It starts with job losses in construction, either because people stop buying new apartments or because resources tanks again. People cut back on spending to keep their mortgages paid. That means more job losses in retail and hospitality. Banks see it coming, cut costs, and stop lending.
Then house prices crash. Owners with jobs avoid selling at lower prices. Younger, newly unemployed owners are fucked. The stock market slumps. Everyone's superannuation balance drops with it. Baby boomers expecting to retire on super and the proceeds of their house now need more from pensions to cover the shortfall.
Banks struggle. Mortgages are difficult to get. Those with savings realise the government hasn't set aside nearly enough to cover guaranteed deposits. They increase the pool, probably too late.
Offshore cash swoops in to buy up bargain real estate. Locals with cash savings can't get loans, and are means-tested out of safety nets so their deposits dwindle.
The government borrows money and/or raises taxes to pay for the increased load on the welfare system and the costs of covering failing banks.
Retirees are left dependent on pensions and their families for support. Older people are stuck paying high mortgages and can't save extra for their impending retirement. Younger people - those who have jobs - face decades of higher taxes and lower funding of services.
All of this happens in the decade or two when automation takes off and employment becomes progressively harder to find.
Sounds great. Can't wait.
This is an accurate summary of the UK right now. I lived in a nice/desirable suburb in south Manchester where 2 bed apartments on the equivalent of say royal parade were selling for £1m+ before the crash, before I left the same apartments were selling for £250k.
The UK too, looking back, had a large amount of self certified mortgages, interest only mortgages and many people rushing into the "buy to let" space. Looking back it was insane, people earning a little above minimum wage getting approvals for insane mortgages like it was no big deal. I had a job for 2 years here before moving on, one time that really sticks in my mind is the manager of a team there which I know for certain were all earning between $70-80kpa saying 'We've all got million $ mortgages here"
I know we are half a world a way and the economy is different here but seeing what happened in the UK makes me very wary of how things may pan out here if there is a crash.
Ok, but the housing and rental market becomes correctly priced. The current high prices are based on an expectation that that value can be extracted from a future generation.
Don't work in construction. Always jobs in my industry even in recession. Been paying more in rent than my parents paid to buy their own home in instalments all their life. Therefore I don't give even the slightest of fucks. CRASH AND BURN.
Banks have already stopped lending, it's easy to see why this poster is unemployed most non nonsensical garbage I've read in along time, the IQs are pretty low around here though.
>it's easy to see why this poster is unemployed
You are stuck in a minimum wage job you hate and have contemplated lying on your resume just to get an edge over more deserving applicants. Are you sure you should be looking down on the unemployed that readily?
That was months ago, also perhaps most prudently AT LEAST I HAVE A JOB YOU BOTTOM FEEDING SCUM, you post here all day constantly in the middle of the day and vote for the greens. I am looking down on you!!!!!!!!!!!!! :)
Your reddit stalking skills are pretty pissweak. Notice how I post on kitchenconfidential and seem to be interested in the restaurant industry? I am a chef and work 50-60 hours a week, I also work way, way harder than you.
>That was months ago
Have you turned your life around and decided to be less dishonest in the mean time?
Yeah maybe you would. I've made a point to avoid fights I don't have to participate in
It's pretty impressive that you've managed to combine "lalala can't hear you" and "I'll beat you up" in one short post. Just need "takes one to know one" for the preschool trifecta
You don't know what Stockholm syndrome is, you don't know how an economy works. If you think he's wrong, explain why instead of putting down meaningless statements.
Exactly! It is not sympathising with their situation and embracing their goodwill to not hurt you. It is realising that the captors enemy will shoot you when they eventually capture him.
Unless you have enough savings to pay for internet, electricity and food for the next year or two while you start an internet business - a crash will devastate everyone. It may not be warm & cuddly to think about how much a dependance we have on bubbles in our economy (mining & housing), but we do and that is it until it changes.
Look at other examples of bubbles world wide, they did not come out with a pop. They keep growing but eventually stagnate in a way that any growth is minimal, so in real pricing terms they essentially flat line as wages & savings catch up.
You're both being too extreme. A crash isn't going to devastate everyone. You'll still be able to borrow money, it'll just be much more difficult. Most people will still have a job but there will be lots that lose theirs. The country isn't going to explode.
Not the type of crash that the OP was on about IMO. That's more of a retracement and can definitely happen via normal ebb and flow.
On a side, personally, which I still doubt will happen in a housing market where there is always a consistent demand (house leavers etc) and bias political interest so it doesn't occur.
tldr; secure jobs and savings won't help you (unless you can pay the full amount of the house price) in a blood-bath-housing-market crash.
I've been through 2 crashes - The dotcom bust & the 2008 sub-prime crisis. Let me tell you that the only ones that came out ahead of that are the ones with millions sitting in their bank accounts and in a position to buy everything at a cheap.
**EVERYONE ELSE STRUGGLED**.
* Banks would not provide anyone a loan unless they have collateral/asset they can hold it against (means you need to have already own something).
* For those that could get a loan, the interest rates was humongously high (think nearing double digits) and most couldn't bear the cost without renting the place out.
* Those that was fortunate enough to scrap by and have purchased properties found that no one was able to pay rent at market rate and had to significantly discount what they could rent it out for.
* People who thought their jobs were "safe" were laid off simply from the fact that there was suddenly a huge market of unemployed talent on the cheap and they could be replaced by a more "talented" person for a much lower wage.
* Even for those that were not laid off, a significant portion had to take a pay cut or even face delayed wages. (i know of a family business where everyone agreed to not be paid for a month so that the business could survive for another 2 months)
I could go on but let me assure you that a housing market crash will not be nice for everyone unless you are already extremely rich.
Without knowing what your income, job & savings are, it is highly unlikely you'll be able to "clean the fuck up" unless you have millions lying around in your bank account. I am assuming you are hoping the prices to crash anywhere between 20%~50% of the current median prices and for that to happen, it will mean a significant catastrophic collapse of a major part of Australia's economy and there will be a flow and effect on everything which includes your job, your ability to secure a loan from a bank and I won't even start on how hard it will be to rent the your properties out.
Unless you secure your savings in an investment (not a house) a real investment like gold or something.
"Those that was fortunate enough to scrap by and have purchased properties found that no one was able to pay rent at market rate and had to significantly discount what they could rent it out for"
Yipee! Sounds great!
Stockholm syndrome.
I'm with op. Fuck it. It's going to happen eventually.
Why? Because it's practically the only thing left in our "economy". Cars are gone. Electricity is killing the few companies left that make shit. Our politics are a joke. The asx is lagging the entire world and has done something incredibly unusual in the last few months - traded in a tight range and finally bumped into the 200dma.
We still have mines. Which are automating and many of which are barely Australian. They're neither domiciled here or owned by Australians.
So... How exactly is that going to be useful for Australians?
Our economy is practically a potemkin village. A pretty facade with no interior.
Be prepared as best you can for the facade to crumble.
It will some day.
That's not even the remotely true.
If everything had turned to shit except property, we'd all be out of jobs. But there's still plenty of people out there working in retail, distribution, transport, financial and technology services, government departments, construction, general trades. All those areas are still plenty strong, but they rely on the entire economy remaining strong.
This is why a big bang housing bust is an extremely bad thing. It's not "Stockholm syndrome", not even remotely, it's a very large part of our economy and if it goes belly up, it has the ability to take all those other areas that are performing well, with it.
What we need to cooling of demand in the housing market to reduce grown in prices, and extra growth in other areas of the economy to level it back out again.
Part of the problem you have recognised, we don't do anything to create value or export value. We just exist. We use to export rocks but we don't even own that anymore!
https://www.macrobusiness.com.au/2017/08/victoria-labeled-parasite-state/
Wow, I wish I had a job where I could guarantee my job security meant that even through a recession it was almost guaranteed that I wouldn't lose my job. Then I could go on the internet and spout all these figures and buzzwords that normal people wouldn't be able to comprehend about how we're all doomed, except for me of course, because I've planned ahead.
So you'd rather pledge 30-40% of your income for your entire working life to buy a house just to avoid the bubble collapsing?
Do you think the 20yos today will be willing to pledge 35-45%?
And the 15yos 40-50%
And the 10yos 45-55%?
And the 5yos 50-60%
And the newborns 55-65%
Because that's what it's going to take to keep it going.
At some point, it has to end.
The people hedging for safety are hilarious.
*Why yes I do believe housing in the eastern states should continue to grow at 9-14% per annum, that is sustainable...* /s
All it takes is more restrictions to FDI or changes overseas directly affecting the investors and the music will start to slow and everyone will start eyeballing the chairs.
"If rapidly throwing up almost empty structures in a building boom is the only source of new jobs, then our economy and job market have become a sort of Ponzi scheme, where building after building needs to be constructed to keep us all one step ahead of the crash"
- Dennis Glover
Well, it is the exact opposite of the attitude that got us into this problem "I hope the price keeps going up so I can keep making money and fuck anyone else"
So explain to me how a median household price roughly 50% higher than the sustainable weekly housing expense for the median income household is such "great economics"...
It's not. It's a ridiculous situation caused by profligate lending causing a great financial imbalance across the entire population.
My comment was about your expectation that you can benefit from crashing house prices. A wide-spread crash like the -30% events in US and Ireland will cause massive pain across all sectors of our "Houses and Holes" economy. You won't be unaffected by this pain, and so probably won't 'win from their misfortune'. We'll all get our feet wet from the tears from property 'investors'.
Except in the long term, demand is driven by affordability > especially when price becomes Higher than the market can afford. It's a closed loop system. You can't have continuous infinite price growth that outstrips wage growth to this extent.
No that's not right at all.
The 1% can comfortably buy property and rent it out as long as there is demand to live somewhere desirable.
There's no "right to own a house".
Except in a market which makes a net rental loss - like Australia. The only way the Australian market operates is through continuous capital appreciation. The Australian population couldn't handle rents high enough to support the current mean dwelling price. The only reason it hasn't fallen over yet is because negative gearing provides an incentive to speculate at an income-loss.
The Australian rental market makes a 10 billion dollar net-loss each year. It's built entirely on the assumption that you'll be able to sell your house in two years time for a higher profit than you'll lose in rental losses. We have a name for a system based on this kind of setup - Ponzi scheme.
The reality is that housing IS a mass market consumer good - there is no "one percent" fixing the prices, just a shit load of the top twenty percent who know that housing is a ridiculously benefited form of investment from a regulatory perspective.
Well, it is the exact opposite of the attitude that got us into this problem "I hope the price keeps going up so I can keep making money and fuck anyone else"
No; many people, from young to old (yes there are people in their 30s, 40s and 50s who still can't afford to buy a home), would love affordable home prices.
But you probably don't *really* want that crash. For starters all home renovations will cease immediately because who wants to improve a property that is going down in price?
No home renos, tradies start looking for work, and hardware stores can't sell product.
Rental properties dry up because investors have no way of making a profit. So you *have* to buy or you've got nowhere to live. Got that deposit ready?
Ah, but banks are not going to lend. Not if there's a risk of negative equity - and in a dropping market banks will be very very nervous.
And are you hoping for the market to recover once you have that home you purchased?
Increased homelessness as panicked investors still up, reducing rental stock. Increased crime from said homeless. Increased depression and suicide from mortgagees who now owe more than their home is worth. Less employment as all those shops and services that were supplying the residents who've abandoned their homes close up.
Higher unemployment reduces GDP, and the dollar devalues, pushing the price of imports up. The RBA lifts interest rates to keep inflation in check by reducing spending, leading to further job cuts in retail and supply, while also forcing more home owners, who can no longer afford their higher mortgagees, out. What's not to love?
Sounds dire. How about panicked investors sell off their investment properties for between what they'd paid for them or what they owed, meaning a drop in market value of an average of a 40%. As most property investors already have quite a lot of equity and have a place they live in, they merely lost the on-paper gains they'd made in the last few years and they escaped unscathed.
This then meant that those who were locked into a lifetime of rent could now afford to buy their own property to live in. But alas, Australian banks were a bit gun-shy about lending money. But as this bubble bursting was an Australian issue only, there were overseas banks ready to jump in and lend money as the market had bottomed out.
Of course apartment buildings in the planning and construction stages were on a path to big losses as they paid stratospheric amounts of money for the land. But that was okay as these huge capital gains on land which had been made just dried up for the various plutocrats and it still meant they were extremely wealthy. The companies doing the developments were often foreign owned and they just counted the profits from previous boom times and took off back home.
But as land prices dropped it meant a ripple effect outwards to new estates. But never fear, development companies had pretty much purchased land that far out many years ago for very little indeed. Which meant they were insulated from 'dropping prices' to great extent and it meant that very little downwards pressure had to be applied to builders and subcontractors, meaning they could all continue working. And due to the lower prices in new estates, even more people could buy and the blokes who used to work in apartment developments in the CBD just worked out on low rise and detached houses out in the outer burbs.
:)
It's a bit of a fallacy. When the market does correct, so will everyone's expectations. Suddenly you start questioning whether spending $500,000 on a shitty 3 bedder in Brunswick is good value or not.
> $500,000 on a shitty 3 bedder in Brunswick is good value or not.
Yes, that is insanely good value. A 3 bedroom house a few kilometres from one of the most desirable cities in the world, for the 5 years of a teachers salary?
That will never, ever, ever, ever happen.
[Then you would suspect wrong.](https://www.aeuvic.asn.au/sites/default/files/Victorian%20Government%20Schools%20Agreement%202017.pdf)
Any regular old public classroom teacher whether primary or secondary is on at least $99,283 after 10 years
What is he saying?
There's far fewer 3 bedroom houses in Brunswick than there are people who wish to live in them.
Unless people suddenly stop earning money (unlikely, government jobs are very safe), or they suddenly find more land and start building lots of 3 bedroom houses in Brunswick (impossible), then the market simply cannot 'correct'.
He's saying exactly what he typed. When there is a correction, so does expectations. A 3 bedroom house in Brunswick today is not worth the same as a 3 bedroom house post a pricing crash.
I don't understand what he means by the market 'correcting', when there is nothing to correct. There's millions of people of people who want a 3 bedroom house in Brunswick, yet there are very few of those houses.
This isn't fuelled by investor demand or price speculation, it is fuelled by people earning real money being able to afford a very desirable item that is in incredibly short supply.
What suburb is at the top of any 'where should I live' thread? Brunswick, Collingwood, Fitzroy, Collingwood, Brunswick...
Unless this demand changes, prices are not going to.
There is plenty to correct as Spain, USA and Ireland have all shown. He's talking about an inevitable correction, or crash, on overall property prices and how $500,000 for a house, doesn't matter where, becomes questionable. Would you still pay half a mill for a house if prices dropped 50%? 75%? There's some for $1,000,000 now... seems pretty logical that a 50% drop would cause buyers to question if $500k is worth it. These drops aren't outside the realms of possibility.
Not happening. Any "crash", in reality, may be a slight correction. A 5-10% decrease in prices at worst. Sorry to break it to you, but you're not picking up a mansion on St Georges Road for 500k any time soon.
I think you're underestimating the impact negative gearing will have on magnifying the effect of negative growth. The entire housing market is geared to be a capital appreciation based growth asset running a continuous revenue loss.
If that continuous capital appreciation stops even for a few years then the whole house of cards is coming down.
Our market is essentially like a shark at this stage - either it keeps swimming forward or it dies.
house prices aren't going down any time soon. our city is simply not set up to support the massive population increase it's currently experiencing. the cbd is too small, and there is too much NIMBY resistance to increasing population density in exclusive inner city suburbs, as a result the vast majority of people have to buy further and further out as the prime inner city parcels of land become more and more sought after hence driving prices up. even worse there are no nearby cities melbournians can live in as '2nd best', the closest alternative is 10 hours away..
as population increases it's only gonna get worse. in 10 years the average family will be lucky to buy within 90 minutes of the cbd..
Why does everyone act like a crash will destroy all jobs and lending? Even during the worst depressions unemployment was 20% or so.
And why does everyone think that it is better to make things worse by pumping the bubble higher to avoid the pain? Is there some magic number where the stack of cards solidifies?
These arguments have been used for over 10 years and it's only gotten worse.
Have you ever *seen* an economy with 20% unemployment? Go check out Detroit. Or for an entire country, Spain or Greece. It might not be so bad if the government had a surplus to fall back on to pay benefits. But at that level, there simply wouldn't be the money collectable from tax payers.
Seriously, the solution to housing prices is to make other cities besides Melbourne and Sydney more attractive. High speed rail to Ballarat, Bendigo and Geelong would be a start. The capitals will continue to grow, so demand will continue to push prices up in them. We have to get over squeezing 30 million people into 7 cities.
Do you have parents? A significant other who has parents? Do you have friends? Family? Ok so if you "clean the fuck up" what happens to these people? Are they homeless? Jumping out of windows because they lost their jobs and can't feed their own families?
You are right it does sound harsh, but that is because you are a selfish piece of shit.
I have parents and friends all hoping for the exact same thing because either they or their children have been locked out of ever being able to own their own homes.
For those of us who who born poor it's a little difficult for us to have sympathy for people who are leveraged to the gunwales and get bitten in the ass when the cycle inevitably comes full circle.
Regression to the mean is the closest thing the universe has to an economic law. Burying your head in the sand isn't going to change that.
Born poor? Mate you fuckin lucked out that you were born in a country as great as Australia. Born poor but still made it to where you have a "Secure job and savings". Shit being born poor in Australia is still better than being born rich in Africa. Just get some perspective, owning the biggest Mcmansion in the street while the rest of the world burns just might not make you as happy as you think.
You having money ready to leap, and people like you, are the reason there wont be a crash. If you all go fucking broke, there'll be a crash. Likely the only way we crash (instead of smaller corrections) is if theres GFC 2.0 since we arent shielded by Chinese dirt purchases any more. Granted you still might be able to clean up.
Tbh- only like 30k (this post was 90% a shitpost.. did not intend for it to become a thing haha). I don't own a car - doesn't make financial sense; public transport is like $1500 a year and I can ride faster than the average driving speed in the inner suburbs.
Yeah it kinda blew WAAY out of proportion. I do think that current growth rates are unsustainable, and I do think that we need to be putting some serious work/thought into trying to ensure a soft-landing before people get hurt - but this comes from a desire to prevent people getting screwed, obviously not a desire for it to happen.
House prices won't be going down any time soon. If a correction comes it will come slowly and over a long period of time, house prices will just stop rising. But I think there is way too much money around and Melbourne metro is too popular so any correction is a long ways away. If a crash like you want happens, you won't have a job and it doesn't matter how secure you think it is.
I think you're underestimating the impact negative gearing will have on magnifying the effect of negative growth. The entire housing market is geared to be a capital appreciation based growth asset running a continuous revenue loss.
If that continuous capital appreciation stops even for a few years then the whole house of cards is coming down.
Our market is essentially like a shark at this stage - either it keeps swimming forward or it dies.
Lol
Go look at the negative gearing figures and you'll notice that it's trending down. Less and less properties are negatively geared. It isn't the problem that class war Shorten and DiNatale want you to think it is.
Look at how many people we are adding to the state and as a result the city each year.
Once you're done looking at those two things, have a good hard look at yourself.
That's like saying a bomb isn't dangerous anymore because you removed 10% of the gunpowder... We just happened to also move a couple of matches closer to the fuse at the same time
The scary thing is, I'm incredibly progressive person - but kinda agree with the sentiment around immigration being too high. Melbourne's population grows by 340 people A DAY. There's no way to keep up with that when they all want to live in the inner city.
> ...except for the fact that the majority of those immigrants work and pay taxes, which pay for everyone else's benefits and pensions.
Relax. There's always one like you when the immigration Ponzi scheme gets brought up. No one was talking about immigrants being unemployed and not contributing. What people are talking about here is the fact that infrastructure development is not keeping up with growth. FFS
One day people will realise that's there's a difference between 'immigration' and 'immigrants'. You can be absolutely welcoming to immigrants, while still having a critical opinion of immigration policy.
Well you've raised some reasonable discussion topics here. I think if you dial down the lunacy sometimes you might find people willing to listen.
I think there's no benefit in using the term "sjw" if you actually want to discuss things. It's the catchcry of idiots, just as extreme virtue signalling is the standard response of idiots on the other side.
Wasn't the professional consensus expressly about not opening up more land and not create more rubbish low density suburbs but instead going high-density in the inner-suburbs and otherwise push people to other cities like Bendigo or Ballarat.
> build fast trains to fringe areas
Self driving busses will be a superior mode of transport within the next decade. They will pick you up from your doorstep and drop you at your destination so will provide a faster journey for the majority of suburban trips.
If I didn't have 2 properties, I probably would too.
I honestly don't see it happening though, stagnation of inflation / price increases yes but not so much a crash.
It starts with job losses in construction, either because people stop buying new apartments or because resources tanks again. People cut back on spending to keep their mortgages paid. That means more job losses in retail and hospitality. Banks see it coming, cut costs, and stop lending. Then house prices crash. Owners with jobs avoid selling at lower prices. Younger, newly unemployed owners are fucked. The stock market slumps. Everyone's superannuation balance drops with it. Baby boomers expecting to retire on super and the proceeds of their house now need more from pensions to cover the shortfall. Banks struggle. Mortgages are difficult to get. Those with savings realise the government hasn't set aside nearly enough to cover guaranteed deposits. They increase the pool, probably too late. Offshore cash swoops in to buy up bargain real estate. Locals with cash savings can't get loans, and are means-tested out of safety nets so their deposits dwindle. The government borrows money and/or raises taxes to pay for the increased load on the welfare system and the costs of covering failing banks. Retirees are left dependent on pensions and their families for support. Older people are stuck paying high mortgages and can't save extra for their impending retirement. Younger people - those who have jobs - face decades of higher taxes and lower funding of services. All of this happens in the decade or two when automation takes off and employment becomes progressively harder to find. Sounds great. Can't wait.
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The industrial revolution created a lot of new tech jobs. The digital revolution is not creating anywhere near as many new jobs by comparison.
Get your STEM degree and there's a job waiting for you! Good old Danny boy said as much.
This is an accurate summary of the UK right now. I lived in a nice/desirable suburb in south Manchester where 2 bed apartments on the equivalent of say royal parade were selling for £1m+ before the crash, before I left the same apartments were selling for £250k. The UK too, looking back, had a large amount of self certified mortgages, interest only mortgages and many people rushing into the "buy to let" space. Looking back it was insane, people earning a little above minimum wage getting approvals for insane mortgages like it was no big deal. I had a job for 2 years here before moving on, one time that really sticks in my mind is the manager of a team there which I know for certain were all earning between $70-80kpa saying 'We've all got million $ mortgages here" I know we are half a world a way and the economy is different here but seeing what happened in the UK makes me very wary of how things may pan out here if there is a crash.
Ok, but the housing and rental market becomes correctly priced. The current high prices are based on an expectation that that value can be extracted from a future generation.
Sounds like Perth 😂
Starts with job losses? Looks like to start with rising interest rates..
Don't work in construction. Always jobs in my industry even in recession. Been paying more in rent than my parents paid to buy their own home in instalments all their life. Therefore I don't give even the slightest of fucks. CRASH AND BURN.
Banks have already stopped lending, it's easy to see why this poster is unemployed most non nonsensical garbage I've read in along time, the IQs are pretty low around here though.
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Yep I know someone that is $40k in debt and they got a loan for $350k with almost no checks. The banks will ride this one until the very end.
They're not telling you everything about their financial position. Report it to the ombudsman if this is actually true.
You don't work in the industry, the data clearly shows they've dried up and ask for bigger deposits.
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Nobody getting a loan with a 5% deposit unless it's some scam, prove it. Post paperworker ganga
I'll just leave this here.. https://www.finder.com.au/95-percent-home-loans
The link still states max LVR is 80% but insured lvr is 95%. I don't get it?
To get the 95% LVR, you need to pay the premium for LVR insurance. Basically it's another cost on top of interest repayments.
Well if you say on finder.com.au you can get a 95% homeloan for any person and any property type I stand down!
>it's easy to see why this poster is unemployed You are stuck in a minimum wage job you hate and have contemplated lying on your resume just to get an edge over more deserving applicants. Are you sure you should be looking down on the unemployed that readily?
That was months ago, also perhaps most prudently AT LEAST I HAVE A JOB YOU BOTTOM FEEDING SCUM, you post here all day constantly in the middle of the day and vote for the greens. I am looking down on you!!!!!!!!!!!!! :)
Your reddit stalking skills are pretty pissweak. Notice how I post on kitchenconfidential and seem to be interested in the restaurant industry? I am a chef and work 50-60 hours a week, I also work way, way harder than you. >That was months ago Have you turned your life around and decided to be less dishonest in the mean time?
D
Did not read, you're an unemployed loser. I'd slaughter you in real life fatboy.
Yeah maybe you would. I've made a point to avoid fights I don't have to participate in It's pretty impressive that you've managed to combine "lalala can't hear you" and "I'll beat you up" in one short post. Just need "takes one to know one" for the preschool trifecta
Where do you go for high IQ discussion? I need to get away from these morons LOL hA Have Hahah Ha
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So, we should invest in foreign currency or gold?
I'd be going for gold. Hard to counterfeit given the rumours coming out of NK that he has been printing his own USD's.
As I said below. That's classic Stockholm syndrome. Don't fear the death of your captor.
You don't know what Stockholm syndrome is, you don't know how an economy works. If you think he's wrong, explain why instead of putting down meaningless statements.
Exactly! It is not sympathising with their situation and embracing their goodwill to not hurt you. It is realising that the captors enemy will shoot you when they eventually capture him. Unless you have enough savings to pay for internet, electricity and food for the next year or two while you start an internet business - a crash will devastate everyone. It may not be warm & cuddly to think about how much a dependance we have on bubbles in our economy (mining & housing), but we do and that is it until it changes. Look at other examples of bubbles world wide, they did not come out with a pop. They keep growing but eventually stagnate in a way that any growth is minimal, so in real pricing terms they essentially flat line as wages & savings catch up.
You're both being too extreme. A crash isn't going to devastate everyone. You'll still be able to borrow money, it'll just be much more difficult. Most people will still have a job but there will be lots that lose theirs. The country isn't going to explode.
Not the type of crash that the OP was on about IMO. That's more of a retracement and can definitely happen via normal ebb and flow. On a side, personally, which I still doubt will happen in a housing market where there is always a consistent demand (house leavers etc) and bias political interest so it doesn't occur.
tldr; secure jobs and savings won't help you (unless you can pay the full amount of the house price) in a blood-bath-housing-market crash. I've been through 2 crashes - The dotcom bust & the 2008 sub-prime crisis. Let me tell you that the only ones that came out ahead of that are the ones with millions sitting in their bank accounts and in a position to buy everything at a cheap. **EVERYONE ELSE STRUGGLED**. * Banks would not provide anyone a loan unless they have collateral/asset they can hold it against (means you need to have already own something). * For those that could get a loan, the interest rates was humongously high (think nearing double digits) and most couldn't bear the cost without renting the place out. * Those that was fortunate enough to scrap by and have purchased properties found that no one was able to pay rent at market rate and had to significantly discount what they could rent it out for. * People who thought their jobs were "safe" were laid off simply from the fact that there was suddenly a huge market of unemployed talent on the cheap and they could be replaced by a more "talented" person for a much lower wage. * Even for those that were not laid off, a significant portion had to take a pay cut or even face delayed wages. (i know of a family business where everyone agreed to not be paid for a month so that the business could survive for another 2 months) I could go on but let me assure you that a housing market crash will not be nice for everyone unless you are already extremely rich. Without knowing what your income, job & savings are, it is highly unlikely you'll be able to "clean the fuck up" unless you have millions lying around in your bank account. I am assuming you are hoping the prices to crash anywhere between 20%~50% of the current median prices and for that to happen, it will mean a significant catastrophic collapse of a major part of Australia's economy and there will be a flow and effect on everything which includes your job, your ability to secure a loan from a bank and I won't even start on how hard it will be to rent the your properties out.
Unless you secure your savings in an investment (not a house) a real investment like gold or something. "Those that was fortunate enough to scrap by and have purchased properties found that no one was able to pay rent at market rate and had to significantly discount what they could rent it out for" Yipee! Sounds great!
If it happens, we all lose. Don't think it will be just homeowners and investors that suffer.
Stockholm syndrome. I'm with op. Fuck it. It's going to happen eventually. Why? Because it's practically the only thing left in our "economy". Cars are gone. Electricity is killing the few companies left that make shit. Our politics are a joke. The asx is lagging the entire world and has done something incredibly unusual in the last few months - traded in a tight range and finally bumped into the 200dma. We still have mines. Which are automating and many of which are barely Australian. They're neither domiciled here or owned by Australians. So... How exactly is that going to be useful for Australians? Our economy is practically a potemkin village. A pretty facade with no interior. Be prepared as best you can for the facade to crumble. It will some day.
We're doing ok on education imports
That's not even the remotely true. If everything had turned to shit except property, we'd all be out of jobs. But there's still plenty of people out there working in retail, distribution, transport, financial and technology services, government departments, construction, general trades. All those areas are still plenty strong, but they rely on the entire economy remaining strong. This is why a big bang housing bust is an extremely bad thing. It's not "Stockholm syndrome", not even remotely, it's a very large part of our economy and if it goes belly up, it has the ability to take all those other areas that are performing well, with it. What we need to cooling of demand in the housing market to reduce grown in prices, and extra growth in other areas of the economy to level it back out again.
Part of the problem you have recognised, we don't do anything to create value or export value. We just exist. We use to export rocks but we don't even own that anymore! https://www.macrobusiness.com.au/2017/08/victoria-labeled-parasite-state/
Wow, I wish I had a job where I could guarantee my job security meant that even through a recession it was almost guaranteed that I wouldn't lose my job. Then I could go on the internet and spout all these figures and buzzwords that normal people wouldn't be able to comprehend about how we're all doomed, except for me of course, because I've planned ahead.
So you'd rather pledge 30-40% of your income for your entire working life to buy a house just to avoid the bubble collapsing? Do you think the 20yos today will be willing to pledge 35-45%? And the 15yos 40-50% And the 10yos 45-55%? And the 5yos 50-60% And the newborns 55-65% Because that's what it's going to take to keep it going. At some point, it has to end.
Crashes are terrible so the solution is obviously to keep pumping the bubble to avoid them.
The people hedging for safety are hilarious. *Why yes I do believe housing in the eastern states should continue to grow at 9-14% per annum, that is sustainable...* /s All it takes is more restrictions to FDI or changes overseas directly affecting the investors and the music will start to slow and everyone will start eyeballing the chairs.
"If rapidly throwing up almost empty structures in a building boom is the only source of new jobs, then our economy and job market have become a sort of Ponzi scheme, where building after building needs to be constructed to keep us all one step ahead of the crash" - Dennis Glover
I'd rather a massive blood bath now than stagnation for a few decades.
Lotta people in here saying it would be bad for non-homeowners too. But it's already bad.
"I hope that everyone around me crashes and burns so i can win from their misfortune" Great attitude for getting ahead there lol
Well, it is the exact opposite of the attitude that got us into this problem "I hope the price keeps going up so I can keep making money and fuck anyone else"
A winning mix of schadenfreude and a poor understanding of economics.
So explain to me how a median household price roughly 50% higher than the sustainable weekly housing expense for the median income household is such "great economics"...
It's not, but crashing the whole thing is even worse economics.
It's not. It's a ridiculous situation caused by profligate lending causing a great financial imbalance across the entire population. My comment was about your expectation that you can benefit from crashing house prices. A wide-spread crash like the -30% events in US and Ireland will cause massive pain across all sectors of our "Houses and Holes" economy. You won't be unaffected by this pain, and so probably won't 'win from their misfortune'. We'll all get our feet wet from the tears from property 'investors'.
Because price is set by demand, not mandated by affordability metrics. You don't have to buy a house in Melbourne or London or New York.
And there's no shortage of demand. Look at the forecasts for population growth and millionaires in Asia.
Except in the long term, demand is driven by affordability > especially when price becomes Higher than the market can afford. It's a closed loop system. You can't have continuous infinite price growth that outstrips wage growth to this extent.
No that's not right at all. The 1% can comfortably buy property and rent it out as long as there is demand to live somewhere desirable. There's no "right to own a house".
Except in a market which makes a net rental loss - like Australia. The only way the Australian market operates is through continuous capital appreciation. The Australian population couldn't handle rents high enough to support the current mean dwelling price. The only reason it hasn't fallen over yet is because negative gearing provides an incentive to speculate at an income-loss. The Australian rental market makes a 10 billion dollar net-loss each year. It's built entirely on the assumption that you'll be able to sell your house in two years time for a higher profit than you'll lose in rental losses. We have a name for a system based on this kind of setup - Ponzi scheme. The reality is that housing IS a mass market consumer good - there is no "one percent" fixing the prices, just a shit load of the top twenty percent who know that housing is a ridiculously benefited form of investment from a regulatory perspective.
That's exactly how a lot of the extremely wealthy got wealthy in the first place, and is how they get even more wealthy. They work the cycles.
Yeh but there are plenty of people who arent extremely wealthy that own houses, or at least are paying off mortgages
Well, it is the exact opposite of the attitude that got us into this problem "I hope the price keeps going up so I can keep making money and fuck anyone else"
A result of suffering for peoples good fortune all our lives.
No; many people, from young to old (yes there are people in their 30s, 40s and 50s who still can't afford to buy a home), would love affordable home prices. But you probably don't *really* want that crash. For starters all home renovations will cease immediately because who wants to improve a property that is going down in price? No home renos, tradies start looking for work, and hardware stores can't sell product. Rental properties dry up because investors have no way of making a profit. So you *have* to buy or you've got nowhere to live. Got that deposit ready? Ah, but banks are not going to lend. Not if there's a risk of negative equity - and in a dropping market banks will be very very nervous. And are you hoping for the market to recover once you have that home you purchased?
Yeah I can't wait to live in Detroit
https://www.zillow.com/detroit-mi/ At least you can get a house.
Increased homelessness as panicked investors still up, reducing rental stock. Increased crime from said homeless. Increased depression and suicide from mortgagees who now owe more than their home is worth. Less employment as all those shops and services that were supplying the residents who've abandoned their homes close up. Higher unemployment reduces GDP, and the dollar devalues, pushing the price of imports up. The RBA lifts interest rates to keep inflation in check by reducing spending, leading to further job cuts in retail and supply, while also forcing more home owners, who can no longer afford their higher mortgagees, out. What's not to love?
Sounds dire. How about panicked investors sell off their investment properties for between what they'd paid for them or what they owed, meaning a drop in market value of an average of a 40%. As most property investors already have quite a lot of equity and have a place they live in, they merely lost the on-paper gains they'd made in the last few years and they escaped unscathed. This then meant that those who were locked into a lifetime of rent could now afford to buy their own property to live in. But alas, Australian banks were a bit gun-shy about lending money. But as this bubble bursting was an Australian issue only, there were overseas banks ready to jump in and lend money as the market had bottomed out. Of course apartment buildings in the planning and construction stages were on a path to big losses as they paid stratospheric amounts of money for the land. But that was okay as these huge capital gains on land which had been made just dried up for the various plutocrats and it still meant they were extremely wealthy. The companies doing the developments were often foreign owned and they just counted the profits from previous boom times and took off back home. But as land prices dropped it meant a ripple effect outwards to new estates. But never fear, development companies had pretty much purchased land that far out many years ago for very little indeed. Which meant they were insulated from 'dropping prices' to great extent and it meant that very little downwards pressure had to be applied to builders and subcontractors, meaning they could all continue working. And due to the lower prices in new estates, even more people could buy and the blokes who used to work in apartment developments in the CBD just worked out on low rise and detached houses out in the outer burbs. :)
This is why I don't wish the crash. I accept it but don't welcome either side of it. We are stuck in a banquet of consequence.
It's a bit of a fallacy. When the market does correct, so will everyone's expectations. Suddenly you start questioning whether spending $500,000 on a shitty 3 bedder in Brunswick is good value or not.
Only half a million? For a *three bedder*? In **Brunswick**?! Absolute bargain.
> $500,000 on a shitty 3 bedder in Brunswick is good value or not. Yes, that is insanely good value. A 3 bedroom house a few kilometres from one of the most desirable cities in the world, for the 5 years of a teachers salary? That will never, ever, ever, ever happen.
I suspect teachers don't earn anywhere near $100k
[Then you would suspect wrong.](https://www.aeuvic.asn.au/sites/default/files/Victorian%20Government%20Schools%20Agreement%202017.pdf) Any regular old public classroom teacher whether primary or secondary is on at least $99,283 after 10 years
Yikes, well my teacher friends sure don't have anything to complain about then.
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I don't think you quite grasp what he's saying here.
What is he saying? There's far fewer 3 bedroom houses in Brunswick than there are people who wish to live in them. Unless people suddenly stop earning money (unlikely, government jobs are very safe), or they suddenly find more land and start building lots of 3 bedroom houses in Brunswick (impossible), then the market simply cannot 'correct'.
He's saying exactly what he typed. When there is a correction, so does expectations. A 3 bedroom house in Brunswick today is not worth the same as a 3 bedroom house post a pricing crash.
I don't understand what he means by the market 'correcting', when there is nothing to correct. There's millions of people of people who want a 3 bedroom house in Brunswick, yet there are very few of those houses. This isn't fuelled by investor demand or price speculation, it is fuelled by people earning real money being able to afford a very desirable item that is in incredibly short supply. What suburb is at the top of any 'where should I live' thread? Brunswick, Collingwood, Fitzroy, Collingwood, Brunswick... Unless this demand changes, prices are not going to.
There is plenty to correct as Spain, USA and Ireland have all shown. He's talking about an inevitable correction, or crash, on overall property prices and how $500,000 for a house, doesn't matter where, becomes questionable. Would you still pay half a mill for a house if prices dropped 50%? 75%? There's some for $1,000,000 now... seems pretty logical that a 50% drop would cause buyers to question if $500k is worth it. These drops aren't outside the realms of possibility.
You're preaching to the deaf matey. If only those experienced teachers could teach basic comprehension.
I looked recently and a shitbox fixer-upper in Brunswick was going for $820,000
If you can't buy a house now you won't be able to if the market crashes.
Not happening. Any "crash", in reality, may be a slight correction. A 5-10% decrease in prices at worst. Sorry to break it to you, but you're not picking up a mansion on St Georges Road for 500k any time soon.
I think you're underestimating the impact negative gearing will have on magnifying the effect of negative growth. The entire housing market is geared to be a capital appreciation based growth asset running a continuous revenue loss. If that continuous capital appreciation stops even for a few years then the whole house of cards is coming down. Our market is essentially like a shark at this stage - either it keeps swimming forward or it dies.
house prices aren't going down any time soon. our city is simply not set up to support the massive population increase it's currently experiencing. the cbd is too small, and there is too much NIMBY resistance to increasing population density in exclusive inner city suburbs, as a result the vast majority of people have to buy further and further out as the prime inner city parcels of land become more and more sought after hence driving prices up. even worse there are no nearby cities melbournians can live in as '2nd best', the closest alternative is 10 hours away.. as population increases it's only gonna get worse. in 10 years the average family will be lucky to buy within 90 minutes of the cbd..
Why does everyone act like a crash will destroy all jobs and lending? Even during the worst depressions unemployment was 20% or so. And why does everyone think that it is better to make things worse by pumping the bubble higher to avoid the pain? Is there some magic number where the stack of cards solidifies? These arguments have been used for over 10 years and it's only gotten worse.
Have you ever *seen* an economy with 20% unemployment? Go check out Detroit. Or for an entire country, Spain or Greece. It might not be so bad if the government had a surplus to fall back on to pay benefits. But at that level, there simply wouldn't be the money collectable from tax payers. Seriously, the solution to housing prices is to make other cities besides Melbourne and Sydney more attractive. High speed rail to Ballarat, Bendigo and Geelong would be a start. The capitals will continue to grow, so demand will continue to push prices up in them. We have to get over squeezing 30 million people into 7 cities.
Do you have parents? A significant other who has parents? Do you have friends? Family? Ok so if you "clean the fuck up" what happens to these people? Are they homeless? Jumping out of windows because they lost their jobs and can't feed their own families? You are right it does sound harsh, but that is because you are a selfish piece of shit.
I have parents and friends all hoping for the exact same thing because either they or their children have been locked out of ever being able to own their own homes. For those of us who who born poor it's a little difficult for us to have sympathy for people who are leveraged to the gunwales and get bitten in the ass when the cycle inevitably comes full circle. Regression to the mean is the closest thing the universe has to an economic law. Burying your head in the sand isn't going to change that.
Born poor? Mate you fuckin lucked out that you were born in a country as great as Australia. Born poor but still made it to where you have a "Secure job and savings". Shit being born poor in Australia is still better than being born rich in Africa. Just get some perspective, owning the biggest Mcmansion in the street while the rest of the world burns just might not make you as happy as you think.
If he was born wealthy chances are he would have an even more secure job and even bigger savings.
And if you were born good looking your chances of success are even higher. Life isn't fair.
And if you were born charismatic your chances are even higher than being born with good looks or/and wealth.
Even if you were born poor, you are still in the 10% of living conditions
If you earn the minimum wage in Australia, you are in the top 2.4% worldwide.
I'm sorry to hear about your parents' gambling addiction.
You having money ready to leap, and people like you, are the reason there wont be a crash. If you all go fucking broke, there'll be a crash. Likely the only way we crash (instead of smaller corrections) is if theres GFC 2.0 since we arent shielded by Chinese dirt purchases any more. Granted you still might be able to clean up.
Yeah but only because I've got next to nothing and enjoy some carnage.
Haha you are kidding yourself! If the market collapses, people like you suffer!!
I've seen a post a month like yours now for at least 6 years.
Mate you're an idiot
Nothing is going to change. We are absolutely fucked and heading towards a feudal system.
OP, how much do you have in savings and what car do you (or the bank) own?
Tbh- only like 30k (this post was 90% a shitpost.. did not intend for it to become a thing haha). I don't own a car - doesn't make financial sense; public transport is like $1500 a year and I can ride faster than the average driving speed in the inner suburbs.
Thanks for your honest reply. So much of this thread is retarded and I was worried about living in the same city as people who want harm on others.
Yeah it kinda blew WAAY out of proportion. I do think that current growth rates are unsustainable, and I do think that we need to be putting some serious work/thought into trying to ensure a soft-landing before people get hurt - but this comes from a desire to prevent people getting screwed, obviously not a desire for it to happen.
Nope, I don't even care about the fallout, fuck them all. (Primarily negative gearers)
House prices won't be going down any time soon. If a correction comes it will come slowly and over a long period of time, house prices will just stop rising. But I think there is way too much money around and Melbourne metro is too popular so any correction is a long ways away. If a crash like you want happens, you won't have a job and it doesn't matter how secure you think it is.
I think you're underestimating the impact negative gearing will have on magnifying the effect of negative growth. The entire housing market is geared to be a capital appreciation based growth asset running a continuous revenue loss. If that continuous capital appreciation stops even for a few years then the whole house of cards is coming down. Our market is essentially like a shark at this stage - either it keeps swimming forward or it dies.
Lol Go look at the negative gearing figures and you'll notice that it's trending down. Less and less properties are negatively geared. It isn't the problem that class war Shorten and DiNatale want you to think it is. Look at how many people we are adding to the state and as a result the city each year. Once you're done looking at those two things, have a good hard look at yourself.
That's like saying a bomb isn't dangerous anymore because you removed 10% of the gunpowder... We just happened to also move a couple of matches closer to the fuse at the same time
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The scary thing is, I'm incredibly progressive person - but kinda agree with the sentiment around immigration being too high. Melbourne's population grows by 340 people A DAY. There's no way to keep up with that when they all want to live in the inner city.
We need to build roughly the equivalent of one Bendigo every year to house everyone. That's just for Victoria.
...except for the fact that the majority of those immigrants work and pay taxes, which pay for everyone else's benefits and pensions.
> ...except for the fact that the majority of those immigrants work and pay taxes, which pay for everyone else's benefits and pensions. Relax. There's always one like you when the immigration Ponzi scheme gets brought up. No one was talking about immigrants being unemployed and not contributing. What people are talking about here is the fact that infrastructure development is not keeping up with growth. FFS
Yeah but...immigrants bad ya know?
One day people will realise that's there's a difference between 'immigration' and 'immigrants'. You can be absolutely welcoming to immigrants, while still having a critical opinion of immigration policy.
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Dick Smith has been [banging on about this](https://www.dicksmithfairgo.com.au/) for years.
This is probably the most reasonable comment you've ever posted. Has your account been hijacked?
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Well you've raised some reasonable discussion topics here. I think if you dial down the lunacy sometimes you might find people willing to listen. I think there's no benefit in using the term "sjw" if you actually want to discuss things. It's the catchcry of idiots, just as extreme virtue signalling is the standard response of idiots on the other side.
Nope it's official, I have decided your a nazi, no questions, end of story, I've now tagged you and the doxing begins. Look out.
Well at least you haven't called me a cuck yet.
Cuck
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Ok. It was fun while it lasted.
Go [Follow Your Leader.](http://3.bp.blogspot.com/_5fiC8OWSexw/S9rtaCI-zLI/AAAAAAAABNw/eHy3o0soLKc/s1600/Follow+2.jpg)
I can't ever see immigration being lowered unfortunately. edit: unless people stop wanting to move here.
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> We could be the Silicon Valley and Green Energy manufacturer of Asia-Pacific Right, and we'll do that by cutting immigration by 66%? Dumb fucker.
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> Or have more well educated children Oh, the irony!
Wasn't the professional consensus expressly about not opening up more land and not create more rubbish low density suburbs but instead going high-density in the inner-suburbs and otherwise push people to other cities like Bendigo or Ballarat.
> build fast trains to fringe areas Self driving busses will be a superior mode of transport within the next decade. They will pick you up from your doorstep and drop you at your destination so will provide a faster journey for the majority of suburban trips.
If I didn't have 2 properties, I probably would too. I honestly don't see it happening though, stagnation of inflation / price increases yes but not so much a crash.
"Buy when there's blood in the streets"
Then, AirBnB out to foreigners or tourists and rake in the rewards till the agent finds out.