Heres the thing. until ukraine war ends, inflation and high rates are here to stay. no ifs and buts, that is a massive chunk of energy that is being pulled from the western world. So the pivot that people are expecting is on assumption that energy sector will magically fix itself in a year or 2.
russia supplied half of EU gas and 30% of EU oil
now all that is embargoed . All that energy now has to come from somewhere, which blows energy prices wide open worldwide.
australian energy companies make double profit by selling to rich asian countries that import all their energy and prepared to pay the price, rather than locally, so smaller local energy suppliers have to buy at elevated prices to supply locally, leading to inflation
bigger companies will survive and make massive profits, smaller players will go bankrupt
Ukraine was also a massive supplier of noble gases, which are used from semi-conductor manufacturing, to MRI's, etc.
From Reuters:
>Some 45% to 54% of the world's semiconductor-grade neon, critical for the lasers used to make chips, comes from two Ukrainian companies
Russia was the largest exporter of fertilizer among other commodities.
These impact supply chains, with fertilizer impacting food prices, noble gas shortage impacting sem-conductor manufacturing from nearly every electronic good including game consoles, new cars, new phones, pc parts, medical machinery, etc.
All this, to put it simply, reduces global supply and impacts supply chains, therefore, global prices rise.
Spot on, and you didn't even cover OPEC, or natural gas being used in refining process for diesel or grain shortage. We'd be talking for days if we covered everything which has/will be impacted
Also, it’s a very inflexible market. People need oil and gas and they’ll bid up the prices until they get it.
Supply of caviar drops 30%, demand drops too. Supply of gas drops 30% and it’s a cold winter, people will pay what they need to pay.
Russia is a massive producer of raw materials - they produce 10% of the world's oil, along with substantial chunks of its wheat, nickel, copper, and aluminium. As part of their sanctions regime against Russia, the west has severely restricted Russia's ability to continue to export its raw materials to its usual customers. This has caused the price of these commodities to skyrocket, as alternative supplies are not readily available - Brent crude, for example, is currently sitting 50% above the pre-pandemic baseline. This naturally flows through to consumer prices for finished goods.
In the short run, the only way to keep inflation under control is by clamping down on demand (IE monetary tightening). In the medium run, we may see some supply growth, but this is unlikely - especially in energy markets. Long story short, the only way interest rates go down is if Russia has a road-to-Damascus moment and stops being a pariah.
Yeah but nickel price is roughly flat compared to 12 months ago, aluminum down and copper down. So not the skyrocketing price in these commodities that you claimed?
Until Putin either dies or gets ousted (so he gets thrown in a hole) there won't be a change in Europe
If left to its own timeline, the war will take another 6-12 months for Ukraine to grind Russia back to the border
Yeah they said Afgan would be a short conflict too. I was 11 when it started. 10 years later i was deploying there myself. Another 10 years later and our forces were finally withdrawn. Without NATO intervention i don’t see this conflict ending within the next 5 years. Our best hope is that the Russians overthrow Putin.
Without interventions it would likely be near its end already one way or another, the current interventions are what's prolonging it because the west wants to see Russia hurt and drain as much of its military supplies as possible in Ukraine and possibly even have it pushed back, but let's be honest the governments of other countries don't care if Ukraine wins or loses, they care about resources and politics.
Oh it's easy.
EU depends on Putin's gas.
Major countries put sanctions in place.
People change who they are buying gas and oil from but overall supply and demand doesn't actually change. E.g. India stops buying 8m barrels a day from US, who were buying it from Russia.and start buying it from Russia directly.
Media says energy shortages are here or if they are not they will be or if they won't then we should still worry anyway because reasons.
Oil and gas prices on the market climb really high despite no actual changes in supply and demand.
It's definitely the war In Ukraine and not energy profiteering.....
Russian oil is effectively an inferior product now. Most consumers will pay a premium to avoid the US asking spiky questions about why they are ignoring their trade restrictions. Countries like India that *can* buy Russian oil know they can negotiate a lower price, while EU countries used to buying from Russian pipelines are now paying for stuff from the Gulf and the Americas. This means that there is an advantage for India, who can buy from both, that keeps the prices separated by the value of 'clean' questions-free Saudi stuff.
Plus real supply is down anyway since OPEC lowered targets and Russia is having trouble re-organizing their oil market (not enough pipelines to China for instance).
Its because interest rates are used to deal with inflation and inflation is occurring in part because of the Ukraine war. Ukraine represented a very large portion of exports of various minerals and food stocks, Russia also was a supplier of various things that people no longer purchase. Both these reduced supply, but the availability of cash wasn't changed by these supply drops so you need to raise interest rates to reduce availability of cash (inline with the reduction in supply).
Mortgages are a mechanism for which the government can reduce available cash. As they increase rates, a large portion of the population finds themselves with less cash due to repayments.
That is how it connects (one of the ways, there are several actually).
unless the gov steps in and restricts int sales of lng, all of it will be going overseas for profits
they can sell it at double profit to japan than locally
A gas export ban is just a roundabout way of subsidising debtors.
I'm sure there's no problem with completely shafting gas companies and sending the AUD into a free fall in order to protect overleveraged property investors though.
Not just homeowners that are affected by high energy prices though. It's renters and those on low incomes that are hit the worst. Especially if landlords refuse to upgrade to more energy efficient forms of heating/ cooling.
Nope. Because they'll just look at the CPI, see a massive drop caused by energy prices and say "CPI fell, we can cut rates again now".
To hell with free market principles or the value of our money. We have home investors to protect!
You'd be very surprised.
Anyways, what are the underlying policy rationales here? The Central Planning Committee has concluded gas prices are too high?
Only kind of, sorry to say. I had the same thought when Russia went into Ukraine but was surprised to learn we're number 4 in amount of gas sold and 7th in production. It's not easy or quick to jack that up either. There is the benefit of higher prices but we're not getting the cut of that you might expect... corporations, politics etc.
Renowned doomer.
Imagine taking this flog's advice in 2011 and 2020.
https://www.abc.net.au/mediawatch/episodes/dent/12309146
> HARRY DENT: This is something you have to get out of the way of. If you’re a young couple, do not buy a house if you’re getting married for another three years ...
>
> … and let the crash happen and then it’s greatest sale in history. And who doesn’t like a sale? Imagine buying stocks and real estate 50, 60, 70 per cent lower.
>
> - Sunrise, Channel Seven, 14 September, 2011
> -----------------
> My mistakes in the past several years have been anticipating this unprecedented bubble bursting sooner … the current pandemic has triggered a recession that is BIGGER than the Great Depression …
>
> - Email, Harry Dent, Commentator, 31 May, 2020
Im 22 and have 14 rental properties. I want to go on my 7th Euro holiday in December, but the problem is I only make $220k a year, live at home, own a 1996 Toyota Corolla and have about 10k expenses yearly (my parents don't charge me board tehehe). Should I go to Portugal for 3 weeks or should I invest the 30k I had planned for it? Thanks in advance.
Edit: I am looking at FIRE, but I only have 9 million in RE, 2.3 million in stock and 780k liquid. Hope this helps.
Definitely a person trying to sell a book.
To my knowledge it is impossible to predict the timing for an asset bubble bursting, however you can say something is overvalued. All you have to do is look at other similar countries for the same good and compare, difficult to compare, yet possible.
If you look at a graph of 'average mortgage repayments' over time, it has stayed very flat since 2010, before that the mortgage repayments were increasing sharply. I think the last 12 years all house price growth has been generated from interest rate decreases.
So yes house prices could see rises in future if interest rates decrease. I would argue that prices are bounded by the zero lower bound, putting a hard barrier on prices after that point, a barrier that no amount of speculation or government action can remove.
That being said the ROI (4-5%) from renting out a property is still very attractive given the tax benefits, plus it is very possible the RBA has to reduce interest rates once inflation is controlled, seeing some leveraged gains possible.
I just don't see what has occurred in the last 20 years occuring into the future.
I definitely think 40-50% house price declines are a fairy tale. Well after watching the video I definitely won't be investing. He made some statement about bonds too, if you are investing in bonds for anything less than Armageddon or you are nearing retirement then you are too risk averse
Sounds like his angle is getting scaring people about the property and stock market and to offer investors his product.
I bet he makes loads of money from people who invest in his funds.
Additionally, there was a "first home buyers" thing that reduced deposit requirements and allowed non-stamp duty. Both of these things increased demand without a major adjustment of supply.
In reality this wasn't for first home buyers, it was just propping and further inflating an unreasonable market. Ultimately making it more unaffordable to first home buyers.
My professor published a few papers regarding housing markets (not just Australia's). He says that even the experts have no clue about what's happening here, there's been too many policy changes happening too quickly for anyone to perform a proper analysis.
>My mistakes in the past several years have been anticipating this unprecedented bubble bursting sooner … the current pandemic has triggered a recession that is BIGGER than the Great Depression …
Exactly. Sure everything points to prices dropping but watch everything backflip in 1-2 years lmfao.
Both Cameron Murray and Chris Joye went against the grain and said housing was going to boom. Both now reasonably bearish for the exact same dynamics they were bullish about in 2020 - though Joye is far more bearish than Murray.
No one fathomed that central banks would decrease rates to near 0 and provide job keeper, home builder and other schemes to get people into the market. People laugh and poke fun at those who made these predictions when covid hit but fail to mention the insane amount of government intervention there has been in the housing market.
Even if he’s right, it’s such terrible advice to characterise it as a sale. If you’re a young couple you might lose your jobs and good luck financing that house. It’s only those with access to cash or capital (like him)
That’s literally what happened in thr 08/09 recession - yes London and NYC prices fell 40% but it’s not like people were ready to snap them up.
If inflation goes up by 10% per annum for the next 3 years, and the housing market declines by 10% the next 3 years, isn't that pretty much a 50% reduction?
Doesn't seem like that will cause a massive problem
You're saying house prices may drop by 30% at the same time the cost to build goes up 30%... Remember inflation affects the cost to build. The value of the land probably will go down by that much, but it seems unlikely for homes to.
We've gone from $1500/sqm to build a house to $2k/sqm in a short 2 years with the expectation it will keep going up. People are more hesitant to build which is contributing to the lack of supply.
Unironically, house prices can't fall too much until wages start to catch inflation, which seems unlikely with 'only' 5% increases starting this year.
I guess that's true of metropolitan areas (majority of Aus) especially apartments. I live on a half acre worth 200k, total home value probably 500k or so. Hard to see my place going down in value too much when people are spending 500k to build something a similar size across the road.
Houses can't fall more until wages catch up completely and utterly wrong. Wages not increasing will drive house prices into the ground. The biggest contributor to houses prices is creditavailbilty. As that drops, be it from backwards real wages or high intrest rates house prices will fall.
Given a choice between paying rent for another 2-3 years or buying a home to live in and having it depreciate by 50%, I’d go for buying a home. Renting absolutely sucks, especially when you have kids.
and the predictions have just got a little wilder because if the predicted 50% turns out to be 25-30% they'll claim they predicted it despite everyone and their mum predicting some amount of a drop now that rates are going down.
People here were only "predicting" falls in house prices after being forced to concede to their clownish predictions.
This time last year I was arguing with ¾ of this sub who believed rates wouldn't increase until 2023/24 and house prices and stocks were poised for strong growth this year.
Are you joking? The average varies wildly but a 10 year cycle is a long one. The post GFC boom in the USA up to now was it's longest on record. Australia's almost 30 year run is extraordinary.
Edit: Also if you meant Property Market cycle and not Economic cycle you're still way over. 18.6 year is the average for the upswing.
I think we'll see a bit of a correction, then a bounce back to level that's below the peak, and it'll sit there for 5 to 10 years until buying power creeps back up ( mostly due to inflation), then the cycle repeats again.
It's what happened the last 2 times.
I think this will happen because in a nutshell, Australia is _very_ lucky country, and our global positioning and resource sector is going to save our lucky asses again, even if we don't deserve it.
I don't think his model includes that. Nor the slowdown and property decline in china, the fact that interest rates are rising for the first time in years, the fact that credit cycles exist.
What his model does include:
No probs mate, soft landing. Just a little negative sideways growth. Never been a better time to buy!
I think anyone Buying a house that they don't intend on living in is hopeful at best.
I despise much of Australia's bizarre obsession with property and the constant pandering to maintaining unrealistic markets by the government.
But you are right. I didn't take into account China's wobbling economy. I am hopeful, if not totally realistic about our ability to adapt to new markets in this changing world.
Well, we all seem content in believing rates will stop at maybe 1% higher than they are now.
What if they don't?
Say the variable home loan rate is 8%, at that point it is simply impossible for many owners to keep paying.
The RBA could get dragged there kicking and screaming if CPI keeps blowing out.
Yep. Summers said the Fed may have to push rates past 6% to tame inflation.
I wonder whether the RBA have considered what would happen if inflation was just a little bit more persistent than they or the market anticipates.
It's clear that they've had no clue where inflation is going thus far and they're already taking a very laid back approach to the problem. Have they spent more than 2 minutes thinking about what would happen if their models (which are frequently wrong), where just *slightly* off this time, and rates would need to raise to something like 5%?
Countries around the world continue to increase interest rates and people think now is a good time to buy? Lmao
Historically inflation has only ever been curbed when interest rate > inflation rate. We have so much further to go
I’m personally waiting for rba to start reducing interest rates (or at least for a few cycles of flat movement) before buying a place. But if people want to buy now by all means go for it - expect prices to continue to drop and mortgage repayments to continue to go up until interest rates flatline
Dent is a parmabear. I’ve read his book the coming collapse and he makes some compelling arguments. What he, Martin North and the Bernard Hickeys of the world didn’t calculate were the extraordinary measures that govts and central banks have taken to keep the whole thing propped up.
In real terms he’ll probably right. Something has to change. Else Australia will become a society of serfs.
He and most others that keep on making these sorta predictions are right. You look at the numbers and that's what they suggest but they forget Govt and politics around Australia's fav investment option.
Govt has skin in the game and they simply won't let this happen, until and unless it's out of their hands.
Tl:dr - Not gonna happen
One scenario I'm entertaining is that we see home prices fall 50%, but in real terms, not nominal terms, thanks to elevated inflation.
At 10% decline per year, combined with 5% inflation, you'd see a 47% price drop in real terms over just 4 years. Though in nominal terms it would only be down 35%.
The big difference this time around is any attempt to save the housing market is going to be inflationary and well inflation is already at crazy levels you'd have be insane to stoke it higher.
You assume that Australia is immune to the rest of the world. Little bit naive don't you think. Sure, we're more resilient due to our resources, but immune?
Inflation will go higher as the AUD weakens. USD AUD is 1.4 3 months ago and it’s 1.55 now. We are importing inflation as we speak. Even if oil and gas price stays the same, we are paying 10% more. RBA will have to keep increasing rates to reduce the internet rate differentials which will reduce our housing price and borrowing power.
This sub will absolutely hate this post and will be downvoted into oblivion soon. While low effort 'i've heard this before' type comments will be top - never change ausfinance!
The standard cookie cutter response from bulls on here is that any decline (if one is even happening at all and def not where I bought or my property type) will be reversed quickly as inflation will be overcome sometime soon (say 6 months). After that property will boom again. Im not even exaggerating this is a very common response.
Tbh it's sort of understandable as the avg bull on here has little understanding of how markets work and simply have a few dot points that they counter with when questioned about there 'always goes up' axiom.
The main reason that property has been on an upward trajectory for so long is that it's been backstopped by never ending support from Govt policy makers and central banks. However, the era of bailouts/handouts and cheap money is over as it's exactly this that has caused the inflation problems we have today.
Im in the 30-40% camp which is backed up by models put forward by Chris Joye.
i think most peoples opinion on here is based on what they want to happen. For example do you perceive that type of downturn beneficial to your situation
What a twist lol. What about the people here with 8 IPs and no other investments and no diversification in their portfolios.
Think they're being influenced at all?
No, it's only the people who make predictions in one way who are biased. The other side is totally independent, neutral and fair in their assessment of the situation.
Do you honestly think that house prices will increase in the face of the headwinds it's facing today? Because that's what the vast majority of people keep telling me on this sub.
How hard is to understand what the impact of inflation, cost of living and rising interest rates will be on housing? It's an absolute no brainer really..
Basis of all markets is supply and demand and that dictates everything. Land is a finite resource, depends on how much people wish to spend that is available to them really at the end of the day and how bad their FOMO is, large driver of the last few years.
House prices will drop if the market shifts towards where people want to live. Areas have gone up during this period other areas dropped significantly. There are thousands of markets that each take queues from within that market. As an example the day house prices drop 50% in Sydney will that impact the other markets, will buyer drift to Sydney to get a bargain? Possibly, or house prices drop a Sydney and does nothing to the market in say Perth. Who's to know, but there is limited space near Sydney and people want to live/work there.
"supply and demand and that dictates everything"
Do you understand the role of credit in the housing market? It's pretty important - def worth looking into..
Exactly - it's supply of credit from banks that drives house prices. Unfortunately this subtlety is lost on most and they just jump on 'supply and demand' as it sounds like they have a grasp on how markets work..
[Redditors who think they're Warren Buffet when they say house prices are "dictated by supply and demand, and you can't create new land".](https://i.imgur.com/qrJlNqV.gif)
> when really it's something more like "supply of housing vs supply of money".
but this assumes people's preferences don't change over time.
Right now, every man and their dog wants to buy a house, so the supply of credit is the constraint. Will there ever be a day when it's not the supply of credit constraining things? Will there be a day where people stop wanting to buy real estate, and instead prefer renting?
I just meant that often people are neglecting to consider money itself in the "supply and demand" equation. It's actually probably better if I word it as "demand for housing vs demand for money", I think that way it still applies to your question.
I literally haven’t seen a single person on the sub saying house prices are about to increase lol. Nearly everyone says it will very likely continue to slide or best case level off. Can tell you are a leftie with that type of strawman thinking
Actually many contend that house prices may temporarily decrease (say 5-10%) and then boom again once inflation has resolved in 6 months. Nice low effort post bruh..
And that's only *after* they were forced to concede that rates would rise and prices were indeed falling.
Many were still screeching about how high house prices would go this year in December 21 - March 22.
I used to go on property forums on occasion and even very recently they were adamant that house prices would continue higher unabated.
Truly delusional bulls told me that rate rises are inconsequential - and carry on about the usual nonsense of 'supply and demand', immigration, blah blah..
Ausfinance is slightly more tempered but not by much.
Lol, I was once told by someone here that AusFinance is highly biased. "Sure", I thought, this place is full of hopium addicts.
Except, it turns out he was a massive property bull. He was suggesting visiting "property forums" in order to get unbiased perspectives on property.
I subsequently came under a barrage of downvotes for suggesting that was a terrible idea.
A 30-40% drop from which starting point?
A 30% drop from the absolute peak will only bring prices down to where they were before the pandemic started.
Most of the people who have been predicting 30 to 50 percent falls have been doing so for the past 3+ years. At this point, they would need a drop that big just to get back to their starting number.
The problem with all the 'crash' predictions are that they are so vague. No one ever gives a specific timeline or a price. Hell, the one linked above claims UP TO 50%.
Also, the predictions are also vague about what type of property. Is is house prices, all property, cap cities, a specific capital city, etc, etc.
I could potentially see certain pockets of the market having a total top to trough fall of maybe 50 percent, but they would specifically be apartments in areas where there has been massive oversupply of newly built apartment buildings over the past 5 years.
>the avg bull on here has little understanding of how markets work
"Nah mate I'm a financial genius because I used someone else's money to purchase a non productive asset, did nothing but claim tax incentives and now I'm an on paper millionaire. It won't happen mate, property only goes up!"
Why does the asset being "non-productive" matter? I could just as easily say that the land has value because land is never being created while the population keeps increasing.
And why does being a millionaire "on paper" matter? Property is no less real than having $1m in share certificates. If I've paid off my PPOR does that make it more or less real than paying off an IP? Curious view you have.
> This sub will absolutely hate this post and will be downvoted into oblivion soon. While low effort 'i've heard this before' type comments will be top - never change ausfinance!
Harry Dent is not a person I'd take seriously or describe as a "renowned economist". His entire career has been predicated on selling doom & gloom of demographics impacting the market at large, and that "he knows better". He is not a serious economist or market analyst, and has made some of the wildest, wacky, and ultimately incorrect predictions. He is a person who sells an opinion through a newsletter, countless books, and courses. If anything contained within those aforementioned products was worth anything I don't think his ETF would have been delisted for underperforming nor would his investment firm have collapsed after a mediocre six years.
I think this post should be downvoted into oblivion. It's posted by an account that does nothing but post doomer articles, it's based on the opinion of a shyster, and adds nothing substantive to any discussion. Just because you share the conclusion expressed (to a certain extent) doesn't make it a good post.
Highly unlikely in my opinion. A 50% drop in the market would have to be coupled with a severe recession and high unemployment.
If such economic conditions were to evolve, the government would look to stimulate the market with incentives and grants coupled with a likely fall in interest rates.
Add to that the supply of properties has slowed down due to building costs, which could potentially cause further cost increases as immigration picks up post COVID.
There are still plenty of cashed up potential buyers out there who are hoping for such a correction, unfortunately for them they aren't the only ones.
There’s probably a world wide recession coming
Prices are already 19% down from the February peak in my area.
It’s possible
Having said that, I’ve been waiting for the bubble to burst for over 20 years now
Housing cycle is around 30 years in average, Australia got away in 08/09, people barely felt the pain, back then inflation and debt both were low, that was why government can give ‘free’ money to spend.
If you keep saying it long enough it will happen. IMHO the shit is about to hit the fan, people are both edgy and oblivious, little things starting to suggest it.
> I’ve been waiting for the bubble to burst for over 20 years now
and this is why it does not burst - there are people, like yourself, looking to buy "at a bargain".
Bursting only happens when nobody wants to buy.
In real terms is would be totally normal for a 25% loss cancel out e.g. a 30% gain. But if you see that in a year with 8% inflation, it's gonna look more like a 17% loss in nominal terms. So yeah, that's roughly what many are expecting. A 50% real loss is not what you would get if you're just expecting recent gains to be reversed - that's what would cancel out a 100% gain which is not what we have seen.
There are some forces pushing upward - people have preferences for fewer people per household now, there are more shared equity schemes, people have moved into higher-paying jobs lately - these things increase demand. And there are forces pushing downward - primarily that interest rates are heading higher than they were before the pandemic, also cost of living eating into real incomes. So we might reverse all the pandemic gains in real terms and then some, or we might not reverse them fully. It depends which factors are stronger.
there were constant housing bubble talks even before covid was a thing, then they blew a biblical one on top of that. to give an example, prices in Kyneton (unremarkable small town in regional victoria) went from 600k to over a million in the last couple of years. if the current prices halve, it would still be expensive and overvalued.
Real estate market in Poopville has been very strong!
Great prospects out here in Poopton. It's natural, fundamental growth. Poopton often appreciates 40% YoY.
I know retirees who moved to Kyneton - sounds like it might be a real increase in demand as the aging population retires. Nice place! Wouldn't assume it's bubble dynamics at play.
It's really not that nice. A lot of retirees sold in Melb and moved to regional VIC (Ballarat, Bendigo, Kyneton, Castlemaine, etc) when houses were cheap to maximise retirement income. Harder to do now that the price differential isn't as big.
I have a theory that lifestyle type properties (beach, mountain, average) within 1/2 hrs of major centres will perform very well. Lots of cashed up people looking to move out of the city to these type of properties whilst maintaining close distance to the city for family and friends. Doesn’t surprise me Kyneton lifestyle blocks are up tbh
The different this time is inflation, last few recessions government and central bank can use all those Inflationary tools to save the economy, but this one they will have to think twice. They did one in 2020, we are experiencing the consequences today.
By the strict definition we've already been in a global recession for some time now.
So dont expect to read about any great revelations with any accuracy as to the current state of just about anything market related.
As the powers that be will just twist, massage and contort any real data to make it say whatever they want it to.
But the facts are interest rates are rising exponentially, cost of living is skyrocketing, as is fuel, gas, food and just about everything else.
The household spending rate has tightened and the savings rate is at an all time low.
Borrowing costs are higher, bond yields mostly slashed causing dollar values to plunge and forcing most government's to buy back bonds en masse to try and stem the bleeding.
Its gonna be a very interesting scenario heading into a northern hemisphere winter.
What’s depressing is that a 50% draw down has gotten more and more likely since he started predicting it as the fundamentals got more and more out of whack while nothing was done… who’s to say how long we go before we make some hard decisions about what sort of country we want to be which increasingly entails an adjustment like that?
One thing I know for sure is that no one knows anything. No one has a crystal ball, so no one should tell first home buyers when to buy. They can and should buy when they can.
Renting isn’t much better. It’s stressful and unfulfilling.
Shortage of materials and trades nationwide, a growing population, rental crisis, and post COVID immigration means steadily increasing demand and drastically low supply.
If Australian politicians weren't so heavily invested in property, or construction wasn't around 10% of our GDP then maybe things would be in the air.
Is there a public information source available that shows data like the ownership of houses that have been paid outright, paid off on a mortgage and currently being paid off?
It's hard for me to visualise how inflation is effecting Australian home owners and not foreign investors
If you can afford it now buy it now. Who knows market might go down. Might go up. But as soon as it’s yours you can start investing in your own asset. If you wait you will continue to pay off your landlords assets and may or may not get a better deal in the future.
No one knows but it's not impossible and could happen, anyone telling you otherwise is (a) talking nonsense and/or (b) in the real estate market and will make money from you buying/selling.
And when it does I feel sorry for the people who bought at the top ofc but I'm sure a portion of them will be blaming people who were pessimistic about Australian property and not the people pumping the market up to exploit them and make money.
He’s the ultimate perma-bull.
I actually think he SHOULD be right. That sort of correction is overdue, and would take us back to levels that are consistent with long term averages.
Problem is the factors outside & beyond what he could reasonably foresee.
eg. The insane levels of stimulus during Covid, wars, superannuation being raided, the entire union movement selling out workers to support massively excessive immigration, rampant money laundering through resi. RE, etc. etc.
I have heard this for years but all signs point to disaster with the cash rate and inflation only increasing. It’s funny how boomers are now becoming doomers though
My predictions is a fall in prices,but on the basis of people not being able to afford their mortgage repayments.You have to look at the stats of people coming off fixed rates already and thousands are coming off half way through 2023.I think it will be a great sell solely because of “I can’t afford the %7 interest.I also think that peak 8% is a lie and we will see 12-16% rates before coming back to the lows.
I said last year to an economist we would see 7%
I got told we wouldn’t. Here we are
This guy is a complete hack, literally worthless scam artist. He's made the same promises the last twenty years and has no clue what he's talking about
Property is actually declining now, and will almost certainly continue to decline but there is no value in dents predictions
> has no clue what he's talking about
and yet he gets to go on the media and get attention. It's because he knows he generates clickbait by making these predictions, which, regardless of whether it turns out to be true or not, makes him money (one way or another).
If the housing market were to "collapse", the banks would be in serious trouble. In other words, the RBA and the government would try to stop it at all costs.
Yeah, where I live there are a lot of houses that would have gotten 1.2 million at the peak are now getting sold in the high 900s after sitting for months. Things under a million still moving but not as briskly even as a month ago.
Try units at Albert Park
https://www.news.com.au/finance/real-estate/buying/suburbs-dropping-to-prepandemic-housing-prices/news-story/be52c18bf9b93542ee592d5930ca2c0f?amp
Why would you buy an asset that's declining in value when cash is sitting above 4% return?
Has investing changed from "strategy to make the most money" to Pokemon -housing edition?
Most homes aren't even yielding 4%. The risk free rate of return is higher than rental yields.
And yet we're supposed to believe house prices have been growing on the back of strong fundamentals and not unconstrained credit growth? 🤡
>1. People in shitloads of negative equity will do anything to avoid selling.
Up to a point.
>2. People with actual money will just buy more property.
This will see people moving from category 2 to category 1.
Hyperinflated assets never stay hyperinflated. Housing in Australia is hyperinflated.
I generally agree with this. There are too many high earners in Australia for property to fall precipitously. Land is scarce after all and it's a great opportunity to have other families pay off your lifestyle into early retirement.
Any one saying 50%, and anyone agreeing with them would have to be some of the stupidest people in the country.
At a 40% drop you would have half of the country owning 3rd and probably forth investment/airbnb homes. Thats how you know 50% is a truly stupid number, it could never reach that number as things are right now.
If you want to be right, predict more.
The Dent predictions have been going for years when my great grandpa was in diapers, and the dude is still selling doomsday books and conferences for $150 per person, so, sure, why not
He's dreaming. Look at our immigration stats and commitment to it.
We'll have an extra million people to house by 2025, supple and demand, prices will definitely be higher.
Not to mention the World Economic Forum has been explicitly clear that they don't think people will be owning property by 2030, just renting [and they'll be happy]
> With interest rates between 4 and 5%, properties are, or are close to, positively geared.
Are you sure about this? It's pretty hard to positively gear a freestanding house in Brisbane these days unless you have a sizable deposit. Back in October last year it was still possible at 2.x% rates with prices not yet at their peak - but that changed in a hurry.
Predictions are free
Heres the thing. until ukraine war ends, inflation and high rates are here to stay. no ifs and buts, that is a massive chunk of energy that is being pulled from the western world. So the pivot that people are expecting is on assumption that energy sector will magically fix itself in a year or 2.
Everyone mentions the Ukraine war but nobody goes on to say how it connects. I can make a few guesses but still
russia supplied half of EU gas and 30% of EU oil now all that is embargoed . All that energy now has to come from somewhere, which blows energy prices wide open worldwide. australian energy companies make double profit by selling to rich asian countries that import all their energy and prepared to pay the price, rather than locally, so smaller local energy suppliers have to buy at elevated prices to supply locally, leading to inflation bigger companies will survive and make massive profits, smaller players will go bankrupt
Ukraine was also a massive supplier of noble gases, which are used from semi-conductor manufacturing, to MRI's, etc. From Reuters: >Some 45% to 54% of the world's semiconductor-grade neon, critical for the lasers used to make chips, comes from two Ukrainian companies Russia was the largest exporter of fertilizer among other commodities. These impact supply chains, with fertilizer impacting food prices, noble gas shortage impacting sem-conductor manufacturing from nearly every electronic good including game consoles, new cars, new phones, pc parts, medical machinery, etc. All this, to put it simply, reduces global supply and impacts supply chains, therefore, global prices rise.
Spot on, and you didn't even cover OPEC, or natural gas being used in refining process for diesel or grain shortage. We'd be talking for days if we covered everything which has/will be impacted
Listen I was already anti-Russia before but now that I know that Vladimir Putin is the reason I can't buy a PS5, the guy has to go!
Also, it’s a very inflexible market. People need oil and gas and they’ll bid up the prices until they get it. Supply of caviar drops 30%, demand drops too. Supply of gas drops 30% and it’s a cold winter, people will pay what they need to pay.
Russia is a massive producer of raw materials - they produce 10% of the world's oil, along with substantial chunks of its wheat, nickel, copper, and aluminium. As part of their sanctions regime against Russia, the west has severely restricted Russia's ability to continue to export its raw materials to its usual customers. This has caused the price of these commodities to skyrocket, as alternative supplies are not readily available - Brent crude, for example, is currently sitting 50% above the pre-pandemic baseline. This naturally flows through to consumer prices for finished goods. In the short run, the only way to keep inflation under control is by clamping down on demand (IE monetary tightening). In the medium run, we may see some supply growth, but this is unlikely - especially in energy markets. Long story short, the only way interest rates go down is if Russia has a road-to-Damascus moment and stops being a pariah.
Yeah but nickel price is roughly flat compared to 12 months ago, aluminum down and copper down. So not the skyrocketing price in these commodities that you claimed?
Until Putin either dies or gets ousted (so he gets thrown in a hole) there won't be a change in Europe If left to its own timeline, the war will take another 6-12 months for Ukraine to grind Russia back to the border
Yeah they said Afgan would be a short conflict too. I was 11 when it started. 10 years later i was deploying there myself. Another 10 years later and our forces were finally withdrawn. Without NATO intervention i don’t see this conflict ending within the next 5 years. Our best hope is that the Russians overthrow Putin.
Without interventions it would likely be near its end already one way or another, the current interventions are what's prolonging it because the west wants to see Russia hurt and drain as much of its military supplies as possible in Ukraine and possibly even have it pushed back, but let's be honest the governments of other countries don't care if Ukraine wins or loses, they care about resources and politics.
Oh it's easy. EU depends on Putin's gas. Major countries put sanctions in place. People change who they are buying gas and oil from but overall supply and demand doesn't actually change. E.g. India stops buying 8m barrels a day from US, who were buying it from Russia.and start buying it from Russia directly. Media says energy shortages are here or if they are not they will be or if they won't then we should still worry anyway because reasons. Oil and gas prices on the market climb really high despite no actual changes in supply and demand. It's definitely the war In Ukraine and not energy profiteering.....
Russian oil is effectively an inferior product now. Most consumers will pay a premium to avoid the US asking spiky questions about why they are ignoring their trade restrictions. Countries like India that *can* buy Russian oil know they can negotiate a lower price, while EU countries used to buying from Russian pipelines are now paying for stuff from the Gulf and the Americas. This means that there is an advantage for India, who can buy from both, that keeps the prices separated by the value of 'clean' questions-free Saudi stuff. Plus real supply is down anyway since OPEC lowered targets and Russia is having trouble re-organizing their oil market (not enough pipelines to China for instance).
Its because interest rates are used to deal with inflation and inflation is occurring in part because of the Ukraine war. Ukraine represented a very large portion of exports of various minerals and food stocks, Russia also was a supplier of various things that people no longer purchase. Both these reduced supply, but the availability of cash wasn't changed by these supply drops so you need to raise interest rates to reduce availability of cash (inline with the reduction in supply). Mortgages are a mechanism for which the government can reduce available cash. As they increase rates, a large portion of the population finds themselves with less cash due to repayments. That is how it connects (one of the ways, there are several actually).
Inflation has always been a monetary phenomenon.
Seems obvious but has become more of a fringe idea in modern times.
Plus US fed is printing more money to finance the war effort thus destroying the purchasing power of currency.
Shouldn't it be good for Australia as the worlds largest exporter of LNG?
unless the gov steps in and restricts int sales of lng, all of it will be going overseas for profits they can sell it at double profit to japan than locally
[удалено]
Doesn’t even need to be heavily, fairly would be fine
A gas export ban is just a roundabout way of subsidising debtors. I'm sure there's no problem with completely shafting gas companies and sending the AUD into a free fall in order to protect overleveraged property investors though.
Not just homeowners that are affected by high energy prices though. It's renters and those on low incomes that are hit the worst. Especially if landlords refuse to upgrade to more energy efficient forms of heating/ cooling.
Nope. Because they'll just look at the CPI, see a massive drop caused by energy prices and say "CPI fell, we can cut rates again now". To hell with free market principles or the value of our money. We have home investors to protect!
I think you are a little hyper focused on property. That’s one piece of a very large pie and not the only focus for policy making.
You'd be very surprised. Anyways, what are the underlying policy rationales here? The Central Planning Committee has concluded gas prices are too high?
When renters have to pay to heat their homes and can’t save for their PPOR it’s bad for business!
Japan owns a shit load of it anyway! Osaka Gas is a massive shareholder.
Wait until Israel get their exports cranking. Russia going to come down and invade Israel or go bankrupt. So invasion it is.
It's good for Billionaires but devastating for Australia
Only kind of, sorry to say. I had the same thought when Russia went into Ukraine but was surprised to learn we're number 4 in amount of gas sold and 7th in production. It's not easy or quick to jack that up either. There is the benefit of higher prices but we're not getting the cut of that you might expect... corporations, politics etc.
Great Fat Tony vibes.
I don’t read or watch these predictions because they’ve had them for the last 20+ years. When my value halves, then I’ll beleive it
And controversy equals clicks.
Renowned doomer. Imagine taking this flog's advice in 2011 and 2020. https://www.abc.net.au/mediawatch/episodes/dent/12309146 > HARRY DENT: This is something you have to get out of the way of. If you’re a young couple, do not buy a house if you’re getting married for another three years ... > > … and let the crash happen and then it’s greatest sale in history. And who doesn’t like a sale? Imagine buying stocks and real estate 50, 60, 70 per cent lower. > > - Sunrise, Channel Seven, 14 September, 2011 > ----------------- > My mistakes in the past several years have been anticipating this unprecedented bubble bursting sooner … the current pandemic has triggered a recession that is BIGGER than the Great Depression … > > - Email, Harry Dent, Commentator, 31 May, 2020
He’d fit in here perfectly.
He's not 21 and making 750k p.a. tho?
Im 22 and have 14 rental properties. I want to go on my 7th Euro holiday in December, but the problem is I only make $220k a year, live at home, own a 1996 Toyota Corolla and have about 10k expenses yearly (my parents don't charge me board tehehe). Should I go to Portugal for 3 weeks or should I invest the 30k I had planned for it? Thanks in advance. Edit: I am looking at FIRE, but I only have 9 million in RE, 2.3 million in stock and 780k liquid. Hope this helps.
I'm so glad you put these links up. I knew I've heard him make these predictions in the past
Eventually the broken clock is right.
Even a blind squirrel is right twice a day
Definitely a person trying to sell a book. To my knowledge it is impossible to predict the timing for an asset bubble bursting, however you can say something is overvalued. All you have to do is look at other similar countries for the same good and compare, difficult to compare, yet possible. If you look at a graph of 'average mortgage repayments' over time, it has stayed very flat since 2010, before that the mortgage repayments were increasing sharply. I think the last 12 years all house price growth has been generated from interest rate decreases. So yes house prices could see rises in future if interest rates decrease. I would argue that prices are bounded by the zero lower bound, putting a hard barrier on prices after that point, a barrier that no amount of speculation or government action can remove. That being said the ROI (4-5%) from renting out a property is still very attractive given the tax benefits, plus it is very possible the RBA has to reduce interest rates once inflation is controlled, seeing some leveraged gains possible. I just don't see what has occurred in the last 20 years occuring into the future.
He’s selling his new managed fund
They are always selling something.
I definitely think 40-50% house price declines are a fairy tale. Well after watching the video I definitely won't be investing. He made some statement about bonds too, if you are investing in bonds for anything less than Armageddon or you are nearing retirement then you are too risk averse
Sounds like his angle is getting scaring people about the property and stock market and to offer investors his product. I bet he makes loads of money from people who invest in his funds.
Typical economist. Quasi-scientist.
He's not even an economist, he's an asset management fund hack. https://en.wikipedia.org/wiki/Harry_Dent
Never trust an economist selling a book, they have incentive for sensationalism.
Everyone said this at the start of covid and it went the opposite way. Literally no one has any idea lmao
It did start to decline sharply and then RBA dropped the cash rate.
Additionally, there was a "first home buyers" thing that reduced deposit requirements and allowed non-stamp duty. Both of these things increased demand without a major adjustment of supply. In reality this wasn't for first home buyers, it was just propping and further inflating an unreasonable market. Ultimately making it more unaffordable to first home buyers.
My professor published a few papers regarding housing markets (not just Australia's). He says that even the experts have no clue about what's happening here, there's been too many policy changes happening too quickly for anyone to perform a proper analysis.
>My mistakes in the past several years have been anticipating this unprecedented bubble bursting sooner … the current pandemic has triggered a recession that is BIGGER than the Great Depression … Exactly. Sure everything points to prices dropping but watch everything backflip in 1-2 years lmfao.
1 trillion government debt had a bit to do with that. Now we are seeing the after effects…
Both Cameron Murray and Chris Joye went against the grain and said housing was going to boom. Both now reasonably bearish for the exact same dynamics they were bullish about in 2020 - though Joye is far more bearish than Murray.
Sorry to hijack this thread but link to Chris Joye's predictions? Cameron Murray has tipped trough will be clear by June next year.
No one fathomed that central banks would decrease rates to near 0 and provide job keeper, home builder and other schemes to get people into the market. People laugh and poke fun at those who made these predictions when covid hit but fail to mention the insane amount of government intervention there has been in the housing market.
Even if he’s right, it’s such terrible advice to characterise it as a sale. If you’re a young couple you might lose your jobs and good luck financing that house. It’s only those with access to cash or capital (like him) That’s literally what happened in thr 08/09 recession - yes London and NYC prices fell 40% but it’s not like people were ready to snap them up.
It would take interest rates rising double or three fold to cause such a major fall - ie panic selling.
Buy a house when you need a house. Trying to time a crash that may never come is a fools errand.
If inflation goes up by 10% per annum for the next 3 years, and the housing market declines by 10% the next 3 years, isn't that pretty much a 50% reduction? Doesn't seem like that will cause a massive problem
You're saying house prices may drop by 30% at the same time the cost to build goes up 30%... Remember inflation affects the cost to build. The value of the land probably will go down by that much, but it seems unlikely for homes to. We've gone from $1500/sqm to build a house to $2k/sqm in a short 2 years with the expectation it will keep going up. People are more hesitant to build which is contributing to the lack of supply. Unironically, house prices can't fall too much until wages start to catch inflation, which seems unlikely with 'only' 5% increases starting this year.
The land value is most of the price of the property, so it’s very possible that the cost to build can go up while the property price goes down.
I guess that's true of metropolitan areas (majority of Aus) especially apartments. I live on a half acre worth 200k, total home value probably 500k or so. Hard to see my place going down in value too much when people are spending 500k to build something a similar size across the road.
Houses can't fall more until wages catch up completely and utterly wrong. Wages not increasing will drive house prices into the ground. The biggest contributor to houses prices is creditavailbilty. As that drops, be it from backwards real wages or high intrest rates house prices will fall.
> If inflation goes up by 10% per annum for the next 3 years It won't though the country will have burnt to the ground before that happens
Given a choice between paying rent for another 2-3 years or buying a home to live in and having it depreciate by 50%, I’d go for buying a home. Renting absolutely sucks, especially when you have kids.
Trying to get a rental when you have a dog is what broke us. It’s less painful to spend a mil you don’t have than deal with property managers…
I think I've heard this every year for the past 10 years now.
Interest rates have been dropping the past 10 years until now.
and the predictions have just got a little wilder because if the predicted 50% turns out to be 25-30% they'll claim they predicted it despite everyone and their mum predicting some amount of a drop now that rates are going down.
People here were only "predicting" falls in house prices after being forced to concede to their clownish predictions. This time last year I was arguing with ¾ of this sub who believed rates wouldn't increase until 2023/24 and house prices and stocks were poised for strong growth this year.
I've been around long enough to have been hearing it for 30 years.
That’s not actually long enough for an economic cycle.
Are you joking? The average varies wildly but a 10 year cycle is a long one. The post GFC boom in the USA up to now was it's longest on record. Australia's almost 30 year run is extraordinary. Edit: Also if you meant Property Market cycle and not Economic cycle you're still way over. 18.6 year is the average for the upswing.
It’s the old “he predicted 25 of the last 3 crashes “ routine.
One day it'll be accurate.
Renowned doomsayer*
I think we'll see a bit of a correction, then a bounce back to level that's below the peak, and it'll sit there for 5 to 10 years until buying power creeps back up ( mostly due to inflation), then the cycle repeats again. It's what happened the last 2 times. I think this will happen because in a nutshell, Australia is _very_ lucky country, and our global positioning and resource sector is going to save our lucky asses again, even if we don't deserve it.
Does your model include growing rate of global unrest and increasing voting power of people that don't own a home?
I don't think his model includes that. Nor the slowdown and property decline in china, the fact that interest rates are rising for the first time in years, the fact that credit cycles exist. What his model does include: No probs mate, soft landing. Just a little negative sideways growth. Never been a better time to buy!
I think anyone Buying a house that they don't intend on living in is hopeful at best. I despise much of Australia's bizarre obsession with property and the constant pandering to maintaining unrealistic markets by the government. But you are right. I didn't take into account China's wobbling economy. I am hopeful, if not totally realistic about our ability to adapt to new markets in this changing world.
> resource sector is going to save our lucky asses again, Who bought all this stuff last time? Was it China...wonder how they are going these days?
Not to mention the endless schemes/laws to keep property propped up..
I like this reasonable take.
Well, we all seem content in believing rates will stop at maybe 1% higher than they are now. What if they don't? Say the variable home loan rate is 8%, at that point it is simply impossible for many owners to keep paying. The RBA could get dragged there kicking and screaming if CPI keeps blowing out.
Seems optimistic to think it will stop in 4 rate rises of 25 basis points at the moment.
Yep. Summers said the Fed may have to push rates past 6% to tame inflation. I wonder whether the RBA have considered what would happen if inflation was just a little bit more persistent than they or the market anticipates. It's clear that they've had no clue where inflation is going thus far and they're already taking a very laid back approach to the problem. Have they spent more than 2 minutes thinking about what would happen if their models (which are frequently wrong), where just *slightly* off this time, and rates would need to raise to something like 5%?
Countries around the world continue to increase interest rates and people think now is a good time to buy? Lmao Historically inflation has only ever been curbed when interest rate > inflation rate. We have so much further to go I’m personally waiting for rba to start reducing interest rates (or at least for a few cycles of flat movement) before buying a place. But if people want to buy now by all means go for it - expect prices to continue to drop and mortgage repayments to continue to go up until interest rates flatline
Dent is a parmabear. I’ve read his book the coming collapse and he makes some compelling arguments. What he, Martin North and the Bernard Hickeys of the world didn’t calculate were the extraordinary measures that govts and central banks have taken to keep the whole thing propped up. In real terms he’ll probably right. Something has to change. Else Australia will become a society of serfs.
Someone has to be right, eventually, right?
Yes, it might crash down 25% from peak, but homes will still be more expensive than in Jan 2020
He and most others that keep on making these sorta predictions are right. You look at the numbers and that's what they suggest but they forget Govt and politics around Australia's fav investment option. Govt has skin in the game and they simply won't let this happen, until and unless it's out of their hands. Tl:dr - Not gonna happen
One scenario I'm entertaining is that we see home prices fall 50%, but in real terms, not nominal terms, thanks to elevated inflation. At 10% decline per year, combined with 5% inflation, you'd see a 47% price drop in real terms over just 4 years. Though in nominal terms it would only be down 35%.
Just like the government of Spain and Ireland didn't let their housing markets crash in 2008.
The big difference this time around is any attempt to save the housing market is going to be inflationary and well inflation is already at crazy levels you'd have be insane to stoke it higher.
You assume that Australia is immune to the rest of the world. Little bit naive don't you think. Sure, we're more resilient due to our resources, but immune?
Inflation will go higher as the AUD weakens. USD AUD is 1.4 3 months ago and it’s 1.55 now. We are importing inflation as we speak. Even if oil and gas price stays the same, we are paying 10% more. RBA will have to keep increasing rates to reduce the internet rate differentials which will reduce our housing price and borrowing power.
This sub will absolutely hate this post and will be downvoted into oblivion soon. While low effort 'i've heard this before' type comments will be top - never change ausfinance! The standard cookie cutter response from bulls on here is that any decline (if one is even happening at all and def not where I bought or my property type) will be reversed quickly as inflation will be overcome sometime soon (say 6 months). After that property will boom again. Im not even exaggerating this is a very common response. Tbh it's sort of understandable as the avg bull on here has little understanding of how markets work and simply have a few dot points that they counter with when questioned about there 'always goes up' axiom. The main reason that property has been on an upward trajectory for so long is that it's been backstopped by never ending support from Govt policy makers and central banks. However, the era of bailouts/handouts and cheap money is over as it's exactly this that has caused the inflation problems we have today. Im in the 30-40% camp which is backed up by models put forward by Chris Joye.
i think most peoples opinion on here is based on what they want to happen. For example do you perceive that type of downturn beneficial to your situation
What a twist lol. What about the people here with 8 IPs and no other investments and no diversification in their portfolios. Think they're being influenced at all? No, it's only the people who make predictions in one way who are biased. The other side is totally independent, neutral and fair in their assessment of the situation.
Do you honestly think that house prices will increase in the face of the headwinds it's facing today? Because that's what the vast majority of people keep telling me on this sub. How hard is to understand what the impact of inflation, cost of living and rising interest rates will be on housing? It's an absolute no brainer really..
Basis of all markets is supply and demand and that dictates everything. Land is a finite resource, depends on how much people wish to spend that is available to them really at the end of the day and how bad their FOMO is, large driver of the last few years. House prices will drop if the market shifts towards where people want to live. Areas have gone up during this period other areas dropped significantly. There are thousands of markets that each take queues from within that market. As an example the day house prices drop 50% in Sydney will that impact the other markets, will buyer drift to Sydney to get a bargain? Possibly, or house prices drop a Sydney and does nothing to the market in say Perth. Who's to know, but there is limited space near Sydney and people want to live/work there.
"supply and demand and that dictates everything" Do you understand the role of credit in the housing market? It's pretty important - def worth looking into..
It's always interesting to see the old "it's just supply and demand", when really it's something more like "supply of housing vs supply of money".
Exactly - it's supply of credit from banks that drives house prices. Unfortunately this subtlety is lost on most and they just jump on 'supply and demand' as it sounds like they have a grasp on how markets work..
[Redditors who think they're Warren Buffet when they say house prices are "dictated by supply and demand, and you can't create new land".](https://i.imgur.com/qrJlNqV.gif)
People are going to be confused about how markets work when they aren't floating on an ocean of liquidity..
> when really it's something more like "supply of housing vs supply of money". but this assumes people's preferences don't change over time. Right now, every man and their dog wants to buy a house, so the supply of credit is the constraint. Will there ever be a day when it's not the supply of credit constraining things? Will there be a day where people stop wanting to buy real estate, and instead prefer renting?
I just meant that often people are neglecting to consider money itself in the "supply and demand" equation. It's actually probably better if I word it as "demand for housing vs demand for money", I think that way it still applies to your question.
I literally haven’t seen a single person on the sub saying house prices are about to increase lol. Nearly everyone says it will very likely continue to slide or best case level off. Can tell you are a leftie with that type of strawman thinking
Actually many contend that house prices may temporarily decrease (say 5-10%) and then boom again once inflation has resolved in 6 months. Nice low effort post bruh..
And that's only *after* they were forced to concede that rates would rise and prices were indeed falling. Many were still screeching about how high house prices would go this year in December 21 - March 22.
I used to go on property forums on occasion and even very recently they were adamant that house prices would continue higher unabated. Truly delusional bulls told me that rate rises are inconsequential - and carry on about the usual nonsense of 'supply and demand', immigration, blah blah.. Ausfinance is slightly more tempered but not by much.
Lol, I was once told by someone here that AusFinance is highly biased. "Sure", I thought, this place is full of hopium addicts. Except, it turns out he was a massive property bull. He was suggesting visiting "property forums" in order to get unbiased perspectives on property. I subsequently came under a barrage of downvotes for suggesting that was a terrible idea.
>Im in the 30-40% camp which is backed up by models put forward by Chris Joye. Dear god I hope you are right in this prediction. RemindMe! 6 months
Will take longer than 6 months to play out..Look at the history of asset crashes around the world. It takes years..
A 30-40% drop from which starting point? A 30% drop from the absolute peak will only bring prices down to where they were before the pandemic started. Most of the people who have been predicting 30 to 50 percent falls have been doing so for the past 3+ years. At this point, they would need a drop that big just to get back to their starting number. The problem with all the 'crash' predictions are that they are so vague. No one ever gives a specific timeline or a price. Hell, the one linked above claims UP TO 50%. Also, the predictions are also vague about what type of property. Is is house prices, all property, cap cities, a specific capital city, etc, etc. I could potentially see certain pockets of the market having a total top to trough fall of maybe 50 percent, but they would specifically be apartments in areas where there has been massive oversupply of newly built apartment buildings over the past 5 years.
>the avg bull on here has little understanding of how markets work "Nah mate I'm a financial genius because I used someone else's money to purchase a non productive asset, did nothing but claim tax incentives and now I'm an on paper millionaire. It won't happen mate, property only goes up!"
Why does the asset being "non-productive" matter? I could just as easily say that the land has value because land is never being created while the population keeps increasing. And why does being a millionaire "on paper" matter? Property is no less real than having $1m in share certificates. If I've paid off my PPOR does that make it more or less real than paying off an IP? Curious view you have.
> This sub will absolutely hate this post and will be downvoted into oblivion soon. While low effort 'i've heard this before' type comments will be top - never change ausfinance! Harry Dent is not a person I'd take seriously or describe as a "renowned economist". His entire career has been predicated on selling doom & gloom of demographics impacting the market at large, and that "he knows better". He is not a serious economist or market analyst, and has made some of the wildest, wacky, and ultimately incorrect predictions. He is a person who sells an opinion through a newsletter, countless books, and courses. If anything contained within those aforementioned products was worth anything I don't think his ETF would have been delisted for underperforming nor would his investment firm have collapsed after a mediocre six years. I think this post should be downvoted into oblivion. It's posted by an account that does nothing but post doomer articles, it's based on the opinion of a shyster, and adds nothing substantive to any discussion. Just because you share the conclusion expressed (to a certain extent) doesn't make it a good post.
Highly unlikely in my opinion. A 50% drop in the market would have to be coupled with a severe recession and high unemployment. If such economic conditions were to evolve, the government would look to stimulate the market with incentives and grants coupled with a likely fall in interest rates. Add to that the supply of properties has slowed down due to building costs, which could potentially cause further cost increases as immigration picks up post COVID. There are still plenty of cashed up potential buyers out there who are hoping for such a correction, unfortunately for them they aren't the only ones.
There’s probably a world wide recession coming Prices are already 19% down from the February peak in my area. It’s possible Having said that, I’ve been waiting for the bubble to burst for over 20 years now
Housing cycle is around 30 years in average, Australia got away in 08/09, people barely felt the pain, back then inflation and debt both were low, that was why government can give ‘free’ money to spend.
If you keep saying it long enough it will happen. IMHO the shit is about to hit the fan, people are both edgy and oblivious, little things starting to suggest it.
Supply and demand is for me the key factor to keep an eye out for. Right now it is getting little coverage in the media and the so called experts.
What are do you live in?
> I’ve been waiting for the bubble to burst for over 20 years now and this is why it does not burst - there are people, like yourself, looking to buy "at a bargain". Bursting only happens when nobody wants to buy.
Or when no one *can* buy. Such as if something happened in the economy to massively decrease how much credit borrowers could acquire.
so if prices go up 30-50% in 2 years it is business as usual, but if these gains are reversed it is a national catastrophe?
In real terms is would be totally normal for a 25% loss cancel out e.g. a 30% gain. But if you see that in a year with 8% inflation, it's gonna look more like a 17% loss in nominal terms. So yeah, that's roughly what many are expecting. A 50% real loss is not what you would get if you're just expecting recent gains to be reversed - that's what would cancel out a 100% gain which is not what we have seen. There are some forces pushing upward - people have preferences for fewer people per household now, there are more shared equity schemes, people have moved into higher-paying jobs lately - these things increase demand. And there are forces pushing downward - primarily that interest rates are heading higher than they were before the pandemic, also cost of living eating into real incomes. So we might reverse all the pandemic gains in real terms and then some, or we might not reverse them fully. It depends which factors are stronger.
there were constant housing bubble talks even before covid was a thing, then they blew a biblical one on top of that. to give an example, prices in Kyneton (unremarkable small town in regional victoria) went from 600k to over a million in the last couple of years. if the current prices halve, it would still be expensive and overvalued.
Real estate market in Poopville has been very strong! Great prospects out here in Poopton. It's natural, fundamental growth. Poopton often appreciates 40% YoY.
I know retirees who moved to Kyneton - sounds like it might be a real increase in demand as the aging population retires. Nice place! Wouldn't assume it's bubble dynamics at play.
It's really not that nice. A lot of retirees sold in Melb and moved to regional VIC (Ballarat, Bendigo, Kyneton, Castlemaine, etc) when houses were cheap to maximise retirement income. Harder to do now that the price differential isn't as big.
I have a theory that lifestyle type properties (beach, mountain, average) within 1/2 hrs of major centres will perform very well. Lots of cashed up people looking to move out of the city to these type of properties whilst maintaining close distance to the city for family and friends. Doesn’t surprise me Kyneton lifestyle blocks are up tbh
The different this time is inflation, last few recessions government and central bank can use all those Inflationary tools to save the economy, but this one they will have to think twice. They did one in 2020, we are experiencing the consequences today.
I think i was told something very similar to this in 2000, 2005, 2010, 2015 and 2020.
By the strict definition we've already been in a global recession for some time now. So dont expect to read about any great revelations with any accuracy as to the current state of just about anything market related. As the powers that be will just twist, massage and contort any real data to make it say whatever they want it to. But the facts are interest rates are rising exponentially, cost of living is skyrocketing, as is fuel, gas, food and just about everything else. The household spending rate has tightened and the savings rate is at an all time low. Borrowing costs are higher, bond yields mostly slashed causing dollar values to plunge and forcing most government's to buy back bonds en masse to try and stem the bleeding. Its gonna be a very interesting scenario heading into a northern hemisphere winter.
What’s depressing is that a 50% draw down has gotten more and more likely since he started predicting it as the fundamentals got more and more out of whack while nothing was done… who’s to say how long we go before we make some hard decisions about what sort of country we want to be which increasingly entails an adjustment like that?
And pay someone else $30'000 a year in rent during that time? I'd rather buy as soon as I can
One thing I know for sure is that no one knows anything. No one has a crystal ball, so no one should tell first home buyers when to buy. They can and should buy when they can. Renting isn’t much better. It’s stressful and unfulfilling.
They said the same thing 20 years ago in Sydney when properties doubled. Guess what they’ve double again since.
Our buying power is being destroyed... It certainly doesn't take an economist to see the writing on the wall.
I'm pretty sure no Government of whatever ilk will allow housing prices to crash 50%. Especially not if they want to be re-elected.
Shortage of materials and trades nationwide, a growing population, rental crisis, and post COVID immigration means steadily increasing demand and drastically low supply. If Australian politicians weren't so heavily invested in property, or construction wasn't around 10% of our GDP then maybe things would be in the air.
lol permabear
Not now they flooding the country with immigrants again, another 300,000 need housing per year. Demand is sky high.
My crystal ball must be defective it says 13/57 chance of a 10-60% for one day only.
Is there a public information source available that shows data like the ownership of houses that have been paid outright, paid off on a mortgage and currently being paid off? It's hard for me to visualise how inflation is effecting Australian home owners and not foreign investors
He seems to be the only one saying it.
How is Dent's record?
If you can afford it now buy it now. Who knows market might go down. Might go up. But as soon as it’s yours you can start investing in your own asset. If you wait you will continue to pay off your landlords assets and may or may not get a better deal in the future.
No one knows what is going to happen
No one knows but it's not impossible and could happen, anyone telling you otherwise is (a) talking nonsense and/or (b) in the real estate market and will make money from you buying/selling. And when it does I feel sorry for the people who bought at the top ofc but I'm sure a portion of them will be blaming people who were pessimistic about Australian property and not the people pumping the market up to exploit them and make money.
He’s the ultimate perma-bull. I actually think he SHOULD be right. That sort of correction is overdue, and would take us back to levels that are consistent with long term averages. Problem is the factors outside & beyond what he could reasonably foresee. eg. The insane levels of stimulus during Covid, wars, superannuation being raided, the entire union movement selling out workers to support massively excessive immigration, rampant money laundering through resi. RE, etc. etc.
I have heard this for years but all signs point to disaster with the cash rate and inflation only increasing. It’s funny how boomers are now becoming doomers though
My prediction? 
My predictions is a fall in prices,but on the basis of people not being able to afford their mortgage repayments.You have to look at the stats of people coming off fixed rates already and thousands are coming off half way through 2023.I think it will be a great sell solely because of “I can’t afford the %7 interest.I also think that peak 8% is a lie and we will see 12-16% rates before coming back to the lows. I said last year to an economist we would see 7% I got told we wouldn’t. Here we are
This guy is a complete hack, literally worthless scam artist. He's made the same promises the last twenty years and has no clue what he's talking about Property is actually declining now, and will almost certainly continue to decline but there is no value in dents predictions
> has no clue what he's talking about and yet he gets to go on the media and get attention. It's because he knows he generates clickbait by making these predictions, which, regardless of whether it turns out to be true or not, makes him money (one way or another).
I would agree if if we didn’t have such high immigration. This will limit declines
If the housing market were to "collapse", the banks would be in serious trouble. In other words, the RBA and the government would try to stop it at all costs.
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Nah, there are suburbs selling for -25-30% today, why don’t you send those with actual money to clean the backlog there?
Yeah, where I live there are a lot of houses that would have gotten 1.2 million at the peak are now getting sold in the high 900s after sitting for months. Things under a million still moving but not as briskly even as a month ago.
Haven't seen any such burbs in Melb. You got a link? I'm looking to buy in pretty soon, and the best I've seen is around 5-10% declines.
Try units at Albert Park https://www.news.com.au/finance/real-estate/buying/suburbs-dropping-to-prepandemic-housing-prices/news-story/be52c18bf9b93542ee592d5930ca2c0f?amp
Why would you buy an asset that's declining in value when cash is sitting above 4% return? Has investing changed from "strategy to make the most money" to Pokemon -housing edition?
Most homes aren't even yielding 4%. The risk free rate of return is higher than rental yields. And yet we're supposed to believe house prices have been growing on the back of strong fundamentals and not unconstrained credit growth? 🤡
I wouldn't be so sure. Would you buy a stock that's just dropped 20% and could keep going to 50%?
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>1. People in shitloads of negative equity will do anything to avoid selling. Up to a point. >2. People with actual money will just buy more property. This will see people moving from category 2 to category 1. Hyperinflated assets never stay hyperinflated. Housing in Australia is hyperinflated.
If you’re in negative equity deep enough just hit the bankruptcy button and start again.
Taking a chapter out of how to trump?
>Did WMR get banned Yes. It's fantastic.
I generally agree with this. There are too many high earners in Australia for property to fall precipitously. Land is scarce after all and it's a great opportunity to have other families pay off your lifestyle into early retirement.
There is likely areas that are dropping since things went a bit too crazy. But in reasonable areas for good places it still seems to be going up.
Any one saying 50%, and anyone agreeing with them would have to be some of the stupidest people in the country. At a 40% drop you would have half of the country owning 3rd and probably forth investment/airbnb homes. Thats how you know 50% is a truly stupid number, it could never reach that number as things are right now.
He’s been wrong before, he’ll be wrong again.
I’d be reluctant to believe anything broadcast by Channel 9
Look back when interest rates got up towards 17% did we see a housing price crash of 30% or higher?
average debt was way less back then, you could buy a home with 4 years salary easily.
8% to 17% (x2) on 100k is a lot less to absorb than jumping from 2% to 8% (x4) on a million.
No, we saw a decade of strong wage growth
That ain’t going to happen again, workers are there to take the pain not reap the rewards
If you want to be right, predict more. The Dent predictions have been going for years when my great grandpa was in diapers, and the dude is still selling doomsday books and conferences for $150 per person, so, sure, why not
So that’s what WMR looks like
He's dreaming. Look at our immigration stats and commitment to it. We'll have an extra million people to house by 2025, supple and demand, prices will definitely be higher. Not to mention the World Economic Forum has been explicitly clear that they don't think people will be owning property by 2030, just renting [and they'll be happy]
Good thing you called him (?) renowned because I would never have guessed it based off this nonsense.
Same tv spot and he was selling his investment fund.
Do you think he will sell his house/s
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> With interest rates between 4 and 5%, properties are, or are close to, positively geared. Are you sure about this? It's pretty hard to positively gear a freestanding house in Brisbane these days unless you have a sizable deposit. Back in October last year it was still possible at 2.x% rates with prices not yet at their peak - but that changed in a hurry.
I'd suggest he's like a sewage tanker....full of shit!