I have been following real estate trends for the last 12 months..
I note market has cooled down a little..
Will it calm down further ??
In the market to buy our first home in Brisbane south.
Thanks in advance for your feedback
Real Estate Cooling down
Sam Sharik on 05/01/2022 - 16:35
Last edited 05/01/2022 - 17:36
Last edited 05/01/2022 - 17:36
Comments
what humidity ??
'market has cooled down a little.. Will it calm down further ??'
from what I've read, SYD/MEL houses have peaked and started cooling - dunno BRIS and the nearby Coasts which apparently have benefited from a lot of WFH emigrants (Mexicans if you will)
I sold an investment house in Sydney last year - breaking the cardinal rule of investment property - 'never sell' - and have since lost a shipload of growth, plus am looking at a mountain of CGT so yeah don't do that.
A friend bought nicely in Bris maybe 6 months ago - a beautiful investment unit for I forget - $400K? - which should do him very nicely.
When to buy - like planting a tree - the best time is 20 years ago - the next best time is now.
Haven't followed Brisvegas for decades, but Sydney cycles are typically flat for 3-5 years followed by 2 years of steep increases. On that history I would expect Sydney to be flat for a few years now. Brisbane may or may not have peaked.
But given real estate's high entry costs - stamp duty, agents' commission, etc. - and exit costs (beware CGT) - it's best considered as a buy and hold forever, rather than dip in and out.
If you can afford to buy you're probably luckier than most young people who need the Bank of Mum&Dad to afford anything.
And please for the love of dog, don't ask your retirement-age parents to guarantee your mortgage - you should burn in hell if your loan default results in your parents being kicked out of their lifetime family home and left homeless on a pension.
Thanks for your input..
I am against using bank of mum&dad..
i can wait if i have to and save more money (chunky deposit)
Thanks again for a great input
Go read through all the similar posts over the past few years on ozbargains, the 'experts' always saying their is a bubble right around the corner.
Fact is, a stand alone house will only ever appreciate. Apartments on the other hand…
Also, the area is a major factor.
banks are making it harder to approve loans bank manger mate. market should cool all Vic here lots are hating our heat wave two new next door to me are vic. they move to Queensland on idea better then be in lockdown. I check some turn light out in vic went they left?
thanks.. yes banks are tightening up !
So glad OP has been following the property market for a really long time. He'll have a good handle on it.
i smell sarcasm… :)
Yes, they should follow it very closely, maybe in 10 years time they will be ready to make the plunge!
something like that
There are always reasons to buy and not to buy. If it is your first home, buy as soon as possible in a good area and provided your job is reasonable secure or you can easily find work elsewhere. It does not matter if it goes down in the short term. Paying off the home loan makes life so much easier and enables other opportunities. If you are handy, buy a fixer upper.
Thanks johno
I made many decisions which I regret, but buying a house was not one of them.
Although, with the benefit of hindsight,
perhaps I would not had sold off all of my CSL shares at $3, making 30k towards my first home deposit and instead just borrowed more… I was cross when they hit $30, I was very sad when they hit $300. Well at least I avoided paying CGT on a 3 million dollar gain….pretty difficult to guess where any share will be in 20 years lol, dont beat yourself up over it.
Bought the first home in 2009, the market was very hot then and the interest was high too (3.9%? Can’t remember). I needed to buy one despite of these because of my new born baby then. Imagine if I was waiting for the right time, I’d be still in sideways.
more like downways bruh
2008/2009 was the perfect bottom after GFC tbh. interest rates were competitively low and so were property prices
Entirely plausible that it'd go down. It depends on interest rates and the extent of population growth.
It's hard to say how high interest rates will go, as this depends on inflation. The government hasn't gone as crazy with extra spending here as they have in the US. So I think not as high as in the US.
this dude purchased a 1 bed unit in Alexandria for $749 WTH
https://www.ozbargain.com.au/node/589707?page=3#comment-1160…
Since you were missing the K in the property value, I thought Alexandria was some rural town with less than 100 people.
i have been tracking house price since 2000… the best time to buy house especially for your residence is yesterday… trust me… it wont stop.. if covid did not stop what will be?
people are scared of inflation, recession, immigration halt.
i am telling you this. you buy today 5-10 years later it will double.. always..
I bought a house in 2008, within 8km of Brisbane cbd. Sold it late 2016 for only 10% more than I paid, less after all selling costs accounted for. Didn't even beat inflation on the sale price alone. This was also the peak of the market, late 2016 early 2017.
Extrapolate this 50 years into the future.
Present day:
Let’s say the average house price is $1M, the average salary is $100k, and the average interest rate is 2%
On a 30 year loan the annual loan repayments on a $1M loan are ~$45k
The take home pay on a $100k salary is $75k with a tax rate of 25%
As such, you can service the loan on a $100k salary and have 40% of your take home salary for living expenses.In 50 years:
If house prices double every 10 years then an average $1M Melbourne house will be worth $32M in 50 years.
A current salary of $100k with generous 5% wage growth per annum will be ~$1.1M in 50 years.
With a loan of $32M for 30 years and an interest rate of 2% the annual repayments are $1.44M per year.With a future salary of $1.1M and tax rates of ~25% as applicable to todays $100k income, your annual take home pay will be $0.825M. Obviously insufficient to service the mortgage. So now assume the household income is doubled due a partners income. Even with a household income of 2 x $1.1M each taxed at 25% your loan repayments will be about ~87% of your take home pay which is not practically serviceable.
The result is that an average house will not be affordable in the future even on a good household income based on the above assumptions.
As such something has to give, either:
A) Salaries will have to increase drastically
B) Interest rate will have to trend to zero.
C) House prices cannot keep doubling every 10 years
D) Something happens that changes the economyIt is very unlikely that (A) will occur due to past trends.
Even if interest rates were 0.1%, the annual repayments on the $32M loan will be $1.1M still making the loan difficult to service on a generous household income. Also low interest rate may lead to increased inflation and may not be sustainable.As such it seems unlikely that house prices can continue to double every 10 years into the future. However, they may continue increasing for a while yet but for how long?
great input
Thanks
The only thing that will avoid this is remote living. If in the future working from home becomes the norm, there will no longer be a need to live in metro areas. You could live in regional woop woop, earning good money whilst paying much less for a property. In vic there has been massive pushes recently for regional living, which is starting to take effect.
Yes arguable a lot of white colour jobs can be done remotely online now and the trend will only increase, this may decrease demand for metro housing and reduce price rises. It is quite wasteful that we have large portions of people commuting daily just to sit in a cubicle in front of a computer
Realistically, especially for a 50 year time frame, I think you'd have to consider some more options:
E) the average property size (both land and house) keeps shrinking, and population density keeps increasing
F) ultimately, the average household might live in apartments rather than houses
G) home ownership (PPOR) across the country will keep decreasing, more people will rent (potentially) permanently.All 3 options are likely to accelerate in the future, as the wealth gap grows.
Let's assume your numbers will turn out to be 100% correct, and the average $1M Melbourne house will be worth $32M in 50 years.
If that's the case, the average household will not be able to afford to get into the market, but that doesn't mean the price or the main trend would have to change their course. It could simply mean that the average household will be priced out of the market, and will be renting for the long term. The wealthier investors will own more investment properties and rent them out.great insight!
I love people who put effort and thought into comments.
Agree completely with your analysis.
The world needs tenants so keep waiting for the bottom
While prices will surely continue go up.100% the market has peaked. People are maxing out on borrowing capacity at current salaries. Inflation is increasing and wages will come up to some degree as a result but the costs of those salary increases will simply be passed onto consumers so people may have higher salaries but their expenses will also increase so it won't be a net real income benefit.
Interest rates are at record lows and will be going up as a result of inflation which will for certain place downwards pressure on prices as a lot of people can't afford to service loans at interest rates of 5 or 6%. It's going to be interesting that's for sure.
Pretty much the only hedge the government can use against it is immigration. They are trying to turn the tap back on but I don't think this will play well in an election year. People are sick to death of 10+ years of massive immigration growth without a corresponding growth in services and cities are getting overcrowded with horrendous traffic etc.
Hold your cash and get ready to buy in the fall. In the 90s crash the property market turned in a week. It's all about confidence and Omicron is putting a biggggggg dent in that day by day. Who the hell wants to leave their house right now?!
Well yes they can use immigration to a degree but new immigrants tend not to buy a house immediately.
I reckon Omicron will not hurt confidence for long and in the long run will be a positive. There are plenty of people that don't care about catching it and are willing to take the risk of leaving the house. And others that do care but see catching it as inevitable, and so are willing to go about their normal lives anyway - as the government is encouraging.
Interest rates are at record lows and will be going up as a result of inflation which will for certain place downwards pressure on prices as a lot of people can't afford to service loans at interest rates of 5 or 6%.
The cash rate will never go up to +5% in our lifetime.
Agree! Something 10times worse than covid can only make that possible..
The average interest rate in Oz has actually been 6%. With inflation going up, why do you think it’s impossible?
The average cash interest rate isn't +6%.
Interest Rate in Australia averaged 3.95 percent from 1990 until 2021,
https://tradingeconomics.com/australia/interest-rateThe cash rate has been going down to the right since 1990 and won't go back up to +5%.
Thanks for the input…
you are the first person suggesting to wait !!
How would anyone know? With interest rates so low where else would you park your hard earned cash? In a highly inflationary economy physical assets always provide investors with a safe haven to park their cash. You may see a small pull back at 10% most over the next 24 months, but the market has risen over 20% in just the past 12, the trajectory by history is always going up. It is really hard to time the market, for PPOR just buy when you can, in 10 years time you will have made a decent profit if the place you bought has a land component and is well located near shops/transport.
Price won't change as long as interest rate stays the same (probably will for forseeable future) and banks don't suddenly approve much more money than before.
That said, normal owner occupiers have prob maxed out their borrowing power after a year of rampage so I'd imagine it stalling for a bit, until probably international border opens when foreign investors get wind of aus being a great market. In terms of demand, probably have slowed but its still holiday period and Jan is typically slow. Will see stocks and buyers out in force by Easter.
Just a warning, the market is already predicting multiple rate rises this year.
thanks, whats your source ?
Probably tiktok, youtube, google news speculation.
Aka more misinformed people in this thread with no working knowledge of economics nor the education to understand how the reserve bank operates with the APRA, the Treasury, and ASIC.
You buy property when you can afford it. Speculation and dip predictions are a fools game led by the poor and uneducated.
https://www.yieldreport.com.au/category/cash/weekly-cash/
Personally, I don't think the market is correct, the RBA is on record that they have changed their mandate, they will only respond to actual inflation - rather than expected inflation. Hence interest rates won't rise this quickly
QLD premier did Australai a great service by opening the borders and letting people and COViD in, so it looks like all the scaredy-cat rich will go there and increase their house prices lol.
Thanks so much Labor Anna, you have eased the pressure off us in NSW.
预备，准备，开始！！
Cashed-up Chinese buyers swarm Australia's housing market as the collapse of Evergrande looms
By Stephen Johnson, Economics Reporter For Daily Mail Australia
15:00 GMT 07 Jan 2022 , updated 15:05 GMT 07 Jan 2022
https://www.dailymail.co.uk/news/article-10377347/Chinese-bu…wth
All I can do is wait and even though I can put a 20% down payment right now, I just don't see myself living in Sydney. It's just so boring here, its work then go home…… and I am too lazy to research anywhere else.
your point ?
Wait IF prices will go down and I don't think they will, it will prob just plateau for a bit then rise again, Sydney is overpriced and boring. There's your point.
hmm, thanks
You said Briabane, and to me that's not providing enough information to answer your question. Brisbane has several markets and you need to specify which one.
Inner city, I believe you'll still see strong pressure from interstate arrivals who've come from higher priced markets than what they are moving into.
Outer Brisbane the price is most likely to revolve around building costs. The amount of available land still in north/south west Briabane means you'll have more and more new subdivisions to keep the prices down for quite some time. It'll just be building costs that dictate.
But in both of the above, you'll see migration to Brisbane. Either interstate or from overseas. Both will mean the market won't drop, some might grow a little the other might still grow a lot.
We have been looking in Slacks creek and Daisy hill area.
We would love to buy around wynnum - which is impossible atm
thanks for your input
Brisbane South is separated into so many different suburbs, and it's not just the proximity to the city that makes one suburb more expensive either. The busway (soon to be Metro) and the highway are overlapping so you either have access to both or neither. The suburbs near the transport infrastructure always seem to do better.
Unfortunately with your budget you may need to look further out. Rochedale South seems promising but it isn't in BCC anymore.
Thanks everyone… my thoughts so far
1.Cash rate wont increase in 2022
2.Slow down around auction and prices are due to the increase in interest rates.
3.Rental demand will increase
4.Appartment prices will decrease due to over supply
5.Low listings will increase the prices
6.Migration will increase the real estate prices
Brisbane/QLD isn't gonna cool down, you need to buy Brisbane before Sydney thinks it's reached it's peak. People will have started cashing out from Sydney now.
Then all the cashed up up owners and inheritors in Sydney move to Brisbane so they can be rich or at least ditch their mortgage. This is compounded by the increase in remote working.
For every one person who has that view, there's a queenslander living in the southern states talking about how glad they are not to have to put up with the humidity any more.