Should we worry about a crash of the housing market? Let's all take a deep breath

Discussion in 'Property Market Economics' started by Perthguy, 28th Sep, 2018.

Join Australia's most dynamic and respected property investment community
  1. Perthguy

    Perthguy Well-Known Member

    Joined:
    22nd Jun, 2015
    Posts:
    11,767
    Location:
    Perth
    talk of a 40% fall in prices is, shall we say, fairly extreme. Put it this way, the Sydney housing market peaked in the middle of last year. Since then the most recent commercial data has the fall about 15% at most (and the ABS data which is three months old has it at just 4%). We have a way to go to get to 40%.

    A crash is always possible, but right now it would require a confluence of events – both local and international for it to occur, rather than just banks increasing interest rates.
    Should we worry about a crash of the housing market? Let's all take a deep breath | Greg Jericho
     
    Morgs likes this.
  2. datto

    datto Well-Known Member

    Joined:
    23rd Jun, 2015
    Posts:
    6,675
    Location:
    Mt Druuiitt
    Bring it on!
     
  3. dabbler

    dabbler Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    8,572
    Location:
    Sid en e - olympic city
    Like anything, it depends on how long before you know the bottom has passed.....
     
    datto likes this.
  4. Sackie

    Sackie Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    25,034
    Location:
    Vaucluse, Sydney.
    Only those who are not prepared and overleveraged for their risk tolerance with zero to minimal buffers should perhaps worry. For those who are prepared and in strong positions, times are only getting more exciting for some great deals.

    " The markets is a device for transferring wealth from the impatient to the patient". Warren Buffett
     
    mickyyyy, Whitecat, Perthguy and 3 others like this.
  5. MTR

    MTR Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    27,786
    Location:
    My World
    Yes, if you are highly leveraged, and dont have an exit strategy. ie cant sell down
     
  6. DrunkSailor

    DrunkSailor Well-Known Member

    Joined:
    25th Jun, 2017
    Posts:
    756
    Location:
    Melbourne
    What if it crashes and stays flat for the next 50 years like in the 1900s. That’ll give you plenty of time to find great deals.
     
    Whitecat, 2FAST4U and Rex like this.
  7. DrunkSailor

    DrunkSailor Well-Known Member

    Joined:
    25th Jun, 2017
    Posts:
    756
    Location:
    Melbourne
    What data has it at 15% down from peak?
     
  8. DrunkSailor

    DrunkSailor Well-Known Member

    Joined:
    25th Jun, 2017
    Posts:
    756
    Location:
    Melbourne
    Are they referring to this:


     
  9. Ricki barkham

    Ricki barkham Well-Known Member

    Joined:
    16th Aug, 2018
    Posts:
    300
    Location:
    Pakenham
    Didn't that say it's only going to drop for next 2 years then stable out
     
  10. dabbler

    dabbler Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    8,572
    Location:
    Sid en e - olympic city
    Yeah, that is the prob....never say never....


    With low rates, high debt and stagnant wages, it is more likely than say 20 years ago......

    It could be going down for a while, it could stay flat for a while too, working out how long a while is, is the unknown.
     
    Whitecat likes this.
  11. marmot

    marmot Well-Known Member

    Joined:
    23rd Jan, 2018
    Posts:
    1,215
    Location:
    N.S.W , W.A
    If the drops continue on a monthly basis , with a few like today's drop it might get a bit ugly over the next couple of years for Melbourne and Sydney.
     
    Whitecat likes this.
  12. paulF

    paulF Well-Known Member

    Joined:
    28th Jun, 2015
    Posts:
    2,103
    Location:
    Melbourne
  13. dabbler

    dabbler Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    8,572
    Location:
    Sid en e - olympic city
    Believe that at your own peril.....

    2.7 my foot

    You will note they call it as "Australia", you will note they say home value index, anyone who bases what is going on off stories or data without knowing what that data is prob will get a shock.

    I may as well say ...

    A Big Mac is 6 bucks, therefore buying an IP now is not bad, yeah....that crazy, there is so much going on and so many blanks to fill in, it is worthless.

    And then like a prior poster, even if it was only 2.7 in say Syd, what if it is 10 years worth of 2.7 loses.....if you know how to use a calculator, that does not equal a total of 27% loss....
     
  14. dabbler

    dabbler Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    8,572
    Location:
    Sid en e - olympic city
    The outlook, IMO, is there is nothing to support it flattening now, in fact I would put it to you that this is still the beginning of the beginning, cause I know people who are in trouble from before APRA second round and the RC, and they have been hanging on, however there is a possibility for it to get much worse, if the govt changes and gets aggressive and ignores how much effect APRA changes have already impacted that are still unwinding....

    And unfortunately, this is exactly how I have seen all govts act....when things start slowing, they throw out all the anchors, when things are warm, they throw a train load of fuel on the fire....so the risk atm is for more downside IMO.

    On paper there will have been already massive losses, it all depends on how many must sell and make it a real loss.
     
    Whitecat likes this.
  15. paulF

    paulF Well-Known Member

    Joined:
    28th Jun, 2015
    Posts:
    2,103
    Location:
    Melbourne
    @dabbler , i do take their data with a grain of salt and i know that property in Sydney and Melbourne has slowed down so no argument there but it seems that most have lost sight of the big picture. Property is not a short term asset.

    I don't get this whole pessimism and shock about the property market in general since the way i see it , it's all normal; as in it's just another cycle. Different levers pushing up and down but still a cycle.

    Yes the downturn might be for a few years but your suggestion of 10 years of downturns is simply baseless barging any black swan events...

    The economy is cruising fine, not at its best but fine, hoards of people from all around the world still want to come and live here, credit is hard to get but still possible. Also keep in mind that the government/RBA hasn't even intervened yet to prop things up again if needs be.
     
    Perthguy and Angel like this.
  16. Sackie

    Sackie Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    25,034
    Location:
    Vaucluse, Sydney.
    You gotta remember the fact that most people fall into the 'herd category'. So the doom and gloom, no opportunities left, Australia imploding etc narrative is their normal place.

    Its only a small percentage of investors who think/act/invest differently to the herd. They are the ones who generally perform a lot better long term.
     
    icic, Perthguy, paulF and 1 other person like this.
  17. dabbler

    dabbler Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    8,572
    Location:
    Sid en e - olympic city
    It is longer term, ish...but can be short too.

    APRA and lending changes are major change, and you have the possibility of change of govt slowing tinteerst in investing further with tax changes, and you also have external investors tossed out recently with both our and Chinese govt making it harder for those people.

    You have poor wage growth, atrocious returns in Syd and the places I looked at in Mel, all along with record low rates and loose credit.

    So, if you look at all these things, these 2 places are an avoid, if you already hold and have good income v your loans, then ok, but when you have money stuck in places that are not performing, you may have to consider many things.

    My main opposition to these places now is high buy in, very poor return with the prospects of further losses in value or running flat, which means a loss in both cases, so why buy in now ?

    I am not talking to people who have property they own from 20 years ago that they could develops etc down the track, or sell, I am talking about going in now...people who must borrow.....buy and hold, it does not add up.
     
    Whitecat and paulF like this.
  18. dabbler

    dabbler Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    8,572
    Location:
    Sid en e - olympic city
    You can't win....

    It is shocking when it is going up...

    It is shocking when it is going down...

    Maybe we should all lobby the govt to now increase negative gearing benefits for LLs :)
     
  19. Sackie

    Sackie Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    25,034
    Location:
    Vaucluse, Sydney.
    Soon it'll be shocking when it goes sideways :D
     
    kierank likes this.
  20. dabbler

    dabbler Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    8,572
    Location:
    Sid en e - olympic city
    Surely that will never happen....I read and heard it just goes up ? :p
     

Buy Property Interstate WITHOUT Dropping $15k On Buyers Agents Each Time! Helping People Achieve PASSIVE INCOME Using Our Unique Data-Driven System, So You Can Confidently Buy Top 5% Growth & Cashflow Property, Anywhere In Australia