When will the Melbourne property market bottom out?

if we

If we are really at the end of a 20-30 year credit supercycle for aussie housing, going forward, there could be a really long dowturn in property markets lasting >10years. So yeah buying now, u do run the risk of 10 or 20 year "time in the market"

The way things are going, it looks like RBA will have no choice but to go to negative rates. And then our economy will be on life support like some developed nations in Europe, Japan, etc. Debt is already ballooning out of control. Do you think there's seriously any use holding for 20 years in such a scenario??

 

Good point and I think it's probably timely for well thought out long term estate planning (ie generational asset wealth) to take front row with anticipated long drawn out downturn like
you mentioned, ie buy hold pass down to offsprings never sell.

Rgds,
FXD

 

110% agree my suburb and surrounds your average home that was easily selling for 900k won’t move now for $800, something good sells for 1.2 / 1.3 no problems...

 

Well your post starts with “if” so I guess you don’t know what happens either.

What I would say is I bought a place, paid it down enough it makes near 2k a month. So I bought another place and paid it down. I also invest in stocks.

So yeh. Happy to hold those assets and add to them. I also don’t hold any property that would be valued under 850-900k in current market. So yeh. I don’t see any reason I don’t hold those assets for 20 years unless people stop renting.

Also I don’t think Australia and Japan are equivalent in any way beyond they both have houses that go up and down in price. Europe is pretty big so hard to comment as there is a lot of influences on different economies there.

 

Yes, this is due to investors sitting on the sidelines. Now that number of houses selling has reached a low (apparently lowest since Keating area), expect demand to build up and lack of investors buying means less medium density development in the near future, this will also drive up demand compared to supply.
This is basically the housing market cycle...

 

Although i don’t think we are near recovery.

https://www.realestate.com.au/news/worst-of-housing-slump-has-passed-as-property-price-falls-begin-to-slow/

This about no new quality places coming on the market and mostly old stock with new agents is very true in my experience being active on the market.

 

I agree, why these arbitrary comparisons.

If you going to compare Australia, then look at Canada, NZ and maybe UK

 

From a piece in Tuesday's AFR by Larry Schlesinger

... One in four new home buyers in Sydney and Melbourne is defaulting on their housing lot purchases due mainly to financing and valuation shortfalls, forcing developers to resell these lots in a market where monthly sales rates have hit seven-year lows, new figures show.

Victoria, the country’s biggest greenfield land market, is at the epicentre of the surge in defaults, with its cancellation rate hitting 27 per cent in the first quarter of the year, up from a 12 per cent in the December 2018 quarter and just 2 per cent fallover rate a year prior, according to land consultancy Research4 ...

Bit alarming if anywhere near correct, especially if you're one of the developers doing the massive subdivisions to the north of Melbourne: Craigieburn, Donnybrook, Wollert etc.

 

All those areas terrify me.

 

I’m thinking Kinley in the outer east as well.

 

agree, althought no one has a crystal ball, I too think that too many people are reliant on the "property never goes down" belief, which so far has been fairly correct

but im a bit skeptical, and maybe im cyncial but feel this time around , the down turn will be longer and the growth wont be like in past cycles (but when havent we head that before)

 

RBA won't lower rates. No point...what I believe is the 7% assessment rate will be lowered to circa 6%.

For my crystal ball, it says 2020

 

Clearance rates consistently trending up

 

April 13: final clearance rate = 51.6 National Auction Market Preview - 21 April
April 20 (Easter ~ outlier): final clearance rate = 63.2 National Auction Market Preview - 28 April
April 27: final clearance rate = 53.6 National Auction Market Preview - 5 May

Domain has this weekend at 61%, but with 40% unreported thus far

This past weekend was a healthy result, but the unreported numbers are still bloody high.. I'm not a property doomsayer but I'd be looking for more consistent final clearance rates at least at or above 60 as well as the total advertised listings to drop.

 

Pretty much this, actual clearance rate would be lucky to finish low 50's% with such a miss on the number of reported.

Catches so many first timers out.

Need to weight the Clearance Rate for the % of reported Auctions. Or if to lazy wait for the revised figure.
~61% is pretty much a record low for the % of reported results. It means your likely to have a much larger revision to the final Clearance Rate.

 

Makes more sense to lower the rate.
* Put's pressure on the AUD.
* Actually puts money into peoples pockets, which they can go out and spend to drive demand.

* Change of Assessment rate doesn't help cashflow and only allows for a greater level of borrowing at the margins.
It shouldn't be lowered to stoke demand.
Only if after careful analysis has found it was set incorrectly (which I would find kind of hard to believe, because it's not supposed to be a supply/demand tool).

 

Yes, yes, but the trend is going up even after revised final numbers

 

IMHO given recent dip again in China's PMI and locally inflation is already stagnating, RBA has no choice but to lower rates further. We are going exactly the way most of Europe went in the previous decade. Asset/property bubble/boom -> bust and financial chaos -> overwhelming debt+ spiralling expenses+everchanging gov.

However with elections coming up and potential BIG reshuffle in Canberra, believe both RBA and APRA will just hold their guns and make any major announcements/changes after the new gov comes into play.

 

And I see mouth watering bargains.

 

Diversified developer Stockland has taken a hit on its residential land settlements after production delays at one of its major Melbourne projects while defaults have also risen above average.

Defaults at Stockland rise, settlements slow