreadful as well to date. They should have stomped on the housing excess long ago, instead of perpetuating it. We are we are and must somehow attempt to find a way out.

An interest rate will certainly dampen housing. Not a bad place to start as Australia attempts to rebuild its economy. Not a bad idea to make the two main cities affordable for starters.

[alscotoz]

On 11/14/2017 at 15:43, Parley said:

Certainly no prospect of rate rises for the foreseeable future.

Inflation and wage growth is very low and the RBA only raises rates when inflation is a problem in the economy.

The RBA don't dictate what rates the banks set, as has been witnessed in the past. They will set the pace and given the 'major 4' don't really 'compete' with each other, the market doesn't control it either. Expect rate rises this year even if the RBA sit on their hands and do nothing. MP's will come out and throw out meaningless platitudes about the banks doing the right thing by the 'mums and dads' (how condescending' is that) and that people should go out and shop around. Shop around, my arse. It's a closed shop. My mortgages are not with one of the big 4 but i know my loan is 'underwritten' by Westpac, so in reality you are still in their clutches. Also the exit fees from mortgages are highly prohibitive and involve dealing with lawyers/conveyancers etc...who needs it? I don't, so I don't do it, too much hassle...yeah I know!

The bubble will burst and it will be messy. If you're one of those people (and there are thousands) who shouldn't have been given a mortgage and can't live with a 2-3% rise or end up with a property that is overcapitalised, that's a shame...but the banks/brokers did give you the money and we'll all pay...except for the banks, of course!

At least the Royal Commission will change things...

 

 

[Parley]

3 minutes ago, alscotoz said:

The RBA don't dictate what rates the banks set, as has been witnessed in the past. They will set the pace and given the 'major 4' don't really 'compete' with each other, the market doesn't control it either. Expect rate rises this year even if the RBA sit on their hands and do nothing. MP's will come out and throw out meaningless platitudes about the banks doing the right thing by the 'mums and dads' (how condescending' is that) and that people should go out and shop around. Shop around, my arse. It's a closed shop. My mortgages are not with one of the big 4 but i know my loan is 'underwritten' by Westpac, so in reality you are still in their clutches. Also the exit fees from mortgages are highly prohibitive and involve dealing with lawyers/conveyancers etc...who needs it? I don't, so I don't do it, too much hassle...yeah I know!

The bubble will burst and it will be messy. If you're one of those people (and there are thousands) who shouldn't have been given a mortgage and can't live with a 2-3% rise or end up with a property that is overcapitalised, that's a shame...but the banks/brokers did give you the money and we'll all pay...except for the banks, of course!

At least the Royal Commission will change things...

 

 

What makes you think the banks will put up rates this year if the RBA do nothing ?

They didn't last year, or the year before, or the year before, or the year before, or the year before, or the year before.

And no the Royal Commission will don nothing about how the bank's set their interest rates. There is nothing illegal or shonky about it.

 

Edited January 15, 2018 by Parley

[alscotoz]

3 minutes ago, Parley said:

What makes you think the banks will put up rates this year if the RBA do nothing ?

They didn't last year, or the year before, or the year before, or the year before, or the year before, or the year before.

 

random google search

http://www.abc.net.au/news/2017-07-17/interest-rates-four-reasons-why-rba-cannot-raise-them/8714010 (about a third of the way down...I experienced those hikes)

They also have form for not passing on cuts in full, because they don't have to...which is my point. 

I never said it was illegal or shonky, I was only responding to what I perceived to be your view that the RBA was the arbiter of whether interest rates rise (or fall) ergo, the banks will fall into line with their decisions.

My reference to the Royal Commission had nothing to do with the setting of interest rates, I fully understand that is not what it has been set up for. Actually if you could enlighten me as to why it has been set up, it would be appreciated.

 

Cheers

[Parley]

The Royal Commission has been set up due to politics.

Bill Shorten thinks he can get mileage by bashing the banks and the Liberal party.

Eventually he won.

It is unnecessary really because there is a regulator already who can act against the banks when needed.

There have been instances of the banks behaving badly, mainly the Commonwealth Bank but it is usually in areas like Financial Planning advice (rogue planners), not paying up on Insurance claims etc.

I don't believe the operation of Home Loan lending is a major issue for the Royal Commissio at all but we will see in time.

It will be a huge waste of money, but in the end the banks wanted it brought on after a continuous barrage of bank bashing by the Labor party and the likelihood that Labor will win the next election.

Edited January 15, 2018 by Parley