What Is Your Prediction for Property Prices in 2021?

I am finding it hard to decide if it is wise to buy a property in the current FOMO fueled market or if its better to wait for things to settle down a bit. Its hard to tell if we are in a short term peak or the start of the next leg up.

It might be interesting to do a poll and look back on it at the end of this year to see if OzBargainers got it right.

Poll Options expired

  • 341
    Prices will go up by a lot (15%+)
  • 109
    Prices will go up by a little or remain steady
  • 59
    Prices will go down

Comments

      • +2

        Fix won't change, variable will.

      • RBA didn't say it won't, it says it 'expects' it won't have to raise interest rates.

        Not ruling it out, but it's currently coming under increasing pressure from the bond market as well as the international markets as bond rates are steadily increasing causing a knock on effect on the actual interest rate.

        I think if we start seeing increased interest rates the FOMO is going to be smothered pretty fast.

  • +16

    From experience, i was holding off buying since 2018-2019 believing price will "normalise". I didn't believe price will keep going up. March 2020, i thought it's "that time" with banks had 30% crash predictions. It only dipped a little in suburbs i looked at. Hardly a crash. Fast forward, i paid abt 8% premium to jump into market. PPOR for the note. Hindsight, i should have bought in 2018-2019 when price cooled down. I paid abt 200-300k more for 2 years gap. Oz housing is low stock, people won't sell if they don't have to. I was a property bear but i don't think so anymore looking at the facts. However, do responsible borrowing, don't go beyond 80% lvr. Have 6-12 months buffer and u ll be all right. My 2 c. Thanks.

    • +3

      Congrats on making the right choice to get in the game rather than be a sideliner. Paying 8% more is better than paying 16% in two years.

      • +1

        Yeah mate, just have to admit. Ppl are holding properties tightly. Low supply very high demand. 6 strong bidders, hence I'm quite confident it's a desirable house. Ta.

    • +1

      Interest rate crashing down doesn't help with ANY assets pricing. Unless the RBA becomes the European central bank, interest rate will rise at some point and house price will cool down. A 0.25% increase in rate equivalent to 12% more in interest payment or about 5 6% total P&I repayment. Interest rate increases also reduce the borrowing capacity.

    • You know in the stock market they say you know it is peak when last of the bears capitulates and jumps in.

      Wasn't it Gordon Brown who was treasurer of the UK who said booms and busts were eliminated then everything went south in 2008/9.

      Problem with bubbles is the bigger they get the worse it pops.

      1929 when they said the stock market was on a permanent new plateau.

      Prices might keep going up for a while still but how much it might go down is anyone's guess.

      I still believe the 30% COVID19 drop is banks asking for a bail out.

      • So you re still expecting a property crash?

        • +3

          Most likely not 2021. Who knows when. It is like on The Big Short. Even the best fundamental analysis could get the timing wrong.

          I am sure a lot of bright minds did what they did on The Big Short but you need the capital to back your bets. I don't have the capital to bet against the mob coming to buy houses with pitch forks, shovels and flaming torches.

          We live in interesting times.

  • +5

    A short uptick into 2021 as young people try to move out of apartments that they have realised are too small to spend significant amount of time in due to COVID. Plus 100,000 returning Aussies need a place to live so some of them will buy. Then older people who’ve held off moving and making big decisions due to the pandemic. All this points to pent up demand. However probably 6 months in things will flatten off as no immigration or students coming in to new housing estate areas or the empty apartments. These areas will probably start to put a drag on the market and the heat across the whole market will come off. I could be wrong but that’s my prediction for 2021. By 2024 interest rates likely to start to rise if unemployment tracks lower which will also put downward pressure on prices. 6 months up a lot, after that is a guess. It depends on the international borders.

    • Yeah, my thinking as well… Will go up much for the mean time until some regulations being enforced like debt to income ratio lowered or tigthened up lending practice like 2018-2019. Most buyers are home ownwes atm, investors are still sidelining. But definitely, not boom time forever.

  • +1

    house price has gone up, while units has stay flat right now. larger city suburb demand is very cool. depend on where you buy and what you want. this trend probably stay until covid situation is over

  • "House" prices always has and always will go up in value. "Apartment" prices on the other hand…

    • +7

      Says no one in Perth and Townsville

    • Apartment prices in or close to CBD are a bit different to suburb apartments though.

      People will always want to be close to the centres where the most jobs are and will pay a premium for it. It can mean the difference between needing a car (and all the associated costs) and just walking to work.

      • +4

        This doesn't quite work for Melbourne apparently, there's a plentiful choice in Docklands and other parts of CBD where apartments recorded near-zero or negative capital growth over the last decade, even worse now, when many companies rethinking their CBD office space with a view to downsizing - hence having a job will not necessarily mean commuting to the CDB, so what is the attraction of a shoebox in the CBD?

        • There's been a lot of new developments in the last decade in Melbourne CBD. When single bedroom apartments are all 400k+ the last decade, of course supply was going to catch up to cash in.

          Capital gains on an apartment in the CBD isn't what you purchase an apartment for - it's the rental yield or because it's close to your work/good for quality of life.

          We can speculate on if workforces are going to mass migrate to greener pastures further out - but I really don't see that happening, personally. For every new WFH worker, there's a kid leaving school who wants to work in or near the city, or a kid wanting to study in or near the city who will rent that apartment out.

          • @studentl0an: But isn't it what the @DiscoJango said:

            "House" prices always has and always will go up in value. "Apartment" prices on the other hand…

            So, what is the difference between apartment prices in or close to CBD comparing to suburbs? Just not sure I am getting your point - nobody disputed yield albeit with ever-rising body corp fees, combustible cladding issues, and generally, poor construction quality and therefore levies which will inevitably eat into this income - it does not look like the yield is like double of that of houses.

            • @ZloyKrys: About ~50k over 400k for a single bedroom in the current market. $350k in the suburbs to 400k+ in the CBD or high density trendy areas such as Prahran or St Kilda Road.

              I disagree that every apartment building is covered in flammable cladding, has high BC fees or poor construction. Sure there are some, but to say that most apartment owners will face these issues is hyperbole.

              While we are making hyperbolic predictions, I predict that jobs will further condense into the cities rather than spread out. I think the idea that everyone's going to be WFH is elitist white collar sipping tea with a pinkie out level of detachment. That level of thinking has been at every single junction of increase in productivity due to technology - and it's only got worse at condensing us into cities, despite all the predictions otherwise.

              Just like everyone's predictions with the housing market a year ago, it turned out to be the opposite.

              • @studentl0an:

                About ~50k over 400k for a single bedroom in the current market. $350k in the suburbs to 400k+ in the CBD or high density trendy areas such as Prahran or St Kilda Road.

                Sounds like they've been at this price point for a while and have always had this sort of difference in prices, effectively they are static, I am still trying to understand your point where you said

                Apartment prices in or close to CBD are a bit different to suburb apartments though.

                Sure they are as the land prices are different. But not that they inner-city apartments appreciating at any faster rate than those in suburbs, as I understand. So perhaps 5 years ago both a brand new 1br apartment in St Kilda and a rundown house on a 700 sqm block in Noble Park were both around $400k and now the same rundown house is what, more like $800k? Worse even, the same rundown house will be likely to attract $400+/wk rent whereas an apartment in the inner-city will be still suffering from newer better stock which, with the absence of fresh migrants, will just put more pressure on rent.

                • @ZloyKrys: That's still an increase of around $50k, while it's nowhere near as high as the 2x in low density areas such as your example of Nobel Park, it's still a decent increase while having a higher rental yield. They also don't require massive renovations like that run down house in Nobel Park would.

                  I also believe migrants are just as likely or more to end up renting in Nobel Park than they are Prahran or St Kilda road. It's better value to rent in Nobel Park. With fewer migrants coming in, that's more pressure on rental property owners in Nobel Park than it is closer to CBD bringing the prices down there too, no?

                  If the trend continues where people are preferring to live close to CBD then an investor would have to look at this and compare it to the yield they would get in Nobel Park. If Nobel Park costs 2x the amount for the same yield, the level of risk is surely significantly higher. I guess you would have to ask a bank manager what their crystal ball is showing to decide if spending $500k in Nobel Park is a better choice than spending $500k in Prahran.

                  • @studentl0an:

                    That's still an increase of around $50k,

                    It's not an increase as a suburban 1br would cost exactly $50k cheaper to buy to start with. So any difference will be from a buyer's pocket not because of higher growth in high-density city areas.

                    while it's nowhere near as high as the 2x in low density areas such as your example of Nobel Park, it's still a decent increase while having a higher rental yield. They also don't require massive renovations like that run down house in Nobel Park would.

                    There is no "increase", a buyer in inner city would have paid those 50k upfront.

                    Surely massive renovations is a whole different ball game, you may also consider knocking it down and put 3 x townhouses as well, but that's not a requirement at all. You might need a grand or two deductible expenses for upkeep but not to the level of replacing kitchens or bathrooms annually.

                    I also believe migrants are just as likely or more to end up renting in Nobel Park than they are Prahran or St Kilda road. It's better value to rent in Nobel Park. With fewer migrants coming in, that's more pressure on rental property owners in Nobel Park than it is closer to CBD bringing the prices down there too, no?

                    Quite the contrary is happening and you might want to look at Core Logic data, since Covid started, rent in houses has grown, thanks to lockdowns and evacuees from the CBD areas who realised they can't work from 1br apartment and need space. And since every day it's getting less and less standalone houses because every man and his dog are knocking them down to put a block of units or townhouses in, a freestanding house becoming more rare commodity which puts obvious pressure at the supply side where no more stock can be made to satisfy the demand. Unless you are willing to move further out of course.

                    If the trend continues where people are preferring to live close to CBD then an investor would have to look at this and compare it to the yield they would get in Nobel Park. If Nobel Park costs 2x the amount for the same yield, the level of risk is surely significantly higher. I guess you would have to ask a bank manager what their crystal ball is showing to decide if spending $500k in Nobel Park is a better choice than spending $500k in Prahran.

                    If an imaginary investor only had $500k they won't be able to buy anything freestanding in Noble Park so it's not even a theoretical question. However, it's damn obvious to anyone that a 3br villa that can be had for $500k in Noble Park will surely outperform a 1br apartment in a high-density tower in Prahran by a large margin. How is that possible? Obviously, because it's a land performance that defines it and the portion of Prahran land in a 1br apartment, although expensive per sqm is tiny, compared to 350sqm that is in a villa in Noble Park: so same $500k will deliver the same investor a smaller proportion of appreciating asset (land) in Prahran comparing to Noble Park's villa. Investing 101: buy appreciating assets - in case of medium and high density, this appreciating asset is less than 10-20% of the purchase price, therefore slow to no growth.

    • House prices are what the vested interests want you to believe.

      How easy is it to ask people to part with a million dollars. Pretty hard in normal circumstances but for a house, well people are tripping over each other to give away a million.

    • Very much depends where they are. Seen plenty of people buy duds in their self managed super funds and lose a lot of money.

  • +1

    If it’s an investment property I’d say think long and hard and you’d have to financially model the situation under a “worst case” price drop scenario to see if it still makes sense,

    If it’s your primary place of residence, I’d say buy. You can never lose as long as you can hold long term and don’t over-leverage. There are so many emotional benefits to owning your own home that should also favour the decision to buy.

    • Its not price drops that bankrupt people, its rate rises (and price drops).

  • maybe try not to time the market
    obviously easier said than done but step back and think:
    - what is my budget?
    - if price falls by 10%, is it the end of the world for me?
    - if price increases by 10%, is it the end of the world for me?
    - do i really like the property or just FOMO?

    • +1

      Don't forget to add, if interest rates increase to 5 -7% is it the end of the world for me?

    • I think these are logical questions one ask themselves, but I think there's still a couple of dot points of emotional questions, e.g.

      • I want my saturdays back
      • I'm sick of losing to the guy at the auction
      • I just want to get on with my life

      etc etc.

    • +1
      • if price increases by 10%, is it the end of the world for me?

      Yes

      • if price falls by 10%, is it the end of the world for me?

      No

      People never thing of the down side. Just the missed opportunities. You always get told IF I did this (I would be rich) stories never the I lost a bomb in some share that was just really bad.

  • +3

    Lets just hope lenders do their due diligence when granting home loans. Remember when the banks got caught a few years back, and the government stepped in to make it harder to borrow; resulting house prices dropping. They then had to relax the rules. However it still seems lenders are not being strict enough. Take for example me and my wife, both working, minimal debt, with a house nearly paid off. I wanted to buy a investment property and got approved for 1.3m, utilizing my equity on my existing property. By just discussing what would be the repercussions if we were to take that whole 1.3m, we would have a home with a 300k+ home loan, an investment of 850k+. Even with negative gearing. If we were to go ahead with such a decision, our whole lifestyle would need to change, money will have to be diverted to home loans, less money for food, education and entertainment. Needless to say, I didn't want such a debt. However I have to wonder how people with this Fomo get by after paying the home loan; unless they are all on a hefty pay packets. Anyway this almost seems like the movie the big short!

    • Don't get me started on how these banks behave. I have a lot of buffer in cash in our offset, but everytime I refinance with another bank because of whatever cahsback offer there is, it's at different points in my life the past few years, e.g.wife took off a year off because of baby, so borrowing capacity has gone down, so when they punch the figures in etc oh no you can't borrow that much etc, then goes back and says hey your expenses should be half of this right? wink wink, I'm like ughhh not really… but whatever you say. I understand what they're trying to do, get the sale. I can skirt around this problem, because I have a big buffer zone, but for the average joe, and they think the bank guy is doing them a favor? good luck in the future…

    • By just discussing what would be the repercussions if we were to take that whole 1.3m, we would have a home with a 300k+ home loan, an investment of 850k+. Even with negative gearing.

      Negative gear is basically negative cash flow all year. I guess people believe in "cash less society"

      If we were to go ahead with such a decision, our whole lifestyle would need to change, money will have to be diverted to home loans, less money for food, education and entertainment. Needless to say, I didn't want such a debt.

      Explain why consumer spending (retail, services etc) are basically struggling because everyone is just paying the bank.

  • On the end of the deal, I'm thinking off offloading a few residential investment properties and possibly getting into commercial property or I dunno, bitcoin??? I don't see interest rates coming back up any time soon, so this trend will continue, particularly if you're in SE QLD where all the southerners are buying property up here sight unseen.

    • southerners are buying property up here sight unseen.

      I thought China was to the north of Australia? Vic and NSW learning from the China how to invest and not make money?

  • When CBA predicts a 30% drop and gets it way wrong, I doubt the average Ozbargainer will get it right.

    Regardless of what happens to the housing market, the government will step in to make sure it remains inflated. Cant have new people entering the exclusive club or capitalising on the stupid risks of others. Nah, if someone took out $1.7 mill for a tiny house with no value and can no longer afford the mortgage, the government will just pay it for them.

    • I'm not disagreeing but how would the gov do that? In pandemic, they do mortgage holiday but it's a special case. However, as long as supply remains tight any commodity/assets won't go down.

      True story. A friend bought a unit in glen 685k in 2016. He needed to sell in 2019 due to high leverage when market is slow. They managed to sell for 725k. So even market is slow but they put 40k more. From buyer's perspective they paid more than 3 years prior.

      • So after stamp duty, real estate sale fees looks like they broke even.

        • Yeah true, but what i was saying even though the maket slowed down price is still modestly going up in some areas.

      • In pandemic, they do mortgage holiday but it's a special case.

        "Special case" is bullshit. Every loan or investment has risks and I don't think it's the job of the government (or the taxpayer) to cover those risks for people who didn't do their due diligence or bit off more than they could chew.

        We have a population already struggling to buy houses yet they are forced to help pay for other people's houses.

        • I totally agree with you mate. It is BS! However, mortgage holiday is always there (at least with cba) but never been made easy as in pandemic. Given the facts, that s why more and more ppl doctored their income to get into property market. I know a couple work as admin, but keep borrowing to buy properties. They do think gov will bail them out or property market in general. How true? Only time can tell.

    • I'm pretty sure the 30% drop was their worst case scenario depending on how things went.

    • Source of the CBA research?

    • If the government just paid for loans then damn I’m going to buy a house in Toorak in Melbourne.

  • +1

    Printed money gotta go somewhere. Property and stocks seems to be it.

  • Glad I bought my first home near 2 years ago when there was uncertainty with the market. Prices were good, interest rates got even lower and I'm not stuck in the same position as many others I know who kept thinking prices would go down following the pandemic and are now priced out of the market even more so. The suburb I bought ins market value went up like 20% too in the past year. Seems the best time to buy is always in the past.

  • The problem with this whole cycle is, is the government going to want to be that government to pop this bubble?

    So say interest rates go up by 1 or 2 percent, and going by what these articles say about how much pressure that's going to put on a household, which the banks really shouldn't have lent the money to in the first place, then it's going to cause this media stir, then if naturally they need to increase it again, and people are forced to sell, then you know naturally humans are going to jump on tv and say this government is not helping me, all I wanted was to work hard and buy a house thats 10 times beyond means, why are you guys all such pricks to me :(
    blah blah

  • +2

    About 3 fiddy

  • Property prices will always go up. Buy one as soon as you can afford one. Does it have to be now? No. Don't fall into FOMO. Stick to your budget limits. Don't overspend. First time buyers: price you are paying is for the land and location. Buy the worse house on the street. Little TLC and you will make enough gains for your dream home in a few years. To conclude, aim to stay within 20kms of the city and your property will give you better gains.

    • +1

      Property prices will always go up.

      Not true.

      Dan has successfully decreased many property prices near the North East Link project as well as properties around Moorabool where he has decided to dump toxic waste.

      • Prices will always go up around the proximity of the cbd

        • +1

          Commercial properties have dropped quite a bit in Melbourne.

    • -2

      Buy the worse house on the street.

      That is like telling people to buy the worst car in the second hand car yard. Not going to go very far at dinner party conversation.

  • -1

    What Is Your Prediction for Property Prices in 2021?

    My strong belief is that prices will continue

    • Prices will continue, however every four years at election time. labour puts a little fright into investors, such as removal of negative gearing. Two years back labour wanted to get rid of it, as soon as they mentioned it house prices flattened out. Libs won, everything went back to normal.
      Libs placed tighter restrictions on lending house prices dropped. Libs reduced the restrictions house prices rose.
      Now with new rental rules post Covid investing in a rental property may be to complicated for some. However I don’t think this has sunken in yet.
      What may be the next time for stagnating house prices is at the end of this month when job keeper stops.
      Don’t forget RBA don’t pre-warn us of an interest rate rise. Which makes people sweat a little thinking about the increased repayments.
      Also don’t forget banks can increase their interest rates without advice from RBA. These uncertainties is what makes me think twice about purchasing another house at such a high price.

  • -1

    Property will alwys go up no matter what..

  • 1/7th on the way to doubling, everyone knows property doubles every seven years.

  • +2

    People are dreaming that prices will keep going up. Interest rates can't go any lower guys.

    • +1

      Remember how you could have one working person in a house and raise kids.

      Then we got 2 working incomes, then we put that money into primary residence.

      Then we found out we could also buy an investment property.

      Now we find out with 2 working adults in a household we can only afford one property because the prices are so high.

  • +3

    Consider :
    1 Aus property amongst the most unaffordable on the planet
    2 Aus wages already high (globally) and won't go much higher
    3 Interest rates cannot go lower
    4 The Reserve Bank of Australia spent $4bn buying Aus government bonds last week in a desperate attempt to keep yields down
    5 No immigration to Aus for about a year so far and who knows how much longer

    =

    Property prices are in a bona-fide bubble and will have to come down.

    • +2

      Funny, i had that thinking for years. I didn't even believe in crash but price correction. Have a look at sold history since 2019, in 2 years there's a good 200k price hike in good suburbs. To be fair, i always looked at good suburbs with good school zone, so may not represent the whole landscape. Imho, the only way price to cool down is when gov/apra curbed lending or debt to income ratio. Good family homes are rare so always low supply and high demand.

      • The most relevant point that I make above is really that interest rates are at rock bottom and can only go up from here. The strongest correlation between property prices increases in Australia is with interest rate drops. With no more drops possible, and with an already expensive market, it's clear that there isn't much upside left but plenty of downside.

        • +2

          It could go lower.

          https://www.msn.com/en-us/money/companies/bankers-who-pionee…

          Fourth-quarter results show that all Denmark’s largest banks have started charging their retail depositors for amounts as low as $16,000, marking the biggest pass-through in the world of negative central bank rates to regular customers via their banks.

          • +1

            @whooah1979: Even tho, i agree with you that interest still can go lower I doubt it will provided that we're out of recession and yield/inflation is going up. IMHO, shares and properties are keep going up is a sign of inflation. My best guess is gov will let the housing boom runs for at least 6 months to encourage economic recovery (new home owners will renovate, buy appliances, etc.). Once the state of economy is in "good" state, they will let APRA/Regulator do their things.

        • I do get what you are saying. You can fix rate at 1.9 ish % for 4 years. After that then question mark. This is what I meant with regulator having to intervene. Imho, if u r shopping for ppor don't speculate much. U ll keep it for long, as an investment then yea have a really good think.

          https://amp-abc-net-au.cdn.ampproject.org/v/s/amp.abc.net.au…

          • @Bargain-er: Problem is people see PPOR and investment as basically the same boat. Especially with negative gearing forcing up the price of PPOR buyers.

    • 1 Aus property amongst the most unaffordable on the planet
      2 Aus wages already high (globally) and won't go much higher
      3 Interest rates cannot go lower

      This is generally called a collar.

      There is upper founds which it won't pay off (no way with salaries to support higher property prices)
      There is a lower bounds (interest rates at 0% literally only paying principle and limits of salaries to just pay principle)

      We're just in this no man's land.

  • Not sure about the rest of Australia, but here in Perth properties are sold so quick in my area i have had 3 agents knocking on my door a week asking if i am interested in selling.

    I guess if they don't have properties to sell they don't get paid much.

    • What i heard it happens all over Australia. Cash is cheap and people for once can enter the market with higher loan. The only wise thing to do is responsible borrowing and calculate if interest went up to 1-2% in next 4 years, will you still be comfortable to make payment?

  • We are nearly due for our doubling of property prices every 7 years. We've had 5 years of up and downs. Get in quick, only 2-3 years to go!

  • Prices will definitely fluctuate.

    That's about as much as anyone can predict.

    Eventually, the press attitude of bubble bursting will occur at some level, but I've lost count of the 'market' is going to collapse' 'news' from 'experts'.

    No one knows, but a house if you need to live somewhere, over a lifetime, it will probably be better than renting, but also be a tie/burden/reduce flexibility etc. and require upkeep.

  • Lots of things - often very local things - can and do move housing prices around in the short term. There's often a lot of irrationality - hence unpredictability - in short term bubbles (and in collapses too).

    Medium term its mostly about ultra cheap finance; that's mainly what we've seen here. Long term it's really only one thing - the rate of household formation. In Australia, changes in that are mostly driven by the immigration rate.

    But interest rates are starting to go up around the world as central banks and deficit finance finally get inflation up into their target range of 2-3%, or perhaps a little higher. And immigration pretty well stopped cold in 2020, with no guarantee that we can continue to attract the more well heeled immigrants (students and 457 visas) that underpinned the boom of the last decade. You can already see what this has done to city apartment prices, and house prices can't defy gravity forever when there is such a glut of cheap substitutes available for new households (migrants, kids leaving home, etc).

    So the current house price boom is definitely a bubble. Like used cars, this is NOT a good time to buy unless you have to. Great time to downsize though.

    • But interest rates are starting to go up around the world as central banks and deficit finance finally get inflation up into their target range of 2-3%, or perhaps a little higher.

      Good luck. How many governments will go instantly broke then raise taxes which is basically an interest rate increase for common people then official rates go up and tax payers get squeezed.

      Why inflation hasn't hit 2 - 3%? Just look at house prices and share market. All the money has gone there. Look at retail consumer spending. It hasn't been good since 2008/9.

      And immigration pretty well stopped cold in 2020, with no guarantee that we can continue to attract the more well heeled immigrants (students and 457 visas) that underpinned the boom of the last decade

      When did we attract well heeled immigrants? It isn't like Mayfair in London where you have middle east brats fly in their gold wrapped Bentleys for the summer of fun. Most migrants here are middle to upper middle class in their own countries which is middle class at best here. Yes there is a few Chinese rich kids but they aren't buying <$1m homes which are out of reach for most normal Australians. They sure won't be buying out in the regional areas.

      So the current house price boom is definitely a bubble

      I agree with this. All these articles from CBA about -30% or Domain about +25% we can see the vested interest

  • +1

    82.5% of OZB are bullish that prices will moon in the immediate short term. 👍

  • +1

    I was glad to have bought my first house just before Christmas last year, paid probably 20k more than I would have liked to at the time. However I now consider myself lucky because from my observation the next weekend onwards prices in all the suburbs I was watching started going bananas. If I had passed the property over that extra 20k then I would have had no chance today, and still be renting enriching the landlord so he can buy more houses. A smaller property one street from my place, similar land size but single story and has less bedroom, less floor space was sold recently for more than what I paid for mine.
    Everyone I know says abolishment of stamp duty is fuming this fomo trend. Imo houses will continue to rise until interest rates go up

    • Spot on. Was holding off in December hoping better stock in NY. Apparently not.

  • +1

    I've noticed over the years (or at least in the last 10 years) the property market has followed this pattern very strongly in terms of being a predictor for the best time to buy or sell.

    1. if the consensus is the price will go up, but the price goes down -> sell and run for the hills - the market has peaked
    2. if the consensus is the price will go up, and the price is going up -> neither a buy nor a sell signal
    3. if the consensus is the price will go down, but the price is going up -> buy like mad - the market has turned
    4. if the consensus is the price will go down, and the price is going down -> neither a buy nor a sell signal

    All over Australia is basically a (2) right now - ie, neither a sell nor a buy signal

    • Imho, we just passed point 3 starting point 2. If price is going up regardless prediction, would you buy if you need one?

  • -1

    The Australian property market is made of many markets and markets within markets.
    Houses in Darwin might perform very differently to waterfront houses in Hobart or terraces in Sydney inner suburbs.
    Apartments are another story again.
    The problem here is the question.

  • The best time to buy is always now.

    • +1

      Actually yesterday according to REA, 2nd best time is now :)

  • Crazy low interest rates, predicted to stay low. House price will be rising through the roof

  • House next door has gone up 18% in 6 months based on other sales on the street. It's booming. REA I've spoken to offline are predicting another 8% growth in Q3 2021 so if you're thinking of waiting….your costing yourself money

  • Inflationary expectations are a key cause of inflation

  • +1

    My prediction is that prices will keeping going up. If a pandemic and closed international borders can’t pop the property bubble then nothing short of a catastrophic disaster will.

    RBA has indicated that interest rates will remain unchanged whilst wages are stagnant. Finance is easy to get at the moment and low rates will keep driving up prices.

    However, once rates go up it will put massive pressure on people with large mortgages and property portfolios. We may see price corrections in this situation

  • ATM it's driven by long term low interest rate. We have to look at supply and demand as well. When the international border opens up the Chinese and Indian immigrant who are stalled overseas will flood into the market. Most of the open houses are full of immigrants in Sydney already

    • More investments from overseas means more stamp duty for NSW. Thanks for keeping our parks clean.

  • This market is on 🔥.

    https://amp.news.com.au/finance/real-estate/buying/crumbling…

    A rundown weatherboard house with smashed windows and a rusty tin roof has sold for a staggering $2.7m after a buyer snapped up the home in Sydney’s south.

  • Merged from Do you think property market will correct itself?

    Hi All,

    We were contemplating to buy a house for some time now, but I personally feel like current property market is highly inflated.

    Do you believe that property market will correct itself in the next few years?

    • No chance. It only goes up unfortunately.

      Wouldn't mind the inflated prices so much but at every auction so far there's people bidding via agents on the phone and they clearly have no issue with extra couple hundred-thousands… There's a lot of wealth out there snapping up everything in sight. It has not been fun…

      • I don't know why people keep peddling this lie, when the information is easily a Google search away.
        There's clearly periods where prices decline.

        Whether we'll see a decline anytime soon, I don't believe so (not with record low interest rates and low unemployment). But the market does go in cycles.

        • +1

          I am no expert just a very small time invested over the past 30 years

          We have a different mortgage arrangement in Australia. In the US you can hand your keys to the bank and walk away if the market goes south. This has a cascading affect on property values and prices plummet. You don't see similar behavior in Australia. If you walk from a mortgage you take the debt with you unless you can declare bankrupt. Bankruptcy is rough.

          The result is you can't sell your property at a big loss and meet your mortgage obligations. So people tend to ride out small bumps in prices. At times prices go backwards a small bit. You are more likely to see long periods with no real growth. I reckon the real estate market has not got much more to go upwards. Higher interest rates will likely cause the market to stagnate in 12 to 24 months time.

          Realestate is a long term investment. If you can buy when people are selling. Sell when people are buying. If you plot the real price of property against time you will see a rollercoaster done wave type curve. By that very rough analysis we must be getting much closer to the peak. Although property prices won't necessarily go down they most likely will in real terms adjusted against inflation and wage growth.

          Our cousins across the ditch in NZ are doing it much tougher.

          • @Gratt: Don't forget Australia really only has two industries: tourism and real estate. Real estate is subsidized to a level unheard of compared to other countries.

            Yes, we have mining industry but it has been automated therefore it isn't employing that many people.

      • Sorry in adv for the long rant(ish) statement but this is my 2c and I hope someone cant take something positive from it.

        Ain't this the truth! After about 9 months of hunting (been eyeing the market since the beginning of Covid), I've been a victim of this on multiple occasions and its truly a demoralizing experience.
        I have walked into several auctions having done prior checks (approx. $800-$1000 each) and gotten word from agents that there seemed to be around 6-10 other bidders.
        For every auction I had 15%-20% buffer on the agents quoted price (so to have a chance at Sydney's competitive market) and have rocked up to the auction about an hour before the bidding to count all the people showing up to the registration desk (agents were usually pretty close).
        Come auction time, the auction starts pretty quiet and slowly progresses but usually 5-10 bids later they're out of my range (fine by me, you can't win everything).

        Time and time again though, at around 20% above the quoted price a bidding war has started and its either a mum & dad investor buying for their child (the kid is usually aloof - mind you the kid probably the same age as me but probably hasn't done a bit of research) or a phone bidder. Both of these kinds of people are, in my experience, relentless and instantly bid on top of the other person without hesitation. This repeats until most places land 30-35% above quoted price (probably at least 20% above market value) and the reaction of most other parties is that of shock. Most places I have been looking at are border-line unlivable, but aren't subject to development interests so its more that many are just happy to bank property and are willing to pay whatever it takes to do so.

        I think as time goes on and interest rates increase (I work in the banking sector, and can say general consensus is a range of increases in Q3 FY22 are expected), we can start to see the average rate of growth start to decline, but don't expected negative growth. With the pre-existing supply shortages in capital cities and current net negative migration, the situation is likely to get much more competitive as migration to Australia kicks up again. Further, demographics indicate that most young 20s live at home (myself), compared to the generations before us, and as we approach the latter half of our 20s and early 30s I'd expect another glut of homebuyers hitting the market.

        The only thing that I hope will stop in the near future is the ridiculous price increases that happen on auction day based on no real underlying factors (other than desperation). For that to occur, I hope that lending restrictions grow tougher (i.e. < 70% LVR for investors (currently up to 90%)), and that banks conduct more stringent bank valuations on auction purchases (e.g. currently many banks just use auction sale price as market value, but instead should use their own 3rd party valuers - like for private sales- and make buyers fork up the difference if it exceeds a certain margin, effectively bringing the LVR down further).

        Case in point, is this place (https://www.realestate.com.au/news/sydney-auctions-agent-and…) that I was at in-person. I wasn't planning on bidding as it was way out of my price range but was looking at the general area. Agent expected 1.1-1.2 and disclosed the reserve at 890 as a marketing tactic. What happened after was pretty much madness and hence made news. 2 places up the street are now for sale as a result, and I'm expecting those vendors are looking for a better result (given they have better zoning).

        • For every auction I had 15%-20% buffer on the agents quoted price

          If you are not winning then maybe you are aiming too high.

          I think as time goes on and interest rates increase (I work in the banking sector, and can say general consensus is a range of increases in Q3 FY22 are expected)

          Probably but final rates will be lower than before COVID. If you look at most western economies: QE, zero interest rates, stock market at all time highs, property at all time highs. Only thing making us different to Japan is property hasn't fallen and stock market hasn't crashed.

          currently many banks just use auction sale price as market value

          Why would they do that compared to private sales. They are not that stupid and it is the end borrower who would be paying. Bank never short change themselves, especially when the little guy will be paying.

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