Housing Price Drops

[ethernet]

Housing price drops started a fire in another thread. Go Here.

If people feel poorer, they will probably fly less. If they are house hunting and your credit card statements over six months is deeply examined, and ONLY disposable income after fixed costs figuring in a 7% rate and a brain dead APRA formula that ignores Super - say 1.6 million - well that will cause issues.

AFF pilots probably wont care - there is a shortage of skilled experienced pilots. Most AFF members are probably too smart to go negative equity. I smile, as the politicians are about to be served a message about looking after us, not themselves - maybe amplified by climate change latte sipping millennials.

I say above CPI house increase was linked to above CPI credit loosening and liar loans. Year on year new car sales are down 14%.. Looks like a good time to upgrade when the distress sales come out.

 

[ethernet]

HSBC pretty much 3.59% owner, but want 40% deposit for country properties and 4% is too much. Banks are looking for well heeled clients.

 

[Hvr]

As someone who owns their modest home outright I really don't care where house prices end up. I have no intentions of selling.

My 16 year old car still works well, I have no debt. I pay off my credit card in full every month.

I'm in an enviable position and am very fortunate.

 

[tgh]

Are you fortunate.. or were you canny
There is a difference..

 

[Forg]

I’m confused about the relevance of the original poast & hence topic of this thread to the vibe/Mabo of the forum.

People feeling they owe a greater percentage of their home to the bank than they thought they did, meaning less travel?
But doesn’t that also mean supply:demand should make flights cheaper?
As long as you’re not working in the housing sector, and of course that the entire economy doesn’t collapse, could be a positive on a personal level?

 

[Hvr]

Are you fortunate.. or were you canny
There is a difference..

I'm going to say fortunate. When I purchased my home it had been on the market for >12 months, the state was in recession and I was retrenched. I was able to buy cheap and then study full time.

 

[amaroo]

House prices are still rising in large chunks of Australia...

 

[Forg]

House prices are still rising in large chunks of Australia...

Traditionally, this is because these areas have lagged behind the main centres. They’ll eventually start to drop, and it may even be after the main population centres have turned around & started rising again,

 

[ethernet]

I’m confused about the relevance of the original poast & hence topic of this thread to the vibe/Mabo of the forum.

People feeling they owe a greater percentage of their home to the bank than they thought they did, meaning less travel? Yes.
But doesn’t that also mean supply:demand should make flights cheaper?No.

As long as you’re not working in the housing sector, and of course that the entire economy doesn’t collapse, could be a positive on a personal level?
Yes, as long as you are not intending or planning to buy a house - or can borrow the entire amount outside the banking system,

That's the point. Supply and Demand is now supply /demand AND historical spending patterns.
Your maximum loan amount depends on low spending and disposable surplus income according to an illogical APRA formula pointed at bankers heads.

Take a holiday, buy a car, do a renovation, or have a high credit card limit, can reduce you purchase limit 30% or 200K easy! Hence the explosion in Afterpay and the like.
The solution is either great photoshopped forgeries, or a radical cutback at the shops.
As for airfares getting mom/dad to buy them is back on. as they plead to pay back after nailing the bank loan.

Expect the bank of mom/dad to be savaged going forward.

 

[ethernet]

House prices are still rising in large chunks of Australia...

Yes, but the units/flats are also shrinking in sqm terms, bigger corporate body fees, and now building construction fault levies. Big blocks are 400sqm! less for more is the catchword. Carpark is extra and offstreet parking getting impossible. Throw in M5 pr Parra road carpark and tempers are high.

 

[RooFlyer]

House prices are still rising in large chunks of Australia...

Traditionally, this is because these areas have lagged behind the main centres.

... which Hobart and rest of Tas is a good example. Traditionally very cheap compared to rest of Australia, because of long depressed economy.

Improve the economy and keep it going for 4+ years, add a number of refugees from the mainland, and prices went crazy starting about 18 months ago. Slowing, but still going up, but expected to top out this year. I brought forward the sale of my holiday house by a year to take advantage and got more than I was asking!

The flip side is that the plan was to buy an apartment in Hobart for use when I'm there for various reasons (I live rural), but that's on hold.

 

[Forg]

Yes, but the units/flats are also shrinking in sqm terms, bigger corporate body fees, and now building construction fault levies. Big blocks are 400sqm! less for more is the catchword. Carpark is extra and offstreet parking getting impossible. Throw in M5 pr Parra road carpark and tempers are high.

They probably don't have units in the places of Australia that are so far from the main centres that prices aren't reducing.

The flip side is that the plan was to buy an apartment in Hobart for use when I'm there for various reasons (I live rural), but that's on hold.

See?

Anyhoo, ethernet, I don't see there's anything to disagree with in what you're saying.
However the bit about the APRA formula, I thought it had been pretty conservative for at least 10 years now? And what's the problem with it ignoring super, you shouldn't even be able to rely on anything to do with any super you've got to pay a mortgage, should you?
Most of us have gone through 5-10 years of early home ownership where lots of cat food was bought (and only when it's on special) & holidays were spent camping in Mum & Dad's back yard, regardless of when we bought; I recall talking to Dad when first looking at a big scary mortgage in the late 90's, and it'd been just as tough for Mum & Dad with always-hungry Baby Forg in the very early 70's.
So yeah, I too think it will have an effect on consumer confidence & hence spending … but the people closest to having their vibe/Mabo affected will already not be spending-up big on French steak dinners at Chez Currency, so I'm not sure how much that's going to hit the entire economy … and as I said before, less demand for flights surely means those cheapest ~$40 Tigerair flights will be easier to snaffle?

However … I'm already seeing a few people saying "hmm, might not have much more to drop this time 'round", at least with respect to the traditionally-leading housing markets of Sydney & Melbourne. And I know there are quite a few people keeping an eye out for that perfect place to be For Sale because they think it might now be something they can buy. I don't want to venture an opinion on what will really happen, and as owner of a mortgage that's not indexed to my house's value I've got no skin in the game at all, but if we were having an AFF Housing Market Tipping Comp I reckon I'd be on the board with a ~30% total drop from the peak and for it to be achieved in … August this year.

 

[ethernet]

They probably don't have units in the places of Australia that are so far from the main centres that prices aren't reducing.

See?

Anyhoo, ethernet, I don't see there's anything to disagree with in what you're saying.
However the bit about the APRA formula, I thought it had been pretty conservative for at least 10 years now? And what's the problem with it ignoring super, you shouldn't even be able to rely on anything to do with any super you've got to pay a mortgage, should you?
Most of us have gone through 5-10 years of early home ownership where lots of cat food was bought (and only when it's on special) & holidays were spent camping in Mum & Dad's back yard, regardless of when we bought; I recall talking to Dad when first looking at a big scary mortgage in the late 90's, and it'd been just as tough for Mum & Dad with always-hungry Baby Forg in the very early 70's.
So yeah, I too think it will have an effect on consumer confidence & hence spending … but the people closest to having their vibe/Mabo affected will already not be spending-up big on French steak dinners at Chez Currency, so I'm not sure how much that's going to hit the entire economy … and as I said before, less demand for flights surely means those cheapest ~$40 Tigerair flights will be easier to snaffle?

However … I'm already seeing a few people saying "hmm, might not have much more to drop this time 'round", at least with respect to the traditionally-leading housing markets of Sydney & Melbourne. And I know there are quite a few people keeping an eye out for that perfect place to be For Sale because they think it might now be something they can buy. I don't want to venture an opinion on what will really happen, and as owner of a mortgage that's not indexed to my house's value I've got no skin in the game at all, but if we were having an AFF Housing Market Tipping Comp I reckon I'd be on the board with a ~30% total drop from the peak and for it to be achieved in … August this year.

Um I have to agree again - and strangely the politicians can't say it as neatly as said here. On Tasmania, I would say the hot money is flowing there - for yield. For a 30% drop, i would say the cap gain 50% discount and neg gearing changes and land tax would need to be added, and more refinancing rejections. That may take 18 months to work in. You imply the old guard who are not retiring will get a 9% plus booting swing against.

Canny people here wlll watch and wait, ready to pounce - although all talk of distress sales is not in any news yet.

I speculate unintended consequences like falling stamp duty, forced mortgage insurance on lower valuations, and councils jacking up DA fees and rates - which will cause unemployment where capital gain is less likely. Woolongong has like $16000 DA fees. I also see healthcare costs rose 4% in real terms.. As Dilbert said, Induhviduals deserve it.

I also note China is using Chinese tourist numbers to threaten (NZ and Canada) for earning negative social credits. Cheap NZ flights may be coming up.

 

[pauly7]

What is really interesting is that the jobs market is reporting increasingly stronger numbers with double the amount of new jobs forecasted created in Jan and most of them FT as well. Participation rate also rose otherwise we would have seen unemployment dip under 5.0% (instead remained static).

So the economy is actually still ticking along despite the ‘housing headwinds’. Be interesting to see how plays out with another resources boom building quietly as well!

 

[Moody]

Trouble is ... wages have been stagnant whilst property prices exploded. We will need a few years of the opposite to reverse the unaffordability gap. As it stands the only people who can afford near CBD housing (and "near" is a very relative term) are those that already have it. Like me.

My kids will have to wait to inherit, or go bush.

 

[Forg]

Trouble is ... wages have been stagnant whilst property prices exploded. We will need a few years of the opposite to reverse the unaffordability gap. As it stands the only people who can afford near CBD housing (and "near" is a very relative term) are those that already have it.

I don’t think that’ll change. Everywhere in the first world is the same. Western society is heading for a crash (I’ll be long-dead before it happens - I reckon it’s 80yrs or so away), and I think affordable housing anywhere near anything will continue to disappear ‘til it all goes Mad Max.

 

[jakeseven7]

Why aren’t the prices in inner Melbourne dropping?! It seems to only be places 10k plus out where credit crunch is hitting hardest.

 

[33kft]

Why aren’t the prices in inner Melbourne dropping?! It seems to only be places 10k plus out where credit crunch is hitting hardest.

Probably because they don't need to sell

 

[amaroo]

Probably because they don't need to sell

Don't catch a falling knife!

 

[jakeseven7]

Probably because they don't need to sell

Might be partially true there is absolutely no inventory in the more ‘desirable’ suburbs. But those that do sell are still getting very good prices.