When Australian House Prices Will Crash!
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- Опубліковано 11 вер 2024
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Back in the day, when I purchased my first home to live-in; that was Perth in the early 1990s, first mortgages with rates of 8 to 9% and 9% to 10% were typical. People will have to accept the possibility that we won't ever return to 3%. If sellers must sell, home prices will have to decline, and lower evaluations will follow. Pretty sure I'm not alone in my chain of thoughts.
If anything, it'll get worse. Very soon, affordable housing will no longer be affordable. So anything anyone want to do, I will advise they do it now because the prices today will look like dips tomorrow. Until the Fed clamps down even further, I think we're going to see hysteria due to rampant inflation. You can't halfway rip the band-aid off.
Home prices will come down eventually, but for now; its best to offset some of your real estate investments and get into the financial markets or gold. The new mortgage rates are crazy, add to that the recession and the fact that mortgage guidelines are getting more difficult. Home prices will need to fall by a minimum of 40% (more like 50%) before the market normalizes. If you are in cross roads or need sincere advise on the best moves to take now its best you seek an independent advisor who knows about the financial markets.
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Clickbait title
Thanks for watching
I can't stand clickbait titles where the content is the exact opposite. However, I got well informed through the comment section so it worked out for the best for me anyway.
It's a shame you live in a world where people are more concerned about selling stuff to people instead of caring about people.
I disagree with much of what you said. Australia's economy is literally one of the least diverse in the world for a start - we do not have great "economic fundamentals" at all. The largest sector of growth in the Australian economy is the ever expanding, bloated public service while our private sector languishes and withers away. We also do not have competent or "effective" government at any level and the RBA has made catastrophic bungle after catastrophic bungle - their predictions are usually wildly wrong. Lastly, our banking system is a joke and is massively overexposed to property in that that's the only kind of lending they really do. Our banks do minimal lending to business start-ups and expansions etc because all they care about is riding the property bubble to safe, record profits year after year. Australian mortgage holders hold the highest levels of debt in the developed world which does not equate to your position of Aussie banks being "well regulated".
You're a mortgage broker so you have a clear agenda in trying to convince people that Aussie property is different and can only ever go up in price. The house of cards Australian economy and the monstrous housing bubble it's built on is a disaster waiting to happen. Nothing goes up forever mate. All speculative financial bubbles burst eventually.
Wont decline if they keep letting in millions of the wrong sorts 🤣
Very well put and agree with what you've said here. We have housing, public servants and dirt - that's about the extent of our economy. One thing you did forget to mention is bringing in a heap of foreign students who can't speak English and giving them worthless degrees. Given this, I can't comprehend why we have the most expensive housing the world!
100%, the Australian economy is not diversified compared to other OECD countries, with some analyst even calling it a banana republic relying most of it GDP in shipping raw mining resources
Ummm... disagree with most of what u said, Australia economy is definitely not robust, per capita GDP has been for negative for quite a while now. And it's only gonna get worse. Australia property market will go up forever , it will never drop. No speculative asset bubbles go up forever. They all burst at some point, it's just a question of when. The first ones to sell at the beginning of the crash will do well, the rest, esp those who bought at the peak, will take a hard hit. Look at what happened to Japan, China, Ireland, and now Canada- now beginning to drop
When Australia's property bubble impresses, it'll be epic. For now, they're keeping it afloat with insane immigration numbers. Let's also not forget the indirect bailouts during the pandemic.
A lot can go wrong for Australia, as we have all our eggs in only a few baskets. The Iron ore sector is about to implode due to China having their own major mines going online in 2025.. which will tank prices.
Australia is heavily exposed to interest rate hikes which are largely dictated by global economy. Inflation in food etc, which we have seen, comes in waves. We've had the first major wave.. people are stretched on every level.
My cousin has an income of 130,000 and is struggling with this mortgage. He's strongly considering downsizing. The canaries in the coal mine are choking, the young are giving up on housing and having their own families.. I see absolute garbage houses in Adelaide going for 1.2 million.. these are yellow brick, ugly houses in bad suburbs.
The simple fact is that when houses to income are at 9x on average, you're at the end of a bubble.. not the beginning. It can't be maintained. Also, the system of debt that we have relies on continued expansion of debt... Without such, it doesn't remain stable.. it implodes.
When the point comes when people can no longer borrow because they're completely tapped out.. that's not when prices flatline.. that's when the market collapses.
politicians want house prices to continue rising and they know they can force it to happen by keeping immigration higher than housing construction.
thats something a lot of people don't understand, it doesn't matter how many houses we build because immigration will always be adjusted to compensate.
if we cut all the barriers to housing construction and double the amount of houses we build each year, politicians will just increase immigration and we'll be right back where we started.
politicians choose what they want house prices/rent to be, and they make it happen. the ONLY way housing supply and housing affordability can be "fixed" is by tying migrant intake to housing avaliability so that politicians can't use immigration to interfere with the housing market like they have been for the last 30 years.
there is something truly horrifying about hearing "our government is doing everything it can to ease cost of living pressure" when they're 100% responsible for the current housing crisis.
Thanks for sharing your perspective!
No there is no shortage at all, the supply was much more from 2013 until 2020. The problem is from speculation. Canada and Australia escape 2008 correction but they will not escape 2024/2025 correction. New immigrants and new generations will not work hard to give old generations easy money.
It’s true that many factors influence the housing market - and speculation is a part of those factors. However, it is a really really small part of the factors. On a national level, we are facing a severe shortage of houses which is why rentals and house prices are going up despite the interest rate hikes.
Ah yeh ... nah! Here's a little economics 101. When you bring in 500 000 people in a year and build less than 200 000 dwellings, that is what us sophisticated types call a deficit. You can do this on a calculator if you like.
The problem is that developers loooooove regulation. It makes it much harder to build a home. My Italian uncle came out in his 20s. With poor English, and in a foreign land, he built his own home and it was one of the nicest homes I've been in. He was a spray painter by trade. Now you tell me. What's the chances of that happening today?
Answer- NEVER..
As long as banks are allowed to lend against unearned and untaxed paper equity/capital gains, perpetual growth will continue
I think it will go sideways for several years with some distressed sales.The government will adjust immagration and interest rates to stop prices from falling too far.This is what has happened in the last 2 recessions anyway.
Yes quite right. At worst we may experience a slight correction but not a major 'crash' in the strictest sense of the word.
politicians never let this happen. The economy is designed to have inflation in properties (specially houses)
thanks for your comment! That's another interesting angle right there!
No idea...our lending practices are appalling, which the banking royal commission demonstrated. This has not improved. APRA are utterly worthless.
Part of the growth in property prices is due to net migration outpacing builds but this is more recently responsible for price growth. Rhe major factor over the last 30 years has been monetary easing that saw mortgage rates reduce from 18% in the early 90s, to close to zero in 2021 - money became virtually free to borrow, so people's ability to pay sky-rocketed.
You're too young to have lived through anything but this boom cycle over the last 20 years when money became "easy"..
Other factors include full employment, and foreign investment, particularly Chinese who have bought large volumes of Australian property creating superficial demand. We've also had massive trade surpluses, meaning vast quantities of money have flowed into the country via the resources sector supporting Chinese urbanisation and growth.
It's been a perfect storm of tailwinds, and no it's not sustainable.we are seeing the impacts now of over leveraged we are o py at the beginning of a deleveraging cycle.
The Chinese economy is falling apart, our governments are deeply in deficit now, and the cost of living crisis has caused discretionary spending to fall off a cliff. Our economy will suffer over the coming decade, we will likely continue to see inflationary pressures, and unemployment is likely to rise.
The party is close to over..
Think Japan 1990 -2020.. the lost decades..
Probably never unfortunately.. Australian property has so many influencial supporters eg. the banks, the government, big developers etc etc that's it will never fall to any great extent..maybe 5 to 10% at maximum.. And the squeels are heard long and loudly until government steps in to correct it..
Thanks for your comment! You raise some valid points right there about the strong support system surrounding the housing market, including banks and government policies. It’s true that these factors can create a resilient market, making significant downturns less likely.
I purchased my house and land package in Perth July last year for my first home. It's just been finished and final valuation came in at 46% more than what I paid for it. Absolutely shocking. Good for me but....not good overall.
That is insane!!!!
Wow, that’s quite a jump in valuation! It’s great to hear that your investment has appreciated so significantly in such a short time. I absolutely totally understand your mixed feelings. Rapid increases in property values can be a double-edged sword…
Total clickbait title then you say the opposite....house prices will crash....no they wont.
Australia is visibly going downhill, and is becoming less and less friendly to the ordinary middle class. Housing prices and living costs are extremely high, similar to those in Northern Europe. Domestic garbage is only collected once a week, and there are no decent industries except mining. With the influx of immigrants, the workplace is becoming more and more competitive, and it is normal for hundreds of people to compete for positions without special skills. Infrastructure is even more messed up, and there is no subway in the Olympic City.
Thank you for sharing your thoughts! Ya, many Australians are feeling the pressure from rising housing prices and living costs.
Drivers for increased house prices are immigration and house shortages...
Unemployment (peoples ability to pay their mortgage and not lose their homes) is the massive risk to our property market.
Prob fact check your comments on a diverse economy... We have one of the most uncomplicated economies fully reliant on mining and then gass exports... The rest is service related and or indirectly depended on mining so our economy is depended on global demand and growth as this effects commodity prices.
Unemployment is reliant on the credit cycle / CBA fund rate. Simply saying unemployment is not a risk because it is low suggests to my you need to look at these cycles and historic connections between the two.
My suggestion is you look into this so you are open to the drivers to look out for leading to changes in the market...
Immigration has been cut.
The only reason prices have risen the extent they have is due to a 35 year decline in interest rates to effectively zero. As interest rates dropped, people could afford to borrow more therefore increasing credit demand which flows into asset prices. Interest rates cycle last approx 35-40 years. Well we are now on the change from lowering to rising interest rate period. Good look keep the bubble going with rising interest rates.
Hey there! You’ve touched on a crucial point about the relationship between interest rates and property prices. While rising rates can create challenges for buyers and potentially cool the market, it’s worth noting that other factors-like population growth, demand for housing, and ongoing infrastructure developments-also play crucial roles in shaping property values.
Money is not meant to control people, rather it is meant to be put to work producing more money for you. You cannot build wealth without putting money in its rightful place...
I feel sympathy for our country, low income people are now suffering to survive yet inflation and recession keep increasing daily, many families can't even enhance the good cost of living anymore. You've helped me a lot Sir Brian! Imagine I invested $50,000 and received $190,500 after 14 days
Very possible! especially at this moment. Profits can be made in many different ways, but such intricate transactions should only be handled by seasoned market professionals.
Some persons think inves'tin is all about buying stocks; I think going into the stock market without a good experience is a big risk, that's why I'm lucky to have seen someone like mr Brian C Nelson.
Finding yourself a good broker is as same as finding a good wife, which you go less stress, you get just enough with so much little effort at things
Brian demonstrates an excellent understanding of market trends, making well informed decisions that leads to consistent profit
Given QE is going to happen again in the USA, and Interest rates will likely fall by the end of this year. Asset prices will most likely keep climbing.
True! it doesn't look like there is going to be a crash anytime soon!
Nah...the world is growing. Materials arecmore scarce. And gvt supports the market
Thanks for your comment! Yea there are many factors that will keep the housing market from crashing.
Haha, never! Politicians will never allow it!
It's already falling
@@leonie563 I meant they will never allow a crash. It started falling a few years back when interest rates started to increase (just after the COVID near zero rates boom), but then politicians ran an immigration intake program on steroids to cause another boom. Each politician owns several properties so it is unlikely they will allow their personal wealth to crash. While there can be slight dips, politicians will never allow a large crash. Either RBA will lower rates, APRA will reduce the interest buffer for mortgage assessment, or politicians will increase demand for property via various grants/schemes, immigration or really anything else. It might only change once younger politicians and bureaucrats who own less properties become a majority (whenever that is).
Salaries have not increased, people can't borrow even if interest rates drop slightly and furthermore immigration is at record levels, 1/3 of people in Australia currently aren't burn here.
What will Australia be in a decade? Probably not Australia.
I remembered 6-12mth AGO you were encouraging people to BUY, now you are predicting a Crash, what?
My idea:
A) Buy if it i your first home to live in and have a steady job with the capacity to repay the mortgage. And also preferably if unable to pay the mortgage you can get help from family members to tie you over difficult times.
B) Don't Buy if you are investing and cash up to buy at a later date.
While I have to say, I almost always agree with you supposition with regards to many aspects of the Australian economy, to describe Australia as having "robust economic foundations" couldn't be further from the truth. Our economy has continued to narrow for decades. Along with it, so has our productivity, the proof of which is in nearly two decades of falling per capita GDP.
The only thing mitigated the fallout of the last two major economic downturns was excessive government spending accompanied by excessive levels of public sector debt.
And the only growth in Australia's economy has been driven by housing and immigration for the best part of three decades.
Mining and agriculture are tiny employers. Collectively they employ fewer people than the building industry! In the case of mining, most of the profits from digging up Australia's resources
go into the hands of multinational companies with Australia receiving peanuts due to the inherently useless or corrupt governments that we've grown to accept as normal.
Manufacturing is a shadow of its former self, employing less than half the people that it did when Howard came to power, just 28 years ago. That's even worse than it sounds when you factor in that immigration has increased Australia's population by just shy of 50% or nearly 8.5 million people, in the same time.
Yes, we have education, thanks to privatising our tertiary education sector. Yes, we have a healthy banking sector.
But don't kid yourself, Australia's economy is still a Ponzi scheme reliant on holes, houses and unbridled immigration. I wish I was a kid again. At least then, all we had to worry about was the global oil crisis and despite that, the economy and our real standard of living was higher than it is today.
Due to corruption. Also fake news in media keeping house prices going up
Sorry mate, I think your graphs are zoomed in enough to support the narrative. Real (inflation adjusted) growth on houses over history trends to inflation, as it is tied to peoples wages ultimately. let's do the maths on your projected 30 year growth at 3.1% real (inflation-adjusted) growth in house prices. So I am 32, what will a house be worth in real terms when I am 62 (in another 30 years) = $2,498,964. which is 26 times the real average wage for an Australian household. And when my son is 60 (another 30 years) = $6,244,820 in real (inflation adjusted) terms. I speculate this will not be the case.
Think of this - decades ago people would have laughed if you told them the levels that real estate would be at today, they would have said that's impossible, there's no way real estate could get that unaffordable and yet here we are. We might look back in a few decades and say wow I can't believe how cheap real estate was in 2024. Crazy.
@@jezg084except that there are decades, even centuries of data on house price to income ratios in different places. The level australia and some contemporaries are at now are already many standard deviations above the level where reversion to the mean occurs. It isnt mathematically possible for it to continue the same trajectory, unless incomes markedly rise. In order to have certain prices, you need renters to be able to afford the rent costs, which impacts the yield of investors. If wages arent commensurate with this, it can only last for a brief time. Youre right that people from 1990 would see our prices as insane, but going from a 3 price to income ratio to 11 is different than 11 to 40. 40 isnt possible because that would require renters pay more than their income.
Furthermore, 1980 to now allowed for such growth due to a while range of cyclical factors like lowering rates over 40 years, unsustainably increading debt levels and the rise of cheap labor in places like china. We now have the opposite macro.
I can guarantee, house prices will only be 4 million in 30 years if our incomes are 400 grand a year, but its likely at least for the next decade, real house price growth will be stagnant at best.
Omg i love you, thank you for explaining this so well
Thanks for watching!
The govs keep moving EVERYONE to Sydney or Melbourne, so ...
hahahaha, true Sydney and Melbourne are literally bursting at the seams right now
LOL
Starting to see more on the market and a stabilisation in qld.
True! Queensland is currently at its peak and the market is starting to cool down and stabilise.
I have been here since 1989, hearing "It's gonna/gotta crash, and here it is 2024 ... will the doom finally surface? What was that phrase: "What goes up ..." We will see.
I guess when it comes to property its "what goes up - kinda stays up" 🙃. Those who buy property without waiting for the 'doon' actually find themselves better off financially than those who wait
Its going to crash.... only those making money out of this in one way or another will try to convince people it wont
It will never gonna happen 😅
Just like you writing the English language...It's never going to happen?
True 😀
Noob
Negative gearing and the price of property in Australia correlate.
Hey, thanks for chiming in!
You're absolutely right, negative gearing does indeed allow investors to claim rental property expenses, including interest on the loan, as tax deductions, which can offset their taxable income. This makes property ownership attractive and can definitely put some upward pressure on prices
LOL won't happen!!!