Is housing market going to normalise when things are back to normal?

Discussion in 'Property Market Economics' started by Bluechips, 12th Sep, 2021.

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  1. Bluechips

    Bluechips Well-Known Member

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    Hi folks,

    With the improving vaccination rate, there is more hope that we are seeing the light in the other end of the tunnel. I wanna get your opinions on this topic - is Australian housing market going to normalise when things are back to normal? And given our vaccination roll out is about 6 months behind US, Canada and UK (thanks to our government...), Any market data you guys observe in those markets? Could potentially be a good reference/lead indicator.

    I listed a few things that either support normalisation/continue rising

    Normalisation:
    International border reopening could resume international travels. Some people may take up higher pay jobs overseas. Household spending will likely be higher as people will spend more on entertainment/recreation post Covid. Immigration will restart too but it will ramp up gradually and likely to be done in stages to different countries until it reaches full scale.

    Affordability will eventually cool the market. To be honest, personally I think the market even shot up further when Delta variant hit our community as the expectation that RBA will raise cash rate before 2023 just vanished...

    Rental demand is weak in two largest capital cities, mainly due to border closure. But the recent construction boom will increase the stock level this time next year. The stock level when the border reopens will be higher than that in pre-pandemic, given we had negative net population growth in the past two years.

    Continue rising evidence:

    Quantitative easing is continued. Money printing is only reduced from 5 billion to 4 billion per week. As long as the cash floods into the market, we all know where it will end up staying...the best asset class despite it's been overvalued in this country...

    We can't use some pre-defined rules to assess some subjects after Covid. As almost all advanced economies in the world has gone down to the path of doing crazy QE and neglect the short term inflation and asset bubble to save their economy, the market will reach the new equilibrium on its own. Therefore, what's been considered as 'too expensive' may not be the case soon.

    Construction is too big to fail, particularly in this country...

    APARA is a bit reluctant this time as the government is saving the economy. Well, did people not know the issue with interest only investor loans back in 2015? Of course, everyone knew. But APARA only acted in late 2017. So there is probably two years gap between when everybody realises it and when APARA puts in a measure.
     
  2. Trainee

    Trainee Well-Known Member

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    After all that, what do you think is a ‘normal’ property market? Each of the australian cities were doing differently pre covid, so dont know what you mean by normal.
     
  3. Closet

    Closet Well-Known Member

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    In the short term once internal borders open up the regionals and Brisbane are likely to see huge levels of demand as they did from the same period late last year. In Brisbane there is also a huge undersupply of land for at least the next 3 years so expect to see strong growth continue due to lack of supply even with normal levels of interstate migration!. So need to be selective about where you invest and expect that anything can and will change in this climate!
     
  4. boganfromlogan

    boganfromlogan Well-Known Member

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    Good question.... I suspect migrating from large cities might continue.

    I don't think enough credit is given to population movements, environment, disease etc too much credit given to 'cycles' and spreadsheets.

    Also boomers have revealed themselves again, obsessing about themselves ( eg. won't take AZ ).

    Boomers die off.

    increased migration.

    None of it seems old normal.
     
  5. skater

    skater Well-Known Member

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    Define normal!

    We have pent up demand from those that are employed, being forced to stay home, with nowhere to spend their large incomes, and interest rates at the lowest they've ever been.
     
  6. Sackie

    Sackie Well-Known Member

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    Vaucluse, Sydney.
    Imho the housing markets are acting perfectly normal through cycles. Cycles are not always easy to predict. But be assured, they will take place.

    As they are now.
     
  7. Propin

    Propin Well-Known Member

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    In the past couple of months two employees from my daughters workplace have left to work for an employer with flexible working from home conditions. Her employer is now offering more flexible work from home options rather than go to the office every day. There is a new normal, nothing will be the same again since this virus.
     

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