End of long term bull market 2022 AMP predictions Dr Oliver

Three reasons why the long-term bull market in Australian house prices may be getting close to the end | AMP Capital

Came across this article.
It raises some interesting points that makes sense but does everyone think this is how it will play out?
My thoughts are highly sought after areas won’t fall by much however may remain stagnant like during majority 2020. Sentiment was poor but prices remained stable due to high % owner occupiers.

Curious of others thoughts though!

 

As the experience during covid shows, what ‘makes sense’ at a certain time doesnt help with predicting the future.

for those who are holding, it doesnt matter how it plays out other than outliers like a long term meltdown.

 

A lot of what happens in the 20s is dependant upon levels of immigration. This is increasingly becoming a political issue so it's difficult to gauge how the public will perceive the taps being turned on in 2022 or 2023.

I'm also curious about the types of housing stock that is spoken about in the article. I'm under the assumption they are inner and middle ring apartments and new builds in outer suburbs. I think going forward, existing houses in inner and middle ring suburbs will still prove to be desirable for many, most notably the aspirational.

 

I took it as they were referring to properties that are considered blue chip due to proximity to the beach and CBD were no longer ‘as’ desirable post COVID versus pre COVID and therefore people are more inclined to take a compromise on location for a better price i.e. moving to the outer suburbs and saving on costs. As stated in the article, because work is not as dependable on your physical presence in the CBD, its less off a trade off being further away post than pre COVID.
I reckon that is true but I’m not sure if there is sufficient volume of such people to trigger a price drop in such established suburbs.

 

I also wonder about the volume. I'm observing people closest to me and their current habits and beliefs. What I'm seeing is those in their mid to late 30s with young children or about to start a family, still trying to be as close to the 'action' as possible but with the biggest possible land/house (within reason) possible. I think middle ring homes are in for some good times.

 

This is what he said in August last year:

Dr Shane Oliver says average property prices rose by 10.3% between June 2019 and April 2020, but that the property cycle has now “well and truly turned back down again.”

“I expect further falls ahead as high unemployment, the depressed rental market and the collapse in immigration take their toll,” Dr Oliver says.​

The twilight zone: Australian house prices falling but worse to come

At the same time, I was predicting that a golden era was coming.

Who was right? And I have no idea .

I have a lot of respect for Shane Oliver but I will make another prediction:- I predict that more predictions will be wrong this year, just like last year, the year before that, ...

I read predictions like jokes; they are good for a laugh .

 

No one can predict the future.

smart people try to.
Dumb people just buy and hold and hope.
Funnily enough....

 

... and wait.

That’s me

 

Yeah I know, there was a few other articles where he called for a significant correction due to COVID which never eventuated either.
Not saying what he says should be taken as gospel, but he makes a few interesting points and I like to see other opinions on how those factors would actually play out.

 

After analysing Shane Oliver's research I'd advise the following:

Find a way to contact Dr Emmett Brown or Marty McFly and then buy this: From the Classifieds: 1981 DMC DeLorean

Go back to 1947. Buy as many houses as you can in Sydney and Melbourne. Sell everything in ~1950. Invest the proceeds in GEICO.

 

Very interesting chart. Do you have anything more current? Between 2017 - 2019, property prices dropped about 15%, so curious to see if there was any damage to the trend line above during this time.

 

Hey @John_BridgeToBricks.
Sorry but I can't offer anything more current. The chart is from the Shane Oliver article linked by the OP. Yes, the 2017-2019 data extrapolated to 2021 would be very interesting considering the falls and then spikes in prices in many Aus real estate markets in the past year or so.

 

If we had a time machine we could be very very rich.

I'll get onto it in the morning after breakfast. Just got to find grandpa's pocket watch if it hasn't already been hocked.

 

According to that chart, real house prices didn't grow for about 30 years, from late 60's to late 90's. A lot of inflation I assume.

Not sure I understand the chart actually. It says real, meaning inflation adjusted. So in today's dollars, house prices were $100k? Interesting. I'm sure it's very a hypothetical exercise to try and inflation-adjust your way back 100 years though.

 

Not even sure how to read inflation adjusted numbers.
Inflation reduces the real return of assets, but reduces the real value of loans too.
Inflation is based on a basket of goods, but that basket changes and is different for each item. Shoes are falling in real terms, while fresh food and energy are probably rising faster than inflation. 'Prices' for anything simply aren't the same now as they were in 1926.

 

He cant even take care of AMP with his predictions.

 

When you say middle ring, you mean 15 km-20 km from cbd

 

Plus, CPI is a useless measure of inflation and understates it - deliberately so. The definition of inflation changed a few times in the 80's and 90's, so it begs the question - which inflation methodology are we using to adjust these nominal returns.

I always work on the assumption that inflation is much higher than is being reported, and that inflation understates inflation so that central banks can keep interest rates low.

 

It's all over. I read it here.

Australia's property boom is beginning to slow - MacroBusiness

Rolling 4 week window. Next it will be a rolling 5 day window from a Sunday to a Friday.

 

I think it's fair to say that the rate of growth is declining.

After the APRA regulations, the market was like a beach ball being held under the water, and it has since sprung up to reflect it's fair value (in light of where interest rates are).

Growth won't always be at a rate of 3.4% per month as it was in March, nor even 2% as is likely in April. It will go back to 0.5% growth per month, which is still a doubling every 10 years, and no where near bear market territory.

So when we say "the boom is beginning to slow" - that is just a slowdown in the the speed/velocity of the increases. It really isn't that provocative a headline,