What will stop the BOOM in Sydney and Melbourne

Yes but if the RBA is upping rates to slow down inflation you can, with a relatively high level of assurance, bet your IP has gone up.
If banks up interest rates for capital requirements etc. this is different and cannot assume capital growth.

 

Only recently came across this forum. Great comments by all.

Regarding the comment of RBA upping rates with inflation rising:
Inflation was just announced today and was slightly lower than expected, around 1.5%
Given that the RBA wants this figure to be between 2-3% what does this say about interest rates?

My guess is the current rates will be on hold till the second half of the year

 

Well according to our Deputy PM Sydney will always be expensive and if you can't afford to buy a house then you should just move out.

Can't afford to buy a home? Get out of Sydney and Melbourne, says Barnaby Joyce


Deputy Prime Minister Barnaby Joyce has a solution for Sydneysiders who can't afford to buy a home: get out of Sydney.

Declaring himself fed up with the focus on Sydney and Melbourne in the housing affordability debate, Mr Joyce suggested homebuyers give up on water views and relocate to the regions, where property is cheaper.

"I get annoyed when people talk about that the only house that you can buy apparently is in Sydney and it's too dear," he told ABC Radio National. "There are other parts of Australia. I live in one, it's called Tamworth."

Mr Joyce was responding to yet another report showing homes in Australia's two biggest cities are among the world's least affordable. The Demographia survey released on Tuesday found Sydney was the second most expensive city in the world for housing, behind only Hong Kong, while Melbourne ranked fifth - more expensive than London and San Francisco.

"Houses will always be incredibly expensive if you can see the Opera House and the Sydney Harbour Bridge. Just accept that," Mr Joyce said. "Houses are much cheaper in Tamworth, houses are much cheaper in Armidale, houses are much cheaper in Toowoomba.

"Sydney's wonderful and so is Melbourne. The trouble is so many people think it's wonderful that the price of houses is incredibly expensive. But there are other parts of Australia.

"I did move out west so I can say this - if you've decided you've got the gumption in you and you want to move [west], you're going to have a very affordable house. If you say 'I want a really affordable house in Mosman,' well, don't we all."

Prime Minister Malcolm Turnbull wants to prioritise housing affordability in 2017 and has handed responsibility of the issue to young frontbench newcomer Michael Sukkar, who is from Melbourne.

And Treasurer Scott Morrison has flown to London to learn more about how the British government has responded to the housing affordability crisis in that country.

Asked whether the Turnbull government needed to do more on housing affordability, or perhaps reconsider tax incentives such as negative gearing, Mr Joyce said the government was doing "other things" such as promoting agriculture and decentralising the public service to regional areas such as Armidale.

"We do other things and when we suggest them, people mainly in the Labor Party, fight tooth and claw to try and stop us," he told ABC radio.

NSW Premier Gladys Berejiklian, sworn in to the job on Monday, has also named housing affordability as a top priority. Speaking to Radio National on Wednesday, she said the situation was not as simple as Mr Joyce made it appear.

"A good society gives people choices," she said, arguing that if someone worked in Sydney, they should be able to buy a house there.

But Ms Berejiklian said she did not believe the situation was yet a "crisis", and also rejected tinkering with negative gearing, saying: "I don't feel at this stage that that is something I would necessarily touch."

Shadow treasurer Chris Bowen said Mr Joyce's comments showed how out of touch the Turnbull government is with Australians.

"Country life is a good life. It suits many people... It is not an option for everyone. It shouldn't be this government's only answer when it comes to housing affordability," he said.

 

I think he has a point.. If it all seems too hard, its time to re-evaluate what you are doing, and if it really is the right place for you.

 

welcome to the forum

 

Rising Au rates, driven by inflation, which in turn is driven by a weaker AUD, which in turn is driven by stronger US rates

Rising Au rates could also be driven by just general rise in wholesale funding costs. Around 50-60% of our funding comes from USA anyway, kind of the same point as above.

Rising Au unemployment, which in turn is driven by falling Asia, which is driven by China slowing down, which in turn could be caused my many factors some of which could include bursting of China's debt bubble which is basically the same as Japan's pre the lost-decade, trade wars initiated by US which will destroy China's manufacturing, a general slowdown in US and Europe (China's biggest customers. Don't forget we in Australia have a warped mentality of China. It is still known as a supplier of most goods in USA/Europe, rather than the country that buys all their properties).

Some other possibilities would be government intervention, eg limiting LVR to 70% (Singapore tanked its market by limiting LVRs).

 

Try telling that to the people who lived through the 90s as adults.

 

Melbourne and Sydney medium house prices roughly doubled in 9-10 years during the 90s...

 

Yes, these markets may have doubled during this period but these markets did not go up every year, that's why stats are what they are, they don't give you the real picture.

For example, if you purchased properties in Sydney in 2003/4 you purchased at peak, which meant you would be holding properties for 8 years before you got any growth, in fact during this time those Syd properties, certain markets would have gone backwards but you still had to pay back bank interest which was much higher then than what they are today. ouch

My point is many will jump into markets for fear of continued rises and missing on the action, but perhaps we are getting too close to peak now?

 

Yes i know. I was just responding to the comment that read that during the 90s property prices dropped / platuaed.

 

You can cut the data whichever way you want. The point was, property prices crashed in the early 90s because of high interest rates.

 

I'm curious which state or territory your referring to?

 

http://www.theaustralian.com.au/bus...y/news-story/23f9caef3a4bca26538f189870c3376e

Google's a good place to start if you're interested in history. To answer your question, the entire country. I think there're some oldies here who've lived through those times.

My folks were paying 20% interest rates in 1991 for your interest, and I think most contemporary developers and property investors went bankrupt.

 

Where are you seeing data that inflation is moving up? Latest ABS data has inflation still extremely weak... 1.5 % Dec 15 to Dec 16 .

6401.0 - Consumer Price Index, Australia, Dec 2016

 

Official rates, maybe, but banks are already raising rates in the mortgage market.

 

Yes that's right interest rates are going up may not be variable/official but still same impact if they continue rising

 

Will finance do it? Just read the post where Bankwest is no longer allowing equity release to investors?

I am in Melb at the moment settling on my sale of Croydon deve/DA this market is still roaring due to lack of stock, therefore townhouses have creeped up another level?

Interesting times in 2017, Melb is still hot hot hot. Perhaps I need to jump in again

 

I haven't read all the comments but everyone seems to be talking about the Australian interest rates and so on. But I think I read or heard somewhere recently that 1 3rd of the investment in Sydney and Melbourne is from Chinese buyers. So wouldn't it make sense to look at what's going on in China? An impact on how they get their money/where they borrow from would impact on the market. If 1 3rd of the main investors stop buying or have to start selling then that would make a pretty large impact.
Just my opinion. And I'm not 100% sure on the 1 3rd figure so don't hold me to it. But you get my theory.

 

Not sure about the Chinese component, in Melbourne, I think Government has put the brakes on foreign buyers.

In Melb its FHB, investors, immigration and as I mentioned stock in certain areas have low and there is still strong demand. Outer suburbs apparently also booming, I expect major regional centres may be also doing very well.

Not been paying close attention to Syd market would be interested to know what is actually moving/booming.

MTR

 

Already happening apparently
Australia's property boom showing signs of slowing as buyers hold back