This Housing Downturn is Over

not sure that's a lay answer - but people don't like to sell in soft markets, and despite all the hype there weren't many forced sellers, so they decided to hold on

 

oh ok, makes sense. thanks for the previous link aswell, interesting

 

A lot of calls about dead cat bounces on here but I'm just not seeing it. This looks more solid, I attended 2 auctions today (northern beaches Sydney, run down homes) both had 5+ bidders, mainly young families.

These people are looking to buy and there just isn't enough stock to satisfy.

 

Guide $1.45 through campaign, sold pre auction $1.7:

https://www.realestate.com.au/sold/property-house-nsw-rozelle-132027918

 

there's a lot of cash flowing around the system still.

 

Dea cat bounce is the brigade that said the downturn would be a decade.
Now changed their tune to dead cat bounce.


This rebound will run 1 year past the last rate cut of the time.

 

This place had a guide of around $900K and sold for $1.4 million. That said, it is a Robin Boyd design, which would have counted for something.

Sold 79 Buena Vista Drive, Montmorency VIC 3094 on 12 Oct 2019 - 2015630386 | Domain

Guide of $1.3 to $1.4 million, sold for $1.75 million.

Sold 170 Canning Street, Carlton VIC 3053 on 12 Oct 2019 - 2015632292 | Domain

Quirky, small inner-city properties have tended to do well for a while. I suspect that they're selling to downsizing retirees who've got plenty of equity in a big family home.

I don't know if this is a dead cat bounce or start of a new boom. We'll find out eventually.

 

I have long stopped engaging with ‘dead cat bounce’ believers. They can choose to live in their own version of reality.

On the ground, Sydney inner and middle ring has already finished recovery and prices are surging 5-10% above last peak of 2107.

CoreLogic daily index is still lagging behind but it’s posting 10-15 percent points on a daily basis and we are not far from seeing full recovery reflected in data.

 

Surely you have to caveat this on-the-ground experience with data on stock numbers. Ultimately it is a game of offer and demand, and stocks are low which drives prices up. And that's not even taking into account easier lending and interest rates drops.

Sentiment can drive another boom, sure, but if price growth is not based on any economic fundamentals (like wage growth, immigration, inflation, GDP per capita etc.) eventually it should get corrected, as it has been in the past two years. And if APRA hadn't intervened the boom continuation and subsequent correction may have ended up more drastic.

Either way it means nothing about buying an investment property or not if you're not a major property developer, you can make money investing in a lot of different ways over different periods of time and locations.

I would just be cautious of using the current recovery as proof that a pre-2017 cycle is back, especially in Sydney, if that's what fighting the 'dead cat bounce' advocates is implying.

 

A big part of the problem is a certain part of population somehow expects prices to stay stagnant and when prices go up as a result of natural demand and supply cycles, they blame regulators and sometimes regulators buy into their expectations and intervene like what happened during APRA/other regulatory interventions between 2014-2018. The issue with these interventions is that they go beyond their intended scope and do irreversible damage to the wider economy. Within last 12 months, we have gone from regulatory position of 'criminalising everything other than VERY stringent lending' to 'giving 3 rate cuts' in 4-5 months.

Sydney 2017 cycle didn't stop because of an increase in supply or reduction in demand. Regulators strangled a good chunk of the demand and rest was crushed by gradual loss in business confidence. Wage growth usually happens at the top end of the cycle but it never followed in this case as Royal commission kept taking regular swings at business confidence for almost a year.

Back in 2017, we had a thriving real estate market (new projects, jobs, new cars, retail whitegood spend) and wages were also on the growth path as unemployment rate was continuously shrinking.

Now we have a recovering real estate market while everything else hangs by a thread, heavily dependent on this recovery.

And I get amazed by those who think real estate prices shouldn't go up!

 

well. I work in retail. I can say for sure that is down down down.
Walk through any Westfields. Only people in Coles and Woolworths and Aldi.

 

Why would you even go to Westfields if you can get it all from home.. (Just something to consider).

 

I haven't been to a traditional shopping Centre for 6 months now. I buy nearly everything online.

No wonder Frank Lowy is out..

 

Quite possibly the best post I’ve read in awhile. So true.

 

Agree. Sums up the series of events very well.

 

I also think Brisbane will be coming along to join the ride this time with Perth follow closely behind as various stats have indicated. Can't wait to see those two laggers picking up their backsides.

 

... with Australia’s highest unemployment rate .

Might have to get rid of Anastasia and the ALP first .

 

One thing to note is that there has been some impact from the trade war. If not for the trade war, RBA wouldn't have had to drop rates that many times this year. I reckon a lot of business confidence loss is due to the global slowdown from the trade war. The uncertainty holds back spending on things like hiring and capital expenditure.

IMHO the regulation put on the banking sector had not been overdone at all and is not a major cause of the economic slowdown we are experiencing.

Even if property markets recover, the larger economy will still be crap if the trade war continues. Things not looking that rosy now.

 

May be except we aren’t as much connected to global economy as we like to think. Australian economy has weathered many global storms in the past without a hitch.

As a matter of fact, I can’t think of a time in last 25 years when one or more global economic shitstorms weren’t brewing and Aussie housing still managed to grow 7-10 times in value.

 

'cus Aussies will use any excuses to pop up the housing market!