Property prices beginning to drop

A lot of us keep saying that ppor in wealthy estates are not going to see much price reductions. It is a limited market and probably a very low percentage of this market would be effected by Covid.

 

In a recession, only the very wealthy really escape the effects with little affect on lifestyle. For the rest of us, it takes time for the recessionary influences to permeate into the economy. You don't know what is around the corner. I have worked in a couple of places that while there was an awareness the workforce was under review, that was it - until one day people got a tap on the shoulder and asked to collect their belongings, received a de-brief on their 'leaving benefits' and asked to leave the building.

Definitely brutal but in these situations you learn that everyone is just a number on the corporate balance sheet and the experiences stay with you for life. However, not many Australians have been exposed to this situation in recent times so its going to be an interesting roller-coaster of a ride.

 

not how a recession works

It’s not their PPOR gets them into trouble , it’s the other investments this demographic and age group have , take a drive around look at the amount of For lease signs on commercial premises , it’s beyond belief

look at the vacant rates in units , look at the holiday rentals they can’t rent, the business they have which is going under , these investments is what forces the sales and reduces the demand

few escape without some sort of impact in a recession ,
Those who do make More money and easier money than in any boom

 

Maybe but I can't see these properties selling cheap any time soon, they simply have to much money.

 

Good point. Even though I would like to see prices fall, there is too much money on the sidelines looking to buy moving forward.

Interest rates are making it very easy to hold onto property. I mean on a 500k loan the interest repayments on 3% are only 15k a year!! Easily covered by jobkeeper or whatnot.

Even the melbourne cbd apartment market isnt as dire as many make out. Saw 3 in the well located 220 spencer st tower sell this weekend at pretty decent prices (not even close to a fire sale). Yes 3 sold on the same day, im astounded.

Was advised by the agent that listings in the cbd are 30-40% lower than last year and there are hardly any listings under 500k. Buyers are looking for cash cows and dont like shares so are targeting these types of assets. He also noted the trend in wealthy asian parents buying apartments for their adult kids continuing as they perceive it to be safer than living alone in a big house in the wild suburbs of melbourne.

Looks like the billions in Asia are still heading our way.

 

Don't get me wrong, I think a lot of property prices could decrease over the next year or two or three, but multimillion dollar ones not so much.
30-40% is a massive drop for those cbd listings, interesting to hear that already.
The 15k in interest seems cheap unless you have lost your job and you have your mortage and interest payments on hold. In these cases interest is capitalised and loan fees and charges will be added at the end of the freeze, loans will need to be extended after this adding even more interest and if your property is already losing value than its not a great scenario unless you can find another job.

 

The 220 Spencer St apartments were not doing well in the best of times. My cousin bought one for $550k or so with a car spot OTP, sold it for $500k or so a few years ago.

 

Interesting how decency bias is playing out in opinions here. When was the last time unemployment was over 10 % and property did well?

 

Melbourne sellers pull auctions as pandemic bites
From todays AFR:

How dire is the situation because I had to have a double look at that figure - this seems a horrendously high vacancy number for only 2 areas.

 

The government is handing money out like never before, it's just a waiting game to see if bank accounts dry out first or the economy picks up in time. I've been told by 2 REA's in SE Qld that anything under 500K is being snapped up.

 

That would be because the FHLDS is 475 k and it saves on average 15 k of LMI.

Im in SEQ and every maniac with a pulse is out bidding 475 k on everything with 3 bedrooms at the moment.

I can’t remember the source but there’s more money I’m in the economy now due to stimulus than the prior quarter. From memory each jobkeeper position paid was contributing an average annualised salary of 75 k (nationally)... add on top of that Scomos SuperReefer and miscellaneous $750 virus payouts for no reason + disguised MMT tax and you’ve got a boiling pot with with an empty bottom... all steam and nothing in it once the lid comes off.

 

must be just human psychology because I cant see how anyone getting $750 per week or is in an uneffected industry is going to be in a stronger financial position to buy a house, unless serviceability requirements have laxed, which I dont think is the case

 

Well, I know a couple who just upsized on jobkeeper, Sold out and pulled back 100 % equity on a dodgy loan port... no job.. 2 kids... stressed out of their mind.

Still did it though.

Never get in the way of a property buyer in this county. They will prove you wrong every time.

 

Prices seem to be dropping in Sydney’s Eastern Suburbs for 2 Bed units.

A couple passed in low this weekend.

I expect this area to get hammered over the next 12-24 months.

 

Some businesses are going full bonkers better than ever, try to buy a push-bike or spare parts. I've mountain biked for the last 15 years and never seen a shortage of bike tubes, even though most us run tubeless tyres these days. I think it will be the flow on effect of the money in some cases.

 

Apparently it's really hard to buy a pet cat in Sydney right now. There is a waiting list for cat adoptions!

 

Wow. It is crazy to think that the lockdown actually appears to be increasing the savings rate for most and with it the demand for quality housing and capital goods.

I am still hearing of quality apartments (mainly those with extended views) in the hardest hit melbourne cbd areas attracting tenants at a 10-20% discount to precovid rents which still places many on NET 3-4% yields before tax benefits. Not a bad way to ride out this period.

 

As every reader of the Melbourne Age (and probably other papers) knows, Harvey Norman are spending an absolute fortune on advertising and they wouldn't be doing this if it wasn't generating a return. Lots of money coming from super being cashed in?