House prices
kaiser][quote=bonza wrote:"Only 15 of the 52 economists who answered the question expected a hike next year"
- Phil Lowe tripled down on no rate hike in ‘22 in last couple of days. Make that 15 out of 53.
It will be battled on a wage growth basis. Basically, their position is no wage inflation = no rate hike while significantly ignoring other indicators.
Yeah I guess it’s the final port of call ie huge house price growth, coupled with inflation on products, causes the worker to demand more income in order to maintain lifestyle. Wage growth is the final piece.
It’s a risky plan as it could have got away from them by the time they react
I wonder if there's also a cryptocurrency and NFT wealth effect at play here with property prices that regulators might be out of touch with?
People have been making solid money in that space. I wonder if these people have been cashing out and viewing it as "free money" or a windfall, so they've just been dropping it on property with no real concern for prices.
(Also, as widespread adoption of cryptocurrency as a means of payment effectively increases the money supply in a way that is not within the control of central banks. I wonder if central banks are starting to factor in this yet.)
Wages won't grow because they will open up the immigration spigot and put downward pressure on wages.
So, status quo.
fr76 here's a timely article by the ABC yesterday trying to convince everyone that immigration actually has a positive effect on wages...:https://www.abc.net.au/news/2021-11-16/as-migration-restarts-does-it-hol...
freeride76 wrote:Wages won't grow because they will open up the immigration spigot and put downward pressure on wages.
So, status quo.
This is true, however if the cost of living makes current wages untenable, then there will still be a need for wage growth. If immigrants come in and have to pay more in rent/ homes and goods than they did before, the base requirement for income will have increased
gsco wrote:I wonder if there's also a cryptocurrency and NFT wealth effect at play here with property prices that regulators might be out of touch with?
People have been making solid money in that space. I wonder if these people have been cashing out and viewing it as "free money" or a windfall, so they've just been dropping it on property with no real concern for prices.
(Also, as widespread adoption of cryptocurrency as a means of payment effectively increases the money supply in a way that is not within the control of central banks. I wonder if central banks are starting to factor in this yet.)
Definitely. 3 trillion dollars of ‘wealth’ has been invented out of thin air. That’s about one and a half Australias, just shoehorned into the global money pool. Has to have an effect
gsco wrote:I wonder if there's also a cryptocurrency and NFT wealth effect at play here with property prices that regulators might be out of touch with?
People have been making solid money in that space. I wonder if these people have been cashing out and viewing it as "free money" or a windfall, so they've just been dropping it on property with no real concern for prices.
(Also, as widespread adoption of cryptocurrency as a means of payment effectively increases the money supply in a way that is not within the control of central banks. I wonder if central banks are starting to factor in this yet.)
An interesting hypothesis. I would like to dig into that and see if there's any data available. My initial take is; there is some of that but how strong is it?
From a broader perspective, a lot of people are seeing crypto and real estate as inflation hedges, especially in the current environment. Maybe in normal times, you would've taken more risk. For example, some with a bit of money would open a restaurant, operate a small business rather than load it into real estate. But who wants to do that in the current environment? From the business perspective, the threat of the lockdown is like the lockdown itself.
Personally, I was always happy to get involved in all sorts of business ventures, even if I lost some money I learned a lot and gained experience. But these 2 years have worn me down to the point that I'm not even confident buying a plane ticket from one city to another. I have no confidence in the current legislative framework, rules can change within a day and anxiety levels are too high.
So, ironically if I was to invest it would only be a selected list - real estate, crypto, some shares...
kaiser wrote:freeride76 wrote:Wages won't grow because they will open up the immigration spigot and put downward pressure on wages.
So, status quo.This is true, however if the cost of living makes current wages untenable, then there will still be a need for wage growth. If immigrants come in and have to pay more in rent/ homes and goods than they did before, the base requirement for income will have increased
Just because there is a need for a wage rise, it doesn't follow that there will be a rise.
It's just as likely, or even more likely, that we will see standards of living fall as wages growth doesn't keep up with the cost of housing.
In fact that is happening now.
All the graphs is one place, click on Download Complete Chart Pack 3.7MB
It is also important to note that the official inflation figure does not include sales of the established properties. It only captures newly built properties while deducing the cost of land. So in essence, it's a cost of building (from a builder's perspective) metric rather than a homeownership metric. As RBA states:
The new dwelling purchase component of the CPI captures the cost of adding to the housing stock – newly built dwellings and major renovations. It is measured as the price of a new dwelling, excluding the value of the land.[2] Purchases of established dwellings are not captured in the CPI, because they are treated as transfers of existing assets. As a result, the price of established dwellings has no direct influence on CPI inflation.
Source: https://www.rba.gov.au/publications/smp/2019/may/box-c-housing-in-the-co...
More details on the basket of goods as a whole:
https://www.abs.gov.au/methodologies/guide-consumer-price-index-17th-ser...
gsco wrote:I wonder if there's also a cryptocurrency and NFT wealth effect at play here with property prices that regulators might be out of touch with?
People have been making solid money in that space. I wonder if these people have been cashing out and viewing it as "free money" or a windfall, so they've just been dropping it on property with no real concern for prices.
(Also, as widespread adoption of cryptocurrency as a means of payment effectively increases the money supply in a way that is not within the control of central banks. I wonder if central banks are starting to factor in this yet.)
The ATO has been very outspoken about crypto in that it certainly isnt being treated in their view as a windfall..and they'll be pegging every capital gains tax cent they can from it even if it take t hem some time (years) to catch up with it/you. How if when .....I dunno..but the ATO has their gunsights on it and certainly if ya make some $'s out of it in capital gain they'll be taxing your ass off like everything else they can get their filthy paws on!
I am struggling to buy this whole state boundary thing. Kyle is from Antioch (Illinois) which is around 20min out from Kenosha city center but on the other side of the boundary. Both towns are squeezed between Chicago (Illinois) and Milwaukee (Wisconsin) metro areas which are only 1.5h apart. The whole area has more than 12m people and there is a commute up and down every day. For statistical purposes, Kenosha is even included in Chicago metro area so, in the neighboring state.
Although it might be illegal (don't know if it is or isn't) to cross the boundary with the weapon it is not strange for Kyle to be in the area. However, biased presentation of his 'travel' sounds like he came from a totally random part of the country to kill strangers. I'm not buying that narrative.
flollo wrote:I am struggling to buy this whole state boundary thing. Kyle is from Antioch (Illinois) which is around 20min out from Kenosha city center but on the other side of the boundary. Both towns are squeezed between Chicago (Illinois) and Milwaukee (Wisconsin) metro areas which are only 1.5h apart. The whole area has more than 12m people and there is a commute up and down every day. For statistical purposes, Kenosha is even included in Chicago metro area so, in the neighboring state.
Although it might be illegal (don't know if it is or isn't) to cross the boundary with the weapon it is not strange for Kyle to be in the area. However, biased presentation of his 'travel' sounds like he came from a totally random part of the country to kill strangers. I'm not buying that narrative.
Wrong thread this post...Can't fix it.
CBA had a bit of a pricing hiccup today
Re: wage growth. My take as someone working in the corporate world and seeing movement in this space amongst my teams... If you stick around with your current employer then wage growth will remain low, unless you're getting promoted into a bigger gig. Your standard annual increases will remain somewhat subdued at 2-3% or thereabouts. It's those increases the RBA will want to see lift.
But if you're in anyway a decent candidate then in the open market you can move to another company, doing basically the same level gig, and request and receive at least 10%-20% increase on salary. I'd go so far as to say if you're changing jobs and not getting at least 10% minimum uplift, you're not doing it right. Tight labour market so companies having to pay overs to attract decent people. Heck I've had some battlers leave my team and tell me they got offered 20% more and if I'd match it. Good luck to them if they can get it.
Dx3 wrote:Re: wage growth. My take as someone working in the corporate world and seeing movement in this space amongst my teams... If you stick around with your current employer then wage growth will remain low, unless you're getting promoted into a bigger gig. Your standard annual increases will remain somewhat subdued at 2-3% or thereabouts. It's those increases the RBA will want to see lift.
But if you're in anyway a decent candidate then in the open market you can move to another company, doing basically the same level gig, and request and receive at least 10%-20% increase on salary. I'd go so far as to say if you're changing jobs and not getting at least 10% minimum uplift, you're not doing it right. Tight labour market so companies having to pay overs to attract decent people. Heck I've had some battlers leave my team and tell me they got offered 20% more and if I'd match it. Good luck to them if they can get it.
Spot on. I'm noticing the same thing.
Far as I can see there is just starting to be tightness in the labour market which is pushing up wages.
Which is the obvious effect of a lack of both skilled and unskilled immigration inputs.
I think business will scream bloody blue murder to get that tap turned back on to hose down that upwards pressure.
In almost all sectors of the economy, from ag to tech to retail to hospitality.
How much bullshit can you fit into a single advertorial? A shit load!
https://www.domain.com.au/news/byron-bay-why-this-infamous-coastal-hotsp...
"Which is the obvious effect of a lack of both skilled and unskilled immigration inputs."
I also think there's been a big covid reset in hospitality. Staff aren't overly keen to go back to being exploited in that industry. Pay proper wages or wait your own tables cafe owners.
Yep, reset in hospo also from employees going 'I need to find a gig with more secure income that won't get cooked by lockdowns'
blindboy wrote:How much bullshit can you fit into a single advertorial? A shit load!
https://www.domain.com.au/news/byron-bay-why-this-infamous-coastal-hotsp...
Hilarious.
Sickening but hilarious.
"Regular" people are fleeing Byron in droves, the people that want to move there now are the business people, the posers, the grifters, the drug dealers, the kids and the easily led.
This exodus has contributed to huge upwards pressure on real estate in surrounding towns.
freeride76 wrote:Far as I can see there is just starting to be tightness in the labour market which is pushing up wages.
Which is the obvious effect of a lack of both skilled and unskilled immigration inputs.
I think business will scream bloody blue murder to get that tap turned back on to hose down that upwards pressure.
In almost all sectors of the economy, from ag to tech to retail to hospitality.
Interesting article this one, which tries to answer the question of does mass migration push wages growth lower for everyone.
https://www.abc.net.au/news/2021-11-16/as-migration-restarts-does-it-hol...
Not a straightforward answer (as you'd expect).
Take-homes include these -
- Reserve Bank of Australia governor Philip Lowe said companies could hire foreign workers to overcome bottlenecks and to fill gaps where workers were in short supply. This had helped businesses operate efficiently, particularly during the resources boom.
- Lowe said the ability to get foreign workers from overseas "dilutes" growth or "upward pressure" on wages in some parts of the economy,
- He said it was possible there were "spillovers" into the rest of the labour market and that the pool of talent meant less momentum for businesses to skill up people here.
- David Card, who won the 2021 Nobel Prize for Economics, disputes the previously widely accepted idea that increases in the minimum wage lead to job losses
- Brendan Coates, who leads the economic policy program at independent think tank Grattan Institute says where migrants' labour rights have not been enforced, this can hurt the wages of similarly-skilled incumbent Australians employed in the same sectors.
(i.e. migrants concentrated in particular jobs or geographies will tend to reduce local workers' wages).
Vic Local wrote:"Which is the obvious effect of a lack of both skilled and unskilled immigration inputs."
I also think there's been a big covid reset in hospitality. Staff aren't overly keen to go back to being exploited in that industry. Pay proper wages or wait your own tables cafe owners.
Totally, the lads are never going back. Also, their opportunities are increasing in their trained fields which should happen anyway. (Still hearing of timber shortages in construction, and folks at the shops today were saying the same.)
"In other words, those coming in on the skilled migration programme are not necessarily particularly skilled."
https://thenewdaily.com.au/opinion/2021/11/18/cheap-workers-import-alan-...
a minimum wage for skilled migrants that reflects the local salary of said industry would help address this rort.
and for anyone that does still actually think immigration doesn't affect house prices...
https://www.news.com.au/finance/markets/predictions-of-falling-house-pri...
but more importantly... what's that new nsw premiers story?
how can he justify such ridiculous numbers?
why?
he's come in in a blaze of glory, I'll give him that... but...
"Mr Oliver said he wasn’t against immigration in any way, saying it was a “good thing” for Australia, but he and other economists are calling on governments to increase housing stock to keep up with rising demand."
FFS
Jeez, regardless of home prices… that’s too many people. Hope someone’s brave enough to take that to an election.
sypkan wrote:and for anyone that does still actually think immigration doesn't affect house prices...
https://www.news.com.au/finance/markets/predictions-of-falling-house-pri...
but more importantly... what's that new nsw premiers story?
how can he justify such ridiculous numbers?
why?
he's come in in a blaze of glory, I'll give him that... but...
"However, one of the nation’s leading economists has now warned that already skyrocketing house prices could rise even further – because of government plans to aggressively increase the level of immigration into Australia in the coming years.
AMP Capital chief economist Shane Oliver told news.com.au"
There must be some mistake VL said immigration rates don't affect housing prices, im guessing this Shane Oliver guy is just a racist fascist or something.
bonza wrote:"Only 15 of the 52 economists who answered the question expected a hike next year"
https://theconversation.com/top-economists-see-no-prolonged-high-inflati...
Economists have been known to be wrong!!!
I think some people may be 100% correlating the housing market with interest rates. Yes sure they're a factor but they're not the be all and end all when it comes to the property market. Other economic affects can also affect house prices. For instance the stock market. When it's bullish, every one believes they have spare income because the glass is half full. Therefore when the economy is booming house prices also boom. Same affect can be said when there's a stock market crash. Every has to save every penny and hence some may have to sell their lavish $3m homes to provide that spare cash. There in lies a drop in house prices.
I'm expecting something around a 30% drop in property prices over 2022/23. Buy the dip!!!
Noted Don.
You're expecting a U.S. stock market crash to send ripples through Australia Don?
That was a juicy forecast Don, I've long given up waiting for something like that to happen, but imagine the chaos if it did. Watched the Big Short last night for the 2nd time, and the feeling between the Ms and I was that the preconditions seen in the film were not yet present around here, but hey, you never know. Imagine the Repo men with all the BMWs and Rangies... We have yet to reach peak 'weightlifter-bro mortgage broker' in this cycle, but by golly it must be close.
Her question was 'so what is Aussie sub-prime'? - and perhaps it isn't sub-prime per se, but just an increase in rates of a certain size, given the mortgage sizes are so huge, that would tip a lot over across many segments at once. Cats and dogs living together would result.
Been too much prudence in the lending standards.
it ain't easy to get a loan unless you already own in which case it's secured money.
The Vendors Version
https://www.news.com.au/finance/real-estate/buying/we-did-nothing-wrong-...
donweather wrote:I think some people may be 100% correlating the housing market with interest rates. Yes sure they're a factor but they're not the be all and end all when it comes to the property market. Other economic affects can also affect house prices. For instance the stock market. When it's bullish, every one believes they have spare income because the glass is half full. Therefore when the economy is booming house prices also boom. Same affect can be said when there's a stock market crash. Every has to save every penny and hence some may have to sell their lavish $3m homes to provide that spare cash. There in lies a drop in house prices.
I'm expecting something around a 30% drop in property prices over 2022/23. Buy the dip!!!
Your rationale Don?
AndyM wrote:You're expecting a U.S. stock market crash to send ripples through Australia Don?
Not just US my friend. Global. Won't take much to tip over the half glass full to make it completely empty. Markets are on a knife edge every time there's a red day.
GuySmiley wrote:donweather wrote:I think some people may be 100% correlating the housing market with interest rates. Yes sure they're a factor but they're not the be all and end all when it comes to the property market. Other economic affects can also affect house prices. For instance the stock market. When it's bullish, every one believes they have spare income because the glass is half full. Therefore when the economy is booming house prices also boom. Same affect can be said when there's a stock market crash. Every has to save every penny and hence some may have to sell their lavish $3m homes to provide that spare cash. There in lies a drop in house prices.
I'm expecting something around a 30% drop in property prices over 2022/23. Buy the dip!!!
Your rationale Don?
Cycles, but this time it's gonna be a big one. And this time (unlike the GFC) Australia won't fair as well because we won't have coal and iron ore to prop us up. Arse end has already fallen out of both so they will dump just as hard.
donweather wrote:bonza wrote:"Only 15 of the 52 economists who answered the question expected a hike next year"
https://theconversation.com/top-economists-see-no-prolonged-high-inflati...
Economists have been known to be wrong!!!
Never a truer word spoken
“ I'm expecting something around a 30% drop in property prices over 2022/23”
Compared to when? 2020. So only impacts buyers in the last 10-12 months. Everyone else will be minimal net. And No big deal unless interest rates go nuts. And fuck those FHBs anyway and their stupid risky decisions. And if IR rise any asset price drop will be cushioned with re started high octane immigration cash.
Hey DW, you calling that as a uniform price drop, or an average?
My view is that some places will be affected more than others. Regional Aus perhaps more so.
etarip wrote:Hey DW, you calling that as a uniform price drop, or an average?
My view is that some places will be affected more than others. Regional Aus perhaps more so.
Most relevant to the Swellnet audience is the cost of house prices at or near the coast.
I can't see them going south any time soon, if ever - irrespective of external influences or national trends.
It's just a simple supply/demand issue, and the simple fact is that there is a limited, finite supply of coastal properties, and a large demand to buy in. Previous barriers such as remote working no longer apply.
Hey Ben, I think that holds true for some areas but my thinking is that where there’s a lower percentage of owner / occupiers (ie investment / holiday rentals) this might play out differently. South coast NSW is an example. I’ve got friends being offered crazy money for houses. Many of those are for ‘holiday houses’ which are Airbnb’d out for most of the year.
I know people who lost money on property / house prices in Perth, bought in 2007-8 and sold at a loss 2011-2 ish.
FWIW, I don’t think that things will crash necessarily. And even if they do drop significantly east coast prices would still be up on what they were 3-5 years ago.
The trend I'm seeing up here on the Tweed is a mix of families relocating away from Syd/Melb (as I did over six years ago), but also an increasing number of people buying houses to relocate to in 5/10/15 years time, when they'll be able to retire (perhaps their existing work doesn't allow them to work remotely). And so in the short term, they're renting the property out via AirB&B - but the long term strategy is to eventually relocate.
Therefore, as long as there's demand for short term holiday accomodation, they should be able to cover the mortgage until such time that they decide to move. And if shit hits the fan again, then they can fast track the plan and move up sooner.
That's just my anecdotal snapshot, anyway. Not sure if it applies to other regions.
And of course, this could all change in a heartbeat. Remote working has certainly allowed a much greater number of people the ability to live/work in regional areas over the last 5-10 years, and Covid-19 accelerated these kinds of decisions. But two years ago, Covid-19 wasn't remotely on the radar.
What other unknown factors are coming down the pipeline to throw a spanner in the works?
Yeah, that’s a good perspective. The shift of people moving to the NR / Tweed / GC has been incredible.
What’s surprised me is that there hasn’t been a corresponding drop or even leveling of house prices in the places that they’re leaving from. I guess your observation explains that in part.
House prices - going to go up , down or sideways ?
Opinions and anecdotal stories if you could.
Cheers