House prices

Blowin's picture
Blowin started the topic in Friday, 9 Dec 2016 at 10:27am

House prices - going to go up , down or sideways ?

Opinions and anecdotal stories if you could.

Cheers

Hutchy 19's picture
Hutchy 19's picture
Hutchy 19 Tuesday, 21 Sep 2021 at 2:30pm

Roadkill - you need to be clearer for me when writing comments . You wrote " Print us$300 billion and cover the
debt ". You are often wrong so I just assumed you need correcting again . Sorry .

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Roadkill Thursday, 23 Sep 2021 at 8:55am
udo wrote:

https://www.abc.net.au/news/2021-09-23/gold-coast-property-market-still-...

It is staggering how fast houses are selling and values rising…I was reading the other day average prices have risen $19k per week for a few weeks. Great for us that own. No complaints here. And, lots more increases to come.

sypkan's picture
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sypkan Thursday, 23 Sep 2021 at 9:41am

yep, sussed you right out...

typical goodguy boomer (in mind), loaded up, locked the gate, endless lockdowns, government cash, no problem... bill generations to come...

and everyone else is selfish!

some people... unbelievable...

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mikehunt207 Thursday, 23 Sep 2021 at 9:49am

Not everybody who owns or is paying off their house is a boomer skypan, some of us just go to work and or got lucky. It doesnt matter what your house / property is worth unless you are going to sell it and then replacement will be more unless downsizing , sucking money out of your mortgage due to the equity is a mugs game too. Vicious circle

sypkan's picture
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sypkan Thursday, 23 Sep 2021 at 10:25am

I know that mikehunt

and I know not every boomer is keyunt

but well before corona came along, it was widely accepted that boomers have rode a wave of wealth in the development of this country that we'll never ever see again... can't blame em for that...

but we can blame em for the lock the gate mentality that followed, that preserves all that wealth and winfalls and makes it near impossible for following generations to get a foot in the market...

think economic rationalism, ending free education, multiple properties, negative gearing in all its forms... trusts etc.

then came corona... and all the cards are thrown in the air...

but the one thing that remains, is a whole heap of rules and winfalls that preserve the positions of boomers...

and, their condescending self serving attitude looking down on all those that follow...

government cash splash, job keeper, job seeker, endless lockdowns, locked in country etc. ...all that 'economic rationalism' thrown out the window... for a pipedream, and some dodgy statistics...

and who's paying?

generations to come... two of em at least...

but anyone that questions this madness is 'selfish'

its madness alright, the whole situation...

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sypkan Thursday, 23 Sep 2021 at 10:29am

and fwiw, I have property, all paid for...

from working bloody hard, ...and a stroke of luck.. I got in, just in time...

I'm not half as bitter as I appear

in fact, Im not bitter at all, ...Im killing it, relatively...

I just cannot handle the judgements and condescending attitudes coming from some people, as they preserve their privelaged positions, at enormous costs to others

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sypkan Thursday, 23 Sep 2021 at 10:36am

"Soaring property prices are forcing people all over the world to abandon all hope of owning a home. The fallout is shaking governments of all political persuasions.

It’s a phenomenon given wings by the pandemic."

and we should be asking how and why that is even possible?

simba's picture
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simba Thursday, 23 Sep 2021 at 1:53pm

They need to end negative gearing........

donweather's picture
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donweather Thursday, 23 Sep 2021 at 4:08pm
simba wrote:

They need to end negative gearing........

And fck off the 50% capital gains saving for investors. Or at least have a sliding scale. These investment properties that are making like $1m+ in the last 5 -7yrs should be slung for full capital gains tax.

Hutchy 19's picture
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Hutchy 19 Thursday, 23 Sep 2021 at 4:37pm

It is not just properties that have the 50% capital gains tax rule if held for 12 months Don . Same with negative gearing . Making major changes to taxation treatment can have major unintended consequences .

Not sure any government will put in danger Australians most important asset . The home they live in .

donweather's picture
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donweather Thursday, 23 Sep 2021 at 5:21pm
Hutchy 19 wrote:

It is not just properties that have the 50% capital gains tax rule if held for 12 months Don . Same with negative gearing . Making major changes to taxation treatment can have major unintended consequences .

Not sure any government will put in danger Australians most important asset . The home they live in .

I know it;'s just not property re the capital gains tax discount. My point is what other investments have gone from $400k to $1.7m in 7-8 years, and enabled an investor to pocket $600k tax free, remembering this "investor" has done pretty much fck all to the property during that time.

I didn't say the "family home", I said investment properties. They're two very different taxation strategies IMO.

And here in lies the major dilemma. Elect a ballsy gov who can see what these negative gearing and tax savings are doing to property prices and hence this ballsy gov will implement major changes to taxation reform on investment properties for the long term future of Australians!!! Or keep the status quo weak as piss government who recognises that our major economy is propped up by a housing ponzi scheme!!!

Blowin's picture
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Blowin Thursday, 23 Sep 2021 at 5:59pm

$400K to $1.7M?

Just found out that a house a few away from mine just sold to Sydney buyers for $3M. Apparently it last sold for $520K in 2014.

Totally normal and sustainable.

Hutchy 19's picture
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Hutchy 19 Thursday, 23 Sep 2021 at 6:20pm

I know you said that Don . My point was that doing a major change on investment properties will have a affect on all homes . That is why you want negative gearing abolished , to reduce home prices .

The old adage comes to mind " be careful of what you wish for " . I think it was abolished in Oz but was quickly brought back in due to unintended consequences . I don't have an investment property or a holiday home so it doesn't affect me . I also am uncomfortable with anyone owning 10's of properties but maybe I am envious .

If implementing in your idea does reduce property prices it could also reduce them substantially . It would then reduce many Australians wealth as most of it is in their homes . No government would be dumb enough to kill the golden goose . I hope !

As I said it would also affect all other investments .

Better to look at other solutions imo . We are not short on land in Australia . State governments have heaps . Same with Federal . Covid is making many people consider moving out of cities and our urbanisation level may drop as people work more from home . Density levels should also increase as not everyone wants a big backyard and as our population ages . Interest rates will probably go up .

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JQ Thursday, 23 Sep 2021 at 6:21pm

Will Australians be forced to eat their veggies eventually and cop a crash in house prices. Certainly feels as though the 'value' of houses and property has been so intensely propped up, surely cannot continue indefinitely.

I think continually propping it up only makes the eventual crash much worse.

etarip's picture
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etarip Thursday, 23 Sep 2021 at 7:04pm

Wealth is relative though, right? So if the market crashes (corrects) then that’s consistent across the board. The fact that you’re not a millionaire anymore doesn’t matter if your neighbour isn’t either.

Or maybe I’m a simpleton.

Roadkill's picture
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Roadkill Thursday, 23 Sep 2021 at 7:13pm
etarip wrote:

Wealth is relative though, right? So if the market crashes (corrects) then that’s consistent across the board. The fact that you’re not a millionaire anymore doesn’t matter if your neighbour isn’t either.

Or maybe I’m a simpleton.

No, you’re 100% correct.

Blowin's picture
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Blowin Thursday, 23 Sep 2021 at 8:01pm

Pretty sure the average Australian mortgage of $750K doesn’t go down to $350K if the price of the house drops by 50% though.

AndyM's picture
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AndyM Thursday, 23 Sep 2021 at 8:07pm

They'll still be able to pay it off.

Craig's picture
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Craig Thursday, 23 Sep 2021 at 8:07pm

Yep, and wow Blowin re the house down the street. Crazy shit!

Roadkill's picture
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Roadkill Thursday, 23 Sep 2021 at 8:28pm

No one should take out a mortgage if they can’t afford to service it, even if the value of the property drops.

Blowin's picture
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Blowin Thursday, 23 Sep 2021 at 8:35pm

I think that maybe it works like this :

House prices tank. Investors flee. Home building industry dries up. Employment contracts. No wealth effect. Non essential spending plummets. Shops close. More unemployment. Mortgages don’t get paid. Repeat until construction, retail , hospitality …..basically everyone is seeing less money through the door.

Everyone except cash converters and bottle shops.

sypkan's picture
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sypkan Thursday, 23 Sep 2021 at 9:03pm

Im sorry, but i think it's grown beyond cries to 'stop negative gearing'

sorry zerohedge haters ...but we are talking money...

I can't claim to understand half of this article, but I'm good with pictures.... and this shit is not normal...

look at these graphs

"...Instead, we live in a dystopian world of engineered markets, centralized economies and dis-information in which extreme money creation by 5 central banks have increased their balance sheets by 12X like this"

"…leading to un-natural (i.e., “accommodated”) credit markets in which sovereign bonds offer negative (and technically defaulting) yields like this"

"…which makes the cost of debt free for a select minority, allowing corporations and their grossly advantaged and over-paid executives to live (and bloat) off their own stock buy-backs at levels this,"

"…which directly results in central-bank-created risk asset bubbles like this"

"…in which greater than 86% of that market wealth is enjoyed by just the top 10% of the population, leading to wealth disparity at record levels like this"

ignore the following chunk of social commentary if you must...

then more economics commentary and graph...

"...Unknown to many in those angry crowds gathering around Robert E. Lee or Dr Seuss, for example, the Atlanta Fed just cut its q3 GDP forecast by 50% in matter of days."

"Debt to GDP: The New Distortion

After all, one way to address the appalling 135% debt to GDP ratio in the U.S.  is to simply reduce the productivity component rather than debt component of the ratio, akin to telling a man with only one arm that his shirts will fit better if we remove the remaining arm...."

"Another Fed Two-Step

Back in August (8/27), for example, Atlanta Fed President, Raphael Bostic, bravely declared: “Let’s start the taper and let’s do it quickly.”

But fast forward just a few days to September 2, and that same Fed President, like so many other fork-tongued masters of doublespeak within the FOMC, back peddled with fabulous elan, declaring instead that “we’re going to let the economy continue to run until we see signs of inflation.”

The amount of “duplicitous dumb” within this single sentence defies both belief and this report’s word count, but for simplicity’s sake, and despite “signs of inflation” literally everywhere, Bostic’s latest semantic two-step translates to this: Don’t expect a “taper” of the free money spigot anytime soon..."

https://www.zerohedge.com/markets/nothing-real-visual-journey-through-ma...

none of this can possibly be normal or sustainable...

I know oz is different, but it seems we're all flying high in the twilight zone

sypkan's picture
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sypkan Thursday, 23 Sep 2021 at 9:33pm

combined with this indulgence in miserableness...

https://www.zerohedge.com/geopolitical/whats-really-behind-war-home-owne...

and every two bit 'investor' also wanting in on a slice of the pie...

whatever happens... be it a correcting or a correction... it seems it's too late to avert some form of impending doom...

bonza's picture
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bonza Thursday, 23 Sep 2021 at 10:00pm
Roadkill wrote:

No one should take out a mortgage if they can’t afford to service it, even if the value of the property drops.

Why? And will the property price drop?
Everyone is else doing it. And making big bucks.

Anyways it’s not the repayment fee now it’s the deposit.. Beg steal borrow. Get the deposit. Get the deal. Government will look after you after that. So will the banks. Coz that’s what they have been doing.

donweather's picture
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donweather Friday, 24 Sep 2021 at 7:21am
etarip wrote:

Wealth is relative though, right? So if the market crashes (corrects) then that’s consistent across the board. The fact that you’re not a millionaire anymore doesn’t matter if your neighbour isn’t either.

Or maybe I’m a simpleton.

Brilliant point!! And honestly if house prices do come down surely that’s gotta be a good thing for everyone. Particularly our next generation who currently have no hope in hell of buying a house.

RBA starting to listen.

https://au.finance.yahoo.com/news/rba-mulls-stepping-in-as-property-pric...

donweather's picture
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donweather Friday, 24 Sep 2021 at 7:23am
Blowin wrote:

I think that maybe it works like this :

House prices tank. Investors flee. Home building industry dries up. Employment contracts. No wealth effect. Non essential spending plummets. Shops close. More unemployment. Mortgages don’t get paid. Repeat until construction, retail , hospitality …..basically everyone is seeing less money through the door.

Everyone except cash converters and bottle shops.

And that’s the problem when you let your countries economy be in all in one basket. A stupid Ponzi scheme basket.

freeride76's picture
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freeride76 Friday, 24 Sep 2021 at 7:44am
donweather wrote:
etarip wrote:

Wealth is relative though, right? So if the market crashes (corrects) then that’s consistent across the board. The fact that you’re not a millionaire anymore doesn’t matter if your neighbour isn’t either.

Or maybe I’m a simpleton.

Brilliant point!! And honestly if house prices do come down surely that’s gotta be a good thing for everyone. Particularly our next generation who currently have no hope in hell of buying a house.

RBA starting to listen.

https://au.finance.yahoo.com/news/rba-mulls-stepping-in-as-property-pric...

Only thing the RBA can do is make credit harder to obtain which makes it even harder for people to get into the market and advantages incumbents.

Basically, locking the gate and locking in gains.

Blowin's picture
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Blowin Friday, 24 Sep 2021 at 8:22am

If credit is harder to obtain the potential pool of buyers rapidly diminishes, heat comes out of the market and prices stabilise. Stabilised prices further reduces FOMO. Demand subsides and prices correct themselves.

Hutchy 19's picture
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Hutchy 19 Friday, 24 Sep 2021 at 8:26am

Don- "And that’s the problem when you let your countries economy be in all in one basket. A stupid Ponzi scheme basket."

You may be right but after 100 years and it happening all around the world the planet is locked into it .

Blowin is also right about the implications of reducing house prices . Check out the "Wealth Effect " .

Most homes are kept for a lifetime . A pensioner sells when they move into a nursing home with the deposit to enter usually more that 500k . This doesn't go down . A quick fall in house prices would be a disaster for this demographic .

freeride76's picture
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freeride76 Friday, 24 Sep 2021 at 8:32am

"Demand subsides and prices correct themselves"

as we found out when the Banking Royal Commission happened and credit was restricted it doesn't subside for long.
As soon as credit is relaxed again, demand comes raging back.

People don't stop wanting to own real estate.

Demand is the unacknowledged thing here: demand from Asia and Europe/UK is massive.

That ain't going anywhere, especially for East Coast real estate.

bonza's picture
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bonza Friday, 24 Sep 2021 at 8:35am

House prices double every 7 years in general - less during Covid. any pensioner who has kept their house over the years are likely millionaires - so any "correction" to the market will be loose change for this cohort. They are laughing.

The disaster is the youth and sub 40's who will never own a home of their own.

Hutchy 19's picture
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Hutchy 19 Friday, 24 Sep 2021 at 8:50am

You are right Bonza with the rate of increase about 10% on average . But pensioners don't have any loose change . They don't think they are millionaires either . Their homes don't bring in ANY income .

It costs them money to live in their home . Rates , insurance , repairs etc . Many do not have money for food or heating . Please give them a break .

You have proved time and time again that you don't think before commenting .

How is your Cane Toad idea progressing ?

donweather's picture
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donweather Friday, 24 Sep 2021 at 9:08am
Hutchy 19 wrote:

Don- "And that’s the problem when you let your countries economy be in all in one basket. A stupid Ponzi scheme basket."

You may be right but after 100 years and it happening all around the world the planet is locked into it .

Blowin is also right about the implications of reducing house prices . Check out the "Wealth Effect " .

Most homes are kept for a lifetime . A pensioner sells when they move into a nursing home with the deposit to enter usually more that 500k . This doesn't go down . A quick fall in house prices would be a disaster for this demographic .

Not sure about your area but around my area the median house price would be at least $800k now so I’m not sure the elderly demographic would be affected a great deal.

donweather's picture
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donweather Friday, 24 Sep 2021 at 9:10am
bonza wrote:

House prices double every 7 years in general - less during Covid. any pensioner who has kept their house over the years are likely millionaires - so any "correction" to the market will be loose change for this cohort. They are laughing.

The disaster is the youth and sub 40's who will never own a home of their own.

Agreed!!

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Hutchy 19 Friday, 24 Sep 2021 at 9:30am

Don - Disappointed that you are putting the boot into pensioners like Bonza and also are not thinking .

If a pensioner lives in their own home and it worth more they have to pay higher rates and insurance . They have to fund this from their pensions .

We are having extreme increases at the moment due in some part to extremely low interest rates . But over the last 50 plus years the 10% p/a over 10 years has been consistent . Rational people would realise that the increases we are seeing today are unsustainable . The rapid increases traps sellers ie sellers are scared to sell . This will build and when they all then see prices start to go down guess what ?

They all sell at the same time . This happens in ALL markets .

It has ALWAYS been hard for youth and sub 40's to buy a home .

Blowin's picture
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Blowin Friday, 24 Sep 2021 at 9:42am

Ring the bell top of the market.

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Blowin Friday, 24 Sep 2021 at 9:41am

The era of extend and pretend is rapidly approaching its use by date.

“CBA launched, then extended, its moratorium on foreclosures for homeowners impacted by COVID-19, which is due to expire in February next year. Mr Comyn said once the moratorium was lifted, he expected CBA would have to force sell up to 2,000 properties. “We anticipate, at some point next year, there will be some very difficult personal circumstances particularly in owner occupied.”

https://www.smh.com.au/business/banking-and-finance/cba-boss-increasingl...

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Hutchy 19 Friday, 24 Sep 2021 at 9:55am

Thanks Blowin - valuable information . The US moratorium will also stop .

A few of those 2000 properties will be owned by pensioners . This is just one bank ! Their families will not be able to support them due to Covid . Their pensions will be at risk due to the assets test . They won't be able to live off the money as interest rates are so low . Many may HAVE to invest in shares for the first time when markets are at high valuations already .

So much can go wrong !

freeride76's picture
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freeride76 Friday, 24 Sep 2021 at 9:56am

Pensioners won't be part of mortgage moratoriums.

they paid off their houses decades ago.

Very much doubt anyone forced to sell will have to sell "underwater" ie at less than they paid for it.

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Hutchy 19 Friday, 24 Sep 2021 at 11:53am

I think you are right 76 . Used it to point out what happens when a pensioner does have to sell .

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Blowin Friday, 24 Sep 2021 at 12:05pm

Where do you get that idea, Freeride? Because you’ve never seen it before?

What of the SMH’s resident economist Jessica Irvine as an example: She bought her first house about 18 months ago ( owner occupier ) after barely scraping together the minimum deposit. The bank recently informed her that her house had appreciated in value by $300K since then, so she used the equity to borrow against and bought an investment property.

So when interest rates rise just a little bit and the mortgage moratorium expires, we will have literally thousands of Jessica Irvine’s suddenly underwater and looking to offload the properties upon which they can no longer service the mortgages. The snowball up comes snowballing back down.

When the market becomes flooded with ever cheaper properties, investors lower rents to compete for tenants. Plus the declining economic conditions see more unemployment and less ability to pay extortionate rents. Rents drop below the ability to repay mortgage obligations and investment properties get sold, when the investment property is sold for less than the mortgage on the property then the difference is taken from the collateral. Unfortunately the only way to extract the collateral from Jessica Irvine’s owner occupier home is to sell it.

It’ll be a contagion. I’ve watched this go down in WA mining towns many, many times and I personally know many people who’ve had to sell houses they bought for $1M for less than $300K. Sometimes a lot less….if they can sell it.

It pays to remember that one of Australia’s largest lenders is the Bank of Mum and Dad. These pensioners have used the inflated equity in their homes to lend their kids hundreds of thousands of dollars. When the kids can no longer service their loans, the banks come to collect the collateral from Mum and Dad’s house. Mum and Dad have to sell as they are cash poor and the snowball gets bigger and bigger destroying everything it’s path.

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Blowin Friday, 24 Sep 2021 at 12:03pm

“Very much doubt anyone forced to sell will have to sell "underwater" ie at less than they paid for it.“

Unfortunately I think this sentence sums up perfectly the suspension of disbelief which is a prerequisite for any Ponzi scheme to get momentum. You honestly think that current mortgages sizes are sustainable for average Australians as is let alone when the reality of the moment hits the ground with a huge thud?

https://www.smh.com.au/politics/federal/mortgage-stress-soars-as-rba-say...

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freeride76 Friday, 24 Sep 2021 at 12:04pm

She's already 300K up, plus whatever capital gain on her investment property, plus she has a job.

Plus the insane demand for East coast property.

Interesting to go back to page 1 on this thread and read the doomsayers.

There are SMH journos, not to mention Zerohedge etc etc who have literally built careers out of predicting a massive property market crash.

Meanwhile, in the real world.......median house prices anywhere near the coast......

Blowin's picture
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Blowin Friday, 24 Sep 2021 at 12:16pm

“Plus the insane demand for East coast property.“

Why do you insist on decoupling this idea from the concept of the Ponzi? It’s like claiming that the Dutch love of tulips which underpinned Tulip mania would never fade. Do you nor associate the incessant demand for property with the real estate Ponzi?

If you believe that North Coast NSW properties are doubling in value due to demand from Sydneysiders and Melbournites bailing from the city, how do you justify the 30% increases in Sydney and Melbourne property prices where populations are dropping?

Anyway mate, you know where I stand. I hereby officially claim that property prices are at the very apex, perhaps even a little bit past fundamental exuberance and what we are witnessing now is overshoot by late starters. It’s over.

The economy is about to tank, the $100B Covid stimulus has been distributed, superannuation withdrawals are already pumped into housing. No where left to go when interest rates start rising.

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donweather Friday, 24 Sep 2021 at 12:27pm
Hutchy 19 wrote:

Thanks Blowin - valuable information . The US moratorium will also stop .

A few of those 2000 properties will be owned by pensioners . This is just one bank ! Their families will not be able to support them due to Covid . Their pensions will be at risk due to the assets test . They won't be able to live off the money as interest rates are so low . Many may HAVE to invest in shares for the first time when markets are at high valuations already .

So much can go wrong !

Correct me if I’m wrong but the principal place of residence is not included in the pension assets test.

donweather's picture
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donweather Friday, 24 Sep 2021 at 12:33pm
Blowin wrote:

“Plus the insane demand for East coast property.“

Why do you insist on decoupling this idea from the concept of the Ponzi? It’s like claiming that the Dutch love of tulips which underpinned Tulip mania would never fade. Do you nor associate the incessant demand for property with the real estate Ponzi?

If you believe that North Coast NSW properties are doubling in value due to demand from Sydneysiders and Melbournites bailing from the city, how do you justify the 30% increases in Sydney and Melbourne property prices where populations are dropping?

Anyway mate, you know where I stand. I hereby officially claim that property prices are at the very apex, perhaps even a little bit past fundamental exuberance and what we are witnessing now is overshoot by late starters. It’s over.

The economy is about to tank, the $100B Covid stimulus has been distributed, superannuation withdrawals are already pumped into housing. No where left to go when interest rates start rising.

I’m hearing ya. But I do think the Aussie Gov will step in at some point and save the Ponzi scheme before it gets to this extreme you’re predicting. The government won’t be able to sit on its hands if it wants to protect the Aussie economy which is built solely around property equity.

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Hutchy 19 Friday, 24 Sep 2021 at 12:34pm

Blowin - always hard picking tops and bottoms ( he who picks bottoms gets dirty fingers ) . "The trend is your friend " until it isn't and then you change tact. Harry hindsight is often the best gauge .

WAY to early to write off our ( and the US economy ) . The fundamentals before the latest lockdowns were in fact too strong and I was worried interest rates would have to rise too quickly . Most Australians ( and Americans ) have built a war chest of savings during Covid .

The Central Banks will be VERY slow to raise rates ( although the BoE said last night they would do it soon due to inflation ) as they now the system will shit itself if they are aggressive .

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sheep shagger Friday, 24 Sep 2021 at 12:46pm

this gronk is a banker now.. last week it was a lawyer, racist and bigot.

Dolt