And we aim for record migration over the next year.
Nothing good is going to happen.
Unless you sell tents.
Tent and yurt manufacturers should go gangbusters...
**Weekly Highlights:**
* As indicated, 2022 plot has been consolidated and replaced by 2023 plot
* [Biggest Auction weekend of 2023, with prelim. clearance rate of 70.7%](https://www.linkedin.com/feed/update/urn:li:activity:7048057400423043072/)
* [Sydney grows 1.4% in March, lead by the upper quartile (which rose 2.0% in March)](https://www.linkedin.com/feed/update/urn:li:activity:7048413313621250048/)
* [House prices set for speedy recovery](https://www.afr.com/property/residential/house-prices-set-for-speedy-recovery-corelogic-20230329-p5cw6d)
* [Economists bet on Feb 2024 rate cuts](https://www.afr.com/markets/debt-markets/economists-bet-on-rba-rate-cut-in-february-2024-20230330-p5cwvf)
* RBA Board to meet **this Tuesday (4 April)**
* [Surging immigration exacerbates housing shortfall](https://www.afr.com/property/residential/surging-immigration-exacerbates-housing-shortfall-20230331-p5cx35)
Yep, fell for this trick in 2019, won't fall for it again. Obvious in hindsight that less borrowing power -> lower prices -> sellers stop selling -> demand unmet -> prices appear up but with very low stock
Well maybe it was just bad analysis on my part, but I bought our PPOR at the end of 2019 and basically ended up paying too much (based on what it's valued at now).
My theory is that the low volume was due to a drop in lower-priced property sales, but desirable mid-priced property sales stayed stable, which drove the average sold price up.
I bought mine mid 2019 and am up about 70% based on comparable nearby sale last weekend. I suspect those who bought sept - December last year are also going to make a killing.
Problem is, unless pushed people can sit on their property and wait for better market conditions. This is what's happening now, I don't see enough pain in the economy to force people to sell.
I have no dog in this fight but I will say, it's rather crazy just how eager we are to shit on the bears that we are cheering price increases. This is not a good thing. Housing affordability is one of the biggest issues facing us today it feeds directly in to other issues such as low productivity and low birth rates.
There's no necessary contradiction. Atrocious housing affordability, as well as delusional takes that it's going to get better for no reason, are both bad.
Don't confuse belief and desire. I want houses to be cheaper, ideally much cheaper. Anyone with a heart does, and those who don't should be criticised. But criticising the bears doesn't mean someone wants housing to be more expensive.
>Criticising the bears is pointing out the harsh reality that they are ignoring.
Nothing falls and rises in a straight line.
No bear worth their salt contested low no. listings. The debate is what % of immigrants are here with cash that can spend straight away and buy a house whilst RBA is still raising rates.
Especially when housing finance is [down](https://twitter.com/ShaneOliverAMP/status/1642735201838329857).
The supply & demand argument alone doesn't make sense, when the availability of credit is more important.
Nonsense.
[Median house in Syd : $1,014,393](https://propertyupdate.com.au/the-latest-median-property-prices-in-australias-major-cities/)
[Median rent in Syd: $630 per week](https://mozo.com.au/home-loans/articles/what-is-the-average-rent-in-australia)
3.2% annual yield.
[Median house in Mel: $747,322](https://propertyupdate.com.au/the-latest-median-property-prices-in-australias-major-cities/)
[Median rent in Mel: $460](https://mozo.com.au/home-loans/articles/what-is-the-average-rent-in-australia)
3.2% annual yield.
Both well negative in real terms once factoring costs and inflation.
You can get a better return in a HISA and have less hassle.
Rentals only get pushed to a certain amount before people look for alternatives, move in with parents, share houses, live in their car.
There is an entire country outside of Sydney and Melbourne.
But yeah; yields in both suck. The apartment I’m renting would return landlord just over 1.5% gross yield.
I bought a 1brm (brick walk up) near Surfers Paradise for $200k five years ago. Rents for $430.
I renovated its next door neighbour for $50k and it rents for $550.
10% gross yield after a few, admittedly exceptional, years. They’re obviously very affordable as they are cash positive.
They’ve about doubled in capital value, too.
BTW as good as that is for me, apparently, I don’t think it is overall. I live in a society. Housing is wrecked in this country.
What happens when something breaks in the economy, cost of capital heads south and your 4.7% HISA turns into 2%?
Having cash in a HISA is a solid defensive position for now but don't confuse it for a long-term asset with sustainable cashflows into the future.
>Having cash in a HISA is a solid defensive position for now but don't confuse it for a long-term asset with sustainable cashflows into the future.
Agreed.
But let's not pretend every property will have sustainable cashflows into the future either.
You also have to deal with risk of damage caused by bad tenants or a poor build.
> Anyone with a heart does, and those who don't should be criticised.
Dumb take. There's nothing wrong with believing in a libertarian meritocracy, in which case houses would be dictated by the market but in general terms (particularly with migration) would keep going up.
I'm not proposing price caps or anything that would distort the market. I like market mechanisms. But I'm a Georgist - I think the status quo is a distortion. Land is a natural monopoly and although a market mechanism should be used for deciding who gets to use land, nobody should be entitled to land rents. The fact that they are causes underdevelopment and makes access to housing more expensive than it needs to be.
There are plenty of libertarian meritocratic Georgists.
Anyway, not convinced you give two hoots about anyone, you're always on about how people should be thrown to the wolves. Count yourself among those I think should be criticised.
> you're always on about how people should be thrown to the wolves.
If you call 'being bound to your own financial choices' being thrown to the wolves then yes.
Look I empathise with WMR and anyone housing affordability is a massive issue but like the other commenters said he was just no realistic, having your head in the clouds in Lala land doesnt help anyone
He never cared about housing affordability or the welfare of Australians he just wanted to buy his own property portfolio and build an audience around finance content.
He had shorted CBA from memory. His interests are not the noble virtue of improving housing affordability. He was trying to make money by being a contrarian to a distorted market while emulating Nostradamus (or Chicken Little).
😂 god this could be up there with Bush’s ‘mission accomplished’ banner. Pull your head in and look at some reason (perhaps) why this might be a bull trap
Edit: I thrive on your head in sand downvotes 😉
and while we obsess about prices generations of australians are locked out of home ownership or accommodation period, this is not something to be celebrated
Yep. I know it's anecdotal but everywhere I went on the weekend was absolutely pumping! How we are anywhere a great crash is beyond me. Everyone is wealthier and richer than they ever have been and jobs galore on the market right now. Its like standing outside on a sunny and cloudless day and claiming "it's raining"
I went to brunch and there was an endless stream of people (including myself) happy to fork out $30 for a chilli scramble
I don't think the economy has ever been healthier and I'm convinced that Aussies are absolutely overflowing in cash. It explains why cars, property, food, travel is so ludicrously expensive.
We are nowhere near a recession, that I'll agree with. Till we get UE from 3.5% to 6% we will be stuck in hyperinflation.
Spot on. With the RBA about to pause you can (if it wasn't obvious based on COVID response) be assured the RBA is willing to let it run as opposed to having a recession. These anecdotes are after 3.5% of hikes a year later. In terms of "slowing down the economy" the RBA haven't even tapped the breaks or changed gears. At best maybe put a hand out the window to increase drag slightly.
Demand is one thing, supply is another.
I heard on the radio we are 100,000 houses short over 5 years. When you also add immigration over 5 years, we are kinda up shit creek.
That doesn’t answer my question though. People don’t have unlimited income streams, so how does one afford the repayments on properties that are endlessly increasing? Their incomes need to be sufficiently high to cover the repayments.
So back to my question: where does the money come from?
They aren’t endlessly, increasing, though, are they? The majority of forecasts show the rates are likely to rise only one or two more times and begin to fall again. I think by this point, most people have a pretty good idea of how much they’re going to be able to afford and as such a more confident in buying now as opposed to 6 months ago where the future was a lot more uncertain
But not many people are selling a $2m house to buy another $2m in Sydney, are they? They’re generally upgrading.
So say they have $1.5m equity in their $2m property, great, but if they go and buy a $2.5m property, they’re now paying more than double the repayments than before (stamp duty taking some of the equity), so where does all the extra income come from?
I'm pretty sure it's a constant raising of the bar to homeownership. 10Y ago you could be a homeowner with a teacher's salary. Now you're rapidly falling behind. The same house the teacher would have bought, now the engineer is looking at. Similarly, a GP is looking at the house an engineer would have bought 10Y ago, and a law firm partner is looking at the old GP home etc.
The upgrading houses is likely simply people moving up in their careers, shedding HECS debts, cutting down on discretionary spending etc.
My grandma’s house, which she could afford as a single parent, is now worth $1.8m.
There’s a photo of of it from around 1950, with “fifty pounds” written on the back. ^(or something not unlike that)
You've got it, just add in the time lag / equity to a new/refinanced mortgage. The buyer originally buys their property at $1m and they've paid off $500k over 15 years. Now the property is worth $2m. They can take $1.5m equity, buy a $2.5m property and up their loan from $500k back to $1m. They now have a $2.5m house, and a new 30yr mortgage, but only $1m debt.
Say you have $1m equity in your $2m property/properties.
You use that to buy *another*, investment property.
Wait for prices to rise, giving you more equity.
Repeat.
> But where does the money come from?
The investor, the tax payer, the tenants pay the money back, through work, endlessly, but initially banks make the money out of thin air.
Our system encourages this wealth creation method.
I’m aware how equity works. You do realise that you need to be able to afford the repayment for any purchase you’ve used ‘equity’ for. Equity isn’t a magical bank account full of money. It’s just a tool that enables you to borrow against it.
I dont know why people continue to think that just simply having equity is enough to buy more properties. Its like they think the bank just gives them free money because their property has equity, and the bank wants absolutely nothing in return
It’s exact what I’ve been doing for decades.
But you’re right; I’ve been imagining it.
Another spin on the above: I renovated a property using $50K equity. @ 5% that’s an extra $50/week in interest. It rents for $100/week more than it did before. (Based on the exact same unit next door to it, too)
That sounds a lot like the bank giving you money in return for something (repayments for how much money they give you for accessing the equity).
Whether the repayments come from rent, tax return, your own pocket, etc, the banks need to make sure you have the ability to keep up with the repayments
You’re asking how people afford it, and they do, or you wouldn’t be asking, right?
Tenants pay for most of the repayments, tax payers pick up some of the rest, and the investor pays the rest. Negatively geared.
After some time, and increases in rent, investor and tax payers pay nothing. Positively geared.
At this point the repayments that the tenants are paying become yield; profit.
When only one or two houses sell in a suburb per weekend and generational boomer equity is being tapped to help adult kids…. Prices hold up remarkably well. There is a shitload of equity out there.. it just ain’t distributed evenly. The strong will feed on the weak in the coming year.
> So say they have $1.5m equity in their $2m property, great, but if they go and buy a $2.5m property, they’re now paying more than double the repayments than before (stamp duty taking some of the equity), so where does all the extra income come from?
In this scenario all they have to do is find an extra $1m plus maybe $150k for stamp duty etc...a combined $250k income will more than allow you to service the loan and there are a lot of DINKS who can afford that.
As the poster below mentioned, the bar to homeownership is also getting higher over time so the people who can afford to buy/upgrade are the richer couples.
With reduced supply, you don't need peoples incomes or wealth to increase, the houses would just be bought by selectively higher income/wealth individuals.
So where does the money come from? The money was always there with high income / high net worth people.
Lots of hand me down.
I look after 35-40 HNW families.
Two this weekend wrote their kids $500k and $1m cheques so they could stay in a desirable area. Their kids are very average in terms of personal capabilities. But it's their kids, so they help out regardless.
Lots of entitled people in Sydney that refuse to move out and do it on their own, they tap the bank of mum and dad, which inflates property prices.
Supply is a massive issue, these 'kids' of wealthy families battle it out with each other.
Lots of DINKS
My best friends group are all DINKS and all on like $250k+ (combined). Even my single friends who are in my age bracket (mid 30s) are on high incomes - accountant/engineer/lawyer/doctor etc
Even 2 nurses/teachers can be on $200k combined without too much difficulty
Throw in still relatively low interest rates and it's easily understood
Also, house prices have fallen significantly in real terms so they're not actually appreciating that much.
There's 600k immigrants coming in this year, and 900k next year.
A good chunk of them are going to land in Sydney CBD. That's 1.5M people. Sydney's entire population is 5M. If even 2/3 of these people land in Sydney, the population will increase by 20% in one year.
They are coming to Aus generally to look for a 'better life'. atm that looks like 850pw rent for a 2 bedroom apartment. or $400pw for a roomshare, that is not realistic rent for an immigrant to pay unless they are loaded in their home countries.
There's no way this ends well. Either you've got a lot of these students working day and night just to afford the rent, or you've got a funnel of 1% Chinese factory money seeping into the Australian housing market, creating insane price distortions.
fun fact, top be in the top 1% in china you need 850k USD, 3.5mil USD to be in the top 0.1% by net worth. Source: knight frank wealth report.
Now times that by 1.4 billion and thats the amount of “potential” money coming into sydney
Debt and illegal money from overseas mainly. Both are drying up due to interest rates and global pressure for Australia to close dirty money going into its real estate.
Lenny: Hey, Homer! How come you've got money to burn? Or singe, anyway?
Carl: Yeah, Homer, what's your secret investment?
Homer: Take a guess.
Barney: Uh, pumpkins?
Homer: [pause] Yeah, that's right, Barney. This year, I invested in pumpkins. They've been going up the whole month of October and I got a feeling they're going to peak right around January. Then, bang! That's when I'll cash in.
Broker: Homer, you knuckle-beak, I told you a hundred times: you've got to sell your pumpkin futures before Hallowe'en! Before!
Homer: All right, let's not panic: I'll make the money back by selling one of my livers. I can get by with one.
After very low levels of new listings / stock on market in december and january, february and now march have gone back to regular programming with elevated new stock to market.
[stock on market](https://sqmresearch.com.au/total-property-listings.php?region=nsw%3A%3ASydney&type=c&t=1)
I think this is just a hang up from the low stock levels listed over christmas. Now more stock is again coming to market it should flow back to price pressures shortly and have a similar year to last year. 1-2pc falls per month unless something else changes.
Id expect to see prices stall in the next month and then start falling next month assuming stock on market continues to grow again.
I think it depends. There is no doubt an element of seasonality to the graph you linked & worth pointing out new listings are still lower then they were in the corresponding month last year and in a lot of previous years.
Also worth considering if demand for housing is also up over the feb and march period it would offset at least some of potential falls due to the uptick in supply.
Its the light blue bit specifically of the chart (less than 30 days) which is super interesting.
How it went so small in december and january is amazing and has managed to cause the market to turn.
The new listings are now back at levels in both feb and march which in my view will put it back to falling prices unless something else changes.
Where my confidence comes from around demand not being high enough to soak up the new supply from feb onward is the dark blue and under moving up in march.
Accept though its only one month so it is hard to tell for sure and the reprieve from new listings in dec and jan have allowed even a lot of older stock to clear too so it definitely looks a while lot more robust than it did in november right now.
After a fairly wild ride Sydney, Melbourne and Perth are approximately where they were 6 years ago adjusted for inflation.
CPI increased by about 15% over that period.
~~So, 15% growth from here just to match prices from six years ago, in real terms.~~
~~Interesting.~~
Edit: haha, I'm a goof. Misread. You're saying prices are basically unchanged from 6 years ago?
Ah housing. The cause of and the solution to all of Australia's problems. /s
And we aim for record migration over the next year. Nothing good is going to happen. Unless you sell tents. Tent and yurt manufacturers should go gangbusters...
Cardboard boxes and waterproof sheeting.
Luxury! In my day it was a hole in the road!
We dreamed of having a hole
Caravan parks too
Mate saw a Yurt on Airbnb for $1000 a night hahahaha wasn’t even one of the palatial ones. Yurt industry is peak
**Weekly Highlights:** * As indicated, 2022 plot has been consolidated and replaced by 2023 plot * [Biggest Auction weekend of 2023, with prelim. clearance rate of 70.7%](https://www.linkedin.com/feed/update/urn:li:activity:7048057400423043072/) * [Sydney grows 1.4% in March, lead by the upper quartile (which rose 2.0% in March)](https://www.linkedin.com/feed/update/urn:li:activity:7048413313621250048/) * [House prices set for speedy recovery](https://www.afr.com/property/residential/house-prices-set-for-speedy-recovery-corelogic-20230329-p5cw6d) * [Economists bet on Feb 2024 rate cuts](https://www.afr.com/markets/debt-markets/economists-bet-on-rba-rate-cut-in-february-2024-20230330-p5cwvf) * RBA Board to meet **this Tuesday (4 April)** * [Surging immigration exacerbates housing shortfall](https://www.afr.com/property/residential/surging-immigration-exacerbates-housing-shortfall-20230331-p5cx35)
Supply issues weighing into the equation now.
Yep, fell for this trick in 2019, won't fall for it again. Obvious in hindsight that less borrowing power -> lower prices -> sellers stop selling -> demand unmet -> prices appear up but with very low stock
Fell for it? What do you mean? As in cause of low volume this recent spark in prices is not reflective of real figures if the volume was normal?
Well maybe it was just bad analysis on my part, but I bought our PPOR at the end of 2019 and basically ended up paying too much (based on what it's valued at now). My theory is that the low volume was due to a drop in lower-priced property sales, but desirable mid-priced property sales stayed stable, which drove the average sold price up.
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Hehehe true.
I bought mine mid 2019 and am up about 70% based on comparable nearby sale last weekend. I suspect those who bought sept - December last year are also going to make a killing.
Good on you mate. Enjoy and make the most of it!
They are. I mean pretty much the only way they can do so is gloat on Reddit.
Must be seq
Problem is, unless pushed people can sit on their property and wait for better market conditions. This is what's happening now, I don't see enough pain in the economy to force people to sell.
Well Porter Davis definitely helped this one!
**2023\~ returns (to 03/04/2023):** Sydney (SYDD) 0.40% Melbourne (MELD) -0.90% Brisbane (inc Gold Coast) (BRID) -1.55% Adelaide (ADED) -1.05% Perth (PERD) 0.12% 5 capital city aggregate (AUSD) -0.34%
RIP 🪦 “WMR”
I have no dog in this fight but I will say, it's rather crazy just how eager we are to shit on the bears that we are cheering price increases. This is not a good thing. Housing affordability is one of the biggest issues facing us today it feeds directly in to other issues such as low productivity and low birth rates.
There's no necessary contradiction. Atrocious housing affordability, as well as delusional takes that it's going to get better for no reason, are both bad. Don't confuse belief and desire. I want houses to be cheaper, ideally much cheaper. Anyone with a heart does, and those who don't should be criticised. But criticising the bears doesn't mean someone wants housing to be more expensive.
Criticising the bears is pointing out the harsh reality that they are ignoring. Ignoring it will only make it worse.
Thanks, that's a much better way of putting it.
>Criticising the bears is pointing out the harsh reality that they are ignoring. Nothing falls and rises in a straight line. No bear worth their salt contested low no. listings. The debate is what % of immigrants are here with cash that can spend straight away and buy a house whilst RBA is still raising rates. Especially when housing finance is [down](https://twitter.com/ShaneOliverAMP/status/1642735201838329857). The supply & demand argument alone doesn't make sense, when the availability of credit is more important.
See: the rental/investment market. It’s that simple. No finance required. Adds to demand, increases rental yield, pushes prices up.
Nonsense. [Median house in Syd : $1,014,393](https://propertyupdate.com.au/the-latest-median-property-prices-in-australias-major-cities/) [Median rent in Syd: $630 per week](https://mozo.com.au/home-loans/articles/what-is-the-average-rent-in-australia) 3.2% annual yield. [Median house in Mel: $747,322](https://propertyupdate.com.au/the-latest-median-property-prices-in-australias-major-cities/) [Median rent in Mel: $460](https://mozo.com.au/home-loans/articles/what-is-the-average-rent-in-australia) 3.2% annual yield. Both well negative in real terms once factoring costs and inflation. You can get a better return in a HISA and have less hassle. Rentals only get pushed to a certain amount before people look for alternatives, move in with parents, share houses, live in their car.
There is an entire country outside of Sydney and Melbourne. But yeah; yields in both suck. The apartment I’m renting would return landlord just over 1.5% gross yield. I bought a 1brm (brick walk up) near Surfers Paradise for $200k five years ago. Rents for $430. I renovated its next door neighbour for $50k and it rents for $550. 10% gross yield after a few, admittedly exceptional, years. They’re obviously very affordable as they are cash positive. They’ve about doubled in capital value, too. BTW as good as that is for me, apparently, I don’t think it is overall. I live in a society. Housing is wrecked in this country.
What happens when something breaks in the economy, cost of capital heads south and your 4.7% HISA turns into 2%? Having cash in a HISA is a solid defensive position for now but don't confuse it for a long-term asset with sustainable cashflows into the future.
>Having cash in a HISA is a solid defensive position for now but don't confuse it for a long-term asset with sustainable cashflows into the future. Agreed. But let's not pretend every property will have sustainable cashflows into the future either. You also have to deal with risk of damage caused by bad tenants or a poor build.
> Anyone with a heart does, and those who don't should be criticised. Dumb take. There's nothing wrong with believing in a libertarian meritocracy, in which case houses would be dictated by the market but in general terms (particularly with migration) would keep going up.
I'm not proposing price caps or anything that would distort the market. I like market mechanisms. But I'm a Georgist - I think the status quo is a distortion. Land is a natural monopoly and although a market mechanism should be used for deciding who gets to use land, nobody should be entitled to land rents. The fact that they are causes underdevelopment and makes access to housing more expensive than it needs to be. There are plenty of libertarian meritocratic Georgists. Anyway, not convinced you give two hoots about anyone, you're always on about how people should be thrown to the wolves. Count yourself among those I think should be criticised.
> you're always on about how people should be thrown to the wolves. If you call 'being bound to your own financial choices' being thrown to the wolves then yes.
Look I empathise with WMR and anyone housing affordability is a massive issue but like the other commenters said he was just no realistic, having your head in the clouds in Lala land doesnt help anyone
He never cared about housing affordability or the welfare of Australians he just wanted to buy his own property portfolio and build an audience around finance content.
He had shorted CBA from memory. His interests are not the noble virtue of improving housing affordability. He was trying to make money by being a contrarian to a distorted market while emulating Nostradamus (or Chicken Little).
WMR was borderline running this sub for a couple of years.
He's banned from reddit again and his sub has gone private
How the hell does he get banned so much?
😂 god this could be up there with Bush’s ‘mission accomplished’ banner. Pull your head in and look at some reason (perhaps) why this might be a bull trap Edit: I thrive on your head in sand downvotes 😉
lol "bull traps" and "dead cat bounces " dont really apply to housing the are over used sharemarket terms
You know beer traps exist too right? Bet you like overused terms like ‘boom’ and ‘buy the dip’. 😂
"Beer trap" sounds like when people accidentally bet a slab against me on their bearishness lol.
I just signed a contract on a new place, and still need to sell my old. Based on that, I'm assuming prices are going to crash immediately.
Can you give us a heads up once you sold please?
Housing prices rising. Interest Rates will be higher for longer.
and while we obsess about prices generations of australians are locked out of home ownership or accommodation period, this is not something to be celebrated
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That’s typical everyone people care about there own lot in life, why should I care that you rent?
Yeah, but look at all the paper money I have!
The great Aussie housing crash lmao
It's up there with the great aussie recession Meanwhile AFL and NRL pulling their largest crowds ever
Yep. I know it's anecdotal but everywhere I went on the weekend was absolutely pumping! How we are anywhere a great crash is beyond me. Everyone is wealthier and richer than they ever have been and jobs galore on the market right now. Its like standing outside on a sunny and cloudless day and claiming "it's raining"
I went to brunch and there was an endless stream of people (including myself) happy to fork out $30 for a chilli scramble I don't think the economy has ever been healthier and I'm convinced that Aussies are absolutely overflowing in cash. It explains why cars, property, food, travel is so ludicrously expensive. We are nowhere near a recession, that I'll agree with. Till we get UE from 3.5% to 6% we will be stuck in hyperinflation.
Spot on. With the RBA about to pause you can (if it wasn't obvious based on COVID response) be assured the RBA is willing to let it run as opposed to having a recession. These anecdotes are after 3.5% of hikes a year later. In terms of "slowing down the economy" the RBA haven't even tapped the breaks or changed gears. At best maybe put a hand out the window to increase drag slightly.
There’s been an imminent housing crash every year since 2001.
Dead cat bouncing for too long
My only question: where does all the money come from to support the ever increasing prices?
Demand is one thing, supply is another. I heard on the radio we are 100,000 houses short over 5 years. When you also add immigration over 5 years, we are kinda up shit creek.
That doesn’t answer my question though. People don’t have unlimited income streams, so how does one afford the repayments on properties that are endlessly increasing? Their incomes need to be sufficiently high to cover the repayments. So back to my question: where does the money come from?
They aren’t endlessly, increasing, though, are they? The majority of forecasts show the rates are likely to rise only one or two more times and begin to fall again. I think by this point, most people have a pretty good idea of how much they’re going to be able to afford and as such a more confident in buying now as opposed to 6 months ago where the future was a lot more uncertain
Houses beget more houses.
But not many people are selling a $2m house to buy another $2m in Sydney, are they? They’re generally upgrading. So say they have $1.5m equity in their $2m property, great, but if they go and buy a $2.5m property, they’re now paying more than double the repayments than before (stamp duty taking some of the equity), so where does all the extra income come from?
I'm pretty sure it's a constant raising of the bar to homeownership. 10Y ago you could be a homeowner with a teacher's salary. Now you're rapidly falling behind. The same house the teacher would have bought, now the engineer is looking at. Similarly, a GP is looking at the house an engineer would have bought 10Y ago, and a law firm partner is looking at the old GP home etc. The upgrading houses is likely simply people moving up in their careers, shedding HECS debts, cutting down on discretionary spending etc.
My grandma’s house, which she could afford as a single parent, is now worth $1.8m. There’s a photo of of it from around 1950, with “fifty pounds” written on the back. ^(or something not unlike that)
It's not fair is it.
You've got it, just add in the time lag / equity to a new/refinanced mortgage. The buyer originally buys their property at $1m and they've paid off $500k over 15 years. Now the property is worth $2m. They can take $1.5m equity, buy a $2.5m property and up their loan from $500k back to $1m. They now have a $2.5m house, and a new 30yr mortgage, but only $1m debt.
Say you have $1m equity in your $2m property/properties. You use that to buy *another*, investment property. Wait for prices to rise, giving you more equity. Repeat. > But where does the money come from? The investor, the tax payer, the tenants pay the money back, through work, endlessly, but initially banks make the money out of thin air. Our system encourages this wealth creation method.
I’m aware how equity works. You do realise that you need to be able to afford the repayment for any purchase you’ve used ‘equity’ for. Equity isn’t a magical bank account full of money. It’s just a tool that enables you to borrow against it.
I dont know why people continue to think that just simply having equity is enough to buy more properties. Its like they think the bank just gives them free money because their property has equity, and the bank wants absolutely nothing in return
It’s exact what I’ve been doing for decades. But you’re right; I’ve been imagining it. Another spin on the above: I renovated a property using $50K equity. @ 5% that’s an extra $50/week in interest. It rents for $100/week more than it did before. (Based on the exact same unit next door to it, too)
That sounds a lot like the bank giving you money in return for something (repayments for how much money they give you for accessing the equity). Whether the repayments come from rent, tax return, your own pocket, etc, the banks need to make sure you have the ability to keep up with the repayments
You’re asking how people afford it, and they do, or you wouldn’t be asking, right? Tenants pay for most of the repayments, tax payers pick up some of the rest, and the investor pays the rest. Negatively geared. After some time, and increases in rent, investor and tax payers pay nothing. Positively geared. At this point the repayments that the tenants are paying become yield; profit.
When only one or two houses sell in a suburb per weekend and generational boomer equity is being tapped to help adult kids…. Prices hold up remarkably well. There is a shitload of equity out there.. it just ain’t distributed evenly. The strong will feed on the weak in the coming year.
I think you overestimate how much people push their initial lending power to the limits.
> So say they have $1.5m equity in their $2m property, great, but if they go and buy a $2.5m property, they’re now paying more than double the repayments than before (stamp duty taking some of the equity), so where does all the extra income come from? In this scenario all they have to do is find an extra $1m plus maybe $150k for stamp duty etc...a combined $250k income will more than allow you to service the loan and there are a lot of DINKS who can afford that. As the poster below mentioned, the bar to homeownership is also getting higher over time so the people who can afford to buy/upgrade are the richer couples.
With reduced supply, you don't need peoples incomes or wealth to increase, the houses would just be bought by selectively higher income/wealth individuals. So where does the money come from? The money was always there with high income / high net worth people.
it's called mortgage stress AMA!
People do earn heaps.
Equity from previous home and generational wealth (parents helping with mega deposit and/or supplementing repayments)
Our estimate is that we’re 70,000 per annum short over 2022-2025. The shortfall is building each year, driving vacancy lower.
Lots of hand me down. I look after 35-40 HNW families. Two this weekend wrote their kids $500k and $1m cheques so they could stay in a desirable area. Their kids are very average in terms of personal capabilities. But it's their kids, so they help out regardless. Lots of entitled people in Sydney that refuse to move out and do it on their own, they tap the bank of mum and dad, which inflates property prices. Supply is a massive issue, these 'kids' of wealthy families battle it out with each other.
Lots of DINKS My best friends group are all DINKS and all on like $250k+ (combined). Even my single friends who are in my age bracket (mid 30s) are on high incomes - accountant/engineer/lawyer/doctor etc Even 2 nurses/teachers can be on $200k combined without too much difficulty Throw in still relatively low interest rates and it's easily understood Also, house prices have fallen significantly in real terms so they're not actually appreciating that much.
Chinnaaaah
It could be China and/or it could be something else. Because the UK is going through the same issue (but less extreme).
There's 600k immigrants coming in this year, and 900k next year. A good chunk of them are going to land in Sydney CBD. That's 1.5M people. Sydney's entire population is 5M. If even 2/3 of these people land in Sydney, the population will increase by 20% in one year. They are coming to Aus generally to look for a 'better life'. atm that looks like 850pw rent for a 2 bedroom apartment. or $400pw for a roomshare, that is not realistic rent for an immigrant to pay unless they are loaded in their home countries. There's no way this ends well. Either you've got a lot of these students working day and night just to afford the rent, or you've got a funnel of 1% Chinese factory money seeping into the Australian housing market, creating insane price distortions.
fun fact, top be in the top 1% in china you need 850k USD, 3.5mil USD to be in the top 0.1% by net worth. Source: knight frank wealth report. Now times that by 1.4 billion and thats the amount of “potential” money coming into sydney
Where did you get those immigration numbers from, out of curiosity?
I’m hearing 300k immigrants, nationally.
Ignoring the numbers of expats each year with those figures. Net migration is much lower than you have cited (but definitely at record highs).
Debt and illegal money from overseas mainly. Both are drying up due to interest rates and global pressure for Australia to close dirty money going into its real estate.
Wasn’t it like 15% annualised 2 days ago??
Yes, such is the folly of annualising daily movements.
Better buy some Z1P, it looks like they are growing at an annualised rate of 3829% based on the last 28 days
Next month they’ll be growing at an annualised rate of -7658%
Lenny: Hey, Homer! How come you've got money to burn? Or singe, anyway? Carl: Yeah, Homer, what's your secret investment? Homer: Take a guess. Barney: Uh, pumpkins? Homer: [pause] Yeah, that's right, Barney. This year, I invested in pumpkins. They've been going up the whole month of October and I got a feeling they're going to peak right around January. Then, bang! That's when I'll cash in. Broker: Homer, you knuckle-beak, I told you a hundred times: you've got to sell your pumpkin futures before Hallowe'en! Before! Homer: All right, let's not panic: I'll make the money back by selling one of my livers. I can get by with one.
hahahahahahah
Christopher Joyce we’re looking at you.
Source: [CoreLogic Daily Indices](https://www.corelogic.com.au/our-data/corelogic-indices) Visualisations: 1. Rolling 28-day % change 2. Index values (2023) 3. Index values (2016 \~ now)
THE GREAT AUSTRALIAN HOUSING CRASH HAS BEGUN
Who could have predicted this 👀
Bears are on life support atm
After very low levels of new listings / stock on market in december and january, february and now march have gone back to regular programming with elevated new stock to market. [stock on market](https://sqmresearch.com.au/total-property-listings.php?region=nsw%3A%3ASydney&type=c&t=1) I think this is just a hang up from the low stock levels listed over christmas. Now more stock is again coming to market it should flow back to price pressures shortly and have a similar year to last year. 1-2pc falls per month unless something else changes. Id expect to see prices stall in the next month and then start falling next month assuming stock on market continues to grow again.
I think it depends. There is no doubt an element of seasonality to the graph you linked & worth pointing out new listings are still lower then they were in the corresponding month last year and in a lot of previous years. Also worth considering if demand for housing is also up over the feb and march period it would offset at least some of potential falls due to the uptick in supply.
Its the light blue bit specifically of the chart (less than 30 days) which is super interesting. How it went so small in december and january is amazing and has managed to cause the market to turn. The new listings are now back at levels in both feb and march which in my view will put it back to falling prices unless something else changes. Where my confidence comes from around demand not being high enough to soak up the new supply from feb onward is the dark blue and under moving up in march. Accept though its only one month so it is hard to tell for sure and the reprieve from new listings in dec and jan have allowed even a lot of older stock to clear too so it definitely looks a while lot more robust than it did in november right now.
After a fairly wild ride Sydney, Melbourne and Perth are approximately where they were 6 years ago adjusted for inflation. CPI increased by about 15% over that period.
~~So, 15% growth from here just to match prices from six years ago, in real terms.~~ ~~Interesting.~~ Edit: haha, I'm a goof. Misread. You're saying prices are basically unchanged from 6 years ago?
yes, an observation from the third chart
Lol day-trading housing. Give it a rest.
It’s a Sydney brioche burger
So many lols , house prices won’t go up until credit becomes cheaper simple
Dead cat rocketship.
I am depresso