Australia housing bubble

[Sprintey]

Originally Posted by T3rminator

Another 50 basis point just announced. Can anyone with an economic background explain how lifting rates is going to help with this current inflation?

Don't have it as a background, but by raising the RBA keeps up with overseas central banks... even though still far behind them. Back in the day Aus bonds yielded about 2% more than US, to attract capital to Aus, which needs to attract overseas capital, Now we are behind the US.
If they get too far behind, AUD gets hammered. If AUD gets hammered, everything we import adds to the inflation shock: think especially, fuels and oils.
So we have to raise, relatively speaking.

[zilo]

Originally Posted by DTFRMONT

With the Japanese situation, totally different demographics from here as mentioned. There is a rapidly ageing population, their country towns are full of abandoned homes. .

yep...30 years later that is the case,
but their downturn started before they had an ageing population and abandoned homes and has not recovered, because prices were sky high when the rot set in.

[MITCHAY]

It looks like another 0.5 whack coming in August is likely.

My mum is trying to offload her investment property so she can sell her house and downsize but it has just been a **** show so far but hopefully soon

[zilo]

Originally Posted by MITCHAY

It looks like another 0.5 whack coming in August is likely.

Some are predicting 0.75 rise...

[MITCHAY]

Originally Posted by zilo

Some are predicting 0.75 rise...

Yep was reading about a potential 0.75 as a possibility on the back of stronger than expected employment numbers.

August rate rise will be 0.5 minimum. Take that to the bank

[Yellow_Festiva]

Originally Posted by MITCHAY

Yep was reading about a potential 0.75 as a possibility on the back of stronger than expected employment numbers.



August rate rise will be 0.5 minimum. Take that to the bank

When is our fuel excise discount getting canned?

I'm thinking it will be between .3 and .5% . 75 basis points seems too much of a kick in the guts in 1 hit.

Having said that, banks are jacking up their fixed rates well above the predictions so anything is possible.

In 18 - 24 months there will be billions of $ in loans coming out of sub 2.5% fixed rates. These people will be going to around 5-6% overnight..

Now that will be an interesting situation to observe....

Sent from my SM-G973F using Tapatalk

[Romulus]

I remember interest rates between 6-7% around 2009-2015. No big deal. The RBA should just increase rates 1% in August and 1% in September to bring rates back to their normal level.

[Syndrome]

The RBA are clueless

They created this asset bubble by flooding the market with cheap credit since 2009

Now they are about to pop the same asset bubble.

This is going to hurt................

[Romulus]

Originally Posted by Syndrome

The RBA are clueless

They created this asset bubble by flooding the market with cheap credit since 2009

Now they are about to pop the same asset bubble.

This is going to hurt................

The previous Federal government is just as much as fault with its idiotic FHB grant boosts, causing financially illiterate folk to enter the money with a 1-5% deposit, those who probably never saved a penny in their lives. People thinking they're getting a $50-60k allowance for 'free' didn't have an ultimate transactional cost?

As mentioned by Yellow Fiesta interesting times ahead with those on sub 2% fixed and variable rate loans entering the market at what will be a 10 year cash rate high according to 3 of the 4 major banks.

[Charliewool]

The homes that are being passed in, or VB ( in Melbourne) appear to be the 1mill-2mill.
Lower valued homes (500-800k) are retaining or actually rising… And selling like hotcakes.
I’d suggest those heavily financed in the plus 1mill bracket are panicking and looking to cut and run and buy smaller?… So, again the first home buyers the losers?

[Citroënbender]

Sounds plausible. Especially the panicking - get an impression there’s a lot of emotion getting ahead of analysis in the minds of people affected by the rate rises.

Will families start having a lodger, to make up the difference in repayments? What about companies offering to contract for a space in your yard to stand a relocatable dwelling? At the moment everyone seems determined to suffer as nuclear families, rather than embraced shared costs.

[zilo]

The best part will be the smug young tradies who have never experienced a downturn,

You know the ones....brand new HiLux or Ranger..permed hair and blue heeler in the tray...reckon they are worth a thousand bucks a day.

Bring it on I say...

[BENT_8]

With rentals in huge demand and rent soaring there will still be plenty of activity in the entry level buyers market as its now cheaper to pay a mortgage even with a LVR above 90% than rent the equivalent property.

[fordomatic]

Originally Posted by BENT_8

With rentals in huge demand and rent soaring there will still be plenty of activity in the entry level buyers market as its now cheaper to pay a mortgage even with a LVR above 90% than rent the equivalent property.

My rent on one of my investments just got put up an extra 35% on the previous tennants, couldn't believe it. Real estate said i'd achieve 40% if i wanted.

I don't think the rise in rent will see more people buy. Most the people renting can't get a loan to buy a house, hence why they are renting. Even with a sizeable deposit, you wont get a loan easily, even if your rent is more per week, that doesnt even come into the banks decision to approve or not.

[GasoLane]

Originally Posted by fordomatic

My rent on one of my investments just got put up an extra 35% on the previous tennants, couldn't believe it. Real estate said i'd achieve 40% if i wanted.

I don't think the rise in rent will see more people buy. Most the people renting can't get a loan to buy a house, hence why they are renting. Even with a sizeable deposit, you wont get a loan easily, even if your rent is more per week, that doesnt even come into the banks decision to approve or not.

With everything else going up it's good to see that Agents are helping renters

Do the agents charge a flat fee for looking after it or is it a percentage of the rent?

[fordomatic]

Originally Posted by GasoLane

With everything else going up it's good to see that Agents are helping renters

Do the agents charge a flat fee for looking after it or is it a percentage of the rent?

The agent charges 5.8% including GST, so it's definately in their interest to get more rent.

I looked at rent in that area and I could have easily got more, im happy though. Remember this is all business mate, you don't make friends in business. Agents are there to make money, not help people, it's just reality.

[BENT_8]

Originally Posted by fordomatic

I don't think the rise in rent will see more people buy. Most the people renting can't get a loan to buy a house, hence why they are renting. Even with a sizeable deposit, you wont get a loan easily, even if your rent is more per week, that doesnt even come into the banks decision to approve or not.

I just did, so has my Daughter.
She's done it on a single wage, its really not that hard, just got to be realistic about what 'entry level' is.
Both of us did it as sole borrowers on sub $30ph.

People will still get loans for first homes, they'll just have to rethink their expectations on what a 'first home' actually looks like and where its situated.

[fordomatic]

Originally Posted by BENT_8

I just did, so has my Daughter.
She's done it on a single wage, its really not that hard, just got to be realistic about what 'entry level' is.
Both of us did it as sole borrowers on sub $30ph.

People will still get loans for first homes, they'll just have to rethink their expectations on what a 'first home' actually looks like and where its situated.

You are a minority though mate, that's what im saying. People, especially the youth of today are not content with compromising. I see it all the time. If it was easy like you say, everyone would own a home, but they don't.

It's the very reason why rent has continued to rise. As long as people pay the asking price for rent, it'll keep rising.

Here in Canberra finding a rental is difficult, with 30 plus people at each inspection and people bidding big. I rent here, I live in a complex. Next door just got re-leased and speaking with the owner they got 20% more than the asking rent price and were given 12 months rent in advance.

That's $40,000 they had straight up front for a years rent. double that and you have a deposit. These people clearly don't want to buy. There will always be a market for renters, history has proved that.

Originally Posted by zilo

Hmmm...yeah...but the elephant in the room is if you lose your job.
Or lose your job and get one that pays less..and less tax to claim.

Then..the situation deteriorates really quickly.

Yep, but that's a risk, as with all investments. You win some you lose some. You don't get comfortable in life without taking any risks.

Originally Posted by T3rminator

I believe there are less than a handful of countries in the world that allows neg gearing on housing. We are one of them. Use the system that is given to you I say, no point complaining about it.

Exactly. I still don't think the housing market will go down past pre-COVID prices. If it does, i'll be there waving cash around to scoop up some bargains. It will always recover, just have to play the long game.

[BENT_8]

Originally Posted by BENT_8

I just did, so has my Daughter.
She's done it on a single wage, its really not that hard, just got to be realistic about what 'entry level' is.
Both of us did it as sole borrowers on sub $30ph.

People will still get loans for first homes, they'll just have to rethink their expectations on what a 'first home' actually looks like and where its situated.

Hate to quote myself but listening to the Roo and Ditz show this morning and they had Adelaides no1 auctioneer on to discuss the market.
They asked him about how rate rises were influencing the market.
He said all its done is push expectations down, so a $450k buyer has become a $350k buyer etc
They're still buying, just that 'all in' isnt achieving what it was 4 months ago.

[fordomatic]

That's not a good example of an investment property. Also, most investors are using property as a tax break as well. No smart person that is earning big $ is paying any tax. It's why middle income earners hold up Australia and not the rich or the poor.

I'm taking all my emotions out of these replies by the way. Reality is hard but the smart person doesn't pay any tax, it's all about playing the system to make it work for you.

[b0son]

Originally Posted by fordomatic

It's why middle income earners hold up Australia and not the rich or the poor.

It's also why we need to look beyond income and also consider wealth when it comes to taxation. If the wealth divide between rich and poor continues to widen, it's reasonable to use the tax system to address it. Will never happen while politicians have a vested interest in the status quo.

[fordomatic]

Originally Posted by b0son

Will never happen

This for truth, like i said, no friends in business

[Polyal]

Originally Posted by fordomatic

That's not a good example of an investment property. Also, most investors are using property as a tax break as well. No smart person that is earning big $ is paying any tax. It's why middle income earners hold up Australia and not the rich or the poor.

I'm taking all my emotions out of these replies by the way. Reality is hard but the smart person doesn't pay any tax, it's all about playing the system to make it work for you.

Perhaps but thats how its advertised to most? Why is it not good?

I guess my point is that housing shouldn't be used for tax breaks or any incentives.

No doubt this is a case of hate the game not the player, its just so core to so many functions of our society...its rather sad, not sure how you change that as you say without the top end cry poor. But its got to change.

Originally Posted by fordomatic

This for truth, like i said, no friends in business

Evil circle isnt it...look after society so it looks after you are make sure during your life/time in office you are looked after...our system is too short sighted unfortunately.

[Polyal]

Ahh I was going to write something up about investing in things that help society and not make it harder but its a free world. There are shares I could buy and make a buck but choose not too. So many issues, so little time.

[asagaai]

Negative gearing is used in Australia to induce the private marketplace to fund and provide rental properties to the population unable/unwilling to buy their own properties.

The Government wanted to transfer this responsibility from the Government to the private sector, as the provision of public housing was as far as the Government wanted to take on, especially as public housing rents are as a matter of public policy artificially lowballed to the detriment of the taxpayer.

[Polyal]

Originally Posted by asagaai

Negative gearing is used in Australia to induce the private marketplace to fund and provide rental properties to the population unable/unwilling to buy their own properties.

The Government wanted to transfer this responsibility from the Government to the private sector, as the provision of public housing was as far as the Government wanted to take on, especially as public housing rents are as a matter of public policy artificially lowballed to the detriment of the taxpayer.

Interesting, I have heard similar and can understand but here we are with the Gov essentially wiping their hands of it and letting the market sort it out. Great leadership. Then they think they can balance it with flicking the interest rate around...

So what did we do prior and how do the other 99% of countries seem to manage?

So far it does just seem to be the upper end thats cooled down. Will see where its all ends up I guess.

[T3rminator]

CPI data updated as at yesterday. Would be interesting to know if furniture were imports or local made. Does "housing" in this bucket represent the increase in cost to build? or cost to purchase?

https://www.abs.gov.au/statistics/ec...ralia/jun-2022

Key statistics

• The Consumer Price Index (CPI) rose 1.8% this quarter.
  
• Over the twelve months to the June 2022 quarter, the CPI rose 6.1%.
  
• The most significant price rises were New dwelling purchases by owner-occupiers (+5.6%), Automotive fuel (+4.2%) and Furniture (+7.0%).

Originally Posted by Polyal

Interesting, I have heard similar and can understand but here we are with the Gov essentially wiping their hands of it and letting the market sort it out. Great leadership. Then they think they can balance it with flicking the interest rate around...

So what did we do prior and how do the other 99% of countries seem to manage?

So far it does just seem to be the upper end thats cooled down. Will see where its all ends up I guess.

Different countries will have different unique schemes that allows their tax payers to get breaks. You should see some of the dodgey contracting schemes they have had over in the UK, take home 80-90% regardless of income level. Bring that here and I'll gladly swap it for the negative gearing. We pay plenty of taxes day to day as it is, which is why I'm of the view, use the schemes given to you.

If people are worried about affordable housing, they are available, just not in the desirable areas.

[Citroënbender]

I don’t think there is much standard consumer grade furniture made here anymore, T3. Apart from artisan tables (there is an essay in this alone!) and possibly cheap pine-framed upholstered foam sofas.

The UK were big on leases, lots of 99-year leases on property that I understand offer the tenant much more latitude in terms of maintenance or capital works. Plus many cars seem to be bought on lease plans as well. I expect these trends to come here so that people can continue to “live the dream”. Even if they no longer own that dream, but are paying to pretend.

This week, I’m feeling the frustration mooted by other posters here about tradespeople thinking they’re worth a mint. Can’t get anyone qualified to quote and (likely) proceed on a $2-3K job of 10% thinning plus deadwooding on some large trees. Because it involves effort in quoting and then professional liability. They’re full of ego, but gutless.

[zilo]

Let's hope we get a decent interest rate rise next week.

At least 0.75% ... and even that is a pussy amount compared to what other parts of the world are getting.

[Yellow_Festiva]

Rates just up another .5%