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

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velocityjohnno Monday, 16 May 2022 at 4:21pm

Just out of interest folks, my cheapest block search (hey, we all have our hobbies) in WA has seen a whole lot listed in the 10K range in inland towns... seems to be by a govt agency? Looks to be 1/4 acre in some of the sizings. Important as private blocks in similar were from mid teens to mid 20s (sorry: those who listed before)

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freeride76 Monday, 16 May 2022 at 5:36pm

How far inland VJ?

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velocityjohnno Monday, 16 May 2022 at 5:55pm

Go to Real Estate FR, search WA, 'block of land', price low to high and goto map - I immediately went through them and sussed the distances. Still quite a way, closest I think were inland of Albany/Esperance/Walpole areas, and be prepared for a different experience of life compared to east coast country towns, but still...

For a bit more coin, found some around the midwest area (where my Ms family is)

Less chance of being flooded out compared to Northern rivers, but it does happen, as it did in Moora from memory..

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san Guine Monday, 16 May 2022 at 6:13pm
flollo's picture
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flollo Monday, 16 May 2022 at 6:24pm
san Guine wrote:

Jericho's prescription for housing affordability
https://www.theguardian.com/business/grogonomics/2022/may/16/five-housin...

Yes, some perfectly normal, balanced solutions that already work in other places. Nothing radical, it is really strange how all our policies seem to be going in one direction.

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bonza Monday, 16 May 2022 at 6:35pm

I disagree with the stamp duty argument unless perhaps applied in conjunction with the NG & CT measures. Replacing stamp duty with landtax will only serve to benefit property investors.
another thing which has been missing from this election on housing is renters rights. Given that both parties policies are only really only aimed to increase wealth for current property holders, not to help FHB's it'd be nice to see a policy around tenant protection - capped rents / long term leases / strict eviction rules. In the vein of the euro model. That alone could play a part in stabilising prices by taking the shine off flipping houses. but of course, they don't want to do that

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GuySmiley Monday, 16 May 2022 at 6:51pm

We can thank Joh for getting rid of death duties in AU - it’s been a race to the bottom since then for tax incentives inflating house prices

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velocityjohnno Wednesday, 18 May 2022 at 7:04pm

https://www.macrobusiness.com.au/2022/05/imf-new-zealands-housing-bust-t...

"“There is likely to be a larger impact on consumption through wealth and sentiment effects. In a scenario of a marked housing correction, macroeconomic policy support may be needed to avoid second round effects and a pronounced downturn”…"

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velocityjohnno Wednesday, 18 May 2022 at 7:14pm

https://www.reuters.com/markets/us/powell-fed-will-keep-pushing-until-cl...

Volckeresque, message seems consistent.

"But if inflation does not fall, Powell said the Fed would not flinch from raising rates until it does.

"If that involves moving past broadly understood levels of 'neutral' we won't hesitate to do that," Powell said, referring to the rate at which economic activity is neither stimulated nor constrained. "We will go until we feel we are at a place where we can say 'yes, financial conditions are at an appropriate place, we see inflation coming down.'" "

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flollo Wednesday, 18 May 2022 at 8:37pm
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flollo Thursday, 19 May 2022 at 10:10am

Some latest info on wages, some good, strong indicators in here like labor participation rate and job opening rate. But salary growth itself is still sluggish. Good thing is, most who want to (or can) work have some sort of job.

Also, if the cash rate goes to 2.5% by mid-2023 as indicated I cannot see an apocalypse of epic proportions in the housing market. That is still under or just around 5% retail which many can handle in my opinion (assuming solid employment opportunities).

https://www.ampcapital.com/au/en/insights-hub/articles/2022/may/econosig...

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freeride76 Thursday, 19 May 2022 at 11:55am

Agreed Flollo.

Subdued wages growth will also weigh into RBA decision making re rates.

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garyg1412 Thursday, 19 May 2022 at 2:02pm
flollo wrote:

Here we go, more issues on the horizon - https://www.news.com.au/finance/business/crisis-talks-underway-as-buildi...

Flollo not on the horizon at all - it's on our doorstep.
Not wanting to be too pessimistic but this is going to play out on a more regular basis and has the potential to be one of the biggest issues the construction industry has ever faced. Companies like Metricon are basically a conveyor belt, pretty much like your brewery punching out a large quantity of their product. Now imagine you can't get glass bottles or cans like they can't get timber framing, trusses or reliable sub trades - how's your cash flow going then. I went bust in 2011 and believe me when you have cash flow problems in the construction industry the debt goes from being and arms length away to knocking on your door before you can blink.
If Metricon goes down, that is two of Australia's biggest builders from both sides of the industry going under in a space of 3 months. Only extremely switched on operators are going to survive this unfortunately.

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velocityjohnno Thursday, 19 May 2022 at 4:02pm

https://www.fool.com.au/2022/05/19/why-is-the-woolworths-share-price-sli...

off the back of a horror Target US earnings announcement

"Ringing a warning bell on inflation, bricks and mortar retailer Target Corporation (NYSE: TGT) told shareholders that rising labour and freight costs took a bite out of the company’s bottom line. On top of this, customers tightened their budgets during the quarter — perhaps due to inflation — resulting in reduced spend on discretionary items."

a bit odd staples get smashed after US discretionary does, but who am I to judge?

Related, as here's that shift in sentiment/reduced discretionary spend stuff I've been mentioning, in concrete results.

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flollo Thursday, 19 May 2022 at 4:40pm

Target sunk 25% in the last few days. Even Home Depot price is struggling despite overachieving on the expectations.

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kaiser Thursday, 19 May 2022 at 10:29pm

Wage growth demand will always lag inflation, and will eventually occur out of necessity. And how far does the inflation genie fly in the meantime? US And UK are cases in point.

To wait for wage growth is to tempt the spiral. And once that happens, well, it’s a spiral…

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monkeyboy Friday, 20 May 2022 at 8:10am

US reported pretty dismal housing numbers today.
Same with Canada.
NZ is struggling.
Seems a lot of demand has been pulled forward. Prettty much every western country implemented the same pandemic response. Not saying it was a bad thing but at some point the demand has to fall back to pre-pandemic levels.

All of this is deflationary.

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udo Sunday, 22 May 2022 at 7:54pm

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flollo Wednesday, 25 May 2022 at 10:41am

New Zealand is expected to raise rates by 0.5% today.

In China, central bankers are urging banks to increase lending to stimulate growth.

https://www.bloomberg.com/news/articles/2022-05-24/china-s-central-bank-...

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velocityjohnno Wednesday, 25 May 2022 at 1:03pm

New Zealand raises unterest rates 50 bps, sugnals more aggrissive hikes

https://finance.yahoo.com/news/zealand-raises-interest-rates-50-02454913...

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Island Bay Wednesday, 25 May 2022 at 1:41pm

We have 7% inflation at the mo (NZ). Screwed.

Just cycled past the petrol station ($3+ petrol, $2.75 diesel), and did a quick mental calc. Diesel has gone up 700%+ in 20 years. My salary, not quite...

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monkeyboy Wednesday, 25 May 2022 at 1:51pm
Island Bay wrote:

We have 7% inflation at the mo (NZ). Screwed.

Just cycled past the petrol station ($3+ petrol, $2.75 diesel), and did a quick mental calc. Diesel has gone up 700%+ in 20 years. My salary, not quite...

I read cauliflowers are $15 a pop over there ? What are they feeding them ???

Seriously I think there is some price gouging happening in NZ; meanwhile we're chucking our veggies away (well, Avocados anyway).

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freeride76 Wednesday, 25 May 2022 at 1:57pm

How's the cost of living over there IB?

Price of fuel is definitely biting here.

Island Bay's picture
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Island Bay Wednesday, 25 May 2022 at 2:03pm

Ridiculous. Food and fuel and building materials especially bad. You don't buy a red cabbage at the supy - you buy a quarter of a red cabbage! (In Denmark we used to joke about Norwegians because they sold half cucumbers).

I've seen grownups break down in tears at the petrol station because they can't afford fuel and food, and without fuel the can't get to work etc etc. It's a complete charlie foxtrot, and a heartbreaking one.

But "Be kind!"

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kaiser Wednesday, 25 May 2022 at 2:18pm
velocityjohnno wrote:

New Zealand raises unterest rates 50 bps, sugnals more aggrissive hikes

https://finance.yahoo.com/news/zealand-raises-interest-rates-50-02454913...

Potential for them to be at 3%+ by year’s end. If we stay at .35 we are gonna be way out of whack.

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Roadkill Wednesday, 25 May 2022 at 2:19pm

I'm surprised fuel is not more expensive in NZ.
I still can't get over NZ voted her back in again..the regret will eventually kick in.

On a good note...I get to come back soon.

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flollo Wednesday, 25 May 2022 at 2:24pm
kaiser wrote:
velocityjohnno wrote:

New Zealand raises unterest rates 50 bps, sugnals more aggrissive hikes

https://finance.yahoo.com/news/zealand-raises-interest-rates-50-02454913...

Potential for them to be at 3%+ by year’s end. If we stay at .35 we are gonna be way out of whack.

We probably won't as our $AUD will turn to shit. Maybe some rationalise it as 'good for export' situation. But all our day-to-day consumer goods are imported (+cars) so it would trigger even bigger inflation. Also, repaying debt in foreign currency would get a lot more expensive.

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kaiser Wednesday, 25 May 2022 at 2:36pm

Exactly. Now is not the time to dawdle and wait to see more prints.
Interestingly (not surprisingly) all who have raised rates have seen prop prices decline. Why will we be any different?

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donweather Wednesday, 25 May 2022 at 3:16pm

Don’t be too hasty wishing for rising interest rates. Watch the US of A over the coming months to see what happens if you rise too quickly and then have to hit the brakes!!

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monkeyboy Wednesday, 25 May 2022 at 4:36pm
donweather wrote:

Don’t be too hasty wishing for rising interest rates. Watch the US of A over the coming months to see what happens if you rise too quickly and then have to hit the brakes!!

Not too far off: https://wolfstreet.com/2022/05/24/housing-bubble-getting-ready-to-pop-un...

The home loan rates are over 5% in the USA. They are still at 3% here.

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velocityjohnno Wednesday, 25 May 2022 at 6:21pm

IB that sounds like a nuts situation. Is that Auckland or Wellington area? Is life less expensive in the NZ countryside?

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Island Bay Wednesday, 25 May 2022 at 6:27pm

We're in Waikato, just south of Auckland, but it's the same in Wellington. And no, a lot of goods are more expensive in smaller towns than in cities.

NZ is generally expensive, and now that the massive borrowing/moneyprinting is starting to bite, and productivity is low, it's just coming together in a massive shit storm.

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velocityjohnno Wednesday, 25 May 2022 at 6:34pm

Cheers, IB, just had a gander and there are some wonders of the world in that location :) would love to do a NZ surf and road trip one day...

Perhaps I can offer a cure to the borrowing/money printing and resultant shitstorm:

https://www.macrobusiness.com.au/2022/05/reserve-bank-vows-to-crash-new-...

"In delivering its decision, the RBNZ stated that it needs to “act as a constraint on demand until there is a better match with New Zealand’s productive capacity”. It also noted that “expected increases in mortgage interest rates are likely to contribute to falls in house prices” and that “house prices are now headed toward a more sustainable level”.

ASB senior economist, Mike Jones, said the RBNZ was “more hawkish than expected”:

“We thought the RBNZ would came out swinging, but today’s statement was still more hawkish than expected. The OCR was lifted 50bps as we and the consensus expected. But the RBNZ’s new OCR forecast profile implies both a higher OCR peak than we’d expected, and a more rapid pace of tightening to get there”

Indeed, the RBNZ’s ‘forward track’ released with its Monetary Policy Statement was far more bullish than economists expected. It shows the OCR at 2.7% by September of this year, 3.4% by December, then 3.7% by March and peaking at 3.9% in June 2023.

This would send mortgage rates to around 6% – more than double their pandemic low:"

Looks like they are going to stay the course, right the wrongs, correct the craziness. I'm impressed.

"In turn, the RBNZ expects “house prices to fall by about 14% by early 2024”:
Given New Zealand house prices are already down 5% from their peak nationally, the RBNZ’s forecast seems optimistic given its bullish OCR forecast."

In markets (14+5=19) 20% is usually termed a 'correction'...

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freeride76 Wednesday, 25 May 2022 at 6:44pm

be interesting to see how far Oz goes down that same path.

Albo will not be keen to own a recession in his first term and be almost guaranteed to be voted out after one term.

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Island Bay Wednesday, 25 May 2022 at 6:51pm

VJ, one of the problems is that RBNZ's mandate was changed by the Labour govt. It used to be "Hold inflation at 3% or less" but Full Employment was added during Covid, and so we were on the slippery slope.

And for your viewing pleasure, here are Westpac NZ's mortgage rates:

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freeride76 Wednesday, 25 May 2022 at 6:57pm

How is all this going down over in NZ IB?

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Island Bay Wednesday, 25 May 2022 at 7:00pm

Like a bowl of cold sick :-)

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kaiser Wednesday, 25 May 2022 at 7:51pm

‘ In markets (14+5=19) 20% is usually termed a 'correction'...’

Correction-
10% is a correction.

20% is a bear

S&P 500 is currently staring down the bear. But the bear is hungry and the s&p is smothered in honey

Nasdaq tried to play dead but it was already too late

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flollo Thursday, 26 May 2022 at 2:46pm

Here's a good link for those who like to dig around a bit.

https://app.remplan.com.au/

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velocityjohnno Thursday, 26 May 2022 at 2:48pm

Right you are Kaiser, it just looks like a horrid, slumping shouldered beast to me at present (that said, 61.8% of people don't expect a counter-trend ripping bounce...) Not sure if I can be any further cryptic... not investment advice!

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freeride76 Thursday, 26 May 2022 at 2:51pm
flollo wrote:

Here's a good link for those who like to dig around a bit.

https://app.remplan.com.au/

Nothing on Northern Rivers in there that I could see?

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san Guine Thursday, 26 May 2022 at 5:43pm
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flollo Thursday, 26 May 2022 at 6:03pm
freeride76 wrote:
flollo wrote:

Here's a good link for those who like to dig around a bit.

https://app.remplan.com.au/

Nothing on Northern Rivers in there that I could see?

https://app.remplan.com.au/northernrivers/economy/summary?state=15Nxfx5e...

You can click on that icon next to Brisbane on the map and it will zoom in. All regions are in here, there's also a community and economy version.

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Nick Bone Thursday, 26 May 2022 at 6:20pm
velocityjohnno wrote:

Right you are Kaiser, it just looks like a horrid, slumping shouldered beast to me at present (that said, 61.8% of people don't expect a counter-trend ripping bounce...) Not sure if I can be any further cryptic... not investment advice!

Just scratching my head. Cryptic enough.

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flollo Thursday, 26 May 2022 at 6:29pm

Liquidity crisis? Always a bad idea to use ATO's money as working capital.

https://www.abc.net.au/news/programs/the-business/2022-05-25/thousands-o...

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Craig Thursday, 26 May 2022 at 6:32pm

VJ you reckon there'll be a bounce after it crashes a bit?

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kaiser Thursday, 26 May 2022 at 8:25pm
flollo wrote:

Liquidity crisis? Always a bad idea to use ATO's money as working capital.

https://www.abc.net.au/news/programs/the-business/2022-05-25/thousands-o...

Right on cue:

https://www.news.com.au/finance/business/other-industries/sunshine-coast...

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simba Thursday, 26 May 2022 at 8:31pm

yep they will start folding like dominoes this year