Is there a housing bubble in Australia?

• 

  Ventak on 13/10/2014 - 22:49

  I think if there is one, it's bound to pop quite soon (if not happening already). I know of for example, some apartments which were built over a year or two ago. All the foreign investors bought up quickly…and now they're trying to sell it but no one wants to buy, so they have to drop their prices. Same goes for houses…some desperate people are actually selling properties below the price they bought it in the first place.

• 

  vor0005 on 13/10/2014 - 23:20

  +2

  There has been an influx in the development of multi-story residential apartment buildings; especially in Melbourne. Yes there will be an increased supply of all of these apartment but these apartments are a complete rip, 2 bedroom for 599k? A property investor would be stupid to place his money in that as you're competing for tenancy with atleast 20 other people with identical apartments to the one your offering for lease. The only people who would buy these are individuals who actually plan on living there (I think people would rather fork out the extra money and get a house tbh). With these types of building, yeah it's gonna pop and very soon as well. In regards to other property investments (older buildings) read below:

  In regards to your question, I think the property market is heavily protected by the government and the big banks. Vast amounts of loans are taken out with the intent of negative gearing. Banks wouldn't let individuals risk the banks money if they didn't trust this form of investment. Banks are highly regulated by the government and the federal government knows what they are doing (most of the time).

• 

  cypher67 on 13/10/2014 - 23:52

  +6

  I honestly don't believe its going to burst anytime soon, if ever at all. In the major cities there is a large portion of wealthy people and a constant stream of foreigners settling with money that are more then willing to pay whatever the price is. Australia is very desirable and the major cities is where most people end up for work and lifestyle. If the housing market dropped even 5%, there is investors out there that would fight to buy the property driving the price straight back up. When I first went to purchase it was when they had the bonus first home buyers, as soon as it was announced more people entered the market to capitalise and the prices went up. I feel even though I got the grant, I paid more for the house then what the grant gave me. I'm ready to buy an investment property and soon as something even remotely looks like a deal I'd be onto it, and there is 1000s more just like me. Supply and demand

• 

  Mon Gol on 14/10/2014 - 12:11

  Off topic
  If we think of the speed prices go up with vs salary increase, the dream to own a house is becoming unreachable for the new population of Australians.

  It is a shame there is no regulation of what portion of property market can be owned by foreigners.

  • 

    cypher67 on 14/10/2014 - 13:16

    +4

    I disagree to the extent that the new generations will just need to set their expectations lower or further from the city. I have plenty of friends who have parents that live in Bondi with a nice house etc and then cry foul when a studio costs $500k. You need to make sacrifices and work your way up. I first bought in Penrith, 4 bedroom for $320k, its now worth $400k. My Salary is increasing and I'm building up equity and I can slowly work my way to the more prestigious suburbs. Everyone just wants the best straight away. I know some kids that refuse to work in Maccas because its beneath them and refuse to accept hand me down cars because they are not “cool”. My first car was an 83 falcon that drove like a tank and I now drive an Audi. We can’t all be trust fund babies but slow and steady wins the race.

  • 

    FourSquareMan on 15/10/2014 - 01:59

    I don't think it's foreign owners who are driving prices up (unless you are in the $10M+) bracket as there numbers are limited and they are only allowed to buy 1 property if they are not resident here.

    Whenever I go to buy a property (to live in) I'm competing against investors.
    In fact there was one property I was bidding on and was competing against my own current landlord.
    Another major group that is having more and more influence on prices is property bought as a speculative investment by middle to late aged people who buy property out of their Self Managed Super Funds.
    All these people are buying houses .. not necessarily for people to live in .. but for speculative gains to be made in the future. This is causing a speculative bubble.

    House prices just don't stack up against other countries except perhaps London, and a small selection of major world capitals.

    I believe Australia has to loose the biggest government 'bludgers' handouts of them all which is negative gearing across different asset classes. I don't mind negative gearing within the same asset class (ie you can offset property losses against future property profits or capital gains) but not against your salary or other investment incomes.

    What government would be brave enough to do that (and perhaps prick the 'bubble' in the meantime).
    Not the current one for sure!

• 

  adamren on 14/10/2014 - 13:31

  Melbourne broke its own open auctions weekend record, think it was 1800. Crazy. Yep, very much heating up and where it's hot is where it'll be overpriced and eventually pop.

  Not all markets & price points will be affected or in the same way though. Multimillion dollar properties will probably survive well as Oz is now a safe haven for Chinese tycoons etc.

  Iron ore prices down and staying down (thanks to Coles for now giving me an earwig on that). So the smaller miners not able to produce iron ore under $90 or so will go bust, flow on down around there.

  I can remember home prices in Karratha shot up from $300 to $900k for foreign execs with the large mining companies to move there. Some were over $1.2mn because they had a pool and more space. Now they're down heading back to pre-boom levels (+ inflation)