House prices fall at fastest rate in 35 years

Discussion in 'Property Market Economics' started by Pete Arendt, 8th Jan, 2019.

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  1. Phar Lap

    Phar Lap Well-Known Member

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    Inflation will always do the trick.

    Does anyone think the mint will be producing 1c & 2c coins again?
    Who thinks that 5c and indeed 10c coins are here to stay ?
     
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  2. John_BridgeToBricks

    John_BridgeToBricks Buyer's Agent Business Member

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    I have often thought that the real estate obsession is an Anglo sphere thing: USA, UK, HK, Australia, Canada, Singapore.... Could be a cultural element.
     
  3. willister

    willister Well-Known Member

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    Before the bust cycle in mid/late 2018 there was a small market for properties beyond say 1.5mil anway,
     
  4. willister

    willister Well-Known Member

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    Nah I always thought it was more a Chinese obsession, which is quite sad really.

    High property prices = low quality of life in most inflated cities, you just work to pay off something that is inflated.

    Look at Hong Kong. Sure prices are very very high something like 80m2 apartments go for well over 800K AUD but the quality of life and pressures of life is very very bad.

    Yeah for a museum or two.

    5c will go, 10c will need to go but probably stay until 2025 is my best guess. Ideally I'd say 50c will be the lowest denomination.

    Back when was a kid in the late 80s and early 90s you could actually buy decent lollies with 1 and 2c coins.
     
    Last edited: 8th Jan, 2019
  5. John_BridgeToBricks

    John_BridgeToBricks Buyer's Agent Business Member

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    Chinese culture, Anglo Saxon contracts/legal system perhaps.
     
  6. willister

    willister Well-Known Member

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    Yep. Probably if anything the UK based legal system is what all these countries/places have in common too.

    The Chinese culture is very deeply ingrained in thinking and protecting for generations, hence the obsession with asset hoarding.

    Hong Kong was probably the epicentre of where it all started. If you go to places like Taiwan, also in the Sinosphere but not based on a UK legal system, prices aren't so ridiculous.
     
  7. JohnPropChat

    JohnPropChat Well-Known Member

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    Maybe it's finally time for Australia to do what US is doing. 10% yields with very little CG.
     
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  8. Pete Arendt

    Pete Arendt Well-Known Member

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    Would be good for retirees. I see so many entering retirement still losing money though negative gearing because the property was overvalued, is funded by excessive debt, and the house is not divisible. They can't just sell off a bedroom when they need some cash/pension. It's like a nightmare.
     
  9. kierank

    kierank Well-Known Member

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    Really bad for retirees!!!

    I would rather heaps of CG but yields to stay the same in %age terms!!!
     
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  10. JohnPropChat

    JohnPropChat Well-Known Member

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    I will take heaps of CG any day but growth is always a combination of CG + Yield (if CF+). 10%+ yields will quickly pay off the property and then some.
     
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  11. kierank

    kierank Well-Known Member

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    Nah, I love NG with the opportunity to go CF+ down the track, after I run up some tax losses (before BS gets in and changes the rules!!!.)
     
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  12. Pete Arendt

    Pete Arendt Well-Known Member

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    For 10% yield, property prices will need to half. Think of how quickly you would be able to pay of an IP if yields were 10% and you only needed to borrow half as much!!! You wouldn't need NG.
     
  13. TheSackedWiggle

    TheSackedWiggle Well-Known Member

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    Cheeky??
    but sydney house prices are already down more then 12% from its peak,
    and its not even half time to 2021 (by when the multiple parallel headwinds come to pass)

    Sydney House price Dec18 update
    Peak CoreLogic Index = 182 (Oct 17)
    CL Sydney house price Index = 159.97
    (from 163 last month)
    Fall from peak = 12.1%
    i.e. Sydney houses have so far lost 22% of its total peak gain from 2012

    Monthly rate of fall increased to an all time high of 1.7%,


    very many suburbs are close to 15% and few over 20%

    [​IMG]


    25% fall from peak for sydney is no longer a doomsday scenario but quite likely case by mid 2020 followed by stagnation for many more years,
    I would be surprised if we cross 2016/17 peak even by 2025.
     
    Last edited: 8th Jan, 2019
  14. Bill Williamson

    Bill Williamson Well-Known Member

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    The annualized 15% figure will probably turn out to be worse by years end.
     
  15. John_BridgeToBricks

    John_BridgeToBricks Buyer's Agent Business Member

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    We already have an annual figure (of about -10%) and from the peak -12.1% as you say.

    It is cheeky because extrapolating 1 quarter into 4 is done to make the situation seem worse and to sensationalise the beginning of the article.

    Unnecessary also because yes, we will get to -15% anyway, (but it hasn't happened yet, and despite it being a consensus view it is still speculation). He should have used actual figures - they are bad enough.
     
  16. Angel

    Angel Well-Known Member Premium Member

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    That would be terrible for everyone who already owns a property. I cant see the govt selling the idea to the 69% of the population who already own their home. Would we agree to drop its value tomorrow but still pay the same mortgage to the bank? Seriously?
     
    Last edited: 8th Jan, 2019
  17. willister

    willister Well-Known Member

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    Well, it boils down to:

    1. Loss for current crop of house owners OR
    2. Future gens paying price of being not able to afford a house

    In Vancouver they pretty much went for 1.
     
  18. Pete Arendt

    Pete Arendt Well-Known Member

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    If you look at current data, the falls are accelerating. There is none of this fast or slow or quarters of positive growth.

    I don't think it is a bad compromise to annualise the last quarter when falls are still accelerating.

    They could have used figures from the month of December! Sydney was down 1.8%, Melbourne 1.5%. Yes, in a single month! As the title of this thread says, prices are falling at the fastest rate in 35 years.

    That is an annualised fall of 21.6% for Sydney and 18% for Melbourne.
     
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  19. John_BridgeToBricks

    John_BridgeToBricks Buyer's Agent Business Member

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    Thanks Pete, I don't think you are intending to prove my point regarding the inappropriateness of annualisating selected short periods of time.

    Let's agree the price falls over the last year in Sydney have been significant.
     
  20. Pete Arendt

    Pete Arendt Well-Known Member

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    John, you are right. The changes have been so significant that anything older than 3 months data is old, and meaningless.