Property prices falling earlier than expected

Discussion in 'Property Market Economics' started by MTR, 25th Apr, 2022.

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  1. Lary

    Lary Well-Known Member

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    Yes, true and it may go even further down. Crypto is also descending harsh. But still, deposits during a high-inflationary period... I know everyone is looking for a "safe haven", just curious what makes you think about deposits being one. I would appreciate it if you could share your thoughts.
     
  2. sash

    sash Well-Known Member

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    I am a renowned contrarian.....sort to speak when everyone is running from the fire I might be running in.

    At the moment...I see a lot of people going from shares/ crypto to property in over leveraged property markets like Sydney, Hobart, Brisbane, Melbourne where the action has already happened. Perth/Darwin/North Qld/some regionals would be a better bet.

    People seem to repeat the same mistakes. I am overleveraged in property so I put it in offsets against property.

    Lets say you don't have offsets or they are full it be better to put it in term deposits once they offer decent returns. Better than investing in markets like Sydney where property is heading down and it will take years to claw back in lossses. Perhaps wait and see where things are going first.

    These are might thoughts.

    A lot of people misunderstand and think I am anti-property. They think I bag certain suburbs.... I have an 8 figure property portfolio so it is strange when people make those comments. I just don't like to hold and pray. When did not get into areas like Logan because I went to areas where I knew I could make immediate returns...and it looks like I was proven correct...some of these areas have gone uo 200-300% in less than 6 years.
     
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  3. Lary

    Lary Well-Known Member

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    Thank you, sash! Understand what you are saying. The last post helped. Thanks for taking the time to explain ;)
     
  4. MWI

    MWI Well-Known Member

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    I agree perhaps only 1/3 of FHO are heavily affected, those with large over committed debts. 1/3 owner have probably no mortgages, 1/3 investors can increase rents or offset.
    So as John Lindeman suggested the prices may not fall proportionally as they rose:
    Why property prices will keep rising
     
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  5. sash

    sash Well-Known Member

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    I think it will fall a lot harder than people think. Let's see
     
  6. Lary

    Lary Well-Known Member

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    Spoke to an agent for a property in Perth today. One of the so-called "booming" LGAs.
    "Offers over..." appeared to be "the stated price will buy you the property".
    Tell me it is still booming, guys. :confused:
     
    Last edited: 26th May, 2022
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  7. MTR

    MTR Well-Known Member

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    Where in Perth?Pleez
     
  8. MTR

    MTR Well-Known Member

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    Mt Druitt:p
     
  9. Lary

    Lary Well-Known Member

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    Cannot send PMs yet.
     
  10. sash

    sash Well-Known Member

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    Druie Numero uno:D
     
  11. frankjeager

    frankjeager Well-Known Member

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    shalvey 2MM median by 2023 :p
     
  12. ollidrac nosaj

    ollidrac nosaj Well-Known Member

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    So what your telling me is investors/home buyers have not even factored in rates returning to historical average. And at 3% there is broad systematic market risk? This is cool and normal.
     
  13. Mr Burns

    Mr Burns Well-Known Member

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    People underestimate how much rates influence the market. Yields have to increase to be worthwhile.
     
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  14. Lary

    Lary Well-Known Member

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    Rents did increase and keep increasing. The tricky moment is probably how much they can increase further before causing a "revolution" (significant social tension) ;) - the RBA wage increase indicator comes to play.
    Another thing to be conscious about is how patient the councils would be before beginning to raise the rates.
     
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  15. sash

    sash Well-Known Member

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    Let me put it this way read the comments on here such as:

    1. RBA will never let rates go that high
    2. Housing can't crash as govt won't let it
    3. Govt will simply print more money

    The same people do not like socialism.....do you see something wrong here??:p:D As for socialism.... my remarks were made in jest. I am for social responsibility... looking after people who can't look after themselves instead of having a laissez faire approach of the US. ... which definitely causes disadvantage and unfortunately seeing the consequences of this.
     
    Last edited: 27th May, 2022
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  16. Lary

    Lary Well-Known Member

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    Hahaha, sash!
    About point 1.:
    Japan, Switzerland and Sweden still have Negative Interest rates.
    European Central Bank currently has it at 0%.
    Their economies are not worse than ours. If not the opposite... as could be seen here: GDP per capita (current US$) | Data
    ...and most of them are not less social either.
     
  17. sash

    sash Well-Known Member

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    Switzerland is exceptional....agreed. You need to check the facts on the rest.

    But Japan is in trouble due to shrinking population. They might be in another deflation spiral.

    Japan GDP Growth Rate - 2022 Data - 2023 Forecast - 1980-2021 Historical - Calendar.

    Swedish economy is fighting inflation also...and is impacted by the Russian invasion of Ukraine. As they are planning to join NATO it is going to get even more interesting...

    The Swedish economy is resilient but uncertainty remains high
     
  18. dabbler

    dabbler Well-Known Member

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    If we become Japan, or elsewhere, then we are stuffed, kiss your growing portfolio goodbye & if you lose money now, it may take many decades of holding to see it improve, which in real terms would be further loss.

    Many people seem to think there is always a guardian angel to catch those who may fall, just as credible as the tooth fairy, Easter bunny and santa
     
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  19. Dmash

    Dmash Well-Known Member

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    Hahaha heard it all before ey Sash.
     
  20. Lary

    Lary Well-Known Member

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    European Central Bank plans for 3 interest rate rises till the end of the year. The interest rate at the end is expected to be 0.25%.
    There is an unofficial consensus between the financial ministers of the union that the interest rate must be lifted to 1% to kerb the inflation.
    There will be many direct subsidies to the small business to keep them alive during the IR lift.
    Again they don’t run worse economy than ours. Doesn’t sound like a huge IR lift could be a sustainable solution.
     
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