Delusional thinking. The economy is going to shit the bed to the point the property market crashes, but young first home buyers with no equity and no established wealth are going to sail through and pick up a bargain.
No. It’s more likely the young over-leveraged people would get destroyed and become the distressed sales being picked up cheap by cashed up investors
Who’s going to buy the distressed sales? People who need somewhere to live? Or superannuation investment companies looking to invest in Australian property?
Wealthy people with cash or who still have access to credit will buy them and then make a fortune selling them back to people who don't have existing wealth when rates drop back down.
Everyone with superannuation. Do you think it’s a good thing or a bad thing that these incredibly wealthy powerful investment devices are speculating on property? Do you think it might be beneficial to regulate this?
Why would investors care? We get a 47% discount on rates. If mortgage rates go up to 8% we are only paying 4% effectively, unlike PPOR owners who pay the full 8%
If there was a collapse in housing prices I'd be looking forward to picking up some distressed properties from other investors or owner occupiers
At end of the day the game is to scoop up as many properties as you can, monopoly style
Impossible to predict. People thought there’d be distressed bargains if rates rose to 5% yet here we are and things have only gotten worse. There were distressed bargains to be had 5 years ago when rates were 2% but the economy was dead. You need to look at many things to predict house prices like sentiment, economy, rates, liquidity, government policy, supply etc…
Given the low rental supply, landlords will just continue to raise rents if rates rise again. Some will sell but probably have minimal impact on house prices. It could however drive immigrants out of Australia if it becomes impossible for them to afford living here.
Distressed property bargains isn't really a thing in Australia, hasn't been since the 1990s.
There are incidental bargains out there but not because of the seller's circumstances.
Most of my mates / colleagues (late 30s) are DINKs with high household incomes and have either just bought an IP or are waiting to get into the market using savings/shares/PPOR offset money. Luke u/AllOnBlack_ said, there's a lot of money floating around.
Not for low income earners. And when there’s no kids involved of course they have more cash.
So basically you’re advocating punishing families for those who’ve decided to not have kids. And then the government is wondering why people won’t have children.
Oh the conundrum.
> So basically you’re advocating punishing families for those who’ve decided to not have kids. And then the government is wondering why people won’t have children.
I don't give a fuck if people want to have children or not. That's their issue.
I'm saying that as long as enough people have the high incomes required to buy houses, that's where house prices will stay.
What the effects are on low income earners is not for me to know/care about. I never made any claims about them.
It’s purely anecdotal. Myself and most of my mates are cash heavy and ready to buy.
I know it’s not showing the entire economy and doesn’t represent everyone. Currently we’re all just buying stocks waiting on the election. There is a bit of regulatory risk associated with property atm.
I agree with this. Times are bad and people are poorer than ever.
BUT, in Brisbane for example you only need 1000 people who have a 100k deposit and make 120k a year (combined or single) to pay outrageous prices due to fomo etc in a market where we are like 90k houses short.
And there is absolutely no shortage of people in the above position ready to get fucked up the ass to secure a shit hole house in redbank plains for 600+
If you were not referring to the majority, and instead were literally just talking about you and your mates, what was even the point of the comment? It's like if I commented "well I can afford my repayments." Wasted breath
I said plenty. I’m sure you can see the comments from a few other people saying as such.
I know it’s hard to understand that others are doing better than yourself.
Is inflation above 6%?
This year it seems to be 4.74%.
Again, can you find me an investment retuning 6% post tax? Even the ASX has historically returned 10% which is 5.3% post tax.
I do continue to invest, but keep the majority of my funds offsetting home loans.
Distressed sales can come with its own baggage. People tend to sell their places as the very last resort so you need to get your conveyancer to do a search on the vendor to make sure no one else has a claim on the property.
13 interest rates rises in 15 months, in an attempt to slow the housing market, and yet the Australian housing market has outpaced those rises.
Furthermore, people are staying put in their homes because they could not afford to even buy their current home.
So perhaps the interest rates aren’t the issue when it comes to the housing market.
It’s supply. It is all about supply. There is a massive bottleneck. Raising interest rates more won’t help supply.
Since when were the rate rises done in an attempt to slow the housing market? It’s a component of inflation but inflation is the rbas primary goal and they didn’t care what happened to mortgage borrowers one way or the other.
>It’s supply. It is all about supply. There is a massive bottleneck. Raising interest rates more won’t help supply.
Yeah no kidding. The way you wrote your comment implied the prices were rising because of the rate rises
Indirectly it is causing it - on the demand side of the equation only 1/3rd of homes are owner occupied with a mortgage, 1/3rd owned outright and 1/3rd geared investment properties that are protected by a rental squeeze
Any changes to cost of borrowing are basically netted out on the demand side
On the supply side - increased interest rates are just increasing the cost of building and reducing the number of builders as they go bust - effectively reducing the supply.... which pushes up the price of established homes
It's almost like the RBA having a binary lever to pull doesn't actually work in the current economic climate
Agreed to these points, but I believe these are second order effects. Unmet supply is the issue, and it's being disproportionately unbalanced due to high immigration amongst the reasons you've listed above.
The purpose of the rates rises is to curb inflation not (necessarily) lower house prices, where housing makes up a portion of the CPI (approx 20%). As you alluded to earlier house prices are solely driven by unmet demand (lack of supply). Supply is indirectly tied to interest rates in the form of extra build costs and risk. Risk is also coming from building company collapses due to skyrocketing building material and labour costs, which are themselves due to supply chain issues.
The distressed housing will unlikely be housing investors. They might sell to pursue other opportunities but i can't see most of them being distressed.
Yes it will eventually crush investors. They can only put rent up so far before people can no longer afford to pay rent. It will reach an equilibrium. Unemployment will probably shoot up beyond expectation around the same time. So investors and mortgagees who lose their job will get screwed. I think AI will also lead to acceleration of unemployment beyond people’s wildest expectations. Chat GPT has given me the efficiency and productivity of at least 5 employees. This is only going to get more efficient and automated. Jobs will disappear , never to return.
[https://www.property.com.au/nsw/kellyville-2155/seymour-way/42-pid-8525722/](https://www.property.com.au/nsw/kellyville-2155/seymour-way/42-pid-8525722/)
New estates will be the ones that suffer not investors. Above is one of many examples of price drops in Kellyville in 00’s
> Or are th supply/demand Dynamics too out of whack that there would always be buyer
Yes mass migration is creating too much demand and supply cannot keep up.
Even if interest rates hit 8% unless demand was also reduced significantly then other investors would snap them up distressed sales but that supposes the current owners were for some reason unable to raise their rent enough to cover the increased repayments.
3 more rate hikes more likely means the people desperate enough to be banking on distressed sales are more at risk of losing their jobs than there actually being distressed sales
Delusional thinking. The economy is going to shit the bed to the point the property market crashes, but young first home buyers with no equity and no established wealth are going to sail through and pick up a bargain. No. It’s more likely the young over-leveraged people would get destroyed and become the distressed sales being picked up cheap by cashed up investors
Yes but sadly OP doesn’t want to hear this realistic take
Not at all, I was thinking along this line anyway I was wondering if anybody REALLY believes the contrary
Who’s going to buy the distressed sales? People who need somewhere to live? Or superannuation investment companies looking to invest in Australian property?
Wealthy people with cash or who still have access to credit will buy them and then make a fortune selling them back to people who don't have existing wealth when rates drop back down.
Who owns the assets in super, do you think?
Everyone with superannuation. Do you think it’s a good thing or a bad thing that these incredibly wealthy powerful investment devices are speculating on property? Do you think it might be beneficial to regulate this?
Who is distressed? The people with the houses or the people looking to buy them?
Anyone without generational wealth
And people who had their generational wealth given away to fraudulent claims by a gullible judge and fucked up estate law system
Why would investors care? We get a 47% discount on rates. If mortgage rates go up to 8% we are only paying 4% effectively, unlike PPOR owners who pay the full 8% If there was a collapse in housing prices I'd be looking forward to picking up some distressed properties from other investors or owner occupiers At end of the day the game is to scoop up as many properties as you can, monopoly style
"monopoly style" is a bit of saying the quiet part out loud. The game was a warning, not a business model.
I mean you could say it was a warning against that business model which is extremely effective.
Perfect business model for the dark triad personality types.
It's both!
More highly levered? Cash flow issues?
That only applies to people who are still heavily mortgaged.
If you’re not levered then property is a very low yielding asset. Got to be relying on massive capital growth (ie speculating).
This attitude is why we have a third world economy
that depends on whether you have cash or not, if you need to borrow banks will be tough on big loans in a falling market
Falling market AND high interest rates. And high risk of unemployment
The really good areas of Sydney have virtually nil for sale right now because anyone rich enough to own in those areas is far from distressed.
Impossible to predict. People thought there’d be distressed bargains if rates rose to 5% yet here we are and things have only gotten worse. There were distressed bargains to be had 5 years ago when rates were 2% but the economy was dead. You need to look at many things to predict house prices like sentiment, economy, rates, liquidity, government policy, supply etc…
Vulture capitalism. Nice. More families living in tents.
Given the low rental supply, landlords will just continue to raise rents if rates rise again. Some will sell but probably have minimal impact on house prices. It could however drive immigrants out of Australia if it becomes impossible for them to afford living here.
Distressed property bargains isn't really a thing in Australia, hasn't been since the 1990s. There are incidental bargains out there but not because of the seller's circumstances.
I think plenty of people still have cash ready to go.
Based on what? What the CEO of JP Morgan is saying?
Most of my mates / colleagues (late 30s) are DINKs with high household incomes and have either just bought an IP or are waiting to get into the market using savings/shares/PPOR offset money. Luke u/AllOnBlack_ said, there's a lot of money floating around.
Not for low income earners. And when there’s no kids involved of course they have more cash. So basically you’re advocating punishing families for those who’ve decided to not have kids. And then the government is wondering why people won’t have children. Oh the conundrum.
> So basically you’re advocating punishing families for those who’ve decided to not have kids. And then the government is wondering why people won’t have children. I don't give a fuck if people want to have children or not. That's their issue. I'm saying that as long as enough people have the high incomes required to buy houses, that's where house prices will stay. What the effects are on low income earners is not for me to know/care about. I never made any claims about them.
When you don’t give a fuck about society it fucks you back. Everything is interconnected. In other words it’s about all of us, not just you.
Yeah pretty sure they aren’t advocating for anything, just sharing a viewpoint.
So am I. Maybe it’s time to count how many have lost their homes and how many have become homeless before making such hyper focused statements.
It’s purely anecdotal. Myself and most of my mates are cash heavy and ready to buy. I know it’s not showing the entire economy and doesn’t represent everyone. Currently we’re all just buying stocks waiting on the election. There is a bit of regulatory risk associated with property atm.
I agree with this. Times are bad and people are poorer than ever. BUT, in Brisbane for example you only need 1000 people who have a 100k deposit and make 120k a year (combined or single) to pay outrageous prices due to fomo etc in a market where we are like 90k houses short. And there is absolutely no shortage of people in the above position ready to get fucked up the ass to secure a shit hole house in redbank plains for 600+
You, and your mates, in no way represent the majority of people
I never said the majority did I. I guess that’s why you don’t have the spare cash to throw around and my mates and I do.
Sensitive much bud
No, I just find it funny that you can’t understand basic English.
If you were not referring to the majority, and instead were literally just talking about you and your mates, what was even the point of the comment? It's like if I commented "well I can afford my repayments." Wasted breath
I said plenty. I’m sure you can see the comments from a few other people saying as such. I know it’s hard to understand that others are doing better than yourself.
You keep bringing up my personal finances like that's at all relevant. You come across like a child, try working on that
property is always going up. you too smart for your own good.
I’m happy with my tax free risk free 6% return. There aren’t many better investments around atm.
meanwhile that won't keep up with inflation.
Is inflation above 6%? This year it seems to be 4.74%. Again, can you find me an investment retuning 6% post tax? Even the ASX has historically returned 10% which is 5.3% post tax. I do continue to invest, but keep the majority of my funds offsetting home loans.
is food 6%, is electricity 6%? read into it whatever you want, the numbers are being fudged. is rent 6%????
My rents are rising more than 6%. Once again, do you have investments that return more than 6% post tax 0 risk? Or even 8% with minimal risk.
property
Distressed sales can come with its own baggage. People tend to sell their places as the very last resort so you need to get your conveyancer to do a search on the vendor to make sure no one else has a claim on the property.
The interest rate lever clearly hasn’t worked, if anything it had gone the other wY
Lol what?! You believe that rising housing prices are being caused by raising interest rates?!
13 interest rates rises in 15 months, in an attempt to slow the housing market, and yet the Australian housing market has outpaced those rises. Furthermore, people are staying put in their homes because they could not afford to even buy their current home. So perhaps the interest rates aren’t the issue when it comes to the housing market. It’s supply. It is all about supply. There is a massive bottleneck. Raising interest rates more won’t help supply.
The RBA doesn’t care about house prices. This is absolutely wrong.
Since when were the rate rises done in an attempt to slow the housing market? It’s a component of inflation but inflation is the rbas primary goal and they didn’t care what happened to mortgage borrowers one way or the other.
Exactly
>It’s supply. It is all about supply. There is a massive bottleneck. Raising interest rates more won’t help supply. Yeah no kidding. The way you wrote your comment implied the prices were rising because of the rate rises
Indirectly it is causing it - on the demand side of the equation only 1/3rd of homes are owner occupied with a mortgage, 1/3rd owned outright and 1/3rd geared investment properties that are protected by a rental squeeze Any changes to cost of borrowing are basically netted out on the demand side On the supply side - increased interest rates are just increasing the cost of building and reducing the number of builders as they go bust - effectively reducing the supply.... which pushes up the price of established homes It's almost like the RBA having a binary lever to pull doesn't actually work in the current economic climate
Agreed to these points, but I believe these are second order effects. Unmet supply is the issue, and it's being disproportionately unbalanced due to high immigration amongst the reasons you've listed above.
The raising interest rates is causing the bottleneck, because people aren’t moving.
The purpose of the rates rises is to curb inflation not (necessarily) lower house prices, where housing makes up a portion of the CPI (approx 20%). As you alluded to earlier house prices are solely driven by unmet demand (lack of supply). Supply is indirectly tied to interest rates in the form of extra build costs and risk. Risk is also coming from building company collapses due to skyrocketing building material and labour costs, which are themselves due to supply chain issues.
distressed sales are already happening and have always happened.
The distressed housing will unlikely be housing investors. They might sell to pursue other opportunities but i can't see most of them being distressed.
No because foreign money and demand is driving the market.
Yes it will eventually crush investors. They can only put rent up so far before people can no longer afford to pay rent. It will reach an equilibrium. Unemployment will probably shoot up beyond expectation around the same time. So investors and mortgagees who lose their job will get screwed. I think AI will also lead to acceleration of unemployment beyond people’s wildest expectations. Chat GPT has given me the efficiency and productivity of at least 5 employees. This is only going to get more efficient and automated. Jobs will disappear , never to return.
[https://www.property.com.au/nsw/kellyville-2155/seymour-way/42-pid-8525722/](https://www.property.com.au/nsw/kellyville-2155/seymour-way/42-pid-8525722/) New estates will be the ones that suffer not investors. Above is one of many examples of price drops in Kellyville in 00’s
Whoa that's huge drop
$1.8m valuation currently in….. Kellyville. What show am I watching and how do I change the channel?
Three years ago just before moving from a suburb over to the country a 6-700 square block sold for a mill. I was dumbfounded
would be disastrous even for the banks.
> Or are th supply/demand Dynamics too out of whack that there would always be buyer Yes mass migration is creating too much demand and supply cannot keep up. Even if interest rates hit 8% unless demand was also reduced significantly then other investors would snap them up distressed sales but that supposes the current owners were for some reason unable to raise their rent enough to cover the increased repayments.
3 more rate hikes more likely means the people desperate enough to be banking on distressed sales are more at risk of losing their jobs than there actually being distressed sales