NSW The definitive Sydney 2022 Q3 and Q4 market analysis and conclusions

This is the key.. not many seem to be talk about this on PC. I don't think the concerned authority will or should get away with the irrational mess they have created for two years. Everything else should be the second priority. As a result of fixing this massive fiasco in the system if there is a significant price correction, so be it. Whether RBA thinks this way or not, time will say.

 

Haha I love this. The headline itself directly misquotes him in order to get their headline...

The uneducated don’t read the body though, the headline will do. Maybe after this hiking cycle the average Aussie will begin to read articles rather than listening to agents yelling “Rates have never been this low, Now is a great time to buy”

 

It wasn't just the RBA... The government free money for companies that didn't need it and letting people raid their super also played a massive role in creating the current mess.
What a mess...

 

"But our judgment is that we are unlikely to see wages growth consistent with the inflation target before 2024. This is the basis for our assessment that the cash rate is very likely to remain at its current level until at least 2024"

What are they misquoting? He shouldn't have said that or at least he shouldn't have put a date on that statement.

 

Again, that is not the offical quote. The RBA statement was “The central case remains we won’t see the conditions to support an increase in the cash rate until 2024”. Now even if you’re an idiot and choose to see “We the RBA guarantee interest rates won’t rise until 2024” they then make a similar statement with a caveat in the link posted above……”The evidence strongly suggests that this will not occur quickly and that it will require a tight labour market to be sustained for some time. Predicting how long it will take is inherently difficult, so there is room for different views.”

So people can feign ignorance, they can blame someone else but at the end of the day we are all adults and we can all read. The RBA relies on data and data can change. It is a free market out there and the over leveraged will either need to work more or sell up

 

You are being obtuse. He is the head of the RBA and people listen to what he has to say regardless of the official statement. He even admitted to his error.

Free market ... that made me chuckle.

 

People see what they want to see when there is emotion involved and housing is very emotional. They seized the chance to borrow the money and now they will need to pay it back

 

I think we assume that the RBA was making statements about it being right. Monetary policy communication is important about direction - the idea is to provide certainty. Going this far out was unusual, but the level of uncertainty was higher than almost all other periods.

Providing this level of forward guidance was important feature of growing the economy when it needed it most. In times of increased uncertainty (the killer of investment), the RBA was providing as much as it could.
Job done, the economy performed.
Coming out and saying the truth - ‘rates are low now but may rise in future, make investment decisions wisely’ would cost the spectacular recovery.

the above is debatable as to whether it should be done…especially given the inflationary impacts, but the above is their reason. To provide certainty when participants needed it most.

they are not politicians. It doesn’t work like ‘gotcha, your were wrong!’ - they have a different job to do and different methods to achieve it. When you can’t cut rates no more (ie your only weapon is out of bullets), you got to do what you can to help achieve the goals your seeking.

 

Also another potential market impact - the RBA is about to be reviewed.

You don’t do that if you don’t want change. Reviewers feel pressure to suggest change in government space.

the risks to housing and the economy of this may be on the downside - potentially reducing our inflation target (perhaps not now!), and also creating fear in decision making to be more proactive. That isn’t necessarily better. In many ways it can be costly too.

As from direct lending experience, the RC into banking cost the economy a fair bit of growth, jobs, stifled investment, slowed housing activity and eventually imo forced the rba to use its bullets. Temporarily we had untrained lawyers who have no idea how an economy works making the set of rules for credit. It took weeks for very obvious loans to be written with no benefit to credit quality.

All beginning with a culture change towards risk from a regulatory review. There may have been positives to the functioning of the market, but doing a political song and dance shows on credit markets has enormous costs. Doing a RC should be reviewed so that people understand this decision cost X number of jobs, X amount of growth, but helped XYZ etc so future reviews have proper information sets when deciding on it. IMO the Liberals were right to be dragged kicking and screaming - the cost to the majority of Aussie well-being’s (jobs growth economy) is far too great to risk for this type of political review. I.e making it pointlessly harder for millions of Aussies and businesses to access credit for reasons that make little value to systemic stability to achieve the outcome wasn’t the right way to do it.

The RBA are far more influential - reviewing them in a politicised way could cause culture change to decision making for the worse in ways we just don’t understand now. I imagine this has been communicated to the Treasurer though so the design of the review will be far more careful given the potential consequences.

 

This is the issue. ...getting emotion. If ya do you lose.

A lot on here too young to remember the ravages of inflation and the destruction it leaves. A lot think it will bounce like 2020. Well this maybe the lesson in a lifetime.

A lot of these people can't see the bank robber called inflation by the time they realise some will need to sell.

Just locked in 2 my rates in the mid 3s for 1 year. My plan is to sell have an average rate of 3.5% well into next year.

 

It was not just a political review. The Royal commission was done because banks were gouging customers on every front and due to misconduct in the banking/finance sector including Mortgage brokers.

Let's not absolve them of guilt here. Also, most of the recommendations were abandoned by the previous government and also back then, Josh Frydenberg repealed the responsible lending laws ...

Accessing credit should not be available to everyone and it should be seen as a privilege, a helping hand to take risk and hopefully get ahead ...
This is exactly why we are in the current situation and the RBA is not the only institute to be blamed for this. Asleep at the wheel APRA and the government are even more responsible.

Having said all that, it feels to me like the change you are talking about should start with everyday borrowed to the hilt Australians, but that is a cultural change which will take years and maybe the incoming inflationary pain might help with that...

 

I’ve written about APRA extensively and often , for years. Warned all readers extensively and often that exactly this sort of thing was going to happen in early 2022 and that they should be using the artificially low rate environment to retire debt and get buffers in place . Couldn’t have been any clearer that cash flow and debt reduction would provide hedges against holding cost pressures when the cheap money and fake assessment rates left the building. It's especially important for borrowers who have been holding assets in SYD and MEL with weak yields, and who may need to revert to P&I because the servicing changes wont allow them to continue to run the model they have been running

#SPARTA

 

Agree there was plenty of benefit and reason to have behaviour looked at.

No way did they expect the macro economic consequences while doing it though (or did they know that it’d lead to such nervousness of everyday actions during the review).

It certainly should not have doubled or quadrupled the time it took a $1mill a year income borrower seeking their only $250k home loan, because they use Netflix instead of Hulu and it’s slightly more expensive. I.e. decision making became insanely stupid and when you choke credit supply, you choke the economy and hurt jobs. Eventually, they cut rates and loosened it shortly after the review to get it going again.

Potentially investigating the central bank may have similar unintended consequences for the property market (and beyond).

There are other ways to do reviews that are much less harmful. The RBA one isn’t a royal commission so perhaps that keeps the review less of a media/political show and more grounded in helping Australia’s institutions be better for the Australian people. We won’t hear about it everyday in a live kinda way, we’ll get a review at the end the public can absorb and consider.

 

Ok @Simon Hampel you might need to rename this thread now.
I cant see any Syd discussion for at least 3 pages - but I could be mistaken.
Interesting discussion about RBA etc though.

 

https://djwproperty.com.au/properties-for-sale/

I see a few agents i keep an eye on properties especially upper end drying up.
Looks like the better property listings are being held back.

What are you seeing?

 

Stamp Duty reforms will allow FHB to opt for Stamp Duty or Land tax from 16th Jan 2023, once the legislation has passed.
Applies to properties upto 1.5m and only for FHB

Any thoughts on how this could influence the market ?
With borrowing power and property prices likely to have gone down between now and Jan 2023 , does the above make it so much of an easy decision for FHB to wait till Jan to make the move ? Or am I missing something in my logic here .

 

I reckon they should remove the trails... like they said they would. The it should fix some of the issues....

 

bit out of touch with this,
Is 'no stampduty' Timebound or permanent?
Will land tax be applicable for PPOR? (similar to what US has in terms of property tax?)

 

0.3% + $ 400 every year based on land value

 

In Texas,
property tax is around 1.8% of purchase house price,
So Property tax itself can be additional 1/2 mortgage,

I hope we are not heading towards that.