House prices

I don't get out of bed for less than $1,000 a day capital gains.

They are not just reclining on their yacht Blowin , they are sailing off into the sunset !

here try this one...trying to keep it simple.......when the pandemic hit there was a rush to the Supermarkets to stock up on food.......and for some strange reason Toilet paper became the most sort after commodity ....some friends and I discussed ,was this the poorer people just trying to feel good ......as this was all they could afford?
Fast Forward 1 year , and now the rich people are buying seaside shacks ./ mansions and taking all the rentals...does it make sense, not really, but is this a type of toilet paper syndrome for Rich people....to be ready for the next lockdown , by having a coastal address?

haha , actually that is the life raft of the mega yacht ......

You might have a point there Brutus, what was VJ saying about stocking up for his kids?

When the world gets over covid, interest rates will rise, sharply, (despite the Reserve Bank that will as usual, move too slow). Your $2k a month mortgage can jump to $8k in less than a year and keep going up. I once paid 17% for my money and that was cheap at the time. When asset prices are rising like this and money is so cheap yet no wage growth for a long time, the alarm bells should be ringing. I don't follow these things as closely as I once did but I believe the bond markets have started turning and interest is only going up from here. I've just lived the best ten years of my adult life because it was the first time I've been debt free. Paradise. Sleep like a baby. If I had a big mortgage or investment property I'd sell, right now, and get a little one or rent, rather than risk getting caught. You can lose everything.

"Could house prices ever reduce? - The late 80's interest rate rise didnt do it"

I always assumed house prices all over Aus went backwards late 80s early 90s?

Where i live there was a decent drop in realestate prices in the early 90s, especially land prices as there was only a few houses in each street of many estates and literally half the streets blocks were for sale.

Houses also dropped in value as back then maybe 70-80% of houses were holiday houses and were the first things to go for people struggling.

Totally different situation here now though, we wouldn't get hit in anywhere the same manner, hardly any empty blocks left and maybe even more permeant residence than holiday houses or close.

Adam I wish you were right but people have been saying that for 20 odd years and it ain’t happened. For the first time in a long time we had an opportunity for a correction softening of the ponzi. And look what happened. The government and banks won’t allow / can’t afford for this to happen. They made pretty clear with the amount of money printing, incentives and handouts to real estate industry / purchasers and hangers on.

... just wait till they open up the immigration scam again

Indo, dare I say fall.... as in $1000 a day like we are seeing the apparent opposite in capital growth currently. I dont mean drop a few % or plateau as we have seen that quite a few times in various places since the GFC. I mean the opposite in fall rate = to the current growth rate.

When you look at how cheaply any Aus Govt has sold off its assets holisbolis its no wonder they've stacked the decks in favour of housing growth as thats how they generate so much of their income. Not leftest or rightwing centric just govts in general. Its doesnt look good!

Bonza, hope you are right. Thirty years ago everyone got caught, even old money got wiped. I lived through it. When things get hot there is no one in control, the Central Bank can only react, the Government can throw all the immigrants and incentives they like at the problem but no one is signing up to a million bucks at even five or six percent and going up when their pay isn't rising, they are selling. It all unravels very quickly.

I expect it took years to drop but down here we saw pretty big drops blocks that were $15-35K dropped to $5K to $15K (a couple houses going as cheap as $30-$50K, not sure how much they were before though)

I was on the dole but still managed to go half's with my GF at the time on a better block for $7K, 10 minutes walk from the beach, unfortunately after 6 months traveling (still on the dole) i owned her all this money so had to let her have it when we broke up :(

I'm tending to agree with Adam. RBA has nowhere left to move with reducing rates. They will rise. And even if the RBA only lifts rates marginally banks will lift their rates more to cover the loss to shareholders during Covid. Rates only have to go to 5-6% now and ALOT of people will be in a world of hurt. Let alone if rates ever get back to the mean of 6-8%!!!! Housing market will shit itself big time. Everyone will be screaming about how could this happen when houses are safe money!!! Stock market is already seeing signs of retreat. Housing market won't be long behind it. And immigration won't be able to save us as full immigration is still some long way off IMO post-Covid, Already seen some hiccups in the vaccine, let alone new mutant Covid strains appearing.

RBA has committed to no rate rises until 2024 at the earliest.

Interesting point re interest rate rising, but this ain't the 80's, and as FR says the RBA have committed to low rates for the next few years. I mean look at Japan, they have had a national interest rate of almost zero since the mid 90's! And Zen seems to be doing ok :)

"Home loan rates hit a record high 17%

A new Labor government was faced with a foreign exchange crisis in 1984 and floated the Aussie dollar, meaning the market would set the exchange rate, not the RBA.

Economic reforms during the 1980s saw Australia’s tariff walls lowered and productivity lifted through industrial relations reforms. The late eighties were a boom time for lending and as the economy outperformed, inflation rose and the RBA jacked up interest rates to try and control demand.

Unemployment was still a problem and in October 1987 global share markets crashed. The ASX lost 40 per cent of its value.

Standard variable home loan interest rates hit an all-time Australian record high of 17.0 per cent pa in June 1989 and stayed there until April 1990.

By July, Australia was in recession and in November the Treasurer Paul Keating said:

“This is a recession that Australia had to have.”

Inflation target added to rates policy
In the 1990s the Reserve Bank governor, Bernie Fraser, adopted a policy of maintaining inflation within a range of 2 to 3 per cent over the economic cycle.

Inflation had long been relegated to a second order monetary policy issue after employment. However, after the stagflation of the 1970s and excessive consumption in the 1980s, the importance of containing inflation became apparent.

An August 1996 joint statement by the new Liberal treasurer Peter Costello and the new Governor of the RBA Ian McFarlane gave formal government endorsement to the inflation objective."

SO as long as inflation is kept in check and the stock market doesn't crash, we could print all the money out of thin air that we could manage. The only difference is the choice between giving it to the wealthy and then praying for some trickle down, or giving it to the poor and have them spend it in the real economy.

"RBA has committed to no rate rises until 2024 at the earliest."

Really got a link?

No wonder people are in a real-estate buying frenzy, kind of gives a bit of short term security.

“The board will not increase the cash rate until actual inflation is sustainably within the 2 to 3 per cent target range. The board does not expect these conditions to be met until 2024 at the earliest.”

https://www.afr.com/policy/economy/rba-expands-qe-by-100bn-upgrades-empl...

Agreed westof. The problem with your analysis Adam and don is that it makes sense. And this is no place for logic.

Edit. Don not rabbit

"Well, the national house price index today is where it was four years ago … “

All good, nothing to see here from the RBA governor

https://www.abc.net.au/news/2021-02-15/why-australian-property-prices-wi...

RBA will not raise rates until 2024, at the earliest and that is dependent on inflation.

Inflation ain't going anywhere. Inflation is beat. ie rates going nowhere.

too much cheap shitt from Asia, no wages growth.

This boom is just getting started.

Blowin I agree. If anything this crisis / bonanza has shown that a) the so called experts in the finance game actually know SFA about their trade and forecasts. There is no reason to it. It’s a game of risk and reading the wind. It’s a glorified game of 2 up. And b) it’s rigged for the rich.

But for the RBA to come out and so explicitly say what they did about interest rates is (apologies for saying it) unprecedented..

What’s a mug to do.

But now buy big. That’s the sponsored message loud and clear.

Yep.
and we've got your back for the foreseeable future.

In a sense this is doing an amazing job of fulfilling an objective the govt has long held: which is to decentralise the Australian economy.
what we are witnessing: an unprecedented development boom in the regions, is what generations of bureaucrats have dreamed about.

This is an historic shift and the RBA will do everything it can not to imperil it.

It was Howard who halved the rate of CGT on investments like property and shares.

The RBA is under no obligation to raise rates.

ie they could keep rates low for there next 20 years and let the prudential regulator tighten lending standards.

thats how they will manage the bubble.

there'll be no crash.

we just went through a Global Financial Crisis and a Pandemic with no crash.

Agree. Well found the 'no raise till 2024'. The UST 10yr rate is the one to watch, if it significantly changes direction and breaks upward, revisions might have to be made. But I have doubts.... Japanification otherwise: better get to work on Australian Anime...

Some imagery from the beginning of a mad, mad time:

https://www.domain.com.au/news/brighton-home-sells-for-1-million-above-r...

https://www.allhomes.com.au/news/cbr-the-perfect-storm-whats-driving-can...

https://www.domain.com.au/news/mount-vernon-home-sells-for-1-million-abo...

and Perth awakens:

https://www.domain.com.au/news/perth-how-this-once-sleepy-market-has-bee...

*bonus question: is there a method you can bring a large sum, say 5-10Mil, be minted into an Australian citizen, and thus escape COVID in the outer world? (First thing you do is buy a house)

"The residential vacancy rate figures have emerged in the same week as a multi-million-dollar campaign to entice city residents to move to the regions.

The Move to More campaign was launched today by the Regional Australia Institute.

It aims to encourage more people from major cities to move to regional areas."

https://www.abc.net.au/news/2021-03-17/residential-vacancy-rates-crash-i...

The local residence vacancy rate here MNC is zero. Unfortunately a lot of the local long term residents have been turfed out to new "locals" willing to pay ridiculous rents, or now just utilised as holiday rentals. At this very moment three houses in my street that had families residing are sitting empty wait for the next load of blowin's to descend. (No disrespect intended Blowin) It is a crying shame (sham) that these families have been up rooted through greed.

One has to remember that we all borrow money from banks not the RBA so it’s the banks that control our loan repayments. Believe me the banks will move independent of the RBA to a certain extent. And inflation isn’t all based on wage growth. There’s a myriad of other things that determine inflation. Fuel prices for instance. Cost of food and goods and services. Ask yourself how much tradie prices have gone up in this pandemic!!! Inflation IS happening. The real issue is wages for the majority are not rising accordingly. So we’re all (apart from tradies) actually taking a pay cut against the cost of living etc. wage deflation is key to house repayments. All it takes is a crash in the stock market for the sentiment of money growth to turn and then the housing market will follow.

" All it takes is a crash in the stock market for the sentiment of money growth to turn and then the housing market will follow."

If there is one thing the last 2 decades have shown us, that is NOT true.

there have been numerous stock market crashes and major corrections and the housing market has not followed suit.

Look at the crash March last year for the most recent example.

Yes, the one where every financial commentator in the land predicted a 20-30% fall in house prices.

Now, what happened next?

btw inflation in 2020 was 0.75%
Currently 1.34%.

Well below the RBA's target range of 2-3%.

https://aurik.com/2020/07/21/the-economic-clock/

I used them as examples of times when stock markets crashed and economists expected deep recession yet house prices did not follow suit.

The two most recent examples.

australia avoided a recession during the GFC. but the pandemic saw us enter one for the 1st time in what 30 years...... and houses boomed.

True. I was just making the point that Stockmarket crashes and corrections have not caused corresponding corrections or crashes in house prices , contrary to what Don said.

i agree FR. was responding to blowin

I wonder why land , rent and house prices where i live are so cheap, its about the cheapest place in Australia near a good wave or two. It might have something to do with constant blackouts every few weeks to months. The waters tasty, the weathers warm, there are jobs always going....i just dont get it.

hard to discount the pandemic as not a financial scenario no matter what side you are coming from.

where is that Groundy?

rough area is fine.

freeride Lower part of NW australia

Groundswell , your in Kalbarri is that right ? Do you know lumo ? I have a friend who sold up in Margaret river a few years ago and brought a house super cheap in canarvon, plenty work picking and planting fruit and veggies , he didn’t bother surfing the bluff last year as no one could go overseas he said it was absolutely packed beyond ridiculous ( superwank is worse lol ) there is still waves to be found though if you know where to look he reckons. Have you been out to the Abrolhos ?

Yeah thats right Supaf i live in Kalbarri ,Lumos a legend around here all his sons rip and have sponsorship deals. Kanes probably the biggest charger out of the lot though.
If you have a boat or good 4wd there are other waves besides the main ones. One was often surfed by Clay Marzo but its a rough track in. he rips it to pieces.

I havent made it to the abrolhos, Jai Perkins, Lumo's youngest son tells me its not worth the trip but its a good place for getting crays. My mate made $25000 in one trip out there.

I met lumo in 82 at the bluff , his and my first time there , had plenty of sessions with a few out , photos are unfortunately in my place in lembongan.

Lumos still getting out the point on good days and getting amongst it. Hates lids though lol.

Great little town Kalbarri , I remember driving past the pub and the sign out front said , if you can’t afford it book it up , I thought awesome this is my kinda town lol

had a lot of surfs with Lumo when I lived there.
worked on wetliners and surfed the Abrolhos a fair bit.