Housing slump "worst in decades"

Housing slump "worst in decades"

The housing market is set for its longest downturn in decades, but any policy change to limit negative gearing such as proposed by the federal opposition could make the situation even worse, according to investment bank UBS.

In the past, when house prices weakened, the Reserve Bank could cut interest rates to stimulate demand again, which looked unlikely to happen now, UBS said.

“But ‘this time is different’,” UBS economists George Tharenou, Carlos Cacho and Jim Xu warned in a note to clients.

“Both (regulator) APRA and the RBA are not flagging easing, showing little willingness to reflate housing. Furthermore, the RBA has limited ability to stimulate given they’re already near the ‘lower bound’.”

 

I can't help but love media putting out news like this. Lots of opportunities coming up in the coming years and I can't wait to start buying again!

 

Oh puhlease....its down maybe 3-10% at most.

This is hardly a blip. Im seriously tired of this clickbait BS and as professionals we need to stop feeding the stories.

Next person who posts something like this gets a 90 day ban

 

Now. Now. We thrive on media hyping up markets during boom so we can maximize growth. We should let them have their fun and drive down prices so we can go back in again ...

 

Ditto more hype please

 

I don't know, the data supports what they are saying. In Sydney and Melb at least the downturn is significant, and it's true the RBA has little room to lower rates as they usually have in such cases . In fact, based on Westpac's recent results it's likely rates will go up.

It's a fair call that there is downturn and it's likely going to be deeper than anything we've had recently due to all the headwinds. It is what it is, some good opportunities for those holding cash in in 2019-2020 maybe.

 

But... isn't that what's is always about Berten? A couple of good opportunities on the downturn while waiting for the upside again?

Yes, some will manage to make money in the next few years but most will make their money by managing to pull through opportunities OR actually... by just holding on to property they have already. This coming period is as exciting as watching paint dry may I add, but that's the game.

 

Maybe. Japan are still waiting and watching paint dry, still > -50% since 1991.

 

Highly unlikely that will happen to us as we are growing unlike Japan. By any standards we are very pro immigration. Yes it might fluctuate with political uncertainty like recent event but the long term trend will remain pro immigration.

 

Plenty of areas already down 5-10%. You cant see it dropping any further from now? Not a lot going to keep prices falling further from where they already have.

 

OH puhlease, there is plenty of areas up more than 5-10%. A lot of demand to keep prices from falling. People do need a roof over their head.

 

Plenty of areas up 5 to 10% in Sydney within the last 6 months? I'd be interested in hearing about these areas.

Sydney immigration falling
New builds increasing

People need a roof over their head yes, but the number of roofs available is increasing while the number of people needing those roofs is decreasing.

 

People will keep burying their heads in the sand until they get a rude reality check like a bank valuation or a house sell very cheap in their street. But we need these people - people who think the market is stronger than everybody else thinks it is - otherwise there would be no buyers in a lot of Australian markets right now.

 

But that's exactly what has happened in Perth over the last 10 years. Prices are way down but people just see it a buying opportunity. The world didn't end. It's just business as usual.

 

....or they just have zero interest and no need to sell.

eg all of our rents went up this year just under 2% with us being pretty much break even....its irrelevant as to what the property is worth until I go to sell them in retirement.

But feel free to keep predicting 50% crashes......

 

I don't foresee a 50% reduction in prices...that would be catastrophic...but 20% down on median is almost a certainty.....as we for rents going up it might be short term. Lots of places are now being driven down in rents. See my comments below in response to Graeme's post (a good one by the way)!

What a soft landing might look like

People did not believe me when I told them the market had peaked in 2016. The only reason it kept going post 2015 was that the RBA reduced rates..so an exception. Anyone who bought property in late 2015 to now would be going backwards over the next 3 years or so.

Similar things are happening in the Inner/Middle Melbourne markets.

The next cities to grow would be Sunshine/Brisbane/Gold Coast corridors....

 

LOL, I don't think it is reasonable to compare Japan to Australia. Whilst I always look up to the Japanese with respect to their culture, technology, innovation, discipline and so on, one needs to look closely into the differences between the two countries.

1. Demographics: as of 2015, people who are 65 and above account for 26%+ of the population. It means that more than a quarter of the population already retired and no longer add significant contribution to the society. The natural population increase is only 8.0 per 1,000 population compared to the death rate of 12.0 per 1,000 population resulting in a natural decrease of -2.6% p.a. Australia, on the other hand, took in 200,000 migrants on average in the period of 2012-2017.

JP Bureau Statistics: http://www.stat.go.jp/english/data/handbook/pdf/2016all.pdf

2. Immigration Policies: As few as twenty refugees that the state took in last year compared to the thousand figure of annual Aussie intake, I am a firm believer that Japan has one of the world's most conservative policies when it comes to immigration.

3. Economy: when you live in a great country under a conservative immigration approach where longevity rate more than exceeds fertility rate, it is almost impossible to make a quick recovery from the real estate bubble back in the late 80s when "The Imperial Palace grounds in the center of Tokyo was estimated to be worth more than entire American states, including Florida.".

NYT: Land Price Begins Fall In Japan

 

Housing Slump.

Best opportunities in decades.

You will reap what you focus on.

 

Not yet it ain't.

 

Well the major parties are, as well as other elites such as the media, FIRE sector, Treasury etc. I don't think the general public is (they have to wear the many costs). There is always then the chance of a popular backlash/ cut in immigration.