a 20% drop from the unrealistic covid peaks seems fair enough. every analyst in every bank in Australia has their own view on how much housing prices will drop though.
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Itās easily down 10-15% from the peak in ACT
20% isnt bad, well only for people that have to sell. Most people will still hold their shelter / investment. I dont imagine there will be that many houses on the market next year.
Have heard a property finance investor guy, saying itās a buyers market now, and good time to buy. Time where can offer a fair bit below asking price and still be a chance.
Local real estate agents have said that the āgoodā properties are still selling, its the fixer uppers that are hanging around on the market.
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We definitely canāt buy now, but if we could I donāt think weād regret it in 20 years
Thats largely been my experience thus far. We are looking to buy, and I have seen a fair few houses go at the lower end or below the estimated range, or simply being passed in at auction only to be sold later on at a reasonable discount. People definitely dont seem to be wanting to pay more than what they think is reasonable for houses at this point in time.
Having said that, there doesnt seem to be too much out there to purchase, so it almost feels like a bit of a stalemate whereby buyers are only able to choose from a relatively small selection but are very picky and have bargaining power in what they choose to pay for them.
A lot of properties also seem to have their prices revised downwards as they stay on the market for a few weeks- and these are decent properties, not fixer-uppers. I think a lot of vendors are getting a rude shock as to the demand in the market at the moment.
I think those who can make a reasonable offer on a property will likely get a decent place at a decent price. It may decline a bit in the short term but if you are in a position to buy, I dont think now is the worst time given that you could potentially buy at a fair discount if the vendor wants to sell ābefore the market crashesā
āedit-- and as soon as I post this I get told a property which was advertised at $980,000 is going to sell for $900,000 (if you trust what the real estate agent is saying). Reckon vendors are getting nervy.
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This is the type of time that Iād had houses up for sale in the past.
But Port Fairy just had its highest price of $6.5m. Beach frontage, plus I understand, riverfront frontage tooā¦based on the Battery Hill precinct.
Going by the amount we move for them Iām not surprised they are booming.
The banks already forecast around 10% drop next year, and 5% the following year, so 20% is not so different. Also worth keeping in mind that loans taken out today are paid back in tomorrowās dollars, so in a high inflationary environment, your debt is reducing pretty quickly. Two years at 8% inflation is going to knock 15% off your remaining debt. Yes, we may see a lag in wages growth, but inflation will cause wages to balance out at some later point. Even at a āusualā inflationary environment of 2-3%, compound that over 30 years, and see how little your repayments are on a housing loan toward the end.
Property is a long term investment. As long as you arenāt forced to sell (and not replace with another) after a drop, then the risk remains low.
Is there a bad time to buy property? When the market is going up, even paying overs is absorbed by the increase in value pretty quickly. In the current market, sellers are already taking lower bids (but probably still making profit on the recent rises), and inflation is reducing debt on the property. And in a bottomed out market, rental return is better, and the chances of seeing equity growth in a medium period is high.
Property is a long game, and isnāt just based on buy and sell price. For investment properties over a long period, the tenants more than pay the property off for you, and the debt reduces over time with inflation. The property likely also increases in value, and if it does, that increase is geared. But even if it never increases in value, the other gains are already enough to make it a sound investment strategy. There are also a number of ways to ābuy smartā or add value that can be added on top of the long term play. Aside from over-extending and being forced to sell at a bad time, or some catastrophic change to global finances which would could ruin any investment strategy or accumulated earnings, I find it hard to imagine a way to do badly on property over the medium/long term. Perhaps I simply lack imagination, but I have seen many people do very well with property over many good and bad years, and I have watched many ābadā deals look like brilliant ones over time. EDIT: To summarise, itās a very forgiving asset class. You can make many mistakes, and still come out the other end looking like a genius, with enough time.
I think a lot of the increases weāve seen in property in the last few decades have been driven by education of the masses on the benefits and strategies, that were previously only known by relatively few, and the entry of large financial syndicates into the property market has also created less supply. The Great Recession in the US over the 2007-2009 period was sparked by bad lending practices and poor governance that we never had in Australia. I canāt see higher interest rates, or even higher gearing of loans causing the kind of crash the US experienced back then, especially as supply continues to be low, and demand is not going away.
Iām not saying we wonāt see reductions/adjustments in the short term in response to the government raising interest rates. We should, and thatās exactly why theyāre raising them. What I am saying is that the fundamentals that caused the unsustainable economic environment that caused the crash in the US, donāt exist here and now.
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- A 20% drop is basically just taking it back to pre-pandemic.
- I predict extreme lag in wages growth!
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That may be hard to measure. We have a dichotomy at the moment, where employers donāt want to raise wages, but are at the same time, paying 20-30% premiums to attract new skilled workers to replace those that leave.
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Yeah but itās relative. Turkey has a credit rating of I think a B or BB minus.
They need to run rates higher to attract capital. And with that crummy record they are slicing returns even further
Next year July onwards will be interesting as a majority of fixed term home loans will expireā¦. Some are paying high 2s low 3s better have worked out what they are going to do ā¦
.15 rise this month Iām hearing at minimum
True. I changed jobs and just landed a 20% pay rise.
It was nice, but I was also thinking perhaps I could have asked for more!
The extra money easily covers the increased debt repayments on my loan, which was welcome.
Definetly worth testing the employment market now.
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FWIW, the jobs where switching employers can get you a big bump salary-wise probably correspond to those more likely to afford a mortgage.
As for the othersā¦ ah, stuff those povos.
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You know you donāt have to stay with a government employer or the one industry.
Look at Qantas struggling to get baggage handlers. They have all gone to get other jobs, realised they are better and donāt want to go back.
The number of say ex senior nurses(in particular) Iāve met in the corporate world. You can run a hospital, means you can run rings around organising a bunch of corporate drones on much better money!
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Thatās fine on an individual basis. But we canāt ALL upgrade.
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If thereās staff shortages then it puts pressure on the employer no matter what the industry.
If youāre in a supervisor or organising style job in a poorly paid industry and you do it well. Your skills will be in high demand in highly paid areas right now.
Many people do it.
Whether thatās mining, banking, tech, private specialist health/education etc.
The RBA is coming down with a sledgehammer right now to make sure we can all afford the proverbial loaf of bread.
And yes it will/is uncomfortable for lots of people. But that discomfort should as much as possible be felt by the employers who need to pay more for staff.
We(employee perspective) have been gifted a pandemic which has greatly reduced peopleās movements. Skilled immigration isnāt as much of a thing.
Now employers are willing to train and pay for people from different industries to come work in their own.
My last employer was giving away cash once of bonuses to arrest discomfort on inflation. Trying to keep a lid on wages.
I had a veritable stampede for my services(much more than what I expected) and I hardly advertised myself to prospective employers nor had very up to date skills.
I definitely urge people to think laterally on their employment and not be price takers as much as possible.
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This is even true in the unskilled labour market to some degree at the moment. Restaurants lost staff to other industries, and havenāt been able to get reliable staff back without paying better for them. Maccas workers earn a little over award, but Maccas stores are finding it hard to find staff, as theyāve moved to better paying jobs, like non-chain restaurants. Some chain restaurants that only pay award canāt even open the doors some days due to lack of staff.
Thereās an organisation I know of that pays a $30k finders fee per successful internal referral.
You could take an entry level part time admin support job there and just throw all your energy into finding applicants. Would earn yourself $200k+ per year with only a handful of successful hires. Bonkers.
Thatās the level of difficulty some industries are having hiring the right caliber of talent right now.
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Well yep! But Iād also argue there are skills in āunskilledā labour.
If youāre a good worker, try move! Your employer if they are smart will either match the pay offer from alternative employment or better it to keep you.
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