Who Is Responsible for Continuous House Price Increases

jrt2020 on 28/01/2018 - 17:54
Last edited 28/01/2018 - 18:09

I went to few auctions to see how it works

The few houses i visited are very bad , good for nothing other than the land price

But saw quiet few people seriously bidding on it

I have checked everything - it is old house and visibly needs very good renovation

very far from school

very far from public transports

not in a convenient location too

land size is also <300 sqm

basically , if I want to buy such a house i can't go above 400k

but in auction people went over and finally it stood at 650k and then agent still persuaded others to bid more which then started more bidding and finally got sold for $680k

The agent being friendly told me after the auction that reserve was $450k and vendor is really happy

But I was wondering what made the buyer to go for such high price!

Seriously for $680K , so much better house with large lot close to all amenities were all available and easily

Seeing this , I believe there needs to be some common sense used by buyers to assess what they are paying for!

I see reasons for increase in house prices due to

  1. People who have lot of money from the home countries and buying land here
  2. Real estate agents who can sell houses not worth the amount to much higher prices
  3. People who think that if they dont buy houses now will never be able to buy

what do you all think?

Is it not a inflated market and certain section of people intentionally keeping the prices high?

And a real estate agent tells me that people queue at their office from 9 pm the previous night to buy a lot in their new release and even if the go for toilet , they will lose their place in the queue.

Seriously!!! Is house and land seriously not available much? The publications like domain and herald sun keep writing stories that create a fear that houses are really getting out of reach!

Is there a way to find good houses and which are worth their right price?
Is there a way to avoid real estate agents when you buy a house( they may be needed for selling house but for buying they should never be used) Thats what I feel

Poll Options

  • 52
    People misguided by media articles about scarcity of houses
  • 282
    People who bring truck loads from their home countries
  • 7
    People who dont value their money enough
  • 102
    Real estate agents
Financial

Comments

  • idonotknowwhy on 29/01/2018 - 16:16
    +2

    Wow really people?

    (44) People who bring truck loads from their home countries
    (39) Real estate agents

    Don't be stupid lol. You're being tricked by the media.

    This should be MANDATORY reading for any OzBargainer:
    https://medium.com/@matt_11659/matt-barrie-australias-econom…

    It's a long article, but it's the most well-researched, well-written and unbiased explanation of our economy in Australia.

    • Hasbulla on 29/01/2018 - 18:21

      not many other options were given

    • kipps on 29/01/2018 - 19:07

      That article is not well-written. It is disjointed and jumps all over the shop. Causal analysis is stretched, or non-existent.

  • El Grande on 29/01/2018 - 17:03

    I thought the property was going to drop significantly this year? Did the predicted drop get cancelled already?

    • c0balt on 29/01/2018 - 17:39
      +1

      If I had a dollar everytime ‘experts’ told of a looming imminent crash in this country over the past 5 years, I’d have enough to buy the mansion next to Mal’s on the harbour.

      • El Grande on 29/01/2018 - 18:01

        I don't know about getting a dollar but I have lost a few hundred thousand thinking it has to crash soon, I'll buy when it crashes over the last 10 years. I don't care anymore it can go ahead and drop 30%. I have bought now and only regret is I should not have listened to the experts like my friends didn't and are better off for it.

        • ozf1 on 30/01/2018 - 00:13

          Do I know you. I have a friend that has been saying that for at least the last 10 years, and raising a judgemental eyebrow, over one of our family friend 'upgrading' about 3 times in the last 5-6 years ( It hurts me to think how much stamp duty they've paid!), the missus in that equation is in denial about the postcode snob she is.

  • MessyG on 29/01/2018 - 17:31
    +5

    We moved from Sydney to Melbourne and bought a house which we probably paid slightly too much for (it was our absolute max limit). A few factors went into it, firstly the auction was on the same day as another house 500m away over a suburb boundary line which went way above our price range. Said suburb highly attractive to yuppies, our suburb not so much, but the vendor got excited and changed the reserve to higher than the real estate range given. Second, we had been trying to buy in Sydney but every time we did, this happened - we had been trying for 10 years, that's how long this has been going on there and had budgeted accordingly. When we moved to Melbourne, we discovered suburbs that people just wouldn't live in, in spite of being right next to extremely popular suburbs - that just didn't happen in Sydney, whenever people got priced out of a suburb, they were onto the next one immediately. Which leads me to thirdly, we saw good value in what we were buying, even at the price we were buying. It wasn't a popular suburb, but right next to one, and close to amenities. So while we bid at our limit, and probably contributed to that inflation, it was within what we could afford and compared with Sydney, such good value. In the year since we bought (2016), the average house price has risen to above what we paid anyway. It's hard when you live in the same place all your life to see this from the outside, but after living in Sydney for ten years, I will never call Melbourne overpriced again. There are still so many suburbs <15km from the CBD that by comparison are so cheap compared to Sydney that people wont live in for various reasons (west/ethnic mix/perceived dodginess), but they will all gentrify eventually.

    • [Deactivated] on 29/01/2018 - 17:51
      +2

      I've worked in some of those suburbs that will "gentrify eventually".

      It will never happen.

      The poor do not want to live there. With that mentality, anyone with the means to will leave. The same goes with many Melbourne suburbs. Some suburbs attract the rich so people with money will likely end up buying there. People in Melbourne seem to flock with socio economic equals.

      The west and the north can only improve if significant changes are made, ie moving commission housing, increase in police presence, engineered rental increase… Anything that displaces the poor pretty much.

      The sales pitch of being close to the city, soon to be gentrified, hidden gems, etc, these are just marketing spiels liberally used overseas to sell new estates here. I have foreign acquaintances that have fallen for them and bought brand new houses in slums next to commission housing. Sure it is close to the city but it's a slum and it isn't changing anytime soon.

      • El Grande on 29/01/2018 - 18:10
        +2

        What about Brunswick in Melbourne? It's gentrified now. My friend bought in a ghetto apartment block 4-5 years ago. I remember when he bought the plaster was falling off in the common area and the whole place was in shambles. Since he bought a better class of people have moved in and Strata is now investing big chunks of money (raised from the owners) to renovate the whole place. The prices in the area have shot up as well.

        • MessyG on 29/01/2018 - 18:20

          Yep this, once upon a time living in Coburg or Footscray was unheard of, now they are highly priced. Northcote is just ridiculous. Altona has gone crazy. Fawkner, Glenroy and Reservoir are starting to shoot up.

          Gentrification is not a myth, it is just a very slow reality.

          I'm not talking about new estates 30+km out of town that are marketed with glossy brochures at hard-sell information evenings. You're right that people in Melbourne flock with socio-economic equals (in spite of their protestations of equality for all), that's why few locals can understand why the property prices in these areas have done what they've done. My sister refuses to move to WIlliamstown because it's 'west'. It's a beautiful suburb on the freaking beach and the houses are well worth the price…but to Melbournians…it's 'west'. Mind blowing.

        • El Grande on 29/01/2018 - 18:49

          @MissG: Williamstown is not in the west lol. I wouldn't live in a 100 Year olf pigeon house. If I could get a house like this though.

          https://www.realestate.com.au/property-house-vic-williamstow…

        • [Deactivated] on 29/01/2018 - 19:36
          +1

          @MissG:
          Yes, it happens really slowly but it's not guaranteed either.

          When it happens that slowly and that unpredictably, for all intents and purposes, it may as well not happen from an investor's perspective. I'd sooner buy another property in a well respected suburb. Yes, I may not benefit from sudden increases but higher security allows me to borrow more, which in turn gives me a much better profit to risk ratio.

          Williamstown is one of those exceptions and it is a gorgeous town but it is a lifestyle move. I've had several meetings there and getting back into the CBD at peak hour is probably the worst experience when comparing elsewhere during those hours. It's also a hairy place at night.

          I wouldn't move to any of those other suburbs you mentioned, nor would I buy there. In any downturn, they are the first areas to crash. They may be gentrified one day but it is far from it today.

          Equality for all has nothing to do with socio economics of suburbs. That's the territory of egalitarinism. That's not equality, that's communism.

        • [Deactivated] on 29/01/2018 - 19:40

          @El Grande:
          I live in a 100 year old pigeon house. For real.

          Took a whole lot of DIY (and honestly, a lot of cash too) but it's now… Liveable. Sort of. I had to remove a coal stove and the fireplace it was placed in. And the many other fireplaces it has.

          But being next to the beach (not Williamstown), my blood pressure has improved and I actually have a life outside of work. Definitely worth living in a 100yo shack.

        • MessyG on 29/01/2018 - 19:54
          +2

          @tshow: They wont crash, you're forgetting the exponential population increase in Melbourne that is continuing on. And remember not everyone is a property investor, that's a whole different ballgame. Home buyers aren't looking for quick returns, they are playing a very long term game. Even if there was a dip in the short term, it wouldn't bear out in the long.

          There's a whole cohort of people like you who wouldn't move to any of the suburbs I mentioned, but as the population increases and more people like me jump from Sydney into Melbourne, there's no going backwards and no shortage of people willing to move into the north and the west. I grew up in the south eastern suburbs but I wouldn't move back there - don't get me wrong they're beautiful and the houses are lovely but they are very very tiny bubble in a very big world and since moving back, visiting my family over there gives me cabin fever! Not to mention I find the traffic as excruciating as you find Williamstown.

          At best you can hope for a plateau in property prices <15km from the CBD (apartments notwithstanding, again that's another ballgame). I've watched his happen over a ten year period in Sydney since we started trying to buy - the only areas that dropped during the GFC were the extremely highly priced houses (like 5 million plus), apartments, and those huge new developments 30km out of the city. A similar boom also happened in Melbourne in the 90s and the suburbs that gentrified then certainly never went back. Frankly I think Melbourne is still a bit underpriced in some areas although they are shrinking rapidly.

          And at the end of the day, a lot of homebuyers aren't out for a huge ROI. I have a backyard, I've planted fruit trees, I've space for my daughter to grow up in and no body corporate. For what I paid, in Sydney I would have got a 2 bedroom apartment the same distance from the city. So I don't really care who or who wouldn't live around me, I'm happy to finally be in my own home, to knock stuff into the walls and sit in my backyard. It was a calculated risk based off a lot of time in the market and I'd do it again no regrets. If I had never have moved away for a long time and returned, I wouldn't have lived in suburbs outside my own bubble either but I'm glad I do.

        • [Deactivated] on 29/01/2018 - 20:01

          @MissG:
          You've bought a home and not just a house. It is a great way to live and I, like many, would like to do one day. However, today we are talking about house prices in context to residential property investment.

          A dip to a heavily geared person means having to decrease the bank's risk. This usually means lump sum payments that is often out of the question. It is speculative but I reckon that is the main reason for stagnation in poor postcodes.

          Cabin fever in the burbs. It starts as soon as people make plans for me in the burbs.

        • MessyG on 29/01/2018 - 20:05

          @tshow: The OP wasn't talking about residential property investment specifically. He asked what he thought was contributing to property price inflation. There's a lot of factors - people like me who are willing to pay just above the market for reasons mentioned, property investors taking advantge of -ve gearing and low interests rates and so on. My response was an addition to the list of factors that might be driving up those prices. It's a complex situation, if I was the OP I'd be reading more on what the RBA has to say on the issue.

        • [Deactivated] on 29/01/2018 - 22:05

          @MissG:
          You're right. I read a little too much into it.

        • ozf1 on 31/01/2018 - 00:20

          @El Grande: Yes it is, I've lived in the surrounding areas for the last 30years… Hobsons Bay district.
          https://www.bobinoz.com/living-in-australia/melbourne/wester…

        • El Grande on 31/01/2018 - 00:28

          @ozf1: I meant I'd call it inner city rather than the west.

        • ozf1 on 31/01/2018 - 00:36

          @El Grande: ummm. It doesn't matter what YOU call it. Your statement was 'Williamstown is not in the west lol'.
          Even daring to include a lol!.
          Again, your statement actually supports half the arguments, West = not best, I rather call it 'inner city'… It's in the WEST.
          It's the West and sometimes, it's BEST in particular when it comes to housing affordability.

        • El Grande on 31/01/2018 - 00:52

          @ozf1: I meant when they talk about the west in a negative way they are not talking about Williamstown. Its 5 steps from CBD (figuratively). I won't call it the west. I won't swap Brighton/Toorak for Williamstown but if I lived in Glen Iris I would be tempted.

        • MessyG on 31/01/2018 - 09:17

          @El Grande: My sister called Williamstown west! As in "I wont live there, it's west ". I was so completely shocked. In my mind it's an inner city beachside suburb…but I don't live in the SE suburbs!

        • ozf1 on 31/01/2018 - 13:32

          @El Grande: It doesn't matter what YOU call it. It's in the WEST.

    • virhlpool on 31/01/2018 - 00:19

      There are still so many suburbs <15km from the CBD that by comparison are so cheap compared to Sydney that people wont live in for various reasons (west/ethnic mix/perceived dodginess), but they will all gentrify eventually.

      Why only Melbourne, dodgy but well located burbs in any growing city should/will gentrify eventually, but the question is - when? If they're gonna gentrify after I pay monthly loan repayments for good 12 yrs, then was it worth it? Probably not.

      • MessyG on 31/01/2018 - 09:24

        They gentrify in housing booms. Coburg is a classic example. Melbourne boomed, Northcote got completely overpriced, then Brunswick, then Coburg. In Sydney it went Glebe, Leichardt, Ashfield, Homebush. There's a good podcast called The Property Couch that I listened to over a very long time and they argued that people tend to fall for not buying over boundary roads (i.e. Bell St in Melbourne) when they should be thinking about boundary zones. So if no one is buying over Bell St but the housing prices below it are unaffordable, buy just over it. As the boom progresses, that zone expands and the house prices creep up in that area. This has happened time and again over the years I've been looking. It's a mental hurdle for locals, it's why interstate and foreign investors seem to get a headstart, because they don't have any of that bias affecting their decision makng. I'm not saying buy 30km out of town because it's a 'great investment' because it WILL take years to gentrify (i.e. Melton, there is not a lot out that way), I'm saying buy over the main road boundary of a popular suburb. But as I said earlier, I'm not a property investor, I'm a FHB. For property investment I can really recommend The Property Couch podcast, it's pretty blokey but they know their stuff.

  • ranap on 29/01/2018 - 19:22
    +4

    The simplest explanation NOW is More Money chasing lower number of assets. With all the quantitative easing and Low interest rates, government has been creating money out of thin air. This $$ in bank accounts has to be invested somewhere and for risk averse population property is a safe haven. Availability of cheap capital has just been the gunpowder for real estate market over all the other benefits like negative gearing, stable growing economy, Capital gains tax benefit.
    While every one wants their wealth to increase, I sincerely believe some destruction of wealth is important for better allocation of resources and growth, else we have this kind of lopsided investments where everyone invests in just one type of asset.

    In the US, you have the angel investors & companies willing to bet hundreds of millions on innovations they believe will be the next big thing. They believe in big risks and bigger payouts. This allows for destruction of some wealth, where some bets fail while some meet spectacular success, thereby allowing some sanity in asset pricing.

    Australia on the other hand does not have much to offer other than Stocks and Real Estate to invest in. While many of us are invested in Stocks through our super, we surprisingly are lot more risk averse to invest more in stocks. It does not help that the ASX market does not provide too many options either beyond the usual Mining, Banking and Retail, Not too many manufacturing, innovation, technology companies. This just means that more investments are funnelled into real estate and consequently asset price inflation.

  • quiteguy on 29/01/2018 - 20:38
    +1

    Looks like even ozbargain cannot help when it comes to housing :(

  • gimli on 29/01/2018 - 21:21
    +1

    Loaded poll

  • DiscoJango on 29/01/2018 - 21:28
    +3

    better public transport infrastructure to the outer suburbs wouldnt hurt

  • [Deactivated] on 29/01/2018 - 21:30
    +1

    Just watch the market when the interest only loans cannot be reset and the banks will convert interest only to principal and interest loans. I wonder how many people will need to offload their liability quickly because they cannot afford the 40% increase in the mortgage payments for the next 30 years.

  • BartholemewH on 29/01/2018 - 21:42
    +1

    12) People that haven't realised you can live outside the city and make above average salary.

    • OzzyOzbourne on 30/01/2018 - 13:59
      +1

      Which people and what kind of work are you suggesting?

  • [Deactivated] on 29/01/2018 - 22:03
    -1

    13) People that haven't realised you can make a million dollar each year in stock market, if you know which ones to trades.

    • whooah1979 on 29/01/2018 - 22:09
      +1

      People that haven't realised you can make a million dollar each year in stock market, if you know which ones to trades.

      lol.

    • neostarsx on 30/01/2018 - 15:17
      +2

      And also lose 1 million

      • [Deactivated] on 30/01/2018 - 18:14

        Or commit suicide.

    • virhlpool on 31/01/2018 - 00:22
      +1

      You can make billions in lottery too if 'you know' which tickets to buy, mate.

  • sien on 29/01/2018 - 22:24
    +2

    This isn't just an Australian problem. Talk to people from the UK and you realise in some places it's worse.

    It's also worth noting that in Australia there are two housings zones - Melbourne & Sydney & their surrounds and the rest of the country where housing affordability is much better and prices haven't been going up as much. Indeed in Perth housing has slightly fallen over the past 5 years.

    You don't have to move to Dubbo, moving to Brisbane, Adelaide, Perth, Hobart or Canberra makes things a lot easier.

    There is not enough land release and not enough rezoning.

    Prices are determined by supply and demand. Demand is high, people are earning fairly well in Australia and other places and interest rates are low. If housing is restricted where people want it then prices shoot up.

    In Australia, the UK, Canada, NZ and parts of the US there are zoning laws that prevent sufficient land being released for housing and prevent people building multiple story, say at least up to 10 stories, easily near the CBD.

    In places where zoning laws are easy and people are allowed to build more like Houston and Atlanta housing prices are not shooting up despite the economy in both places doing fairly well.

    The demographia survey goes through where housing is hard to get and where it isn't. They point out that places that have lax zoning have cheap housing. Places where you can't easily get land have rising prices if there is rising demand.

    http://www.demographia.com/dhi.pdf

  • ozf1 on 29/01/2018 - 23:57
    +1

    Buyers fault IMO (same as Market).
    ie. I have a family relative that has moved three times (could even be four…?), to a perceived better and better postcode.
    Very.. VERY few people make a 'smart' decision, most make an emotional decision. Again from what I have seen based on:
    - Perception of who I am and how successful I am (ego).
    - Comparing or outdoing others.
    -Counting on their money to keep rolling in.

    Some people I know say they want a bigger backyard one minute, they then buy a house with literally no backyard at all, but in a 'better' postcode.
    Some buy in areas where their children can access particular schools.

    A friend of mine has been saying the housing bubble will soon burst…. he's been saying that for the last 10 years! Although I can not believe how the prices have been increasing incessantly for the last almost 20 years, we need a recession for the prices to really plummet. He bit the bullet and bought a house last year at last.

  • ozzpete on 30/01/2018 - 00:44

    The illuminati :/
    and … of course >>> The bikies :)

  • gccmelb on 30/01/2018 - 07:09

    The agent being friendly told me after the auction that reserve was $450k and vendor is really happy

    You should report him, as he can get fined for this.

    You also forgot developers jacking up the price of land.

    • BartholemewH on 30/01/2018 - 14:14

      He didn't issue a valuation before the auction, so he hasn't misrepresented anything.

  • Kanasuke on 30/01/2018 - 07:20
    +2

    Who Is Responsible

    the reserve bank

  • Jikx on 30/01/2018 - 10:09
    +2

    Just rent…. the current place I'm renting is "worth" 1.1 million.
    The valuation based on the rent I'm paying? $750,000.
    … something doesn't compute.
    Being able to put a picture frame up is not $350,000.

  • macrocephalic on 30/01/2018 - 10:53
    +2

    Move to Brisbane - the real estate isn't quite to stupid here. You can get a 3 bedroom home, on 500sq metres, 20km from the CBD, near schools (although public transport sucks) for about $450k here.

    • HoracePinker on 01/02/2018 - 00:33

      The market has just gone insane after xmas I know because im seeing ridiculous prices being snapped up its like people dont do any homework. or reno investors trying to flip houses ( I would have thought the buy low sell high would have been the rule) Reno delights are selling for more than renovated places … go figure
      Also an interesting statistic thats starting to emerge is that people are buying houses with two incomes. if they get a divorce sell house then cant afford to buy another house on a single income. Divorces are at highest rates ever. This will be interesting to see how this demographic plays out

  • [Deactivated] on 30/01/2018 - 11:48
    +5

    Rich white people, rich chinese people, basically rich people in general

    • Nanokillaz on 30/01/2018 - 12:01
      +5

      This at least is a somewhat decent answer. Why only blame rich Chinese people. Chinese prefer buying in a suburb where there is more population of Chinese or larger shopping centres. There are plenty of suburbs in both Sydney and Melbourne where there aren't too many Chinese but the prices are just as eye watering.

      • [Deactivated] on 30/01/2018 - 13:40

        Well it cant be all your old rich lawyer entrepreneur family and friends sucking up all the property, so it must be the chinese

      • chefdillu on 30/01/2018 - 19:41
        +3

        The Indian Community seem to be the next in line with some very nice big houses too

  • LifeHacks101 on 30/01/2018 - 13:02
    +6

    Sydney Population 2011 - 4 Million
    Sydney Population 2017 - 5.4 Million

    www.population.net.au/sydney-population/

    Demand > Supply

    It’s kind of like a government ponzi scheme fueled by immigration to keep the economy growing (25 years no recession).

    • iDroid on 30/01/2018 - 13:22
      +1

      Population figures don't have much meaning without other factors.

      What is the occupation rate of dwellings.
      What is the vacancy rate of dwellings.
      What is the increase in supply of dwellings.

      My research suggests that population growth has very little to do with house prices.

      One obvious example is Tasmania. Tasmania has almost zero population growth, yet house prices have still increased in line with the rest of the country.

      What percentage of immigrants purchase housing? I expect this is a rather low figure (no idea, just speculation).

      I hear about "demand" often with respect to house prices, yet I don't see how there is a supply issue (where are the homeless people who are looking to buy a house, I don't see them - they're already in a house (owned or rented) - hence demand has already met supply (of dwellings). There are plenty of houses in Australia to meet demand, heck, there's a tonne of empty dwellings, unsold apartments, and vacant land to be had - supply issues are a paper concept that reality does not support.

      House prices are high IMO due to speculative investment fuelled by tax incentives and historically low interest rates.

      • freemoneyhunter on 30/01/2018 - 19:12

        "My research suggests that population growth has very little to do with house prices."

        I don't know what job occupation you are in, but you are at risk of losing it to Blind Freddy.

        • iDroid on 30/01/2018 - 21:44

          I'd accept your assertion had you provided something more than ridicule.

      • Baysew on 31/01/2018 - 10:59
        -1

        Tasmania top of the pops for population growth, report finds

        A recent CoreLogic report showed Hobart was by far the strongest housing market in the country for the month, quarter and year — rising by 1.5, 3.1 and 12.3 per cent respectively.

        • iDroid on 31/01/2018 - 11:08
          -1

          Population growth has increased about 0.09% over 10 years from 0.55 to 0.64%

          Do you really believe that a population growth increase of 0.09% can equate to double digit price increases?

          I concede that my comment about Tasmania is out-of-date (they did have years of almost zero growth yet had significant house price increases).

          One incorrect/out-of-date fact does not make the entire concept incorrect.

          I still stand by my original comment that population growth does not appear to be the leading cause of house price increases, and population figures on their own have very little value.

        • ninetyNineCents on 01/02/2018 - 09:13

          @iDroid:

          I: Population growth has increased about 0.09% over 10 years from 0.55 to 0.64%

          99: Says who and where ?

        • iDroid on 01/02/2018 - 10:06

          @ninetyNineCents: In that link @Baysew posted and I replied to.

        • ninetyNineCents on 01/02/2018 - 10:14
          -1

          @iDroid:

          That link mentions the pop increase for the state of Tasmania which is different from Hobart. Its obvious the price increase for Hobart is because its a major city even if its small, and the increase is due to locals there seeing the price increase in other Australian cities etc.

        • iDroid on 01/02/2018 - 10:21
          -1

          @ninetyNineCents: This is all in reference to my assertion that population numbers have little influence on our current house prices. What those figures above are referencing is mostly irrelevant, the fact is, population growth is not the leading cause of our house price increases. I used Tasmania as one example of why I believe this, then that link was posted implying that I'm wrong - so I was just pointing out some numbers from the linked article and expressing that despite the theme of the article, the numbers do not represent a realistic reflection of what's happening.

          I stand by my comment. Our house price increases are not due to population growth. It is due to cheap credit and tax incentives turning real-estate into an investment vehicle (not a smart move IMO).

        • iDroid on 01/02/2018 - 11:00
          +1

          Instead of negging, why not use words if you disagree. If you think I'm wrong, we'll all benefit from words more than negs.

          Not that I care about negs, but discussion is useful.

  • jason101 on 30/01/2018 - 13:24

    I'll declare my hand and state that I work in a property sales related job. I'm really struggling to comprehend how high prices can be attributed to the real estate - can those who polled "Real Estate Agents" please jump in and help me understand how agents drive up prices? My simple brain equates property sales to supply and demand but I am genuinely interested in public perception as to the evils of real estate agents in relation to their involvement in price appreciation.

    • BartholemewH on 30/01/2018 - 14:18
      +2

      I didn't vote for agents being the problem, but I think people are hinting at collusion between agents to ensure that every property listed is at a higher price than the last regardless of actual demand to encourage panic buying amongst those uneducated in real estate.

      • Soluble on 30/01/2018 - 17:57
        +1

        Agents are competing for commission, the only collusion we see is agents that tell home owners their property is worth more than what it is to get the property and move forward from there. Creating a vicious cycle!

  • Candour on 30/01/2018 - 13:49

    agents are not valuers. a valuation would determine a fair price. auctions play on the madness of crowds.

    • Toph Beifong on 31/01/2018 - 00:19

      Aah the moment when you realise that you just paid a million dollars for a dog kennel.

    • abc on 02/02/2018 - 12:22

      You would find "valuation" is at a basically level just looking at similar sales statistics in a particular area.

      Therefore it's the market that drives value.

  • OzzyOzbourne on 30/01/2018 - 13:57
    +1

    Government policy and banks

    If you restrict supply, increase demand, make credit cheap and create tax incentives to invest, obviously prices will increase.

  • [Deactivated] on 30/01/2018 - 13:59
    +1

    not sure who is the main contributor however people are paying $800k-$1M+ for a parcel of land in Kellyville (500-600 SQM) Who are those idiots?

    Couple of well off people buy something at a high price point and all of a sudden that becomes the norm. What a city we live in!

    My land according to my council is under $900 per square meter and I'm 50km from the city. These idiots are paying as much as $1,600-$1,800 per square meter of Sydney land and are causing a major price increase - yet more and more people keep buying. Fear of missing out maybe? I don't understand!!

    /rant over

    • mini2 on 01/02/2018 - 08:46
      +1

      I wouldn't necessarily call them idiots, they're just punters who's betting the bull run won't stop.

      Slightly further away from Kellyville/Ponds there's Scholfields/Box Hill/Riverstone…admittedly I haven't checked their prices lately, IIRC they were a tad cheaper.

      On the other hand, if people are paying 800-1mil for a block of land over there, why don't they just do a KDR at Mt Druitt? Cheaper and closer to the CBD.

      • [Deactivated] on 01/02/2018 - 11:48

        Yeah i agree with you. I've looked into Box Hill at an estate where they want $600K for a 450 SQM block ($1,333 per sqm). Tough market for anyone not oozing equity or high income earning. Land in places like Box Hill should be $1k per SQM realistically - greedy city we have, again supply and demand dictates!

  • Cluster on 30/01/2018 - 14:23
    +1

    As long as people believe in this formula house prices will keep on going up.

    Step 1: Get into debt as high as possible. Cheat if you have to, but do anything to get into the housing market.
    Step 2: Suffer for numerous years as your life is devoted to paying off the house. Sacrifice everything.
    Step 3: Be safe in the knowledge that when it's time to sell, there are plenty of people ready to take Step 1.

    In regards to overseas investors, I personally know of a case where the investor asked a local businessman to create artificial invoices to make it look like the foreign investor had a higher income than they really did, all in the name of getting the highest possible loan. People will keep doing this as long as they believe house prices never fall. This type of 'service' is more common than people think.

  • JoJoker on 30/01/2018 - 14:37
    +1

    There will be a collapse and the youth will win. A good percentage of my friends and I are completely turning our backs on property investments, even to the point of sending out money overseas. When the collapse happens, that money will return.

    • Cluster on 30/01/2018 - 15:00

      The youth are waiting for their parents to die and inherit the houses, then the former youth become resistant to house price falls. The cycle repeats itself.

    • one man clan on 30/01/2018 - 16:08

      Keep dreaming

      • JoJoker on 30/01/2018 - 17:05
        +1

        I will. And until that dreams happen I'll make my returns on investments that aren't housing.

        • one man clan on 31/01/2018 - 10:43

          Investing money is always a good idea.

          What do you think is going to happen though? Overnight the housing market will implode and suddenly stock will be half the value it is today and you can come in and buy up multiple properties and become a real estate magnate?

        • JoJoker on 31/01/2018 - 15:59
          +1

          @one man clan:

          I don't really know what will happen. I certainly know I won't be buying multiple properties – perhaps one. But there will certainly be reasonable buys to be made when those who are invested up to their tits find out what 10-20% interest does to their repayments and how accomodating the banks won't be when they ask for the difference in value back. As insensitive as it sounds, I won't have much sympathy for those with multiple investment properties because they've turned their back on fair in favour of riding the bullish market. That's fine, you can have the market when the bear comes out to play too then.

          It's a shame the ultra rich will be the biggest winners, though.

    • outlander on 30/01/2018 - 18:21
      +2

      The youth won't be winning.. Housing is so wrapped up in everything else that when it goes down, its going to drag a whole lot with it. Best you can hope for is that the youth won't lose as much

      • idonotknowwhy on 31/01/2018 - 21:04

        @JoJoker: If what you and the guy you're replying to say is true, sounds like now is a good time to buy some bitcoin.
        If this shithole goes into recession, it won't drag bitcoin down with it.

  • hamwhisperer on 30/01/2018 - 15:11

    A list of things.

    Negative gearing (paying the rich to buy more houses, arguably)
    Capital gains concession (similar to above)
    Ridiculously high immigration rate (China + others)
    Foreign investment (almost entirely China)
    Very low interest rates.

    These 5 things are slaughtering several generations. If you only own ONE home or less, you're getting stiffed.

    Thank John Howard for at least 2 of those directly.
    Note: The government DO NOT CARE, don't think they do, they don't.

    • Ragnarok1983 on 30/01/2018 - 18:25
      +4

      Contrary to popular beliefs, the US and UK are the largest property investors in Australia. Chinese are just more visible and tbh easier target for public 'outrage'

      • hamwhisperer on 30/01/2018 - 22:16

        Total and utter rubbish pushed by defense squads.

        That's OLD data you're referencing. The last ten years have been distinctly obvious.

        • Ragnarok1983 on 30/01/2018 - 23:56

          What's there to defend. It's not in anyone's interest for any foreign investor to buy up property and jack up price for rest of us.

        • paul11 on 31/01/2018 - 02:14
          +1

          @Ragnarok1983: It is definitely in the interest of the foreign buyer to see his property price jacked up.

        • Ragnarok1983 on 31/01/2018 - 17:41

          @paul11: Or perhaps the baby boomer looking to cash out. Again, takes 2 to tango.

        • paul11 on 31/01/2018 - 20:12

          @Ragnarok1983: Yes, definitely, baby boomer looking to cash out. And an uber rich Chinese investor willing to make his/her dream true by paying a million $$$ for a 2 BR house, thinking that property prices keep going up, and he can double his money in 7-8 years (maybe sooner).

      • virhlpool on 31/01/2018 - 00:25

        How do the US and UK invest in property here? Can you shed some light?

        • hamwhisperer on 31/01/2018 - 07:35
          +1

          It's an old statistic, the last ten years have been absolutely distinct. 85%+ representation from Chinese in many Melbourne and Sydney auctions

          Also, it's hardly the primary point of my post :/

  • amsaini15 on 30/01/2018 - 16:53
    +1

    Simple. Remove Negative gearing benefits and investors wont get into market.
    Government will never do above as they want to keep the market going up and up.
    Without this rich will keep getting rich (multiple properties) and there will beclass of people who can never buy property in their lifetime.

  • GourmetFoodie on 30/01/2018 - 17:51
    +1

    I spent 6 years thinking property was over priced and waiting for The Crash.

    I then finally had a reality check.

    Go overseas. Look at the quality of life in other major cities in the world. It is CRAP! Dangerous, pollution, terrible climates, political or social instability….and anything within 30km of the city costs minimum $1 million + and is a shoebox! You think 300 square meters is small…people in HK or Tokyo are living in 20 square meters!

    Australia is heaven on earth in comparison. That is why so many people want to live here. Most properties are actually fair value if you consider that you are paying for the quality of life that Australia provides.

    • virhlpool on 30/01/2018 - 23:18
      +1

      But those cities/ countries also offer more opportunities to make money i.e. better paying and more jobs, less childcare / rental / living expenses, more business opportunities, etc. You shouldn't forget that. Let it be a fair comparison.

    • [Deactivated] on 31/01/2018 - 18:36
      +1

      Here's the key words "so many people want to live here" = immigration.

      Can you imagine what will happen if you import few million Indians, Filipinos, Chinese, whatever to this country? That would be the day when its a good time and pack your bag and live somewhere else.

      The main reason why I want to live here is because the western culture, the freedom, 1 language (English), 1 ideal.

      When we have to many migrants, they will bring along their culture, religions, habits, languages, these will become a recipe of racial tension in the long run and disharmony.

      When the government decided to allow skilled migrants here, those people are already middle aged, they can't adapt, at mid 30s they already indoctrinated by their cultures and hard to assimilate.

      • idonotknowwhy on 31/01/2018 - 21:06
        +2

        Didn't you hear? Comments like this aren't allowed in 2018 :p

        • [Deactivated] on 01/02/2018 - 00:12
          +3

          But deep in your heart, you agree to it….

        • TimboAus1234 on 01/02/2018 - 19:40

          @blaccdong:

          Damn your right

      • virhlpool on 01/02/2018 - 23:46
        +1

        @blaccdong: Migration to US, UK, Canada, Australia, NZ and many other parts of the world isn't new. Some of these countries are made of immigrants, and not just western immigrants. WW1, WW2 and many other global events caused huge levels of migration across borders/ countries, if you read history. We are lucky to have a refined immigrant class - more skilled, more educated, more financially, mentally and physically healthy as compared to an 'average' immigrant. Thanks to strong foundation of our immi policies. I agree that every policy can have loopholes but the good should get its credit.

        Migration or multiculturalism don't harm country, nor its economy. It enriches the strength of the country on more than one aspect. It's been proved now and again. Look at sports, art, innovation, education, entrepreneurial fields.. you will find the multiculturalism shining, more so in the countries where migration is older and more established such as the US or UK. It'll be utter narrow-mindedness to believe that we would have been a better off with a uni-cultural society. No wise man will buy this point.

  • scrone on 30/01/2018 - 18:15
    +2

    Who is responsible for ridiculous house prices?

    The Reserve Bank of Australia. There's a beautiful negative correlation between house prices and the RBA cash rate.

  • centrelink on 30/01/2018 - 19:18
    -3

    We got a reason, in H1Z1 we call them Chiners

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