Property prices beginning to drop

Discussion in 'Property Market Economics' started by Property Baron, 18th Jun, 2020.

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  1. Ben20

    Ben20 Well-Known Member

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    Is all that demand actually leading to transactions? All property enquires, especially on online platforms may not necessarily mean demand but may be people interested to see where the property market is heading to? I guess in couple of months time things will be clearer.
     
  2. Jezzah

    Jezzah Well-Known Member

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  3. Jana

    Jana Well-Known Member

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  4. Jezzah

    Jezzah Well-Known Member

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    Yeah, a significant drop over 3 years.
     
  5. Someguy

    Someguy Well-Known Member

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    Some speculation gone wrong!?
     
  6. fl360

    fl360 Well-Known Member

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    I suspect the banks are de-risking, banks are more conservative on valuation, and also on borrowing capacity now.

    they are kind of driving down the market now.

    what the banks are saying is, if you want to pay 100-200k more to buy that place, you better risk that sum of money from your parents / your savings, not on my balance sheet.
     
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  7. John_BridgeToBricks

    John_BridgeToBricks Buyer's Agent Business Member

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    Team Property Chat,

    Get out of the weeds my friends. The economy is melting up into an inflationary depression, and asset prices are de-coupling from the economy.

    Last night, every asset class surged: from the Dow Jones, to oil, to gold and silver. You can bet your bottom dollar that real estate is setting up for a multi year surge as well.

    I said in a webinar back on 1 April, that you couldn't see it now, but that the policy setting so irresponsible and that there is so much stimulus in the system, that property prices will rise sharply.

    So far, these policies have simply prevented prices from falling. Is the next stage higher prices?
     
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  8. ToBeFree25

    ToBeFree25 Active Member

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    i bet it is some chinese guy who have to offload due to visa finishing, or cannot stay in australia anymore. you hear a lot of those stories now. they just have to sell. it is not the bank pushing it.
     
  9. fl360

    fl360 Well-Known Member

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    There is a fundamental difference between shares and property.
    shares are based on earnings on real companies, and their earnings can be observed.

    shares / gold / silver are surging because there are lots of government stimulus / no where else to put them / distrust in governments

    however property need to have rental income, and just watch out on the vacancies and falling rents... which is happening now.

    usually it is
    economic expansion => property / rental demand => lower rates => drive property prices up.

    we are in a recession now.

    I have been actively looking in the last month what I can see is 1/2 of the listings are from vendors who don't need to sell, not accepting a low ball offer, hence listing sitting there for months.

    1/4 are for sellers who need to sell, they are sold quickly (within 1 week), and often 15% to 20% lower than the stable listing asking price.
     
  10. John_BridgeToBricks

    John_BridgeToBricks Buyer's Agent Business Member

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    Shares are just businesses that need customers; renters are just customers. I think you will find that they have more in common than you think because stimulus makes the arithmetic of owning income producing assets more attractive. But we will see.
     
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  11. Melbourne_guy

    Melbourne_guy Well-Known Member

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    I get that you can have rampant inflation when in an economic crisis...Zimbabwe is the classic example but war and corruption meant they had no productive economy. This is not the situation in Australia with its iron ore and coal exports. I also understand there are people who have cash and are in a position to purchase and there has been a recent injection of Govt and RBA money into the economy.

    What I don't quite get (and probably not the only one) is who is buying these inflated properties if they cannot be sustained through rental tenants, the unemployed or families affected by the loss of the second income; part-time or permanent?

    Telling everyone to "Get out of the weeds my friends" is an unwarranted warning when you haven't translated where we are in this crisis into rampant property prices. Most are seeing a different story on the ground with a 10% unemployment, potential bank restricted lending, bank lending default and a likely massive loss of businesses. The economy was heading south even before coronavirus. In 10 years time I may agree with you but I can't see it within the next 2 years - so why buy now?
     
  12. Zimplestiltskin

    Zimplestiltskin Well-Known Member

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    I agree completely. More money in the system means more money to go into assets (ie higher prices). I think right now investors are already taking precautions to throw this excess fiat into stocks, gold, oil and crypto, which has escalated them quickly. I imagine the same will happen with our property but slower. I think houses/townhouses/villas could really boom, cbd apartments probably dip.
     
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  13. essendonfan

    essendonfan Well-Known Member

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    Agree with the above, still a meeting of minds between vendors and buyers. I think it will take some time for vendors to adjust their expectations and meet the market.

    Plenty of vendors are rejecting at market offers, the stock sits on the market, archived.

    Will those vendors that are sitting on their hands - be forced to move that stock in the next 6-12 months?

    I think this is also a generation issue. Those with additional stock on hand, not forced to sell (unless the price is right), with no/minimal mortgage and minimal pressure to sell but want to sell vs younger generation trying to get into their 'upgrade/family' property with lending/budget restraints.

    This is only my experience talking with agents and making offers in the Melbourne and Sydney market recently.
     
  14. essendonfan

    essendonfan Well-Known Member

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    FYI REA group reporting full-year financials this Friday. Will be interesting to get the data around properties listed for the year and their forecasts.
     
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  15. MelindaJennison

    MelindaJennison Brisbane Buyer's Agent & QPIA Business Member

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    Brisbane Property Prices are resilient. See latest Corelogic data below.
    Capture.JPG
    Houses are holding up better than units which is to be expected. Remember this data is all of Greater Brisbane ... we are seeing price growth in some areas closer to the CBD despite the overall trends. tempsnip2.png tempsnip1.png
     
  16. fl360

    fl360 Well-Known Member

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    exactly what I am seeing, I made ~5 calls to agents daily now, and before I inspect I have a frank discussion asking the agent if the seller is "really need to sell", the agents are very frank as soon as I tell them I am trying not to waste each other's time.

    on RE.com.au you can pretty much get a feel of how long it has been in the market. years ago websites used to show the listing date, now it is removed, however if it has a youtube video attached you can tell by the upload date on youtube.
     
  17. FredBear

    FredBear Well-Known Member

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    I ask for a copy of the contract to be emailed - you can see the dates on the land title search and the council planning certificate. These tell you when the vendor prepared the sales contract.
     
  18. Jezzah

    Jezzah Well-Known Member

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    I recommend using this site which was recently updated to include days on market in addition to calculating the change in advertised price over time.
    PriceData.Properties

    upload_2020-8-5_16-42-53.png
     
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  19. timetoact

    timetoact Well-Known Member

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    I think you are overlooking the fact that property is just another asset that has potential for capital growth and income.

    Right now there is a lot of money that is facing near zero returns on term deposits and government bonds. What do you do if you are one of these investors. Do you leave it in the bank or do do you accept some risk with a long term outlook and look for some kind of return and capital growth?

    Ok, so now you have investors looking for somewhere to put their funds.
    Share markets are equally if not more inflated than property given the current outlook.
    So they take a look at property.
    Property has very long history of delivering capital growth over the long term, especially in Australia. So risk is low-ish if you are prepared to hold. Yield isn't great, but it is still a lot better than banks.

    So, IMO, there is support for property and over the next few years once Covid becomes more understood and the outlook a bit clearer. You will find a lot of money looking for a home in Australian property. Areas with higher yield will be most attractive.

    Will property values drop, yes. Will they recover quickly with ultra low interest rates for the better part of a decade.... I'm thinking yes.
     
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  20. Property Baron

    Property Baron Well-Known Member

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    I'm seeing a few price rises in 1m+ properties
    I'm seeing a lot of price drops in properties under the 1m mark approx 5-15% drops

    It's to early to predict future just yet. We have seen nothing like this in our lifetime before.
    I have money to spend but I guarantee you I would not be buying unless at least 20% of advertised price was achieved and even then I would not be confident.

    Take a look at the world:confused:
     
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