Credit Availability IS Australia’s House Prices

Discussion in 'Property Market Economics' started by Nodrog, 25th Jun, 2018.

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  1. Graeme

    Graeme Well-Known Member

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  2. Herbert

    Herbert Well-Known Member

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    Actually it is not really a global problem, there are some countries with a genuine housing problem, but they are not actually the norm.

    As far as Australia is concerned, unfortunately one of the most egregious examples. The main difference with practically the whole of the rest of the world is negative gearing. And yes you may argue that there is some sort of good economic reasons to differ from a thousand years of history,
    but if everyone is using VHS, why would you go betamax?

    Suddenly, as a good earner from Macquarie Bank, with a decent tax bill to ameliorate, it suddenly does not really matter what I pay for this Paramatta Unit, it is a tax offset which is bound to pay off, because in a ponzi scheme prices can only go up, (way ahead of inflation........just like wages really)
     
  3. hobartchic

    hobartchic Well-Known Member

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    Negative gearing has just encouraged speculative behaviour. Ultimately, cheap credit has been the driver of the Australian real estate market. Easy access to Interest Only credit for Property Investment is a big part of that.
     
  4. jprops

    jprops Well-Known Member

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    Looking at the business he has built, I'm sure it's not for a lack of ability.
     
  5. Perthguy

    Perthguy Well-Known Member

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    That's simply not factual. Old article and misses the point, but:

    Australia is not alone in its housing affordability crisis.

    A global snapshot shows many governments are confronting booming property prices, putting pressure on low to moderate income earners.

    Affordable homes? Try the law of the land, Texas style

    The United Nations housing envoy, Leilani Farha has prepared paper on housing commoditisation for the UN human rights council. This paper outlines that housing affordability is very much an international problem.

    Today, Farha, the UN’s special rapporteur for housing, presents a paper on housing commoditisation to the UN human rights council in Geneva. It sets out how unregulated global capital has in recent years not only distorted housing markets all over the world – turbo-boosting prices and rents to a level that excludes and expels poor and middle-income families from so-called prime locations – but has also created housing precariousness on an unprecedented scale.

    There are hundreds of trillions of dollars invested in residential property worldwide, the paper estimates. The effect has been to accentuate housing need: displacing poor residents (often through forced eviction), driving up wealth inequality, and creating social dead zones in the once-beating hearts of cities.

    There are hundreds of trillions of dollars invested in residential property worldwide, the paper estimates. The effect has been to accentuate housing need: displacing poor residents (often through forced eviction), driving up wealth inequality, and creating social dead zones in the once-beating hearts of cities.

    OHCHR | Ms. Leilani Farha - Special Rapporteur on adequate housing

    Rents continue to rise across the UK and in London

    ‘Housing should be seen as a human right. Not a commodity’ | Patrick Butler

    I won't go on. Suffice to say there is abundant evidence that housing affordability is a global problem.
     
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  6. Perthguy

    Perthguy Well-Known Member

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    Perth has negative gearing, cheap credit and interest only loans. Overall, prices are lower than 11 years ago. I wonder why? ;)
     
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  7. hobartchic

    hobartchic Well-Known Member

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    Well...even with cheap credit people need jobs to keep things going. Same with negative gearing. Also, speculative buying always ends...like a gold rush.
     
  8. Perthguy

    Perthguy Well-Known Member

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    Well, credit is being tightened and becoming less available. It will be easy to test if "credit availability IS Australia's house price".

    If the statement is true then Perth prices will continue to ease over the next couple of years.

    If Perth prices do not continue to drop then the statement is not true.

    I am voting for option 2 ;)
     
  9. hobartchic

    hobartchic Well-Known Member

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    Who said I'm talking about Perth? Though I do expect the prices there to moderate, and then continue to drop in older housing stock. Newer, well built stock, may do well.
     
  10. Perthguy

    Perthguy Well-Known Member

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    I wasn't addressing your post or I would have quoted you. There are plenty of posters claiming house prices are purely driven by easy credit. Take away the credit and house prices will crash. Time will tell who is right and who doesn't understand the property market.
     
  11. MWI

    MWI Well-Known Member

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    Long time ago I heard at a seminar a question?
    'Who controls affordability?' The answer, 'The Banks!'. Hence any credit squeeze has some consequences, but at least here we have around 70-65% owner to 30-35% investor ratio, so even if all investors needed to sell, we as owners need to live somewhere and have a roof over our heads, hence not ALL properties would sell....?

    Is your property the breadwinner of the family? – realestate.com.au

    So how do we justify Tamarama of $6million median price for around $90K income? Or other many suburbs for that matter....?
     
    Last edited: 3rd Jul, 2018
  12. Perthguy

    Perthguy Well-Known Member

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    Fear and greed, the true drivers of any market.
     
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  13. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    I dont think anyone does.

    Some would say its akin to a min wage earner in the US being able to afford a decent Apartment in NYC.

    Those that have the money can buy the places - generally without or little borrowing, supply demand scenario there I would say

    ta
    rolf
     
  14. Marcus Yuuu

    Marcus Yuuu Well-Known Member

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    didnt no more wage growth until recently?
     
  15. Perthguy

    Perthguy Well-Known Member

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    Prices peaked in 2007 in many areas. Prices in some areas are now lower than 2007. Wages have not been stagnant for 11 years.

    The median wage in Perth is not low compared to the median house price. Lack of wage growth does not explain Perth property prices.

    The Perth market was seriously declining by 2016, with the Sydney market experiencing boom conditions.

    Average Full Time Ordinary Time Earnings Q2 2016

    New South Wales $80,132
    Western Australia $88,327

    Average Salary Australia

    It's not wages.
     
    Last edited: 3rd Jul, 2018
  16. Perthguy

    Perthguy Well-Known Member

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    That's not correct for a willing sale. What is happening in Perth is if a willing seller can't get the price they want, they are taking the property off the market. That's a price floor right there mate.
     

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