Inflation - is anyone noticing it?

At this point in time, I think you are right. However, interest rates can not stay at this level, and QE means that inflation will come, rents will go up etc. My belief is that the yields across all asset types will improve. Maybe not back to where they were 20 years ago, heck maybe not even 10 years ago, but slowly things will start to trend upwards a little.

 

Low yields won’t be a forever thing in my opinion, in 3 or 5 years when we have a sizable correction across all asset classes the yields will return to circa 5%
Probably spurred on by rate rises

 

Yields only go up when demand is stronger than supply and if there is oversupply rents actually fall. I think when this market finally tanks we will see an oversupply in some markets???? Just my opinion and I could be wrong

 

Why not and for how long?
The current macro financial trend does'nt seem to be reversing and no gov looks like even thinking about reversing it.

 

I am currently building and prices of timber, steel just keep rising. Scary stuff

 

.... and now low doc providers are fighting for business and opening their doors

interesting times

 

Inflation is definitely taking place right now, it's just how the machine works. What I have been thinking about and honestly not sure how to answer - if you are hedging against inflation with property... is it better to get into the market now, when the rates are lower, and you can borrow more with less, but conversely supply is lower and prices are higher. Or is it better to be getting in when rates are higher, your dollar won't go as far but it's worth more, and supply is higher + demand is lower... but by that point the raised property prices will have probably stuck.

 

We have gone to market with 2 price rises in 3 months, our customers and other industries are struggling with raw materials in many area's including 2-3 price rises and not thought to slowing down.

3 main raw material plants globally have shut down, the storms and fires in Texas have really caused an issue globally, Freight has near doubled in some cases, container space is limited and at a premium, Timber, steel, Aluminium, all experiencing shortages and are months out in some cases.

Labour is the other issue, im hearing it every day that no one can get staff, no one wants to work. Show up for half a day and clip the ticket then go back to the benefits for 6 weeks.

There's a real shortage of good productive people, and we may see alot of poaching shortly. Hopefully this addresses some of the wage growth issue's because business are killing it and making profit hand over fist in many sectors. And with prices going up, and wages not. its getting harder and harder.

Its going to be a very interesting next 12-24 months IMO, i cant see prices stagnating they will just keep moving based on supply/demand, and i see property following suit. Boom like no other

 

I have locked in prices with my builder

The larger builders are stinging with 5% increases

This will only push end values up

Interesting times for sure

BTW. My next project is going to be a cottage in inner Melb, renovate/extend. Should be fun

I hope I can source trades/labour

 

What suburb?
This is what I do for a living, very different beast to multi unit dev and new home builds

 

For build???

 

For inner city cottage

 

sure

inner city north
Northcote, Thornbury, Clifton Hill, Brunswick.

wondering about Preston, some value here and perhaps development? But with Labor tax changes, not sure I could be bothered. Also your process can be a nightmare if we end up at VCAT???

 

CPI is a consumer basket of costs and doesnt reflect a true cost of living for each consumer. eg It may have assumed rents had fallen when a consumer may not have experienced a rent reduction or be paying a loan and hasnt changed home so their personal costs are unchanged. Approx 1/6th of CPI is housing with is partly average rents and also housing costs. Steel etc likely has a trivial impact on cost of living since the amount of timber and steel puchased will be trivial from a consumer perspective. Instead it is a cost of input to other things. Like new housing.

Consumer purchases are under cost pressure to rise for sure. Its just what has declined ? Major price rises in property only affect the % of new buyers vs existing buyers. A small cohort v total population.

 

Looked at a place in Seddon today.. absolutely love the area. Hidden Gem.

So close to city, trendy cafe culture with beautiful streets. Pretty excited to have found it. Very much like yarraville but with bigger properties/blocks and nicer streets.

 

Farmers are ploughing bumper post-drought food crops into the ground because they cant get workers for harvest and the cost of transport to market is higher than any income they would receive for their produce. This is not relevant to real estate prices but will affect the entire population of the country.

 

We have had what they call “force majeure” where basically this is so unprecedented and unpredictable that contracts are ripped up.

You might have local builders lock in a price but be careful as things are changing almost fortnightly on materials that they may not honour it.

There’s so much work on out there, if prices on goods & materials keep moving 5% every month, it’s impossible to hold a price even 3 months out.

 

Wow, this will hurt

 

Are there really grounds to call FM? Genuine question.

 

Ye we ended up at VCAT (neighbor took us) with a current project, well didn’t quite end up there, waited four months for our hearing and then neighbour decided to withdraw a week before date. So basically just wanted to pay $960 to lodge his vcat application and hold us up.

Only issue in this current market is the entry price. In Clifton hill/northcote your paying circa 1.7-1.8 for a double fronted home