House prices
monkeyboy wrote:sypkan wrote:"...The job market is storming, make hay while the sun shines (well, before the floodgates open and Australia gets more immigration ... oh look the borders have reopened and the currency has/is taking a freefall....) Nicely done !"
how has opening borders put the currency in freefall?
an economic guru dude other day pointed out the last time commodity prices were this high the AU dollar was at parity with US dollar... and wondered why not now?
all the 'indicators' and events should have AU $ climbing, but we are seeing the opposite...
yeh I know US interest rates going up, but you would think our rates also going up would cancel that out?
I wasnt suggesting opening the borders put the currency in freefall although it does read like that. The currency is dropping most likely as The Aussie is seen as a "risk on" type currency and with iron ore prices falling and a flight to the USD it isnt that attractive. We're also behind on interest rate increases (I can earn more on the US Bond than on an Aussie bond for example.
My point was more that by opening up our borders further it aims to address a huge shortage of workers (the goal being to redice wage pressures perhaps), letting the aussie fall helps with inbound tourism and foreign investment (yes it also makes our cost of living greater for those things we import anyway). Many commodities are way off their highs (Iron Ore for example - our biggest export).
Ok, that makes sense
economic guru dude was weeks ago, when iron ore still high...
and oz $ down down down since then... so quickly!
still surprised, oz economy still so good, and promising, relatively....
DudeSweetDudeSweet wrote:Déjà vu
Not dissing Peter Schiff but even a broken clock is right twice a day.
There's an old saying - "if you are going to forecast, forecast often"
udo wrote:https://www.abc.net.au/news/rural/2022-07-07/farmland-sale-of-35-hectare...
This is the unfortunate future for the Sunny Coast. So much beautiful land begging to be cleared, concreted over for 400 sq m lots and cookie cutter housing full of morons (sorry). And we wonder where all the native animals have gone, why the wind patterns change and it keeps getting warmer. Beautiful Verrierdale and surrounds wont be far off.
yeah, and note the SCC just received UNESCO Biosphere Reserve status, belittles the value of a Biosphere Reserve in my opinion. At least the Council seems to be against the Twin Waters West development. But then think of their position on the Yaroomba Sekusui development - overriding the Planning Scheme and pushing for it when the community was totally opposed, makes the Council a bunch of hypocrites
GreenJam wrote:yeah, and note the SCC just received UNESCO Biosphere Reserve status, belittles the value of a Biosphere Reserve in my opinion. At least the Council seems to be against the Twin Waters West development. But then think of their position on the Yaroomba Sekusui development - overriding the Planning Scheme and pushing for it when the community was totally opposed, makes the Council a bunch of hypocrites
I'm a little surprised about the Twin Waters west tbh - the council even changed their planning regs so Stockland could amend their plans to meet the new ones. I have no idea why people would want to live next to a motorway (which they've hinted at widening) but they do (see "Aura"). The Biosphere is a joke - same in Noosa; its just a tourism badge like Canstar is to Insurance companies. So many native trees being cleared for Aged Care housing, and Man-Sheds it's just nuts. And at the same time the Council "despairs" over housing affordability - its a trojan horse.
Here come the Olympics {sigh}.
And still there's absolutely no sign of any conversation regarding a sustainable population for Australia.
Of course, if we keep voting Lib/Lab that conversation just aint gonna happen.
Those mad lads at the Bank of Canada rose 1 whole % yesterday. What a time to be alive.
velocityjohnno wrote:Those mad lads at the Bank of Canada rose 1 whole % yesterday. What a time to be alive.
respect!
though I do appreciate the counter arguments...
'this time is different'
maybe
US tipped to do same by many commentators ...totally 'behind the curve' and 'too slow to react'...
their actions are almost as desperate as the ones that got us into this mess
imagine the collective wig out if australia went one percent...
sypkan wrote:velocityjohnno wrote:Those mad lads at the Bank of Canada rose 1 whole % yesterday. What a time to be alive.
respect!
though I do appreciate the counter arguments...
'this time is different'
maybe
US tipped to do same by many commentators ...totally 'behind the curve' and 'too slow to react'...
their actions are almost as desperate as the ones that got us into this mess
imagine the collective wig out if australia went one percent...
Here’s my two cents worth. As soon as the war in Ukraine ends and oil and gas prices come back down to the norm the US will realise they’ve gone way too hard on interest rate rises and have to start reducing interest rates. This will send markets in a whirl wind uprise, albeit short term but everyone will be jumping on the FOMO band wagon wanting to not miss this one again. And this is just when the market will self implode and recession will hit shortly after.
So enjoy the ride both in the short term and medium term as she’s gonna be one hell of a roller coaster.
Fun fact: RBA raised Australia’s cash rate by 1% twice in a row in 1994 (although 2 months apart)
Aug 1994 - 75 point raise
Oct 1994 - 100 point raise
Dec 1994 - 100 point raise
2.75% in five months!
Bring on the interest rate rises. I was taught by a very wise property investor when i was 18 years old that if you cant afford the property at minimum 3 x the current rate you a purchasing at then you can not afford that home.
Another fun fact about the RBA's November commentary on monetary policy, as reminded by this article on the upcoming review of the RBA:
“Our central scenario is that underlying inflation reaches the middle of the target by the end of 2023,” he said of the RBA’s 2 to 3 per cent inflation target.
“If this comes to pass, it would be the first time in nearly seven years that we will be at the mid-point. This, by itself, does not warrant an increase in the cash rate. It is still plausible that the first increase in the cash rate will not be before 2024.”
Wow, what a difference The Tasman makes. 7.3% over here.
Island Bay wrote:Wow, what a difference The Tasman makes. 7.3% over here.
Aus at 5.1% as per 27/04.
NZ at 7.3% as per 17/07.
Let's see what happens on the 27/07 when Aus data released.
Futures are already pricing in the Fed stopping and reversing a little next year Don. My 2c is the Fed is chasing energy and wants to slay this beast - the beast will not go quietly, and will be slain last. We've had as close-to-dammit a crash in US indexes already this year, I guess a crash in Q3 would be a huge continuation down at this stage. Dunno if that one will occur.
Of note is the bank that forecast the smallest overall rise (CBA, to 2.1%) has now revised upward to 2.6%.
https://www.macrobusiness.com.au/2022/07/cba-rba-to-hike-then-slash-inte...
And ANZ have bought Suncorp.
In local anecdata, the young apprentice actually had an RDO after a week of cleaning up things around the worksites. Did this mean work flow is lessening? Nope - new big job just started. Boom on, in the face of everything.
"My 2c is the Fed is chasing energy and wants to slay this beast"
in a political manner rather than economical?
I think I mentioned a house up the corner from me, bought last Mar for a million, sold this Jun for 1.7.
Old mate two doors down must have had some offers.
For sale sign went up, less than 2 weeks later: SOLD.
my personal opinion is while these waves of Covid are still happening the flight to the regions will continue.
No sign of any slowdown here, anyways.
Go ya halves FR? https://thepoint.house/
How long before this adds another few hundred to the lineup?
https://www.realestate.com.au/sold/property-acreage+semi-rural-nsw-lenno...
It's definitely slowed a bit here. Mate's a REA said people offering less than list now.
you are in god's own country freeride... literally...
I cannot see your region experiencing any major correction
the big cities however... already...
meanwhile, certain regions are still seeing growth, geez even staid old adelaide is holding / still increasing...
I'd actually say adelaide is currently heading towards some of the most overpriced housing in oz... it might be appealing from the distance of yet another cold covid melbourne winter... but totally unsustainable from a house price / opporunities / dust has settled perspective...
No slowdown here either.
Last time I posted here was when people across the road tested the waters - probably at the behest of their RE agent - with a price that, from memory, was closer to three million than two. I thought that was monstrously out of step yet it ended up going for two and a quarter. An old weatherboard house on an average-sized block that can't be sub-divided owing to the small amount of street frontage.
Incredible.
Meanwhile, in the papers I was reading all about belt-tightening and downturns and falling house prices. It wasn't happening here.
Now a For Sale sign has appeared on the neighbours two doors up - can see our dunny window in the photos! - and what they're asking would imply the downturn still hasn't struck. Another weatherboard house lifted on janky old brick pylons, admittedly with a view of the escarpment, but also a view into our upstairs bog.
kaiser wrote:Fun fact: RBA raised Australia’s cash rate by 1% twice in a row in 1994 (although 2 months apart)
Aug 1994 - 75 point raise
Oct 1994 - 100 point raise
Dec 1994 - 100 point raise2.75% in five months!
Yes but what was the starting interest rate in 1994?
donweather wrote:sypkan wrote:velocityjohnno wrote:Those mad lads at the Bank of Canada rose 1 whole % yesterday. What a time to be alive.
respect!
though I do appreciate the counter arguments...
'this time is different'
maybe
US tipped to do same by many commentators ...totally 'behind the curve' and 'too slow to react'...
their actions are almost as desperate as the ones that got us into this mess
imagine the collective wig out if australia went one percent...
Here’s my two cents worth. As soon as the war in Ukraine ends and oil and gas prices come back down to the norm the US will realise they’ve gone way too hard on interest rate rises and have to start reducing interest rates. This will send markets in a whirl wind uprise, albeit short term but everyone will be jumping on the FOMO band wagon wanting to not miss this one again. And this is just when the market will self implode and recession will hit shortly after.
So enjoy the ride both in the short term and medium term as she’s gonna be one hell of a roller coaster.
Just clarifying I wasnt referring to the housing market. More so the stock market.
Inflation hasn’t resulted in a across the board wage increase spiral but it has seen a huge uptick in profits. Many business owners are making out like bandits and so the housing market is being sustained enough to keep the illusion happening.
Unfortunately, further interest rate rises will put a huge downer on the construction industry in general as the average punter feels the squeeze. The construction industry is the hub of the Australian economy….we get the export dollars with mining and churn them through the country with the construction industry before it flows through to the service industries.
Anecdotally I know people who are still building the property portfolios and also people who are starting to shift their pants cause they can’t get out with a positive result on their over capitalised property flips. The weighting is moving way more towards the FONGO* mob than the shoppers.
Fear Of Not Getting Out
sypkan wrote:"My 2c is the Fed is chasing energy and wants to slay this beast"
in a political manner rather than economical?
Yeah, maybe both. Think about who they might not like internationally who are all but a petro-state.
ANZ predict 4 x 0.5% increases, whoa
https://www.dailymail.co.uk/news/article-11023321/ANZ-expects-50-basis-p...
With that FONGO stuff, have heard a little of the panic in the mum & dad new homebuyers/mortgagee areas. Not necessarily the flippers, but those that must have bought in the corona FOMO madness and 0.1% rates, and bought for the house to set up their family life. It was the drop to unheard-of lows that put the 'hazard' in the moral hazard we are seeing now.
It’s funny. There appears to be a real state of denial going on. Nobody seems worried… everyone’s still spending like mad. And if the narrative holds that people only expect a brief period of rate rises before pulling back again, just how far will they need to go to rein in inflation?
If nothing else, they’ve got plenty of catching up to do to stay in touch with others ie NZ, CAN, US, UK.
When people stretched for < 2% fixed and it expires to 7% with negative equity there'll be some pain, also bargains.
Maybe in the 'burbs of western Sydney and Melbourne.
Can't see coastal real estate doing anything but levelling out a few degrees.
Too much supply shortfall, no end to demand.
The housing shortfall in the Northern Rivers over the next 15/20 years is estimated to be 41000 houses.
They'd need to be building a new Legoland every 6 months to keep up.
freeride76 wrote:Maybe in the 'burbs of western Sydney and Melbourne.
Can't see coastal real estate doing anything but levelling out a few degrees.
Too much supply shortfall, no end to demand.
The housing shortfall in the Northern Rivers over the next 15/20 years is estimated to be 41000 houses.
They'd need to be building a new Legoland every 6 months to keep up.
Spot on. Metro dwellers have seen there's a better, less stressful life out there and contrary to what I have read in this thread WFH is well and truely entrenched in well-paid big business and government land (and likely for good, can't speak for small business though). I'm guessing a lot of city-based, overworked tradies/teachers/health workers would also want to make the jump still. A lot of Victoria/Melbourne's desirable land close to the coast/hills is locked up for good as green wedge which will further compound things long term down here.
Relativity will still apply, just now the parameters have shifted as the work environment has too. If the decline in cities is sufficient, then the draw of the coastal life will be weighed against the price premium. Coast won’t be immune but will fare better than previously. Cities could become the value areas. Interesting times. Wouldn’t want to have Syd/Melb CBD property, especially commercial and retail…
Lotta super funds wrapped up in that
Yep it's revenge of the coastal lifestyle areas.
For many years the local RE market update flyer has pointed out coastal prices were a function of access to city/growth in city; wonder if they will pick up on the decoupling.
Or will the coastal lifestyle areas actually fall if peeps are forced to sell off coastal getaways? Can't see it tbh.
If people want to have holiday homes and can afford it then they should be able to but there shouldn’t be any tax benefits to support them, particularly with current housing crisis.
https://www.abc.net.au/news/2022-07-20/homeless-crisis-million-homes-vac...
Maybe Oz should be looking at increasing the time period between purchase and sale when capital gains tax can be applied to reduce short term speculation driving up coastal property values.
Distracted wrote:If people want to have holiday homes and can afford it then they should be able to but there shouldn’t be any tax benefits to support them, particularly with current housing crisis.
https://www.abc.net.au/news/2022-07-20/homeless-crisis-million-homes-vac...Maybe Oz should be looking at increasing the time period between purchase and sale when capital gains tax can be applied to reduce short term speculation driving up coastal property values.
Why should there be ANY capital gains benefits on ANY investment property? If you had invested in the stock market and made a profit you don’t get any tax benefits so why should someone who invests in property get a tax benefit? Makes absolutely no sense whatsoever apart from driving up demand in investment properties.
donweather wrote:....
Why should there be ANY capital gains benefits on ANY investment property? If you had invested in the stock market and made a profit you don’t get any tax benefits so why should someone who invests in property get a tax benefit? Makes absolutely no sense whatsoever apart from driving up demand in investment properties.
100%. Same with negative gearing.
I'm no tax expert, but isn't it the case that there is no capital gains benefit on investment properties apart from paying tax on 50% of the capital gain if the property is held for over 1yr - and this also applies to shares?
Is there actually no such thing as "negative gearing", as mentioned at the Treasury website (see screengrab below)? And the idea of "negative gearing" applies equally to shares?
Doesn't abolishing "negative gearing" mean not allowing the claiming of expenses on an investment property (such as repairs and maintenance, insurance, interest amount on loans, etc)? So this would be the same as not allowing a business to claim expenses? Seems absurd?
Is it possibly the case that "capital gains benefits" and "negative gearing" isn't what's driving the property bubble?
If you sold your Home / Residence for Bitcoin..Does that make you liable for CGT on Sale of the Bitcoin ?
gsco wrote:I'm no tax expert, but isn't it the case that there is no capital gains benefit on investment properties apart from paying tax on 50% of the capital gain if the property is held for over 1yr - and this also applies to shares?
Is there actually no such thing as "negative gearing", as mentioned at the Treasury website (see screengrab below)? And the idea of "negative gearing" applies equally to shares?
Doesn't abolishing "negative gearing" mean not allowing the claiming of expenses on an investment property (such as repairs and maintenance, insurance, interest amount on loans, etc)? So this would be the same as not allowing a business to claim expenses? Seems absurd?
Is it possibly the case that "capital gains benefits" and "negative gearing" isn't what's driving the property bubble?
not solely no but its a big part. unsustainable immigration. land banking by developers, and grants and incentives also play a big part to drive demand.
and houses should not be classed as a "business". certainly not in this day and age
udo I think it would be a very risky game to sell an investment property and receive bitcoin in the hope of avoiding paying tax on capital gains!
To start with, the ATO can easily work out the $AUD value of the property sale given the bitcoin price at the time.
And there's rules surrounding trying to sell a property below market value in order to try to avoid tax on capital gains - see for instance the ATO explainer...
Home/ Residence not investment property
a few yrs back many homes were sold for Bitcoin and im asking if when offloading the Bitcoin does that make you liable for CGT ?
Had they sold for Aust Currency id definetly would not .
https://www.realestate.com.au/news/properties-you-can-buy-with-bitcoin/
Don't know about that one but I'd assume the ATO would likely question how/when the bitcoin was acquired and then determine a "cost base" using the bitcoin price at the time of the property sale. (So it could also result in a capital loss.) But I'm only speculating here...
udo wrote:https://www.sunshinecoastnews.com.au/2022/07/22/5-ann-street-dicky-beach...
Someone just paid $1.7m for a block of land that doesn't have ANY ocean views whatsover. Fcking ludicrous and they're gonna be in a world of hurt after they build their $600k McMansion and the arse end falls out of the market and they're left with high mortgage repayments and a significant loss in equity.
This would put their completed house and land at around $2.3m, some $400k over what the house down the road sold for at the peak, let alone what the market will pay come 12 mths+ time.
donweather wrote:udo wrote:https://www.sunshinecoastnews.com.au/2022/07/22/5-ann-street-dicky-beach...
Someone just paid $1.7m for a block of land that doesn't have ANY ocean views whatsover. Fcking ludicrous and they're gonna be in a world of hurt after they build their $600k McMansion and the arse end falls out of the market and they're left with high mortgage repayments and a significant loss in equity.
This would put their completed house and land at around $2.3m, some $400k over what the house down the road sold for at the peak, let alone what the market will pay come 12 mths+ time.
Add another $100k on for the asbestos removal.
They're retired, most likely loaded and couldn't give af less, probably die there but yeah I see your point.
looks its gonna be a long drawn out recession...
https://www.ft.com/content/afdc756d-a6da-4482-8d9b-d9c22fdc8968?segmentI...
I know there's not much choice, but the volcker tactic seems kind of impotent under the current conditions... will get there eventually... i guess... but geez, it seems our now multi tiered society will need to inflict a lot of pain to get there...
a lot of pain for some...
Im wondering if those in power will hold their nerve
sypkan wrote:looks its gonna be a long drawn out recession...
https://www.ft.com/content/afdc756d-a6da-4482-8d9b-d9c22fdc8968?segmentI...
I know there's not much choice, but the volcker tactic seems kind of impotent under the current conditions... will get there eventually... i guess... but geez, it seems our now multi tiered society will need to inflict a lot of pain to get there...
a lot of pain for some...
Im wondering if those in power will hold their nerve
paywall
geez its odd how these paywalls work... sometimes you're ushered in, sometimes its hostile door bitch...
a US article yes, but seems a similar situation in oz, ...plus US sneezes and colds and all that...
hard to believe US housing stock so under pressure... but same here... wonder how many multiple property owners they have?
and how much air bnb scourge?
"In Eric Farmelant’s nearly decade-long career as a real estate broker in Miami, he had never witnessed renters engage in bidding wars over rental properties until the coronavirus pandemic fuelled scorching demand for beachfront housing in Florida. He can no longer show four or five listings to clients because many of the properties are being rented sight unseen. “You’re seeing renters putting down a year’s worth of rent up front to get their offer accepted,” said Farmelant, who works for Ibis Realty Group. Rents, in turn, are up nearly 40 per cent since January 2021, according to Apartment List, indicative of a broader trend that has gripped the country.
For realtors, double-digit rent increases have been a boon for business. For the Federal Reserve, they serve as yet another hurdle in the central bank’s quest to get the worst inflation problem in decades under control. With little relief expected in the near term, economists warn elevated rents will act as an accelerant, maintaining upward pressure on inflation even as consumer price growth stalls for other categories. It makes the US central bank’s job of tackling soaring prices all the more difficult. “It’s going to be hard to say ‘we’ve got inflation under control’ if you still have shelter costs continuing to march higher,” said Sarah House, senior economist at Wells Fargo. She expects lofty rental inflation to persist until at least the end of the year, and despite some offsetting moderation in other goods and services, “that will complicate the task ahead for the Fed”.
Top officials pay close attention to housing-related inflation, given that it is such a significant component of overall inflation. By some estimates, shelter costs make up about a third of the consumer price index, which in June rose at an annual pace of 9.1 per cent, according to the Bureau of Labor Statistics, in what was the fastest such increase since November 1981. For the “core” measure, which strips out volatile items such as food and energy, it makes up over 40 per cent. Compared to the same time last year, rents rose 5.8 per cent after the biggest monthly jump since 1986 of 0.8 per cent. Owners’ equivalent rent, a measure of what homeowners believe their properties would rent for, rose 0.7 per cent. In all, shelter costs are up 5.6 per cent over the past 12 months, the most since 1991.
The larger-than-forecast acceleration has reset expectations about how quickly headline inflation can moderate this year and how much more monetary policy tightening may be forthcoming. The Fed has said it needs to see a clear deceleration in monthly inflation data before significantly slowing the pace at which it is raising interest rates. Forecasts for rent inflation hinge in large part on the trajectory of home prices, which surged during the pandemic as people reshuffled their lives in a new era of working from home, sought out less dense locales and took advantage of ultra-low mortgage rates. As more prospective buyers were priced out of the market, they turned to rental options. Now buyers are being priced out for a different reason. Home prices are beginning to moderate after hitting another record in June, according to data released by the National Association of Realtors on Wednesday. But the cost to finance that purchase through borrowing has skyrocketed as the Fed has jacked up interest rates. According to Realtor.com, the gap between monthly starter home ownership costs and rents has widened by roughly 25 percentage points, or nearly $500. In June alone, the NAR reported sales of previously owned homes were down 5.4 per cent, or 14 per cent from a year earlier. “People who have been priced out of the for-sale housing market are increasingly turning to the rental market and that also pushes up demand,” said Daryl Fairweather, chief economist at Redfin. Coupled with the fact that rental prices trail home price changes by about 18 months, Kathy Bostjancic, chief US economist at Oxford Economics, said rental inflation may not moderate until the second quarter of 2023.
Economists such as Ryan Wang at HSBC have revised higher their forecasts, pencilling in rental inflation on a year-over-year basis to top 7 per cent by early next year. “New leases are being contracted at much higher rent levels than before, and this is leading to increases in the overall universe of rents as measured in the CPI,” he said. Given the way BLS calculates the rent data, the broader inflation effects can also take time to show up in the official figures. Michael Pond, head of global inflation-linked research at Barclays, reckons the lag can be anywhere between six and nine months. In February, researchers at the Fed’s San Francisco branch estimated that current rental market trends would increase overall CPI inflation by an additional 1.1 percentage points in both 2022 and 2023, or 0.5 percentage points to the central bank’s preferred inflation gauge, the personal consumption expenditures index. So far, those predictions have held up.
What could help ease some of these pressures is increased housing supply, which the Biden administration is prioritising. But economists and housing experts say those efforts do little to alleviate the immediate problem. “We don’t have enough housing. Even if you’re building over half a million units,” said Danushka Nanayakkara-Skillington at the National Association of Home Builders. Soaring material costs for builders are also being passed down to tenants, she said.
Realtors and real estate investors are most wary of a recession, which economists predict next year, as the Fed follows through on its “unconditional” commitment to restoring price stability. For Tom Porcelli, an economist at RBC Capital Markets, housing is already likely “just at the beginning of a recession”. “We are in store for a period of stagnating economic growth because of the interest rate increases the Fed is doing,” added Redfin’s Fairweather. “That will drive down price growth for basically everything, including rent. But it will just take a while for that to trickle down.”'
https://www.ft.com/content/afdc756d-a6da-4482-8d9b-d9c22fdc8968?segmentI...
House prices - going to go up , down or sideways ?
Opinions and anecdotal stories if you could.
Cheers