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broooooskii

They release these predictions every quarter and they are pretty wrong most of the time.


Badger_Saurus

You mean economists don’t have a crystal ball? I’m shocked to hear this.


broooooskii

"The correction is yet to arrive in Adelaide, however, which is expected to post a 9.9 per cent gain this year ahead of a savage reversal next year of 16.3 per cent." Well they seem to think they do since they're giving numbers exact to one decimal place and not even a range.


iced_maggot

Still interesting to see what the prevailing sentiment is if nothing else.


broooooskii

Yeah, I mean I still have a look at what is predicted but it's just been quite amusing to see how the predictions differ than six or twelve months ago.


[deleted]

It’s not the prevailing sentiment It’s what the banks want you to hear so that maybe a few folks out there will look at lending with a tinge of rose tinted glasses It’s not information or sentiment it’s what they choose to publish/hightlight. It’s grooming of the public so that some more folks can get “apo piso’ed” into another shitty mortgage to keep that revenue coming.


Electrical_Age_7483

Why would they want you to hear down in some capitals and up in another?


[deleted]

The biggest market, or the golden egg for the banks, has always been Sydney. Sydney is the flagship city for bankers. Of course they’re here to say Sydney will buck the trend. I’d be more impressed if they said it was all going to fall. Almost sounds like they’re still trying to make a some lemonade out of the lemons the Australian economy is currently presenting them I mean I’m not surprised as 80 percent of commbanks loan ledger comes from residential real estate.


panzer22222

Perth prices are barely up to what they were 10 yrs ago. Think it will hold up here


sir-cums-a-lot-776

Someone explain how housing went up so much when interest rates dropped to 0.1%, but now that interest rates are back above pre covid levels housing is still way up?


iced_maggot

Prices are sticky on the way down and housing markets are slow moving, illiquid beasts. Give it time.


gugabe

Inflation also offsets a bit.


Nickools

I think inflation will only offset, if inflation is from wage growth. If there is little wage growth and high inflation I think houses must come down as people have to divert money away from housing and towards the cost of living.


gugabe

I mean more in the sense that even if a house has hypothetically gone from $1 mil to $1.25 mil and back to $1 million over a 5 year period there's still an extra 10% 'discount' there due to inflation.


Nickools

Oh, I see what you mean now.


Tmnsoon96

The capitulation takes time. People now will be trying to sell for pre-rate hike prices, and they’ll have to sit on the market for a while before the owners will reluctantly lower the price, then lower it again, until they eventually sell it. And only once the sale is made does it count in the home price indexes. It’s not like the stock market where price discovery happens instantly.


[deleted]

Precisely. My partner & I are patiently waiting to buy a house in a specific area, and it's fun seeing the asking prices drop every month or two.


Kruxx85

along with your borrowing capacity, right?


onepoundfeesh

They might have a big enough borrowing capacity that even as it lowers, will still have more than enough for the area they want


[deleted]

Precisely this. We can borrow well over a Mil but are perusing the $700k range. Wanting to be prudent with borrowing when we are going to have kids in future and accounting for the lower income.


isophy

A few of us are around but people can’t fathom not borrowing to your max.


[deleted]

We're just taking our predicted income in a few years with a few kids multiplied by 6.


machopsychologist

Oh hey, same... except I'm hoping to get a 1mil house now for 700k 🤣 pipe dream i know.


[deleted]

a 30% drop isn't hugely out of the question given Sydney is what, 10% down from the peak officially and I've seen 15% in some places unofficially? Do your best man!


LabAccomplished249

Not at all, there is always bargains to be had


NalaTheDoggo

Borrowing yes, but sitting on a big deposit gives you better buying power.


Frank9567

Or being cashed up enough to not even need finance. I know a few Gen X who have enough for decent second or third houses in cash...just waiting.


Reclusiarc

ooh tryin to gettem with the BC argument - looks like it didnt work!


Tmnsoon96

I haven’t seen prices drop much where I am (melb western suburbs) so hopefully will see some drops next year.


arcadefiery

Just knowing that the economy is cooling and everything is a little tighter is great to see for those of us on the sidelines.


Drazicc85

Maybe you’ll be ready in 2037


[deleted]

We're both accountants, so don't pay LMI or higher interest rates on deposits, down to 10% We have more than enough, thanks.


Drazicc85

Well done, I was not questioning your finances, I was questioning waiting for a good deal. There is never a good deal in property, only in hindsight


[deleted]

[удалено]


Drazicc85

I've never actually done that? You might have me mixed up with someone esle, "Dingle Berry".


Frank9567

As are lots of cashed up Gen X. (Boomers, mostly, are too old to be bothered at their life stage. Either they've done it enough to retire comfortably, or they never will). But those who are totally cashed up are waiting in the wings.


switchbladeeatworld

One of the properties I have tracked on Domain just increased their price. It’s tenanted because they couldn’t sell it, they bought it a year ago and reno’d it to flip it. Love watching it because it’s $50K overpriced.


Frank9567

That's because people often don't have to sell at all. The rental market is tight, so handing over to a Real Estate Agent becomes an increasingly better alternative as house prices go down. Faced with crystalising a huge dollar loss by selling, or a small ongoing annual loss, it's not hard to decide to wait it out for years. It's really the property flippers *with short term finance*, or smaller numbers of people who have been caught out in some way (eg unemployment) and *have to sell* that are affected. I think the increased price is just like giving a share broker a sell order at a high price. It's not necessarily expected, but if it gets a bid, then there's a sale.


[deleted]

Why sell at a loss when we can just rent out at massive prices to cover the rate increases? You guys just don’t get it


iced_maggot

Some (most) people will just hunker down and do what you’re suggesting sure. Volumes always nosedive during a downmarket. But there will always be some who NEED to sell. Whether due to urgent financial troubles, moving away, messy divorce or whatever the reason. Prices are set at the margins so if your neighbour a street over sells their very similar property for less then it affects the price of your property too.


[deleted]

You’re right about the people being forced to sell but I feel that it will be mostly confined to the mortgage belts of new cheaply built homes on tiny blocks in mass subdivisions rather than established desirable areas with larger blocks and good schools, these people have money and back up plans in place to not sell at a loss ever and have seen it all before.


[deleted]

or people who get divorced or die or move...sales have to happen for a lot of people in a lot of situations.


iced_maggot

Sure rich areas usually contain rich people. Seems common sense enough. There’s always going to be individual suburbs, streets etc that all act differently to each other. I’m sure there are some suburbs are growing in price right now.


rise_and_revolt

Rich areas also contain people who would take the most money anyone would give them, and now are staring down the barrel. Some of the biggest price falls so far are in suburbs like Narrabeen and Collaroy, so clearly affluent suburbs are vulnerable.


hdfb

And these people holding on to homes in nicer areas during these downturns (supposed) will only increase scarcity of good stock in their suburbs and help with better sales being achieved off market...


Tmnsoon96

Then why are house prices falling? Down 5% so far in capital cities.


RobertSmith1979

Exactly - go on domain and see how many houses are for sale at the moment across the country - ‘but no one will sell EVER’ Oh no my house is down 20%! Oh no the new house I want to buy is down 20% too… oh wait?


Tmnsoon96

Where I am there’s open homes everywhere, so it doesn’t seem that no one is selling. Thats real estate bull cope.


[deleted]

Are they all though? Or just cherry picking the data to come to a 5% drop and a headline? I mean there’s niche areas within those capital cities that haven’t dropped at all


AntiqueFigure6

Home ownership amongst people aged 70 plus is very high and lots of them die or are forced to sell up to move into nursing homes every year.


RobertSmith1979

If you were 45yrs old. Live in a capital city and got a new job in another capital. Say your syd, you brought a house for 500k that’s at peak was 1.6mil and is now 1.3 you really think you’d be like ‘damn I’m selling at a loss!’ Not to mention the place your moving to the cost of houses you were looking at have also dropped! Net position is the same basically. 95 % didn’t buy in the last 2 years.


[deleted]

I Agree I’m 42 and couldn’t give a rats arse about a small drop in values unlike the majority on here constantly droning on about it.


RobertSmith1979

Yeah exactly. People go on here like every house was purchased in the last 2yrs as investment etc. and are apply textbook investment theory to it all


_CodyB

I do a periodical webscrape of newly listed properties of what was a very hot area in the last couple of years. Inlast week, in a catchment of about 700,000 people there were 50 newly listed properties when it usually varies between 300 and 500.


slugghunt

Most mortgage holders haven't seen a real big impact to their out goings. The end of next year will be ugly when people are coming off the fixed loan periods, and can't keep up after a few months in the new rates.


all2228838

Because interest rates are not the sole driving force behind house prices..


sir-cums-a-lot-776

Prices sure went up dam quick when interest rates dropped


all2228838

And continued to rise constantly even though interest rates stayed at the same level for 16 months


shrugmeh

No, they didn't. They fell marginally for a few months.


Basherballgod

It wasn’t the interest rate drops that spurred the market


Badger_Saurus

No one is talking about the supply of houses being the driver behind price increases all of a sudden.


all2228838

Plenty are and have been. One of the big drivers in covid was the average household size shrinking as people who had previously been living in share houses or with parents moved into their own properties for additional living space to deal with lockdowns and set up homes offices for working from home etc. This led to a big increase in demand and prices went up to follow.. just one of many factors outside interest rates that led to house prices rising


Badger_Saurus

You’ve missed my point. If supply was the sole driver, then why are prices not still increasing now? The fact of the matter is, it’s the supply of money that is the largest factor which influences house prices in Australia.


all2228838

One of many factors. As I said in another post, the vast majority of the huge gains over covid occurred in a period during which interest rates did not move at all. There were and are clearly many other factors at play


[deleted]

Ah, yes, the period when they didn't move because they were historically low and thus gave people access to more credit than ever before. That period, eh?


all2228838

Yes. The period when they didn’t move. But house prices kept rising. But interest rates didn’t move. That period.


[deleted]

They were at the zero boundary, lol. Did you want them to go negative? This is not a good argument.


loves-pineapple-P

Demand levels, and don't forgot inflation. Money maybe expansive to borrow however it value has decreased meaning it offering house prices. Plus it's not correct to think rates had been the only reason we have such a big increase over the last 2 years.


rowdy2026

Because even with the rate rise, the interest on borrowed money is still very low comparatively.


Count_Slothington

Wow is this headline misleading. “Accelerate” means “start” and “be the exception” means “start earlier”.


iced_maggot

National home prices are expected to drop 20 per cent overall from their peak, with the bulk of the decline to come next year for most capitals except Sydney, where the correction has hit harder and earlier, according to NAB. The bank’s quarterly survey of the residential property market has been released in the same week as the Reserve Bank of Australia’s decision to lift rates by a smaller-than-expected 25 basis points. The move buoyed equity investors and real estate pundits. But NAB chief economist Alan Oster said the staging of the rate increases – the official cash rate is now 2.6 per cent – had made little impact on NAB’s overall expectation of a terminal rate of 3.1 per cent, at which the RBA would likely pause to take stock. He warned that, despite the slowing pace of rate rises, their full impact was yet to be properly felt by borrowers. “It takes time,” Mr Oster told The Australian Financial Review. “Most people so far have not paid very much at all in terms of the increased rates. “Most of the notices we’re sending out, we’re sending out recently or now, and so they’ll be paying them in October, November and so that’s when the rubber hits the road.” NAB expects housing prices in Sydney – houses and units combined – to fall 12.9 per cent this year and 9.4 per cent next year. Melbourne prices are forecast to drop 9.1 per cent this year and 14.1 per cent next year. Brisbane will slip into negative territory this year before declining 9.4 per cent in 2023, on NAB’s forecast. The correction is yet to arrive in Adelaide, however, which is expected to post a 9.9 per cent gain this year ahead of a savage reversal next year of 16.3 per cent. Higher interest rates, which result in a significant reduction in borrowing power, are the key driver for falls in property prices, NAB noted in its quarterly survey. “Indeed, the two capital cities most bound by affordability constraints – Sydney and Melbourne – have fallen the most,” it said. “To date, Sydney and Melbourne have led the declines, but prices in other capital cities now appear to have also peaked. And the decline in Brisbane has accelerated.” For aspiring buyers, it is not just the size of the loan that is high on the agenda but also the issue of whether a property needs renovation. The rising cost of renovations is having a “quite significant” influence and has encouraged people to buy fully renovated properties, according to NAB survey. A different story is playing out in the rental market, which is tightening significantly as vacancy rates fall. Rents rose in the third quarter and are expected to grow by a solid 3.5 per cent in the next 12 months and 3.8 per cent in two years’ time nationally, according to NAB. “With rents growing faster than house prices, gross yields should improve, with rents out-stripping prices in all states,” the report said.


Luck_Beats_Skill

Brisbane will likely still be up for the 2022 year. So would definitely be expecting it to be worse in 2023. Though the 30% gains in 2021 will be hard to unwind.


spider_84

Maybe hard but not possible. In today's environment very likely.


trueschoolalumni

It's not a uniform drop though - my ex and I just sold a Melbourne townhouse due to divorce and the offer was at the higher end of our window.


[deleted]

It’s weird how they talk about how interest rates are taking time to affect the property market. The thing that pushes down prices is more how much people can borrow and afford to service rather than how much existing mortgage holders are paying on their mortgages. You’d think therefore that the effect is actually very quick, as each rise leads to an immediate decline in borrowing ability.


Near_Canal

Yeah, thought the same. That particular paragraph seems out of place like they’re just talking about the economy in general feeling the rate rises. I assume some analysts are thinking rate rises will lead to increased sales/supply but I’ve also read (particularly from banks) that the majority of mortgage holders are well placed to absorb rises - will healthy savings in offsets, having not reduced minimum payments over the covid period, being years ahead on payments etc. I’m almost certain NAB themselves had released commentary of that nature.


[deleted]

Yeah - to be honestly unless mortgage rates get to about 8% we won’t see much distressed selling. They’re likely to peak at 5.5-6.


Nickools

I think it would be quick if everyone was borrowing to their max, but some people would have always been planning to borrow under their max and therefore won't be affected by decreased borrowing capacity straight away. Also, some people will be selling and buying and therefore will have a large chunk of equity to use from their old house not needing a large loan. I think it will take a long time for the market to readjust, for the reason above and also as sellers need to come to terms with lower prices.


[deleted]

If what you’ve said is true then rising rates will have a much lower impact on prices than expected


Nickools

I'm not expecting as big a crash as other users of this subreddit. I think we are more likely to see us returning to pre-covid price and then we will be in for a period of little to no growth over the next 5 years. I can only see big crashes if the Australian sentiment towards housing changes ie goes from "Houses only ever go up over time" to "Maybe you can lose money on houses". But honestly, your guess is as good as mine.


[deleted]

Back to pre covid would be a huge crash. That’s like 30%. Housing would’ve gone up 10% over those two years even without all the stimulus demand etc. Also wages etc went up during that time


forkrissake

I guess it has an immediate impact on demand, but a gradual impact on supply? I.e. it immediately reduces borrowing capacity of potential buyers, but will need time to chew through savings/ max out household budget cuts of potential sellers. And given how lopsided the dynamics between those two elements have been of late, it may take time find a new equilibrium that is significantly different from the peak of the market. Immediate impact on volume, and then price follows perhaps?


[deleted]

I’d like to see the impact on land and house packages. Surely they’d be impacted pretty quickly by the lowering of borrowing capacity.


systemonrails

Not seeing any signs, i live in eastern suburbs melb and prices holding strong, despite it being alot more expensive now to mortgage


Nowhere_Games

Not sure which eastern suburbs you're in. But the 4 around us have noticeably dropped. Most of our friends and family that bought in the past year or 2 have negative equity in a variety of eastern suburbs ranging from close to the city to mitcham. And those that sold or looked to sell over the past 2 years stopped or didn't turn a profit when you factor in all the costs. We've seen auctions of sister houses go for 5-20% less, but most have fixed interest rates and had reasons to by, so they're okay. One thing that can hide the losses is size creep. So a 350m2 is now selling for what a 325m2 used to sell for. Seems to be the same price between 2 houses, but one is clearly bigger and better.


Astro86868

> Most of our friends and family that bought in the past year or 2 have negative equity in a variety of eastern suburbs ranging from close to the city to mitcham. They must have had exceptionally small deposits?


Nowhere_Games

All were a minimum of 10%. For an average house in the Eastern suburbs that's 6 figures, so I'm not sure if it should be considered small or not. Thus highlights that some of the sales have been more than 10% less. But since m² and similar aren't reported with the average figures It's hard to tell what the drops really mean if you don't see direct comparable (essentially sister houses). I guess this also fits in with the recent RBA report that at some point we have to realize it's not just the lowest earners that are facing financial uncertainty


Astro86868

10% deposit I can understand. I don't think many people who paid a 20% deposit will be in negative equity yet especially if they've paid down 1-2 years of the principal. Probably a different story by Feb-Mar if falls continue at the predicted rates.


Nowhere_Games

It's important to keep in mind that it's not linear though and paying a mortgage for 5 years doesnt mean youve paid off 20% of a 25 year loan. With low interest rates it's not too bad, but it gets noticeable above about 3% and really extreme above 5.5% For example, 6% on a $1M loan. Year 5: $385k paid on the mortgage, principle is still $900k Year 10: $770k paid, principle is still $760k. At 3% interest it takes about 4 years to pay off 10% of the principle and about 6.5 years to pay off 20%. So depending on how far you think houses will drop, you can back calculate who will be in negative territory based on what deposit size.


DependentEchidna87

I’m curious as to why they think Adelaide will turn to poo, and quickly. My guessing is that there is some delayed linkage between what happens to east coast. What about net migration towards Adelaide, why can’t it gain some grounds on melbourne and Sydney and then stay there ?


iced_maggot

Because Adelaide simply doesn’t have and (won’t anytime soon) the economic prospects of the eastern states. If the eastern states go through a downturn, especially if it’s due to something wide ranging like reduced credit availability (unlike something local like say a flood) it’s highly unlikely SA will go through unscathed.


AntiqueFigure6

Adelaide is falling right now, has been for about a month.


7Zarx7

Thank you. Great insight. Grateful. Unfortunately Australia does not allow many lending models, like community lending, that can help change that fact. It's good to have this public chat. Can I ask if you live city or regional?, just for my context.


iced_maggot

I live in Brisbane city mate. Always glad to have a civilised chat :)


7Zarx7

Same same. Regional jobs are paying well and with great lifestyle and affordable living. Many migrants seem fixated on city living. And, maybe on warranted historical cultural performance, but a lot has changed, it's a sellers market. With a bit of research, there are plenty of ops there. Most industries. Pay same if not more. And expenses are lower. Schools are great. Access to health is reasonable, but often high quality. Sounds like an ad but I know lots of happy regional migrants. Anyway. Thanks for sharing.


7Zarx7

Rubbish. New migrants to fill skills shortage will fortify the market.


rise_and_revolt

Near 0 migration was expected to crash the market during covid, but precisely the opposite happened. One learning from covid was that immigration's impact on housing is not that significant in the short term.


iced_maggot

Unless these new migrants will be coming with enough dollars to buy in cash they still need to borrow. With interest rates going up they can’t borrow as much. As you say though the pent up demand will put a floor under prices.


7Zarx7

Often their families will liquidate assets and put life savings into an individual in the hope to secure steady income, safety, and opportunity to migrate to a safe nation one day. RBA will also have to mitigate anti migrant sentiment regarding migration appetite as the global competition for skilled labour returns with easing of borders. Again, fortifying domestic housing stock. Also demand for existing housing stock will be preferred as supply chain continues to lag. And with housing stock being absorbed by investors for visitor economy activation for high return airbnb, supply of housing will be, again, slow to grow. Not to mention the massive issue with town planning processing at shire level due to skills shortage pushing out new housing stock development. And then there is land availability, shortage, sensitivity with green wedge policitcs, and land banking problems with legacy holders of infill ops...old money does not need to sell. So...the market won't drop far.


iced_maggot

Disagree, with respect. Although a while back now me and my family were one of those skilled immigrant families. We struggled for ages as did many of our friends to save and scrounge a deposit like everyone else. I think you’ll be quite disappointed if you’re expecting rich foreigners to come in large numbers and prop up the market despite increased lending restrictions. Also the RBA has no instrument to mitigate anti migrant sentiment. They set monetary policy and that’s it. Attracting lots of skilled migrants will also be more difficult since wage growth here is lacklustre whereas you look at the states and they’re doing much better in that regard. Most of your arguments have been made forever and ever and they’re certainly relevant. But the biggest factor by far has and always will be availability of credit.


Bubbles_012

Mate, the skilled migrants don’t have to move to Australia.. have you seen this thing called ‘working from home’ …


7Zarx7

So 200k aged care virtual dribble and bum wipers. Yeah, that should work...


Bubbles_012

The impact of lower income skilled migrants (aged care, hospitality, retail) on property buying is delayed and limited. These people don’t just show up tomorrow and buy homes when they land. It might impact rental market, but there is also a tipping point for that too. There is only so much rent people can afford.l, before it is no longer viable to move here.


7Zarx7

Unless they live communally, which is what they are doing to offset costs, save money, and buy properties. I think many Australians think narrowly about how modern day, and future markets will work. If I had more cash I would be buying every house that came on the market. By the end of 2024 (war excluded), the market is going to accelerate like we have never seen before in history. The incentives from government to attract migrants to sustain growth will be huge. And there is a shortage of affordable housing, nationally...already. Watch this space.


windowcents

Although difficult to predict, it would be interesting to see eventually once the rates become stable, still property prices increase over the next 5-10 years. If the avg ppor rate remains between 4-6%, it will reduce borrowing capacity for a long time to come


Drazicc85

Why house no crash?!? Love it.


FreeApples7090

House prices have fallen 30% in most of Sydney. They spin some shit with the numbers


DMmefor1400AUD

That's quite a big drop, interested to see the data you use (because I assume you don't believe the corelogic data is correct) ?


Nowhere_Games

That's what blows my mind. The letter we got in the mail from a local real-estate agent in Melbourne shows on average a 15% decline for the 4 suburbs that REA works in. That's an agent mentioning falls that big as already realized.


FreeApples7090

The data is always 3 months behind on this stuff too. Which amazes me on what the RBA is using to make decisions. I feel they’re repeating the mistakes of 1994


TopInformal4946

Where I've in Sydney, my 600ishk house I bought 8 years ago and similar places around here are still going for between 1.1 and 1.4, so seems to be holding up in my corner


ELI-PGY5

Title of this thread is a bit silly, NAB isn’t talking about “acceleration”, that would suggest an ongoing trend. They’re just calling the change in medians for 2022 and 23, and saying the drop will be 20% overall. What the article says (behind the paywall): NAB expects housing prices in Sydney – houses and units combined – to fall 12.9 per cent this year and 9.4 per cent next year. Melbourne prices are forecast to drop 9.1 per cent this year and 14.1 per cent next year. Brisbane will slip into negative territory this year before declining 9.4 per cent in 2023, on NAB’s forecast. The correction is yet to arrive in Adelaide, however, which is expected to post a 9.9 per cent gain this year ahead of a savage reversal next year of 16.3 per cent.


[deleted]

WA prices still rising then ?


iced_maggot

Perth fell 0.4% in September. It’s only just recently tipped over into declines, so peaked much later than the other eastern states. Road ahead probably won’t be fun.


[deleted]

Perth rises weren’t even close to east coast levels. I think prices will hold


iced_maggot

My opinion: they will definitely drop, but peak trough declines will be way less than the east coast.


Drazicc85

50% crash during covid ring a bell? Fiscal cliff etc etc. Those did not age well. It's all guessing games and hyperbole to get clicks. We will know what is going to happen once it actually happens. Lots of hopium here.


iced_maggot

Yeah 50% falls was hopium mate. But thinking prices won’t go down significantly with the pace of rate rises we’re seeing is hopium of equal magnitude in all honesty.


Drazicc85

I never said prices wont go down in certain parts of the market. Conversely to that, rents and general cost of living will likely continue to increase, leaving people waiting on the sidelines waiting for the perfect moment to enter to be worse off. Generally people wait for bottom, which can never be picked accurately, and end up chasing their tails and FOMO'ing in in a rising and heated market.


vichi29

At this rate, only 5% of the current young population (who are in high paying jobs such as Young Gps, mining) could be able to afford a ‘decent’ house. It’s insane how quickly the real estate business has taken off. I call it partly ‘greed’ as well, not that I wouldn’t want to increase the purchase amount if I were a seller, but could’ve done it raising it only slightly. Truthfully, everything’s on the rise, and people are living either on the edge or buying properties thinking tomorrows going to be the last day before covid strikes again. To the real estate market who’ve won this battle between buyers and sellers, and gained sufficient control of finances and profits obviously in the past two years. Here’s me wishing and praying, The market has some mercy over this young generation.