Effect of interest rate hikes - are you feeling it?

virhlpool on 29/04/2023 - 18:03
Last edited 03/05/2023 - 18:44

Hi OzBargainers! This is a hot topic at the moment and it's hard to ignore. Whilst on one hand I see people spending money on literally everything (houses, holidays, shopping) like there's no tomorrow, on the other hand media has been making the interest rate hikes a big deal (even though RBA seems to have been much less aggressive/ decisive than the other central banks) and then there's news about layoffs (at a very small scale yet) and softening job markets. As if this isn't perplexing enough, my every visit to a shopping centre or a mall gives me a bigger shock about the price increases - 30% price hike in 3 years sounds 'mild' now when some products have almost 60%-70% higher prices and yet I don't see people at large complaining about it (or rent increases for that matter).

Things are no different on the housing front. Some economists predict price rises in the near future whilst others predict a fall. People are still very optimistic about price trajectory and don't seem to hesitate to take $1m-$2m loans even at 6% interest rate, demonstrating that a huge population, at least in the major cities, still has an ability to repay $8,000-$10,000/ month towards the home loan despite such a sharp increase in overall cost of living.

I was wondering if there is a huge number of people who have started feeling the pain (though it doesn't look like if you visit any stores) OR not yet. Whilst obviously no one has a crystal ball, it will be insightful to hear thoughts of savvy OzBargainers on the current state (and direction) of economy, inflation, property market, etc. Feel free to share your ground-level observations as well, if any. Media can be biased so a neutral voice can be often more interesting. Thanks!

P.S.: Added a poll later so there are only a few responses. Your vote is welcome!

Poll Options

  • 158
    No, I don't feel the pain. I continue to live like before and my saving/ buffer is still decent.
  • 172
    Yes, I feel the pain and my saving has shrinked but I have a large enough buffer so it's ok.
  • 63
    Yes, I feel the pain and my saving/ buffer has shrinked significantly. I'm worried.
  • 12
    Yes, I am in stress and actually struggling financially.
Financial

Comments

  • [Deactivated] on 29/04/2023 - 18:08
    +8

    You go first

    • virhlpool on 29/04/2023 - 18:23
      +54

      Fair enough. A few of my experiences - my grocery bill is up 40% on average. My plan to purchase a newer car has been postponed because of the current prices of the used cars. My lifestyle has definitely been affected - I can't just book random holidays when I feel like going out of city or buy gadgets every now and then because those things are absurdly expensive (I wonder how people can pay $400 a night for a very ordinary room in a weekend).

      Our savings have decreased significantly, no doubt, but we are just managing because we still have jobs. I will need to think many times before I go and take a big home loan because it will be a big risk if any of us lost a job, honestly. However, I feel that this situation isn't sustainable for a long term as eventually sales volume of everything will fall when people will start feeling the pain or realising their financials are in mess. On the contrary, if the current situation sustains, then quality of life will not be the same that we had earlier. For example, an international vacation now costs 60% more than what it did in 2019. Incomes haven't risen that high. There are many such instances where you think you can't live the life in the same way anymore that you did just three years back.

      Over to you, mate.

      • loropy9 on 29/04/2023 - 18:44
        +40

        The WEF will be glad to hear their plan is working. You will own nothing and you will be happy. Liked it or not.

        • 7ekn00 on 29/04/2023 - 19:09
          +6

          Yep, people scoffed and wondered how they were going to do that without permission, guess we are finding out!

          • Dogsrule on 01/05/2023 - 18:53
            +9

            @7ekn00:

            people scoffed and wondered how they were going to do that without permission

            They got permission - people gave away their freedom willingly for 'security'.

        • Name on 01/05/2023 - 13:04
          +2

          What is WEF?

        • whyisave on 02/05/2023 - 09:09
          +2

          To permanently put people in servitude,
          you will rent everything….even rent back your own country.

      • [Deactivated] on 29/04/2023 - 20:45
        +12

        I wasn't being rude - it's just that I find it odd when OPs request certain information yet don't offer anything of their own experience.

        I actually think you're doing quite well - you're a double income household; own at least one car; and have some savings which is very similar to my circumstances. We differ on the 'random holidays' front as I've never just booked one without planning/saving.

        I just view things differently to you in that it serves me no purpose to ruminate over the things that I have to pay more for because prices have increased across the board; it's a given. Sure, the degree of price rises has been quite the trajectory of late but such is life.

        I also choose not to compare my circumstances with that of people who are spending up big on mortgages, expensive gadgets and the like and wonder how they're able to do it now. I'm just thankful that I own my home and don't have financial distress like so many tenants and mortgagees are experiencing at the moment.

        • whyisave on 02/05/2023 - 09:10

          it's just that I find it odd when OPs request certain information yet don't offer anything of their own experience.

          maybe doing market research or sentiment gathering for focus groups

          • [Deactivated] on 02/05/2023 - 10:28

            @whyisave: Those OPs definitely read that way sometimes

        • serpserpserp on 02/05/2023 - 20:48

          I find it odd when OPs request certain information yet don't offer anything of their own experience.

          You mean you didn't think their findings that most people in capital cities have 1-2 million dollar home loans credible? I mean, it was so scientific.

          • [Deactivated] on 02/05/2023 - 20:56

            @serpserpserp: Look, I'm almost certain OP has insider mortgage information from all the financial institutions OR they're surrounded by ppl who inflate the size of their mortgage & they're a trusting soul.

      • Pinchy on 01/05/2023 - 08:14

        Bali is still pretty cheap to holiday too

        • R4 on 01/05/2023 - 21:39
          +1

          It is but we were there in November and costs have gone up significantly for most things. It's still an affordable place to holiday, just not like it was even a few years ago.

      • aimon on 02/05/2023 - 14:11

        May I ask your age? Nearest decade will be ok. I ask because your spending habits sound like someone who has only ever known cheap credit and that is what has screwed the economy. Average incomes never used to go on random holidays and did think twice before buying a house.

      • The Wololo Wombat on 02/05/2023 - 15:47
        +2

        This is because we started (for the first time in Australia) quantitative easing: 300 billion in 2020-21 to fund our COVID policy. It's almost at 1T now.

        There's a GREAT recent podcast episode I recommend to all - Peter Costello speaking with John Anderson they were key players on the team that eliminated Australia's debt and built the wealth fund (surplus) that allowed us to sail through the 'GFC' with relative ease.

        One key takeaway for me… we're now spending more (each year) on servicing our debt than we are on Medicare. Seems like the public appetite for fiscal conservatism is not what it used to be…

        • virhlpool on 03/05/2023 - 14:54
          +1

          Thanks for sharing. Btw, our sovereign fund needs to be much bigger to ensure that govt can sustain Medicare, bulk billing and paying pension to the coming generations. Look at the sizes of various sovereign funds here: https://en.wikipedia.org/wiki/List_of_countries_by_sovereign… (I wonder why UK, Germany etc aren't on the list or they don't have any?)

          Norway has done a fantastic job when other countries were busy overlooking it. Their future generations are well secured for decades to come.

        • Ponsonby on 04/05/2023 - 16:51

          A large part of the debt reduction during the Howard/Costello years was due to the sale of Telstra. They exchanged a high value equity investment for cash and were able to pay off debt with the cash. While Net Debt of the Commonwealth was reduced as a result of theTelstra sale, the sale itself made no difference to the balance sheet because we no longer held the equity in Telstra. This is not to say it was the wrong decision to sell Telstra (that is another debate) but simply to point out that the Commonwealth's net worth did not change as a result.
          The other influence was the boom in commodity prices and volumes in the mid 2000s which puffed up Commonwealth revenue (temporarily as it turned out). Many would argue that in such boom times, we should have been running larger surpluses and paying off even more debt - those observers would say that we were in fact running structural deficits in those years (as opposed to nominal surpluses) and that an opportunity was missed.

          • Hearthstone on 04/05/2023 - 20:07
            +1

            @Ponsonby: nah, $32 billion from sale of Telstra was given as seed capital to future fund
            that capital is now grown to $100bn

            whereas Telstra today worth $49 billion, you can say they did a bloody good job flocked off Telstra use that money in future fund to invest elsewhere and got a much better return

  • freefall101 on 29/04/2023 - 18:12
    +16

    yet I don't see people at large complaining about it (or rent increases for that matter).

    Really? I don’t know anyone who pays rent who isn’t concerned about rent increases.

    • virhlpool on 29/04/2023 - 18:25
      +1

      If they were concerned, you won't see the retail sales that you see in the stores and malls (a couple of friends run stores in the malls and they are busier than ever).

      • freefall101 on 29/04/2023 - 19:00
        +4

        When people tighten their belts a little bit you don't see the result of every mall turning to a ghost town (like covid times). It's progressive, it impacts different markets in different ways and you definitely can't tell the state of the entire economy from a couple of stores and malls locally to you.

        What do your friends sell? What does "busier than ever" mean? How much of it is concentrated foot traffic into malls after so many store closures during covid? What is the overall change in retail spending (it was up 0.2% in Feb, likely dropped in March from all indicators)? Which days did you go to the mall (did you check every store, every day and ask people whether they were browsing, buying, whether they had decreased spending elsewhere to increase spending in the mall?)

        or the tl;dr version - the plural of anecdote is not data.

        • drprox on 01/05/2023 - 07:19
          +4

          Yep and stores like Kmart could even see increased foot traffic due to changing consumer preferences!

      • seannami on 29/04/2023 - 19:23
        +1

        The thing is, rate rises effect around half the population (mortgagees, renters whose landlords are mortgagees) more than the other half. The 'safe' half can spend on their merry way.

        There is also the probability that people are buying stuff now with the feeling they may not be able to soon or again for a while. When I was doing sessional work, when gaps in work were imminent I'd spend up knowing I'd have no chance. It's a psychological thing. It may also seem busier because people are shopping around more- they may have bought everything in one shop and worn the price difference for convenience before, but now the money is worth the effort.

        And in answer to your question, yes it's biting, mainly in the speed of savings and getting the house fixed for the moment.

        • Thaal Sinestro on 01/05/2023 - 04:54
          -6

          If inflation is caused by "too much money chasing too few goods", then the government should just increase the top tax bracket to 55% (or more) and use the extra revenue to pay off debt. That is more fair than just wacking mortgagees with increase rate increases. Tax the rich, the people with "too much money".

          Instead the execrable ALP is pushing through with tax cuts for the rich, the Stage 3 tax cuts.

          • seannami on 01/05/2023 - 09:52
            +2

            @Thaal Sinestro: Afraid that may not be a popular option (even though the tax breaks are going to cost a lot which would be better spent on social services). I read somewhere, and I agree, that some form of compulsory savings option may be better, maybe to send to super or a government bonds account or some such- you are able to access the money when inflation calms down or upon retirement, but for the moment, you aren't contributing to market forces as much. That's rather more equitable (as the amount put aside would be means tested) and you would be taxed on the interest like any other savings account, so there is a tax win too.

            Also being in the top 11% (apparently) of earners, I agree, we don't need tax breaks, we need better funded welfare and medicare systems (among other things).

            • BobLim on 01/05/2023 - 19:34
              +2

              @seannami:

              we don't need tax breaks

              How about we have inflation-adjusted income tax brackets then? Hardly a "break" IMO

      • Pinchy on 01/05/2023 - 08:16

        I went to my local Westfield on Sunday and it seemed really quiet compared to normal. Was actually nice to shop at without too many people

        • Korban Dallas on 03/05/2023 - 21:55
          +1

          No one goes to the mall. We have like Amazon now.

      • druex on 03/05/2023 - 21:39

        Why have retail sales been falling then? Last Christmas saw a huge drop in sales figures.

  • lachhelix on 29/04/2023 - 18:15
    +2

    Of course people are feeling it lol - who enjoys paying more interest on their home loan every month??

    • virhlpool on 29/04/2023 - 18:27
      +1

      It's not a question about liking it or not but you don't see people reducing their other expenses or selling their homes/ cars, for example. The most are able to lead the life in the same way that they would before the pandemic.

      • jjjaar on 29/04/2023 - 23:11
        +1

        I know a lot of people who have reduced expenses, and the property market is much busier now compared to 12 months ago, with a lot of properties (specifically apartments) selling for a lot less than when purchased.

        In inner Melbourne, I’ve seen apartments up for 500k that were purchased at 650k only 5 years ago. This is not uncommon, a lot of apartments in Melbourne are doing similar. If people weren’t struggling with all of what you’ve explained, they’d be holding onto them, but they’re not.

        • virhlpool on 30/04/2023 - 01:08
          -2

          Agree, though a lot are selling because they are getting better prices even now. It's surprising.

      • Millikano on 01/05/2023 - 21:51
        +1

        I think most will feel the pinch eventually, though there are still a lot of people with locked in interest rates down in the 2's or less who won't feel it for another 6-12 months. We're certainly feeling it, though we have everything we need and are lucky to be on a good enough wicket between us. If we went down to one income for more than 6 months it'd be a challenge- I imagine many are delaying having kids due to that impact.

        • virhlpool on 01/05/2023 - 22:52
          +1

          It sounds like pain in property market is yet to come though many believe the price bottom is well past us. Media also says the same though they have vested interests so I wouldn't take it seriously.

  • Iwantthebestprice on 29/04/2023 - 18:30
    +9

    This post need a poll!
    Yes
    No
    I’ve cut back substantially

    • Shoocat on 29/04/2023 - 18:35
      +10

      Fourth option: I'm living in my car

      • elgrande on 29/04/2023 - 18:40
        +24

        You still have your car?..

      • 33725 on 29/04/2023 - 18:58
        +2

        How much are you renting the back seat?

      • Ghost47 on 29/04/2023 - 19:01
        +4

        Fifth option: I'm living in a tent in the local park and the only time I can use OzBargain is when I visit the library.

        • iDroid on 30/04/2023 - 20:36
          +1

          Buy some pringles and make a wifi antenna..

          Oh wait, yeah… no one can afford pringles either.

        • eddyah on 30/04/2023 - 21:50
          +1

          Hunker down!

  • Kaz0551 on 29/04/2023 - 18:41
    +3

    FWIW, yes everything has gone up but I am not feeling any pressure to reduce expenditure in any areas.

    • iDroid on 30/04/2023 - 20:37
      +1

      Which IMO is one of the reasons for our massive inflation - the punters have the will and the means to pay and they're paying it.

  • Ghost47 on 29/04/2023 - 18:48
    +47

    Interest rates in Australia have been on the steady decline since the 1980s. The past 10 years post-GFC — especially in the US, where they say "if the US sneezes Australia catches a cold" — has been known as the age of easy money. Look at how many new companies sprung up. Five years ago we had phones with one camera lens on the back of it, now most phones have at least two. There are phones with five or six lenses on the back of them. You can see the effects of easy money here too.

    People these days get food delivered to them on a scooter. People's houses earn more money a year than people going to an office to work for eight hours a day, five days a week. Remember when Eddie McGuire hosted "Who wants to be a millionaire?" back in the early 2000s? Back then, $1 million was considered to be a large amount of money. These days it's considered to be nothing, because people will happily throw that kind of money on their dream house 40 minutes out of the Sydney and Melbourne CBDs. We've been living in an age of abundance.

    The problem, especially now in this country where we treat housing as a get-rich-quick scheme is that we are in a very precarious situation where — since we are now so reliant on increasing house prices to prop up the economy (i.e. the so-called "wealth effect") — any small increase in interest rates will be felt very strongly by people who have leveraged themselves out the wazoo after putting down 5% deposits on mortgages that are 6-7x their income.

    That's why we've opened the immigration floodgates again.

    You think the immigrants who to this country are poor? No, they're the ones with money because the government knows that most Aussies on average have no liquidity. That's why we've opened the floodgates, so rich people can come over to a country they think is better than their own country and bring their cash here to keep the housing market from falling over because they're the ones buying property. It doesn't matter anymore whether you're born here or not, it's money that talks.

    We're headed for a big Australia even if the majority of Australians don't want it, it's basically a requirement now to keep our property market from falling over. So prepare to endure congestion, queues getting into and out of shopping centre car parks, high density living and all the joys that come along with a huge population increase without the infrastructure to support it. Think you can go down to the next suburb on a Saturday night to have a leisurely dinner with your family? Prepare to spend 20 minutes finding a car park then waiting in line at the restaurant for another 20 minutes after which you'll sit down at a dirty table that hasn't been cleaned because the wait staff haven't had time to clean it as they're run off their feet, then another 20 minutes waiting for your dinner to be served (which will hopefully taste half decent) and then heavy traffic on the way home with 80% of the cars on the roads being SUVs that you can't see past because you don't drive an SUV. Lovely.

    • Kaz0551 on 29/04/2023 - 18:57

      after putting down 5% deposits on mortgages that are 6-7x their income.

      At least!

      • Ghost47 on 29/04/2023 - 18:59

        Yep. 6-7x has been often cited, and that's been when rates were around 2.x% or 3%. Now that rates are >4%, when factoring in interest paid over the life of the loan, it's going to be a lot more for those people if rates don't go down. But they will, because property.

        I should've also mentioned that it's not enough to have a fully paid off house to live in, in the age of abundance and easy money anything short of a PPOR + 30 investment properties isn't enough for an average person.

      • dcep on 30/04/2023 - 13:18

        I thought Sydney is over 10x wage?

    • orangetrain on 29/04/2023 - 20:01
      -1

      We need to keep the property market from falling over. It's generating massive profits for the economy.

      • Ghost47 on 29/04/2023 - 20:10
        +3

        I agree. More money to increase house prices! More immigration!

        • orangetrain on 29/04/2023 - 20:24
          +2

          I feel the extra immigration that will finally solve 20+ years of skills shortages might make it harder for first home buyers. How about giving each of those $50k or $200k or in form of tax breaks? We need to give those young people a lift up! Maybe young people can tap the super too. They can retire comfortably on the tiny delicious silver of backyard grass!

          • virhlpool on 30/04/2023 - 01:22
            +4

            @orangetrain: Why isn't there any resistance against the immigration policy or the govt voted in by them from the young Australians? I feel that the young will need to be more aware politically and put pressure on the govt to rule in their favour. No one else can protect their future.

            If we don't have enough jobs or infra (roads/schools/hospitals) to support a bigger population, then why don't the locals push govt to build it first and then bring in more people? Our infra isn't enough even for the current population and yet govt lets thousands of immigrants in and the local population which is most negatively impacted by all this is busy partying.. why?

            • Lunarboogie on 30/04/2023 - 07:27
              +1

              @virhlpool: It's a good question. Despite the increased attention on immigration matters, most people have accepted the booming numbers as a fait accompli. Can the people change the current trajectory? And just as aptly, do they even want to?

              I get the impression most OzBers are a conservative lot and support capping numbers due to a combination - from what I can see - of environmental and housing concerns and a lost nostalgia from a time when several million privileged Aussies occupied this broad continent and had acres of private space at any given beach in the country and could nab a table at their favourite surf & turf joint, without a booking and for under $10.

              Those days are gone.

              • virhlpool on 30/04/2023 - 09:29
                +2

                @Lunarboogie: Let's even forget about nostalgia and housing size/ affordability part. How about just the infra - do we have enough roads, transport, schools and hospitals/doctors? Everyone knows the answer and yet everything is hunky-dory. In a politically aware society, people put pressure against such policies that are not sensible for them but I don't see any resistance (e.g. from young Aussies or relatively new immigrants who face a lot more challenges) at a broader level at all.

                I am not referring to being against immigration at all. All I am saying is, bring in heaps of people (that if you have to) when you are equipped for it.

                • Lunarboogie on 30/04/2023 - 09:47
                  +3

                  @virhlpool: I get your point. But I wouldn't think new immigrants will be leading of the reform vanguard. Most feel blessed to be here and despite the scourge of what we moan about on this site, things are still a damn sight better compared to where new arrivals have recently come from.

                  This rebellion will be need to be lead by native sons, if at all.

                  • virhlpool on 30/04/2023 - 10:10
                    +1

                    @Lunarboogie: I agree but I would like to differ on one point here though unless you are referring to refugees.

                    Most people who come here, at least those who come as PR, from China, India or England are well qualified and well to do, and that's where the majority of them come from. There is, in fact, a compromise on their income compared to back home initially when they move here. FYI.

                    They move to Australia for a slightly better lifestyle (thanks to our lower population) but the difference is diminishing fast and hence many stay back for better career/incomes (and lower cost of living, more comfortable living etc) even if they have an opportunity to move here. Scope of higher income is much much better in India and China for the qualified at the moment as those are very fast developing economies. Life has other challenges there though but so do we here.

            • Ghost47 on 30/04/2023 - 14:29
              +1

              @virhlpool:

              Why isn't there any resistance against the immigration policy or the govt voted in by them from the young Australians?

              I think it's because most Australians want property prices to go up. Anyone who owns a house or invests in property must love immigrants and want immigration to increase, otherwise it's 100% cognitive dissonance. You can't have booming property prices with a low population, it makes no sense. This is our fate. One day we will all become real estate agents, selling houses to each other. Better start re-skilling now.

              • virhlpool on 30/04/2023 - 14:37

                @Ghost47:

                One day we will all become real estate agents, selling houses to each other. Better start re-skilling now.

                I echo you.. this line has a real deep meaning for our society I reckon. Start innovating, manufacturing, coding and expanding farming before it's too late — is kinda my interpretation of it. :)

              • BargainCowboy on 02/05/2023 - 18:09

                @Ghost47: Reskilling implies it's a skill…

            • greatlamp on 02/05/2023 - 12:27
              +1

              @virhlpool: Because young people are brainwashed.

              Wanting lower immigration and caring for the low income and unemployed citizens above non citizens are now views that will have you labelled a racist facist.

              Left leaning groups claim to want to help the poor but will denounce any controls on immigration - whose primary goal is to apply negative pressure on workers wages. They have had their leadership taken over by 'benevolent billionaires' who know whats best for us - am I'm not talking about the conspiracy theorists favourite monster, I'm talking about in Australia

      • aimon on 02/05/2023 - 15:24

        I cant tell id this is a joke or not. The economy doesn't have profits. Also real estate is a stupid business. You can't export property.

    • jjjaar on 29/04/2023 - 23:22
      +10

      80% of the cars on the roads being SUVs that you can't see past because you don't drive an SUV

      This is extremely frustrating though, you literally can’t see in front of them and so you don’t know why they may suddenly break or speed up. So annoying.

      • Ghost47 on 29/04/2023 - 23:51
        +9

        I agree completely.

        There are so many stupidly large cars on our roads now. I went out today and saw a stupid amount of SUVs and larger vehicles, literally at least 50% of the cars around me and in the shopping centre car park were SUVs. As I said, people are simply used to abundance now. Everything is abundant, even the size of their cars.

        When you’re in the middle lane and surrounded by SUVs it isn’t a nice feeling, especially when there’s only one or two people in them anyway.

    • virhlpool on 30/04/2023 - 01:19
      +3

      But for how long can the Ponzi go on afterall?

      • dcep on 30/04/2023 - 13:21

        Last crash was over 30 years and counting.

        Imagine someone renting for the past 30 years, VS someone bought a home back then on 17% interest rates.

      • greatlamp on 30/04/2023 - 21:32
        +3

        'The market can remain irrational longer than you can remain solvent'.

        Don't try and outsmart the ponzi. How many people didn't buy a house 10 years ago because we were in a bubble. Now where are they? Absolutely (profanity), they will never be able to catch up to the house they could have afforded.

        News.com.au is telling you a housing crash is coming, so people are pulling back from buying a home. You shoud do the opposite, you should be going into more debt. Bank interest is 6%, inflation is 8%, that means your debt of hundreds of thousands of dollars is losing real value.

        Instead by saving harder and getting 5% from you savings account on unleveraged money - your savings are losing value more than the interest you are earning

    • Toph Beifong on 01/05/2023 - 22:27
      +2

      Reading this post has made me reflect on the overall quality of life that I have experienced in Perth over the last 25 years. And I tend to agree with most points.
      1) Congestion getting to and from work is reducing whatever precious remaining time for us to be at home with our families, the time we have to wind back and relax
      2) Ballooning property prices making it difficult for our children and future generations from ever buying a home of their own
      3) Casualisation of employment - reduction in job security and full-time benefits- even though many work full-time hours with the same responsibilities as their full-time permanent counterparts.

      Successive governments have focused too much on getting "people" and "skills" and "investment" into Australia that they have forgotten to invest in their own people.

      • serpserpserp on 02/05/2023 - 20:57
        -1

        Their own people didn't want skills. They just wanted to work at the factory or the coal mine and earn 120-200k a year for a manual labour job for 35 hours a week.

    • mikeangelo on 02/05/2023 - 19:49
      +3

      That was very well written and pretty much sums up how I see it…

      Now, something else to think about is, we know there's a lot of fixed rate home loans rolling off this year, and many of those in that situation, might have to pickup overtime/second job for servicing the higher rate mortgage.. So, if the government is focused on big immigration, and bringing in students and other skill shortage visa workers, who are happy to work for less, then I'd imagine that would drive pay lower across the board.

      Businesses will consider immigrants in an attempt to reduce their running costs, they'll also more likely offer minimum pay…. So for those on a big mortgage and now looking for extra work to stay afloat.. Well, they're now competing with a huge increase of workers happy to work for less…

      A mortgage holder who cannot pay their mortgage, will need to sell…. This effect increases the amount of houses for sale on the market, and competition amongst sellers, thus driving prices lower…. If prices go too low, then, there's a domino effect and spill over into those who rely on home equity and being able to drawdown on it for paying for everyday costs. If those mortgage holders can't do that anymore, then they might need to sell as well, thus further increasing the supply of houses for sale, and further fueling lower prices. This could potentially put another round of mortgage holders who were previously safe, but now in the red !

      The government needs to treat and balance this big immigration strategy very carefully. It isn't a case of, just bring in more people, and keep the competition for housing going so prices stay high. There's this higher interest rate environment we live in now, and there's a whole lot of mortgage holders who need to work for the extra cash… There's got to be enough work, jobs and cash to go around for everyone !

      • virhlpool on 03/05/2023 - 15:32

        Extremely well explained. Thanks! A good read for those who think immigration is good for housing bubble.

  • Wiadro on 29/04/2023 - 19:01
    +9

    nope, i didn't get a crazy big mortgage

  • plmko on 29/04/2023 - 20:27
    +4

    You can see it. So many commercial spaces for lease, shops in non-premium shopping strips are ghost towns. Come back and look around come September.

    • dcep on 30/04/2023 - 13:22
      +1

      Come back and look around come September.

      It'll be full as more immigrants and students rushing in.

    • Nebargains on 03/05/2023 - 06:24

      I don't buy it. Reality is some people have more money than others. What do you think is going to happen between now and September that will suddenly break the camels back and send unemployment sky rocketing?

  • Hearthstone on 29/04/2023 - 21:52

    offset = mortgage so haven't need to pull back on anything, seeing my group of friends still spending, eating out, holiday, new car etc…

    though I did pay some interest at 2% but my dividend pays more

    but as soon as I see inflation start to go up, my risk management kicked in and I start selling off some shares and load up the offset so
    it the same as the mortgage so if rate goes to 5-10 or 20% I am safe from spiraling interest payment.

    • virhlpool on 30/04/2023 - 01:30

      You seem to be a lucky one to have a manageable debt. Building offset balance against a huge debt is not easy, especially with the current cost of living. Good on ya.

      • Hearthstone on 30/04/2023 - 09:16

        Lady Luck usually comes to you when you work hard and made sacrifice along the way.
        I don't have much growing up, I could get more on Centrelink or work in odd jobs and get pay shit money I chose to work.
        future employer sees my work ethics and getting new jobs and better pay was easy

  • GourmetFoodie on 29/04/2023 - 21:55
    +1

    Immigration. 200k+ students entered the country this year alone.
    Thank you ALP.

    • Hearthstone on 29/04/2023 - 21:59
      +4

      “When the winds of change blow, some people build walls and others build windmills.”

      be the guy that build windmills and you can overcome anything

      • PumpkinHater on 30/04/2023 - 21:58

        What kind of windmill should one be building given the context of your comment?

        • gromit on 30/04/2023 - 22:31
          +5

          Student accommodation rentals

        • Hearthstone on 01/05/2023 - 08:08
          +2

          Invest in student related services, something like IDP Education that target foreign students and migrants
          though the windmill builder already sees this coming before the complainers, it has gone up 5 folds and made a lot of money in the last 5 years

      • GourmetFoodie on 01/05/2023 - 13:44
        -1

        Lolololol so what kind of windmill do you suggest exactly that will magically build enough houses to house 200k people while enabling our own citizens to actually afford roofs over their heads?

        Honestly unless the ALP get their shit together we are going to see racists like One Nation winning more seats next election. I am a moderate and I don’t want to see that but you can’t screw over your own citizens in preference of foreigners and the elite classes without seeing some kind of terrible outcome. All the revolutions of history were caused by increasing wealth inequality.

        • Hearthstone on 01/05/2023 - 20:23

          Building wealth is not an over night job, it takes many years. It required certain mind set and certain discipline

          People expect instant success or nice house on the get go is not going to get it

          if you don’t have much you just have to put up with what you got, lives cheaper, further way and work harder, save more and build up your wealth.

          You can have it all, nice house, nice car, nice holiday, nice toys you just can’t have them all at once

          • caitsith01 on 01/05/2023 - 21:47
            +3

            @Hearthstone: This is basically a neoliberal philosophy that if you just 'work hard' you can pull yourself up by your bootstraps. It's objectively false. If you start with money it's easier to make more money, if you start with nothing it's increasingly impossible to make any serious inroads unless you happen to be either very lucky or very good at what you do, which doesn't describe most people.

            The average punter has literally no way of making money from the 'winds of change' being referred to, they can barely pay rent or afford the grocery bill lately.

            • Hearthstone on 01/05/2023 - 23:21

              @caitsith01: the rules and philosophy has not change for centuries, to have any chance of becomes wealthy you work hard, you spend less than your earn and you invest the excess cash wisely.

              How one does it is entirely up to them, not everyone can do it though and those that can becomes wealthy
              and the rest complain this and that and having all sort of excuses.

              it more to do with how you behave with your money more than any else

              I know plenty average workers on average wage accumulates a fair bit of wealth over 2 decades and I also know plenty of smart people who earn a lot of money and accumulates a lot less wealth than these average workers. Go over to properchat forum and you can see a lot of them accumulates a lot of properties and shares on average wage

              Ever heard of this guy? (how can a gas attendant amassed $8 millions), all he does is he live a frugal life, spend less than he earn and he invest

              https://en.wikipedia.org/wiki/Ronald_Read_(philanthropist)

              • greatlamp on 02/05/2023 - 12:48
                +1

                @Hearthstone: Do you think peasants could work their way out of indentured servitude?

                Do you think wealthy people work harder?

              • GourmetFoodie on 02/05/2023 - 13:45

                @Hearthstone: Anyone could have invested in property in the last 2 decades and become a millionaire.

    • KozieSeller on 30/04/2023 - 22:26
      +2

      Hi “Dey took our jerbs” person. That’s not related to this forum lol.

    • FlyingMiffy on 01/05/2023 - 08:21
      +2

      No students turned up to my auction last month! 4 families, all upgrading within or from nearby suburbs. The students probably saved quite a few landlords though in the city with 50m2 apartments. By the way, the stats say that the rental problem is mostly from people who are moving out from home/shared housing after moving back home or in with other people during COVID (something like 2.6 per houshold to now 2.1).

      • GourmetFoodie on 02/05/2023 - 13:55

        Let me educate everyone on the “domino effect” since people seem to fail to understand my point. Bearing in mind too, students are just one component of our insanely high immigration rates. Rest assured, from first principals, the more people you have needing housing, the higher the demand and the higher all property prices.

        Now speaking to student immigration specifically. These students might not be renting or buying family homes but they are taking lower level housing stock which has a domino effect. Prices go up in the lower levels. Some people are priced out completely. Others push their budgets and move to the next level of property. Demand goes up in the next level, prices go up. The cycle continues.

        • FlyingMiffy on 02/05/2023 - 16:34

          Yawn! Thanks for the education mate but your spill lacks data. Students who proceed to PR and are successful is about 16% each year, so they arent quite the root cause of an "immigration" problem contributing to demand. Also formal student accommodation like uni lodge is only for students - those that choose to room share in your so called lower level housing is a fraction of the whole. There are about 10.9m dwellings in Aus, 0.5 leaving home or shared housing for something else is 5.45m people making a change to their living arrangements… thats statistically a much bigger problem mate. You only need 10% of them to look for new dwelling to exceed the supply increments each year.

    • baldur on 01/05/2023 - 21:47

      So every "Citizen" was perfectly able to afford to purchase home before 200k poor students arrived in Australia?

      • virhlpool on 01/05/2023 - 23:02

        Neither students are poor (the poor don't think to study abroad in MOST cases, particularly when the fees are exorbitant for an average quality of education), nor all citizens were ever able to afford purchasing a house ever (otherwise there won't be so many tenants).

  • echelon6 on 29/04/2023 - 22:45
    +3

    Definitely feeling it. Had to postpone early retirement.

    • serpserpserp on 02/05/2023 - 20:53

      You were going to retire at 70? Taking a half career is something?

  • Sweet3st on 29/04/2023 - 23:25
    +6

    The interest rates I can wear for the moment because they will go down again. Food and other essential consumables… they will not drop the prices, and price increases for groceries have been shocking. Also finding hotels and anything travel related very expensive. Will go to India next year, US and Europe will have to wait until the madness dies down. Eating simpler, no food delivery, think before I buy another useless toy.

    • virhlpool on 30/04/2023 - 01:32

      Indeed. Anything related to travel is unthinkable and yet all hotels/AirBnBs are fully booked and airlines are running at the full capacity. How on the earth, I fail to believe.

      The interest rates I can wear for the moment because they will go down again.

      It won't be too soon either I reckon. And will not go down to 3-4% any time in the near future. We are in for a long game.

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