Who Is Responsible for Continuous House Price Increases

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

Comments

  • -2

    The most modern estate in Melbourne with 7000 Blocks when completed
    http://www.woodlea.com.au/

  • +2

    The poll results don't seem to be showing facts. What % of home buyers bring money from abroad and buy houses here? In my own guess, the number can't be more than 6-7% at max. That number isn't strong enough to drive home prices except in a few suburbs in metro cities that one can count on fingers.

    If govt/ authorities were concerned about housing price increase and affordability crisis, more and more new suburbs should have been created and abundance of housing supply should have been released to beat the crazy prices of the existing stock. Why was it not done?

    Another problem is buyers' preferences. Since outer suburbs have less opportunities to offer for anything and everything (jobs, safety, schools being the major concerns among many others), people are forced to prefer suburbs close to CBD and it increases competition and drives the prices up. There should be very proactive plans to drive the population AWAY from the CBD and the first step toward it is to create jobs elsewhere, far away from CBD in new areas. Build the top schools and hospitals far away from CBD. Increase the frequency of buses and trains for far off locations. Build so much infra in those far locations that people themselves are lured to move there. Increase police presence in those areas which are less preferred for specific reasons. Broaden the roads so that people get attracted to the areas and don't have to think about traffic or commute.

    Removing neg gearing or increasing home loan interest rate alone wouldn't fix the root cause of housing issues here. "Far from CBD = Cheaper" concept needs to be kicked away by taking focused measures and everything else will be ok. Making the established areas more congested isn't the solution.

  • +2

    Lot of @#[email protected] idiots on this thread.

    One simple answer and elephant in the room.

    More people on this planet than ever before. And it is growing. One word. Overpopulation.

    People need a place to live. Period. Supply and demand curve babe.

    Oh, and why don't you post another sarcastic and whinging poll whilst you are at it.

    • +1

      Don't worry God has a plan in mind to solve this overpopulation problem.

      • which god theres so many of them obviously not Venus

        • The One True God https://en.battlestarwikiclone.org/wiki/God_(RDM)

    • @mojito33, which world do you live in ? Australia is the 7th Least Densely Populated Place in the World. Approx 3 people/km.

      Since when "overpopulation" became a problem for Australia ?

      There is no shortage of land in Australia, it's just government policies that's created this housing problem.

      • +1

        3 people per km? Okay, now recalculate it using the habitable land - even using just the areas that aren't considered a desert.

        • +1

          Las Vegas was once a desert, Sydney and Melbourne were once unhabitable. There are many examples in history.

          Where there's a will there's a way. An unhabitable place can be be made habitable. No need to recalculate anything.

        • +1

          @paul11: I think you mean "an uninhabitable place can be made habitable". Inhabitable and habitable are basically synonyms.

        • +1

          @PJC: Thanks, Fixed it now.

        • @paul11: Genuinely curious, and more so because I probably didn't listen too much to Australian history at school haha. What do you mean Melbourne and Sydney were uninhabitable? As in the landscape wasn't suitable to aa typical European city?

        • @PJC:

          PJC: Inhabitable and habitable are basically synonyms.

          99: No they are opposites, synonyms means they mean the same thing (almost).

        • +1

          @ninetyNineCents: No, uninhabitable and inhabitable are opposites, or antonyms. The same applies to uninhabitable and habitable. Inhabitable and habitable share the same meaning and are therefore synonyms.

      • +2

        THe only problem with your nonsense is that most of Australia is empty. What you should really be measuring is how many people live in Sydney and other major cities. Its obvious its overpopulated, take a train and see for yourself. The cities are simply not ready for more people. There aren enough trains, schools are full, beaches are full, roads are full.

        Everything is full.

    • Did you know that every human beings can be fitted inside the Grand Canyon and still plenty of room to spare?

      • +2

        And we can fit 10 people in your car, but that we dont because that is un-comforttable. Thats whats happened to Sydney, the car is full.

  • +1
    • Reality TV shows about house flipping.
    • Old folks putting their money into one property to live in so it's not counted when they collect the pension.
  • +2

    Wait for the RBA to raise interest rates half of a percent and there will be lots of properties for sale because the ambitious buyers won’t be able to afford repayments

  • 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

    I wish I could find a house with that kind of price in Sydney

  • Houses aren't expensive.
    It's the land they sit on that has been speculatively overvalued.

    • Another misconception. The labour is damn expensive in Australia. The person you sometimes see holding the STOP sign alongside road, charges $40-50/hr. Many other workers involved in house construction easily make anywhere from $50-100/hr.

      • houses themselves depreciate eternally.

  • +1

    Melbourne is the only city left where the bubble has not started to burst YET!

    Ok not many will believe me but I do not care at all, knowing frome very reliable sources is at least very satisfying to me.

    The sheer name "Real Estate" touches everyone's soul. If you have not yet had it ticked off your bucket list your choice.

    So what is the real culprit? They created something new after the GFC. What would the smart money underground pullers like the Rothmann's call such a trick to fool the 60% stupid population? An acronym had to be re-used. something so deep enshrined in the dumb folks that they will get away with it.

    The press is of course owned by the same mob so why not use the obious like the most famous lady in London? So the money pullers know that the Chinese have been working too hard for far too long. So would they hand this country over to them with all the recources??

    Australia got away lightly after the GFC but this was just the beginning of a new area. So the new Monster to save the US from the GFC supposed to be called quantitative easing. Nobody talkes about gasoline in the states, you simply gas up your car.

    So here they come out, QE then the most publicised QE2 etc. Never mind the debt spiral running away. (just google debt clock)

    Of course wealthy suburbs will continue to climb while the middle class pays for it.

    Would I wanna live in Melbourne? no thanks..

  • +2

    Lot of people blame immigration for price rise without knowing how immigration to Australia actually works and if it has to do anything with wealthy people. Let me share my understanding in brief:

    The biggest category of immigrants is 'skilled migrants'. They are assessed for the skills that Aus government needs. Their assessment has nothing to do with wealth. In fact, most of them are 'not wealthy' at all, but they are skilled. Wealthy people from abroad don't come here to struggle even if they were 'skilled' (struggle to enter job market to start at entry level, high living cost, family resettlement challenges, cultural issues, etc). They have servants, cooks and drivers in their homes. Their life here isn't more luxurious. Let's be clear about it.

    Other categories - students, employer sponsored, holiday visa holders (mainly from EU), and finally refugees. Yes, some of these can be wealthy but very few - probably some students (kids of rich dads).

    Lastly, a very small number of people who come on investor visa by investing a huge sum in Australia (a few million $$) - they can be wealthy and they are supposed to be wealthy but we are talking about a very tiny number.

    Please note that some other foreign buyers of Australian houses can be wealthy but they haven't moved here. They are investors and still sitting in their home country, churning money.

    So, the belief that foreign buyers bring a lot of money from their home country to buy houses here isn't correct in as far as I understand. It's because - what % of home buyers here are foreigners (very small %) and are they really so wealthy (a few are, but most not)?

    • +2

      @virhlpool, Seems like u don't understand the corelation between immigration and high house prices. You again mentioned ….

      "The biggest category of immigrants is 'skilled migrants" which are not wealthy …..

      But they do earn big $$$$ in Australia, Right ? because they are highly skilled. I myself know many immigrants earning well over $100K.

      Skilled migrants are not directly responsible for high house prices. But they do indirectly. Here is how …..

      A rich Chinese investor bought a million dollar home or a Chinese builder building high rise apartments, selling a 3 BR appartment for $1M. Who do you think will rent these $600-1000/week homes or buy $1M apartments ?

      The very skilled migrants earning big $$$ here or another rich Chinese property investor. Right ?

      In case of a skilled migrant, he/she thus becomes a life long slave of banks. Australian household debt is among the highest in in the world. Read more here. A cycle is created and the property bubble keeps floating. An arrangement that's perfectly suits the government, who has no clue how else to grow the economy. Create artificially high property prices, and bring in more consumers/buyers that creates the demand and to pay those prices. A win-win situation for government. Trying to give an impression to everyone that everything is alright.

      • Your comment makes sense. The point in question was whether the buyers bring truckload of money from their home country to buy houses here. The answer is NO in the most cases.

        • +1

          The point in question was whether the buyers bring truckload of money from their home country to buy houses here.

          They bring truck load of skills to make money here. So it doesn't matter if they are bringing the money from their home countries or not. If the government slow down the immigration, it will have a direct impact on housing prices.

          High Skills = High ($$$$) Salary

        • @paul11:

          Skills or rather educational degrees on paper don't relate to high paying jobs in a different country (Australia) necessarily. You will be surprised to see so many unemployed immigrants (accountants, IT professionals) though there are 'skilled' as assessed by govt and were let in. They end up working in casual jobs to survive. Some are happy with that and keep continuing their search for a better job and a few go back to where they came from if they find that their degree is totally irrelevant here.

        • @virhlpool: There's a lot of visas where you have to be sponsored by an employer who can't find that skill here, these tend to be well-paying jobs, and the visa won't be valid if they end up in a casual job.

          In any case, the amount of money they have is kind of irrelevant, they need somewhere to live, and demand causes prices to rise. Of course, they also need somewhere to shop and other services, so immigration is propping up economic growth, stop it and we would be in recession pretty quick. One of the issues though is that it's propping up economic growth while keeping a lid on wages. Basically, businesses are the beneficiaries of the economic growth while households with no wage growth just see the growth in prices.

        • @paul11: So you are saying the Australians are very low skill and not as competitive as the immigrants?

        • @virhlpool:

          Skills or rather educational degrees on paper don't relate to high paying jobs.

          Right, but in reality they do. If anyone is faking anything on paper, they will soon be out of job. But if they prove their worth, then employer will do whatever to keep a skilled person and pay top $$$.

        • @od810: Nopes ….

        • @paul11: but if they're making good money here and buying houses here that's good for Australia. I'm not sure how creating skill shortages and crippling your own economy is a good solution to high house prices.

  • +2

    buyers: "i want the cheapest price possible"

    sellers: "i want the highest price possible"

    agents: "i want the highest sales price and therefore commissions too"

    property industry people (tradies, architects, builders): "what a great business year it has been!"

    dreamers: "i want a place so convenient to the CBD but have my smashed avo breakfast and cappucino every morning too"

    realists: "i think it is time to move to another state.. Brisbane or Perth or Adelaide"

    Get your bum off your comfort zones! Migrants do this for better life (not all the times).

    FYI: not so fancy houses on at least 405m sq block within 5km of Brisbane CBD can still be had for under $700k. On busy streets, or further away but still within 20km of CBD, even cheaper!

    Prices here at the moment are like Sydney prices, back in 2008.

    Move to Brisbane guys, then one problem solved :)

    • I WISH people would go to QLD, mostly Queenslanders, they are FLOODING Melbourne at the moment, it must be impacting jobs, rentals, property and public transit.

    • +1

      I get what you are saying but you are missing the fundamental point here. The property market running above wage growth means affordability drops, which in turn means people have to lower their standard of living and move out further as you suggest. This in turn makes these once affordable houses more expensive which in turn forces the next bracket to move out and so on and so on all the way until you get to the bottom end where the entry price is getting higher and higher locking more people out for longer.

      Whats the net result? Standard of living has dropped for all but the top end, everyone has higher mortgages meaning less discretionary spend which hurts the economy.
      Who is winning - people who are old enough to have bought before the boom when they actually sell, governments on stamp duty and the parasitic real estate industry.

      So to say just accept less is a folly as all it means is the value of your dollar continues to buy less and less. What we need is growth in line with wages so it rewards people with the ability save well in order to buy a house they can afford.

      • I think this hits at the heart of the matter. Many home earners were willing to sacrifice standard of living to get into the game. I moved further from city to a dingy little apartment.
        First home buyers today seem to want it all but not work for it.

        You can buy a home, but it won't be where you want to live, it won't be as nice or as big as you'd like, and you'll have to cut back on spending too.

        Once you join "other other side", you won't care anymore - house prices become irrelevant. It'll cost more to buy, but you'll get more when you sell.

        I have a daughter who currently rents and is a very low wage earner, but she'll be able to buy if/ when she's ready. I've suggested she move to Gladstone. A 3 bedroom home in town recently sold for $90,000. That's where I'm going!

  • +1

    The biggest factor to me is that everyone wants to live in a capital city, which affects supply and demand.

    Case in point, I work in a regionally in a town that's only about two hours from a capital city in a professional job. We, along with other firms in town, struggle to retain professional staff. Most junior professional staff will only stay for around two years to get their experience up and then move to a capital city. It's actually at a point where we've decided not to advertise for new staff member mainly because any new recruit is highly unlikely to stay long term.

    As soon as you look at property prices in areas that are outside a commutable distance from a capital city, prices drop off significantly.

    Where I live, you can pick up a 800 m2 block of land less than 10 mins from the CBD for $130k. If you don't mind being 15 min out of town without town water or sewerage, you can pick up an acreage for around $150-175k. It's very much a buyer's market and auctions are uncommon.

  • +1

    The person responsible for house prices increasing is me.

    Sorry about that.

  • thats what its called. a housing bubble.

    we are in everything bubble right now. stock markets, housing, government bonds, dollar. crypto currency

    the only safe heaven i can find right now is GOLD. there is nothing you can buy today that will hold and increase its value a lot in the coming years but gold.

    • +3

      Said the gold dealer.

      • Just until harvesting gold from ocean water becomes viable (sooner rather than later).

    • The government will keep demand high and supply low, whilst the banks will push cheap finance. It won't be a bubble, banks and government have too much control. It's win win for both of them if prices keep going up. It will be the norm from now on.

  • +1

    Chinese Investment is propping the Australian economy causing the housing prices to rapidly increase. Essentially Australian government laws allows foreign ownership through clever part Australian ownership. Therefore chinese investors who potential obtain massive loans from Central Chinese Banks at very low interest rates can invest in properties in countries such as Australia with full ownership and entitlement. The problem is that a proportion of them do it as investment opportunity waiting for the price to increase before selling, making a gain on their original capital and causing a false market value shift. This in the long run will cause problems for the Australian economy considering the government is failing to keep up with the change in population demand and supply.

    • +1

      Therefore chinese investors who potential obtain massive loans from Central Chinese Banks at very low interest rates can invest in properties in countries such as Australia with full ownership and entitlement.

      I was told that Chinese people in Australia can buy a house with cash. He told me how his neighbour turned up with bags of cash ($1.5 million) and bought the house. I can't see why he would lie to me considering he is Chinese and a senior employee at my company.

      • +1

        It's all true - go to docklands and look around. It's so obvious.

      • He's not lieing to you, hes just not telling how he obtained his cash. Before chinese people was investing in Australia they were investing in their own economy, but there was a crash and heaps of investors realised the chinese economy wasn't as secure. So they looked for more investment opportunities and they decided that there was less regulation and control of the Australian economic market. So they decided to start investing here. Now the problem with that is we are a tiny economy compared to China and when you have a huge economic power investing in Australia it causes constant unreliable growth. This is a problem because when chinese investors aren't making the rate of return on capital they expect in Australia, they will take their money out and place it in another investment market. This will cause a crash in the Australian economy and most likely the unemployment will soar. There was an economic case study where a small country "Sri Lanka' realised what the chinese was doing and kicked them out quickly, but thats another long story.

        • There was an economic case study where a small country "Sri Lanka' realised what the chinese was doing

          pretty sure they're still there selling arms to the army and building sea ports, roads, bridges and shipping lanes.

        • Till contract terms are finished, yes. Motorways, seaports and bridges. Poland is also another country you should look at, who also got rid of the chinese

  • +2

    I wonder if anyone is reading these comments or if people are just adding their 2c..

    • +1

      I stopped ages ago.

    • +1

      I read yours

  • live within your means.

  • Low interest rates mean high borrowing power. If rates go up, house prices will come down. If they go up enough it could lead to existing owners being unable to service their mortgage, causing them to sell, further flooding the market and creating more sales competition, driving prices further down.

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

    Seriously show me where I’ll buy it.

    • +2

      Whose income? Where I work (low income) our income rises have been behind Cost of living for about six years. In reality our income has been going backwards. How is this done with all the bullshit double speak saying otherwise? http://www.abc.net.au/news/2016-02-05/cost-of-living-report-... and this http://www.utas.edu.au/__data/assets/pdf_file/0006/467898/UT....

      Low income workers are definitely suffering. And have been for years. And yet, it is the bottom of the heap where the cuts continue to be made as you yourself (Dr Prepper) are suggesting. What is wrong with the ridiculously wealthy paying a bit more? Of a fairer goods and services tax that is now sees the poor paying as much as the wealthy?

  • +2

    Who Is Responsible

    Govt for treating a basic commodity as a cashcow through foreign investment, CGT and stamp duty to fill their coffers then spend the money irresponsibly

    • 100% they are lining there pockets.

      Worst thing they done was the changes to stamp duty discount for 1st home in Victoria added fuel to the fire.

      All it did was add 10k to new developments to fill developers pockets in make the market more un-affordable

      me personally im happy about it i owned 2 properties that were purchased well under 600k - there value increased by at least 20-30k it passed but it is f*** poor government policies that have lead to this shambolic housing problem

  • +3

    Government. A very simple tax law change from stamp duty to yearly land tax would solve all problems: foreigners don't want to hold onto empty properties because of land tax. Rich retirees will sell expensive inner city properties in exchange to more peripheral cheaper properties to save ongoing land tax. Working people can move closer to work due to lack of stamp duty (traffic congestion will also improve). A land tax that goes up in percentage with land value will make people think twice about hoarding onto properties.

    • If the land tax was based as a % of last property sale per Sq. mtr price in the area, Every other resident in the area would actually pray and hope for a price fall. :)

    • This is what the ACT government is doing:

      https://grattan.edu.au/news/following-the-act-land-tax-appro...

      As they are politicians in a place that always votes Labour they did lie about also rapidly reducing stamp duty but the intention is there.

      A land tax is what the Henry George league has always advised:

      https://en.wikipedia.org/wiki/Prosper_Australia

      It should also be noted that in Texas that has big growing cities, as well as not restricting growth with zoning they also use land tax quite a bit.

  • -3

    People with no money complaining.

  • +1

    Move out the big city. regional center if you find a job have a better life and better house price 6 year old home last week for half what you pay in the city. house is 5min drive from the beach. sunny beach all the time

  • +3

    Government!!!! The government doesn't act enough to stop the property prices going up.

    • +1

      Or the fried rice seasoning paste to blame :)

  • The best part for baby boomers is as their property prices go up, so does their aged care costs (year on year).
    You don't just go making money for jam folks. Always some scumbags ready to jump you at the end of the line.
    Next boom industry is old peoples homes.

    • Next boom industry is old peoples homes.

      When that starts happening, it's time for us to move out of Australia.

    • This is already a boom industry.

    • And cremation.

  • +4

    What a stupid poll

  • -1

    1,500 new migrants every week to Melbourne = housing shortage = inflated prices. Stop migration = end inflated prices.

    • +1

      Really not that simple man. I don't like the overcrowding in Melbourne either, but that's not what's causing the prices to rise.
      Have a read of this (long read, but worth it):
      https://medium.com/@matt_11659/matt-barrie-australias-econom...

    • -1

      Are these the same immigrants who go on Centrelink? The Schrodingers cat immigrants who steal our jobs and houses while simultaneously taking welfare? Give me a break.

      • As a migrant myself, I am simply stating basic economic facts, more demand = higher prices. I never mentioned welfare or stealing or employment. If you are looking for something to be offended about may I suggest that the simplest of simple economic FACTS is not the thing. It exposes the chip on your shoulder.

        • -1

          Except you're completely wrong that immigrants are inflating house prices. The RBA has been very clear on that. The only chip I have on my shoulder is with people oversimplifying complex problems to a single issue that aligns with (and exposes), their values. This is a complex problem and you're blaming immigrants.

        • +1

          @MissG: Oh I see, they repealed the law of supply and demand did they? BTW, did you miss the part where I mentioned that I'm a migrant? And I'm not "blaming" anyone, additional demand = higher prices, simple fact. Your cognitive dissonance is showing.

        • @MissG: So you tell me that my view exposes my values as anti-migration, which I'm not, and then when I point out that I'm a migrant myself you say that's irrelevant and I'm disingenuous. More cognitive dissonance. I'm going to end my part in this conversation right now, since you can't just accept that you lost the argument. Demand DOES affect supply and price. End of story.

        • @Gershom: I agree with you, demand does affect supply and price, and that demand comes from a complex set of factors, as does supply - except that wasn't your original statement. HTH.

      • best article ever?

  • The answer is the reserve bank they have set interest rates too low and basically set us up for an eventual crash.

    Sooner or later rates will need to rise - resulting in increased mortgage default - most studies are saying a rise of just 1% would result in like 40% increase in defaults especially considering the number of interest only loans out there.

    So essentially the reserve banks aim to 'protect' the economy in the short term will have a long lasting damaging effect in the long term because people have loans that if the interest rates where sitting at 5-7% they would have to declare bankruptcy

    As much as a dislike real estates they are just doing there job (usually dishonestly) but they are just trying to make money everyone would be doing the same thing - if anything it is the governments fault for not regulating the industry property

    • Rates will rise just as a lot of interest free periods are ending on investment loans.

      • Where can I get an investment loan with an interest free period?

  • +2

    Blame people like this guy who likes to purchase 200 properties - https://amp.afr.com/real-estate/residential/property-club-in...

    • +1

      It wouldn't surprise me if they've managed to buy a single titled block of flats then divvy them up in separate titles and bump up the property count at the same time.

    • I know this guy and the business. Very bad news. A lot of people lost a lot of money.

  • Obama.

  • +1

    Interest rate when it dropped to record low in 2012, thats when it all started.

    Borrowing money is cheap. Cheaper than renting in many cases.

    Some took it as a chance to spend more on new OLED TVs, go on holidays, buy new $80k cars as soon as graduating uni..

    Some took the risk to buy property or properties.

    And these people are usually risk takers and always on the hunt for opportunities.

    And many are not immigrants who came with suitcases of cash.

    Sydney buyers in 2012 got it lucky. Perth.. not so.

  • +1

    Normal human behaviour - I need a shelter, I'll pay to get one, oh it is expensive, but I need a shelter, I'll pay to get one.

    Stop whinging and get onto it.

    • True Aussie… Informative discussion = whinging. Must drink more beer.

      • -1

        We are human after all.

        3 necessity - sex, food, shelter

        If you don't get it for free, you pay for it.

        Everything else is superfluous.

Login or Join to leave a comment