What was the reason for the last boom in Melb/Syd?

Somewhat reduced. The FIRB has limited overseas buyers from purchasing established homes but they can still buy brand new (KDR or new estates) and new apartments. Au govt responded to local's backlash against this demographic outbidding local buyers.

At the same time APRA brought in tighter lending restrictions which reduced demand from everyone who would have previously qualified for large mortgages.

The lead up to the 2019 federal elections also dampened some real estate activity.

 

In my experience, rate cutting made a big difference. Buyers kept spending more every time rates were cut. Actually caught me out as the cuts didn't match the buying fever I was seeing. Consumer confidence, as they say.

 

It wasn't just the cost of finance and immigration, it was APRA's brakes in March 2017 slowing down investment loans as the overall loan "pie" and the year on year growth banks were allowed to enjoy in that space that brought things skidding to a halt.

 

Did you read the link I posted? 2016 sheds some light here

 

Booms still going in most of Hobart with the 2nd wind.

 

Hard to know but I think any city that booms significantly in the world is probably driven by high net immigration. You look at places like Vancouver or HK, it’s all driven my fresh capital coming in. While the migrants may not make up a huge proportion of the buyers, an extra 5-10% of buyers is a lot because prices are driven by the marginal buyer or marginal bid at an auction. The difference between having 1 bidder or 2 bidders at an auction can be a 20% price difference - I’ve done my fair share making people pay extra $200-400k at an auction.

In contrast places like Japan don’t boom - you can buy freehold resi buildings 10km from central wards for 7-8% net yield in Tokyo (looking at one right now) and borrow at 1.5% interest rates.

 

You’d think right? But must be more than that. See my post above. I can borrow in Tokyo and buy easily at 7-8% net yield and borrow at 1.5%.

 

Can't really compare Japan considering a house is worth $0 once it turns 20

 

how come?

 

Earthquakes?

 

really? thought their buildings are earthquake proof

 

That's their tradition over there. At 22 years old they deem the house to be worth 0 so they knock down re build. I guess it's a way of keeping residential construction constant helping the economy with a decreasing population.

 

More buyer demand than seller supply
Cheap credit and an abundant lender market - all competing
Foreign buyers
Greed and a need to outbid those around you when equity in other property was a factor (ie no 80% LVR cap)
Hype especially agents and media
No signs of a price collapse
Lenders who would lend to anything with a heartbeat.
LMI
****ing stupid lenders offering 95% no LMI and such deals
Net migration
First home buyer desperation
FHOG schemes
Marketing and tax hype eg rentvest etc
Sheep mentality
Poor regulation and oversight. It was the wild west

 

Cashed up Chinese buyers thinking Australia is part of China with less air pollution, fresher food, and better baby formulas, also our properties are freehold vs China's unclear title.

China has restriction on how many properties you can buy, so they have to diversify. Where here is unlimited as long as you have $$$.

 

Also do not like keeping bulk cash in bank or buying shares, prefer to use property as main store of wealth. Even if a fraction of their population say 1% decide to buy a property overseas, that is close to 12million+ buyers :S

 

What was the reason for the last boom in Mel/Syd? Just the usual 2 culprits.....fear & greed.

 

Just like how when online shopping they show 1 item left in stock and 200 people watching.. gets me everytime

 

In Sydney it was under supply. In the 10 years up to 2012 the city was ruled by save our suburb type activists and development phobic councils. This left the city unprepared when a wave of demand hit from low interest rates, loosish banking standards, greedy investors, Chinese buyers and strong economy

 

I heard in China you have to do a divorce to buy more property so to avoid the restriction.

 

You forgot to add loose lending and every other act of fraud uncovered as per the royal commission