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

freeride76's picture
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freeride76 Thursday, 1 Sep 2022 at 11:22am

"With a world economy crash"

GFC?
Global pandemic?

AndyM's picture
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AndyM Thursday, 1 Sep 2022 at 11:22am
kaiser wrote:

I’m baffled that we have seen such an outflow of people from CBDs, with such low immigration to fill those ‘vacated’ properties, that we haven’t seen corrections in capitals sooner. And bigger than what we’ve seen so far. Anecdotally there has been as much investor buying as owner occ in the regions. If they’re leveraged across multiple asset classes, then their fate could be linked to performance in those classes. Equities has already fired a warning shot, crypto stared briefly into the abyss. Prop markets worldwide are feeling the pinch, but we carry on BAU?

I just feel like there’s strong denial. I’m sure people will do whatever necessary to hold property above all, but the cost of holding is gonna suck a lot of money out of the broader economy. And at the same time central banks are pulling money out. The number and variety of discretionary enterprises out there that rely on flippant expenditure is alarming.

To be honest, I don’t know what I reckon, but surely the music stops at some point. It has been a crazy period of ease and excess.

I think it was VJ who pointed out that everything eventually returns to the mean or long term trend. That in itself could be a big correction, given the run we’ve had

"surely the music stops at some point"
Sooner or later, yes. But what's the real catalyst going to be and is it now?
I still feel there are enough levers to be pulled that we can carry on the Ponzi scheme for decades yet.
Maybe the real catalyst will be environment issues i.e. global warming.

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bonza Thursday, 1 Sep 2022 at 11:30am

war with china.

freeride76's picture
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freeride76 Thursday, 1 Sep 2022 at 11:39am

that would do it.

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AndyM Thursday, 1 Sep 2022 at 11:44am

Yep, surely it would have to be huge and overarching.

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sypkan Thursday, 1 Sep 2022 at 12:25pm
freeride76 wrote:

"With a world economy crash"

GFC?
Global pandemic?

but they didn't happen...

the reality was staved off by money printing

you know what happens when you keep and keep putting off something you really really need to do...

only when there was literally nothing left in the can (0.1 % & even -%) ...did they a stop the kicking...

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kaiser Thursday, 1 Sep 2022 at 12:32pm

Financial contagion.

GSCO’s chart on previous page shows what that could look like for house prices

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freeride76 Thursday, 1 Sep 2022 at 12:32pm

I hear ya Syp.

The facts are though, barring a world war, a billion middle class Asian people will keep improving their material circumstances and part of that will have a huge influence on Aus, including RE prices.

I remember, like Andy, in the 90's still in the delusion that RE prices here would be limited by wages.

Yes, they are limited by credit, but only in the short term.

I'll ask again: where do you think 160-200000 people a year will live, and what do you think that demand will do for RE prices?

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sypkan Thursday, 1 Sep 2022 at 12:50pm
freeride76 wrote:

I hear ya Syp.

The facts are though, barring a world war, a billion middle class Asian people will keep improving their material circumstances and part of that will have a huge influence on Aus, including RE prices.

I remember, like Andy, in the 90's still in the delusion that RE prices here would be limited by wages.

Yes, they are limited by credit, but only in the short term.

I'll ask again: where do you think 160-200000 people a year will live, and what do you think that demand will do for RE prices?

I actually mainly agree with you re. house prices, at least there's an assett there, markets may fall, plateau, pause, stop, be loan holidayed... etc. etc. ...but at least there is generally an assett there...

and most people will do whatever it takes to hold onto them...

I imagine the real 'correction' is coming to the other 'assett' classes kaiser suggests. many have little, if any, inherent value at all

even many of the 'good' stocks, if the shit really hits the fan...

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sypkan Thursday, 1 Sep 2022 at 12:58pm

"...The number and variety of discretionary enterprises out there that rely on flippant expenditure is alarming..."

this'll be the massive hit to australia

whilst everyone is whinging and moaning... (myself included) ...australians have developed an incredibly high level and standard of living over the last few decades that few of us are even aware of...

a bit like frogs in boiling water

the slow build up has been phenomenal

it seems these is / always was, an argument to be had around avocado toast..

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gsco Thursday, 1 Sep 2022 at 1:50pm

re other assets, given the nasdaq tech bubble in 2000, what would you call the recent high we've just come out of?

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kaiser Thursday, 1 Sep 2022 at 1:53pm

Himalayan

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donweather Thursday, 1 Sep 2022 at 2:31pm
gsco wrote:

re other assets, given the nasdaq tech bubble in 2000, what would you call the recent high we've just come out of?

Still more to go upwards and parabolic in that chart (in the next 6 mths or so assuming Russia/Ukraine can sort their shit out).

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gsco Thursday, 1 Sep 2022 at 3:27pm

A graph of Australian (real, so inflation adjusted) house prices going back to the 1920s. Has been dome quite spectacular downturns:

source

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freeride76 Thursday, 1 Sep 2022 at 3:25pm

Yeah, nothing sustained though in the post-war period.

Depression era crash fits that bill.

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thermalben Thursday, 1 Sep 2022 at 4:29pm
thermalben wrote:
thermalben wrote:

Forget house and land prices, check out the pubs!

Justin Hemmes has apparently bought a block of Byron land on Jonson Street for $50 million, and is said to be spending $20 million building a new venue along the lines of the Coogee Pavilion.

Hemmes also bought the (vacant) Cheeky Monkeys backpackers bar for $13 million. And in Vicco, picked up the Lorne Hotel for $38 million.

Sydney developer Podia paid $18 million for the Byron Bay Backpackers on Jonson Street. The old Woolworths (opposite Cheeky Monkeys) also sold for $120 million to the Mustaca family and they're building a new four-star hotel.

Stu Laundy recently bought the Lennox Hotel for $40 million and The Farm for $16 million.

Last year, the Byron Bay Beach Hotel sold to investment bank Moelis Australia for $104 million.

And, media reports a few months ago said that both Hemmes and Laundy were in a bidding war for the Pacific Hotel at Yamba, with an asking price of around $50 million. Dunno if it sold though.

Another one to add to the list.

It’s reported that last week the Great Northern Hotel sold.

$80 million.

Buyers were apparently Scott Didier, founder of ASX-listed building company Johns Lyng Group, and Scott Emery, founder of ASX-listed online lender MoneyMe.

Kingscliff Hotel on the market for $100m. Just a couple of doors up the road from the Swellnet office!

https://www.afr.com/property/commercial/kingscliff-beach-hotel-near-byro...

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AndyM Thursday, 1 Sep 2022 at 4:47pm

That's insane Ben, seems like only the other day Kingscliff was a sleepy little town.

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AndyM Thursday, 1 Sep 2022 at 4:52pm
gsco wrote:

A graph of Australian (real, so inflation adjusted) house prices going back to the 1920s. Has been dome quite spectacular downturns:

source

War really is good for (very big) business.
Great way to kick start things after a slump.
Or just to keep things topped up.

If there's not an adage that peace only comes through prosperity, maybe there should be.

DudeSweetDudeSweet's picture
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DudeSweetDudeSweet Thursday, 1 Sep 2022 at 5:02pm

Took 30 years ( 1930-1960) for real value recovery in house prices post 1930.

I’d call that a previous correction of note.

Of course that could never happen again because……exceptionalism.

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andy-mac Thursday, 1 Sep 2022 at 5:12pm
AndyM wrote:
gsco wrote:

A graph of Australian (real, so inflation adjusted) house prices going back to the 1920s. Has been dome quite spectacular downturns:

source

War really is good for (very big) business.
Great way to kick start things after a slump.
Or just to keep things topped up.

If there's not an adage that peace only comes through prosperity, maybe there should be.

War may be good for business, but if next one gets out of hand there may be not many people around, or businesses.... Talk about a Reset! Back to Stone Age....Interesting times...

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AndyM Thursday, 1 Sep 2022 at 5:13pm

Just gotta be in it for the long haul :)

DudeSweetDudeSweet's picture
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DudeSweetDudeSweet Thursday, 1 Sep 2022 at 5:16pm

I reckon I’ve got my forever house. It was sort of forced upon me but has since shown to be a pretty sweet deal.

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AndyM Thursday, 1 Sep 2022 at 5:53pm

From what I've seen, it's epic.

kaiser's picture
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kaiser Thursday, 1 Sep 2022 at 8:00pm
DudeSweetDudeSweet wrote:

I reckon I’ve got my forever house. It was sort of forced upon me but has since shown to be a pretty sweet deal.

Kudos for planting your roots DSDS, and you should always have a foot in property. Question for the room though - if you had your forever home, and had another as investment, what would you do with it right now? At a time of record prices and yields? Do you realistically see capital and rent growth from here? Or cash in and shore yourself up? Or use it to cover other investments you thought were a safe bet but have turned out otherwise? And if the equity in the inv prop erodes enough it may threaten the PPR?

What goes first? And who wants to be last to go?

PS great chart GSCO, to even get back to trend is a 26% fall. And rarely do we hit trend without going below…

Man, I need to lighten up… sorry everyone

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bonza Thursday, 1 Sep 2022 at 8:14pm

“Do you realistically see capital and rent growth from here? “

Yes.
It’s because the investor class are outstripping once again FHB as they pass onto the rentier class any interest rate rise.
It’s because even now no one is talking tax reform.
It’s because right now in Canberra the unions are drinking grange with big business over what’s a reasonable floor for immigration pa. >200k
It’s because the already limited east coast housing availability footprint has just had a sizeable portion of its arse end floodplain literally shit it self.

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kaiser Thursday, 1 Sep 2022 at 8:14pm
AndyM wrote:

I still feel there are enough levers to be pulled that we can carry on the Ponzi scheme for decades yet.

Sorry, one more question, and not facetious. What levers haven’t already been pulled? They’ve cut rates, printed money - what monetary levers remain?

Can’t see immigration in a shrinking world economy being the answer.

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kaiser Thursday, 1 Sep 2022 at 8:17pm

Yeah I get that bonza, but in the big picture I wonder whether betting big on an increasing population while we remain an expensive place to live while everywhere else does what’s needed to become more affordable, is wise.

We still are not the biggest importer of
Asian people. They do have choice

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DudeSweetDudeSweet Thursday, 1 Sep 2022 at 8:18pm
kaiser wrote:
DudeSweetDudeSweet wrote:

I reckon I’ve got my forever house. It was sort of forced upon me but has since shown to be a pretty sweet deal.

Kudos for planting your roots DSDS, and you should always have a foot in property. Question for the room though - if you had your forever home, and had another as investment, what would you do with it right now? At a time of record prices and yields? Do you realistically see capital and rent growth from here? Or cash in and shore yourself up? Or use it to cover other investments you thought were a safe bet but have turned out otherwise? And if the equity in the inv prop erodes enough it may threaten the PPR?

What goes first? And who wants to be last to go?

PS great chart GSCO, to even get back to trend is a 26% fall. And rarely do we hit trend without going below…

Man, I need to lighten up… sorry everyone

I’m in that exact situation. We have a propert in WA and have received an inviting unsolicited offer on it via a local RE agent. No debt burden and the cash is tempting but what do you do with more cash? I’m not taking the piss. The place in WA is utterly hassle free but surely it can’t increase in price……?

Hard. Life is easy when you don’t have to make decisions.

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kaiser Thursday, 1 Sep 2022 at 8:26pm

Well if you don’t have debt, you don’t have any worries.

bonza's picture
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bonza Thursday, 1 Sep 2022 at 8:36pm

Global competition for new immigration is a piss easy win for Australia. There are hundreds of levers to be pulled Kaiser.

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kaiser Thursday, 1 Sep 2022 at 8:41pm
bonza wrote:

Global competition for new immigration is a piss easy win for Australia. There are hundreds of levers to be pulled Kaiser.

Fair enough I’ll take your word for it

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bonza Thursday, 1 Sep 2022 at 8:45pm

just my view mate. I know fuck all about economics. the only thing I have learnt is that no one else does either.

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kaiser Thursday, 1 Sep 2022 at 8:47pm

Amen

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DudeSweetDudeSweet Thursday, 1 Sep 2022 at 8:58pm
kaiser wrote:

Well if you don’t have debt, you don’t have any worries.

I’ll be the first to shout that debt is slavery but eliminating debt doesn’t equal the end of drama.

Here’s one of the best books written in the history of humanity. Unrivalled wisdom. 36 pages long with illustrations. Essential Instruction in life doesn’t get any more digestible or imaginative..

This has been a guiding light for me since I was literally four years old. Never bettered. Reckon I’ve been carrying that bat ever since.

http://taylorlhs.weebly.com/uploads/2/9/4/8/29480235/101141408-dr-seuss-...

AndyM's picture
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AndyM Thursday, 1 Sep 2022 at 11:56pm
kaiser wrote:
AndyM wrote:

I still feel there are enough levers to be pulled that we can carry on the Ponzi scheme for decades yet.

Sorry, one more question, and not facetious. What levers haven’t already been pulled? They’ve cut rates, printed money - what monetary levers remain?

Can’t see immigration in a shrinking world economy being the answer.

I think Australia could ramp up immigration a lot more if it wanted to.
And didn’t those rate cuts work perfectly to increase house prices?
That’s what we’re talking about right?
Population growth and/or low interest rates could surely kick the can down the road for a long time.
Just balance things so it’s a continual steady increase not the madness of the past two years, find the sweet spot before inflation goes crazy but there’s still acceptable demand for goods including property.
I thought things were (relatively)fine before The Covid Effect.
Isn’t this what the RBA is currently trying to achieve?
I’m not saying this is what I want but it appears totally achievable, at least while housing is an investment and is also open to international investment.

udo's picture
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udo Friday, 2 Sep 2022 at 12:39pm
AndyM's picture
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AndyM Friday, 2 Sep 2022 at 1:24pm

Credit to the journo for at least having a stab at bringing class into the discussion.

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kaiser Friday, 2 Sep 2022 at 4:26pm

65,700 people left Sydney and Melbourne, and prices continued upwards with gay abandon.

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groundswell Friday, 2 Sep 2022 at 4:55pm

I wish my mum would sell her way too big and hard work to look after every garden and everything else by herself house in Sydney, and move to Indo or Thailand.She could live on a yacht charter for the rest of her life in the tropics.

kaiser's picture
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kaiser Tuesday, 6 Sep 2022 at 3:06pm

Another 50bps on the pyre

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donweather Tuesday, 6 Sep 2022 at 5:00pm

No surprises

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velocityjohnno Tuesday, 6 Sep 2022 at 6:27pm

https://twitter.com/WallStreetSilv/status/1565704584747749382

I find some commonality with Vlad when he describes the ridiculous recent monetary inflation as being the cause for current actual inflation...

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donweather Thursday, 8 Sep 2022 at 12:03pm

https://www.davidmurrin.co.uk/media/geopolitics-and-the-shifting-world-o...

Quite long video so don’t expect you to listen to it all but very worthy discussion from the 40min mark. Stick with it because he talks about traditional assets like property not going to withstand this next crash.

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flollo Thursday, 8 Sep 2022 at 3:06pm
velocityjohnno wrote:

https://twitter.com/WallStreetSilv/status/1565704584747749382

I find some commonality with Vlad when he describes the ridiculous recent monetary inflation as being the cause for current actual inflation...

Despite the ridiculous monetary inflation (which is true) this is a propaganda speech where Putin is trying to position himself as 'the leader of the poor countries.'

The reality is - he is a king in one of the most feudal systems alive today. His regime facilitated a huge wealth transfer through privatisation of state-owned assets to the compliant oligarch class. He deliberately developed a classist society where some are unimaginably rich (I'll repeat - unimaginably rich) while others are fed with peanuts and controlled through strict limits on freedom of information.

The poor for him are cannon fodder. The rich did not get rich because of their skills. They got rich because they were close to the regime. You can see that with the way they behave with money. Insane show-offs. When Russians have the money you'll fucking know about it. Classic case of becoming rich overnight.

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velocityjohnno Monday, 12 Sep 2022 at 10:09pm

Completely agree, it's just I can't summon Murray Rothbard to deliver the monetary speech.

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velocityjohnno Wednesday, 14 Sep 2022 at 8:24am

& tumultuous night in finance nerd land, SPX fell more than 4% on an 8.3% inflation print in the US. A more human interpretation instead of the chart porn here:
https://www.zerohedge.com/markets/fed-mouthpiece-speaks-least-75bps-next...

imagine if they go the whole %...
if markets predicting a terminal US rate of over 4.3% and Oz tops out at the 2.6% wanted by some banks here, surely that differential summons the Australian peso once again (perhaps we can have a car industry again at such a crushingly cheap exchange rate)
anyway we see next week

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velocityjohnno Wednesday, 14 Sep 2022 at 8:56am

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bonza Wednesday, 21 Sep 2022 at 7:42am
udo's picture
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udo Saturday, 24 Sep 2022 at 10:43am
DudeSweetDudeSweet's picture
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DudeSweetDudeSweet Saturday, 24 Sep 2022 at 11:06am

Just got told that the wet land development here -hundreds of homes- is ultimately owned by Chinese developers. Haven’t spoken to one person in town who wanted it. As long as the rich cnts in China are happy!