"Property buyers and developers should be quaking in their boots"

Property buyers and developers should be ‘quaking in their boots’

Summary from the intergenerational report:
The growth in housing prices seen since 1990 has been driven by lack of supply and falling interest rates. Future population growth forecasts have reduced significantly compared to pre-pandemic levels and interest rates are likely to rise by a few %, therefore future growth prospects don't look great.

Critic responses:
- Deloitte’s Mr Richardson argues weakness in the economy, weak wages growth, low inflation and structural changes will keep a lid on rates.
- Andrew Wilson, the chief economist at My Housing Market, adds: “We are continuing to find factors hampering any return to long-term normal, particularly income growth.”
- Simon Pressley, a buyers’ agent and head of research for Propertyology, said population growth was “way down the list of influences on property prices” after interest rates, jobs and economic confidence.

Thoughts?

 

Anecdotally, I find people want to move to Australia from all around the world. Eg Hongkongers and Chinese. And alot of them are bringing 5m with them (investor visa)

 

Australia's birth rate had fallen to it's lowest ever recorded level in 2019.
So In 18-25 years it might make a difference ......

This sort of claim is like saying divorce rates are falling, so due to people staying together less houses are needed, this will cause a glut of empty properties

https://www.google.com/url?sa=t&sou...ECAMQBg&usg=AOvVaw3Q-GnRsmcwMdK_xM_9BP1Y&cf=1

 

The predictions are pretty restrained, actually. There are no specific predictions on property prices.

Using current (short term) factors to predict long term trend is risky. For buyers..... you want to take the risk low immigration continuing?

Maintain buffers (offset better than paying down the loan).
Avoid high rise units and new built suburbs.
Keep houses in capital cities for the long term.
Sorted.

 

I'm both a property buyer and a developer and I'm not 'quaking' at all.

It's all about risk management.

Those who manage risk well will survive (and likely thrive). Those who don't...well....

 

For development point of view, it’s getting harder and harder to achieve decent return (above 20% net margin for simple splitter blocks development) with material prices going up average 20-30% in the last year. I suspect new supply will be slow as they have been historically in the last 30 years.

From population aspect as pointed out by others, Australia is a very attractive place to live and it is close to Asia, the rising economic power. I am not worried at all with stagnating natural growth (people prefer to have dogs than kids nowadays I heard), it is not a matter if but when the government opens the floodgates of overseas migrants when the economy growth stagnates.

Australia is rich with resources, and its people are well educated. Government decides to take in skilled and rich migrants only. They just need discipline and strive to be more productive.

And geographically it is located far away from any potential wars. Basically, it is just one of the sweetest spot to be in the world.

Bloody lucky country!

 

The prediction of 'one more boom' I have heard for some time and I think it has some credibility. It is based on population forecasts.

Basics are the boomer population bubble will pass when boomers pass into the next life and appetite for houses will reduce. The ' big Australia ' touted by some pollies never really had legs.

My expectation is that property will have this current boom and that afterwards less likely to keep booming. More likely to stay flat for EVER.

So adding value to existing property will best idea post this boom to increase.

Pessimistic outlook I know. I also think sea levels will rise.

 

You must be kidding right?

 

If I am wrong .... what I mean is if demographers and geographers and climatologists are wrong I will be happy.

But if property flatlines I have a plan ( adding value ) that will help avoid the worst impact.

In truth I have no idea.

It seems so unlikely that property will go up for EVER.

 

Cause history supports this claim...
And yeah, "past performance is not an indication of future performance", but still people invest in blue chip cause they historically perform well in the past. So...

Anyone who had those claims in any point in the future, eats their own words.
The reality - property prices, just like any other product, keeps goes up. FOREVER.

 

I think anyone after Covid know where is the safest! Pandemics will happen again, sorry to be a doomsday sayer, but if Australia can keep its practice, it's a haven to be. Look at the list of most livable cities 2021...

 

You obviously don’t understand inflation or monetary policy lol as long as the system stays the same, property (I should say land) will keep increasing. Land will continue to be chopped up, built out/up, wages will always climb (albeit slowly) inflation will always erode debt, and there will always be a cycle where demand out strips supply. IMO the deck is stacked, too many factors that will always make it increase.

 

So this is the latest threat to the viability of property investing . I’ve lost count of how many there have been over the last 20 years .

At one stage Japanese debt was going to be the down fall . That’s probably about ten threats ago .

Yawn …

have they got a book they’re selling ? That’s usually a trigger ..

Cliff

 

I think the effects of monetary policy will stem any reversal in value but the underlying demographics will make boom times unlikely.

IMHO flat lining will be new normal and staying in line with inflation is also a version of flatlining.

I love property BTW I just find it credible to think that the years of booms and growth are not well supported by the dwindling nature of Australian population growth.

Without ' big Australia ' that is.

 

I invest in property, but also find it reasonable to think boom times won't necessarily be there.

Adding value to under performing property in under performing areas might still work. But buying holding and putting Ur feet may not be great.

The past is not a good predictor of the future anymore.

 

Your statement can only be justified with the benefit of hindsight, which would then not be about the future at all but about the past, so you cant really make it in the present.

If that makes sense

 

It makes more sense than 'eternal growth'.

I would like to know whether u think there is a heaven.

 

I haven't encountered it in the past so I figure I'm not likely to in the future.

 

Now THAT is logic.