Anecdotal evidence says there are huge numbers of purchases made in family members names.
http://knowledgesource.com.au/chinese-buying-review-cant-see-the-forest-or-the-trees/
What it takes to change the market
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Anecdotal evidence says there are huge numbers of purchases made in family members names.
http://knowledgesource.com.au/chinese-buying-review-cant-see-the-forest-or-the-trees/
That's some nice work right there. Good on ya!
What else can affect prices?
Oversupply. Too many properties going for sale due to greed taking over - as people see how much their neighbours are getting when they sell !
I am seeing this first hand at the moment.
Apparently over the next 3 weekends Sydney has over 800 auctions scheduled.
http://smh.domain.com.au/real-estat...-showing-signs-of-cooling-20140324-35dz5.html
IMO , this current level of growth is not sustainable. The last time we saw growth like this in Sydney (2003) - 2 interest rate rises late in the year was what stopped house prices from rising in the hills area. We may have further growth to come this year ... but how much nobody really knows.
Maybe the new train line may help cushion the blow this time?
Oversupply. Too many properties going for sale due to greed taking over - as people see how much their neighbours are getting when they sell !
I am seeing this first hand at the moment.
Apparently over the next 3 weekends Sydney has over 800 auctions scheduled.
http://smh.domain.com.au/real-estat...-showing-signs-of-cooling-20140324-35dz5.html
IMO , this current level of growth is not sustainable. The last time we saw growth like this in Sydney (2003) - 2 interest rate rises late in the year was what stopped house prices from rising in the hills area. We may have further growth to come this year ... but how much nobody really knows.
Maybe the new train line may help cushion the blow this time?
The lay down miserere event in 2003 was Bob Carr & Michael Egans vendor duty and land tax mousetrap. That stopped the market dead in its tracks.
Political ill will will do it every time.
Can't see that happening with current govt.
Christopher Joye, AFR, reckons interest rates will do it.
"To get the discounted variable mortgage rate back to normal, which is around 6.6 per cent, the RBA would have to lift borrower repayments by 30 per cent. If inflation becomes an issue like it was in 2007, home owners could face variable rates over 8 per cent. Either of these outcomes would likely induce significant price corrections as buyers cut expectations of capital gains, which are being biased upwards by current experience. When prices do start sliding, it is not inconceivable that we could see unprecedented 10 to 20 per cent losses across the board."
http://www.afr.com/p/personal_finan...ices_headed_for_record_gSdGyBWsYfyuDcVBwatptN
"To get the discounted variable mortgage rate back to normal, which is around 6.6 per cent, the RBA would have to lift borrower repayments by 30 per cent. If inflation becomes an issue like it was in 2007, home owners could face variable rates over 8 per cent. Either of these outcomes would likely induce significant price corrections as buyers cut expectations of capital gains, which are being biased upwards by current experience. When prices do start sliding, it is not inconceivable that we could see unprecedented 10 to 20 per cent losses across the board."
http://www.afr.com/p/personal_finan...ices_headed_for_record_gSdGyBWsYfyuDcVBwatptN
its getting out of control, and now we have all these overseas investors who come from countries where theres a billion people pushing FHB out of the market. older People say housing affordability is all relative to when they where growing up. so i asked my parents and they bought there house for 50k and earnt 30k a year in a decent area. how is that relative to today!!!! If they keep going up kids who in there late teens will probably never own there house.
Late onto this one and a lot said already, I'm of the same opinion as Brady's comment re: affordability.
Brief chat with some mates today and one of them made a passing comment about Melbourne prices. Where can you get a house for $450K in 2014 no way etc. 15 second quick search for online ads Vic Metro area, which includes Geelong shows 4000+ results for houses 3 bedders between $300-450K (generalised yes, but still a significant point). That was the end of the conversation.
Even if rates rise substantially, people can still afford to buy and hold. Others have said it also...people's ability to raise a deposit is one key to prices.
Another key is population growth. I always refer back to ABS stats, and future ABS projections. All these new people have to go somewhere...it's no secret that the four biggest capitals take most of them due to employment opportunities.
Additionally there's a lot of old money in the market where the property owners own outright etc, therefore this adds to scarcity. A lot of investors will never need to sell also, which leads to scarcity.
It's a solid bet that any reasonable price paid for a property today in the four biggest population areas will be worth more in 2024 than it is now. If you are looking for a mass correction, then you may get small ones in pockets over 1-3, even 5 years, but expect to make it back again in the next upturn or at least via inflation. Short term investing is a different story, & is really just speculation.
What it takes to change the market? "It takes a lot to change the market." Not an increase in unemployment, prices still go up. IMO - A combination of population decline, or zero population growth long term & a significant ongoing contraction of bank lending can do it, if you are hoping.
If anything, property is probably undervalued in the big 4 metro areas.
Brief chat with some mates today and one of them made a passing comment about Melbourne prices. Where can you get a house for $450K in 2014 no way etc. 15 second quick search for online ads Vic Metro area, which includes Geelong shows 4000+ results for houses 3 bedders between $300-450K (generalised yes, but still a significant point)
. That was the end of the conversation. Even if rates rise substantially, people can still afford to buy and hold. Others have said it also...people's ability to raise a deposit is one key to prices.
Another key is population growth. I always refer back to ABS stats, and future ABS projections. All these new people have to go somewhere...it's no secret that the four biggest capitals take most of them due to employment opportunities.
Additionally there's a lot of old money in the market where the property owners own outright etc, therefore this adds to scarcity. A lot of investors will never need to sell also, which leads to scarcity.
It's a solid bet that any reasonable price paid for a property today in the four biggest population areas will be worth more in 2024 than it is now. If you are looking for a mass correction, then you may get small ones in pockets over 1-3, even 5 years, but expect to make it back again in the next upturn or at least via inflation. Short term investing is a different story, & is really just speculation.
What it takes to change the market? "It takes a lot to change the market." Not an increase in unemployment, prices still go up. IMO - A combination of population decline, or zero population growth long term & a significant ongoing contraction of bank lending can do it, if you are hoping.
If anything, property is probably undervalued in the big 4 metro areas.
I'm looking into this a bit more because it is something I am interested in.
Firstly, as we are all aware:
So looking at the "market" as a whole is a bit unproductive. To see a significant downturn in a market (no a crash, more a correction) involves a interplay of related factors:
http://www.smartcompany.com.au/grow...n-property-market-a-quick-history-lesson.html
It's the last one that I haven't seen discussed... people cashing out. I am thinking doing this with one of my properties late this year and early next year. I am not sure how many people/SMSFs will decide to cash out but it could have negligible impact or some impact depending on how many do.
Firstly, as we are all aware:
So looking at the "market" as a whole is a bit unproductive. To see a significant downturn in a market (no a crash, more a correction) involves a interplay of related factors:
http://www.smartcompany.com.au/grow...n-property-market-a-quick-history-lesson.html
It's the last one that I haven't seen discussed... people cashing out. I am thinking doing this with one of my properties late this year and early next year. I am not sure how many people/SMSFs will decide to cash out but it could have negligible impact or some impact depending on how many do.
perthguy; said:
My thoughts are that most people who are in that situation don't have to do it at a certain time , whereas loosing your job and not having enough money or not being able to afford a 1 % interest increase are more immediate in their impact.
Cliff
I love it how you interpret the first sign of movement in a segment as a sign of its impending demise . The upper end moves after most segments and it's not driven by returns . It's driven by people trading up , by business profits and share market returns . As the last two are only at the early stage of the economic cycle I think the main growth in the prestige market is yet to kick in .
There will always people who want to sell when they market starts to move as they can finally get back what they put in when they bought the property x years ago , but you see that happen in every segment .
In sydney volumes remain high , as do clearance rates and prices are moving , including in the above 2 million range . We know several people who have wanted to sell for a while ( upper north shore , mainly over 2 mill ) and now they've all sold in the last few months . Don't know any one else in the same boat , so my thoughts , at least in our area is that there maybe a decrease in supply coming to the market in the near future. The next two weekends are big numbers in terms of volume in sydney and then we get to Easter and historically the market slows after that , so I'd be surprised if there are many people who have wanted to sell for a while who haven't even sold or about to sell .
In share market terms I'd call that overhanging supply , and it's only once that oversupply is cleared that the market really takes off . The lower parts of sydney cleared that overhang awhile ago and then took off . I wouldn't be surprised to see strong price rises in the prestige market in the next 1- 2 years and quite possibly in the next six months over winter .
Cliff
Immigration policy. Rise of Asia.
Totally agree +1 from me.
I don't know Sydney too well, in Melbourne from memory there were about 11 sales $6mil+ last year, up to about $15m. and agents were all quoted as saying you know the market has picked up because the top end is moving. A few of these were on the market and taken off in 2011-12 and back on for people trading up, and moving their money (as Cliff said)
I know Melbourne had 3 decent ($5mil+) sales so far in 2014. $6m, $10-11m & $15m approx. The $6 million sale was a few weeks back and was hundreds of thousands above reserve. Sydney had the $19 million sale recently.
Totally agree that the prestige market will be continue on strongly for 12-24 months. Would love to see that big Sydney listing sell for a record.
There was a fly-in sign and buy, take to the football and fly back to Asia $13 million purchase in Hawthorn last year so agree here too.
lolThere is always irrational urgency just before a market correction, as interest rates rise - from buyers who don't want to miss out and who feel if they buy now they can lock in low rates and from sellers who want to cash out at the top of the market. You have right they don't have to sell, they create their own urgency by wanting to cash out at the top of the market and sell because they don't want to miss out at the great price they must get. It probably has little impact on the market overall though.
Would probably be the share market equivalent of a blow off top or a candle stick with a long top tail .
Cliff
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