Are we heading towards a recession

Any views on what a recession looks like & impact on property?

 

Not forgetting US has been on the up for 8+ years and when US does go through a correction it can be very very aggressive.

Late in the US cycle i would not have the courage to go into. But following the next cycle shift I will definitely consider entering the market.

 

Yes
For those who got in early its cashflow and growth play so if market crashes should not be a major issue

 

There is so much negativity in the media at the moment that I think the exact opposite is going to happen.

 

Ok thats good then you should be buying

Good luck

 

Personally i think there are too many uncertainties to be buying atm

 

Ugly result for building approvals. Down over 25% year on year.

Australia building approvals for June -1.2% versus 0.2% estimate

 

Great news for rents

 

not for next few years at least in Sydney,

Oversupply:
32500 new multi-unit dwellings hit Sydney in last 12 months.
Sydney has a pipeline of 194,000 multi-unit dwellings at various stages of development yet to hit market.

Restrictive migration to Syd/mel:
No condition new PR(free to settle anywhere) is now reduced to 18k from 43k, remaining new PRs have to settle in non syd/melb.

https://www.smh.com.au/national/nsw/apartment-oversupply-puts-squeeze-on-rents-20190705-p524cp.html

 

Its strange how not many understand that rents do not continue to rise just cos it a major capital
City.... its all about supply vs demand

 

Would you happen to know how many buildings have cladding issues, need to be torn down and rebuilt?

 

What isn't that I don't understand? If supply slows or reverses then that gives time for demand to absorb. It will take time but it's still good news for owners that have been droppings rents.

 

Yeah but there's 2-3 years until these approvals hit the market and probably another couple of years before demand soaks up the previous excess supply. So yeah it's probably good news for rents in 4-6 years.

 

I had no idea it would take 4-6 years. Wow

 

Ironically the money spent replacing and repairing the crap built in recent years could save the construction industry from a deep deep recession. Sucks for whoever has to pay for it (owners or taxpayer is the big question).

 

There's still a stack of buildings to come on to market over the next couple of years so the oversupply will continue for a long while yet. Dublin went through a similar rental cycle where construction investment fell off a cliff from the start of 2008 and rents have exploded in the last couple of years in response to the under supply. It takes a while though.

 

I was not referring to you?

But I will reply to this.....

Its not good news if its an investor holding property and rents are dropping, it could take years for rents to recover

In the meantime investor must still service debt will be more difficult as the rental yield shrinks

 

Household income goes backwards

The latest Household, Income and Labour Dynamics Australia survey revealed the median household income in 2017 was $80,095, $542 less than 2009 adjusted for inflation.

"The income for someone in the middle has basically remained unchanged since 2012," report co-author Professor Roger Wilkins said.

 

In the just-completed financial year there were a net 56,357 house sales across the country. It was the lowest annual number in records that go back to the 1991 recession. In NSW, house sales fell to 10,220, a 15 per cent drop from 2017-18 and a fresh record low.

 

What does that number mean? People are staying in their homes longer?

We bought our current home 31 years ago in 1988 (3 years before they started recording this number).

We have been through property booms and busts, economic upturns and recessions including the GFC, high and low interest rates, flexible and tight lending policies, multiple changes of government at all three levels, ...

The only reason we haven’t sold is that we LOVE our home.