Ah but they don't What falling market? Still powering along quite nicely. House in Blacktown sold for $1m, 100 inspections and 32 registered bidders.
Some reason that it's not a bubble because: In the good old days we had: Much higher interest rates = much lower house prices relative to incomes Today we have: Ultra low interest rates = much higher house prices relative to incomes In both cases affordability (repayments) are not that dissimilar. Leading many to reason that repayment affordability, and not nominal prices, is the key indicator of an asset bubble.
Low downside risk maybe, but far from a guaranteed upside. She could have just as easily spent $1.8M and not found a buyer to pay that $1M more a year later. That was a 55% gain in 1 year when the average is, what, 10% or less in the last year? This is on the extreme end of a good result, it it very far from typical.
Does that factor in the change from wage earner income to household income when measuring affordability? People tell me they often bought a house back then on a single income rather than the combined income of a husband and wife.
These days it's becoming more common to have parents go guarantor for their kids house purchase. Meaning less deposit is required. Also you can still borrow more than 80%, it just means paying mortgage insurance. The ongoing cost of mortgage insurance can be offset by using interest only loans. IMO the biggest threats to Australian real estate are: China recently tightening controls on moving money overseas. Limit was $50K now $7K. Increased regulation. I work in the industry, there are new regulations requiring more granular living expense calculations. And limits on percentage of a bank's portfolio to investors. Any significant rise in interest rates. Stagnant or negative wage growth.
That's not happening in Perth house prices here have fallen and continue to fall, 25% of Commercial Property in CBD remains vacant.
Good question. How many hours do you think people actually assemble deals? It is not so much about the investment, but the investor himself/herself.
If you look at the diagram below, you will know that Australia (Sydney) Real Estate is supported by many pillars. Interest rate is one factor - a very important factor. Scoring the Trump Economic Plan written on September 29, 2016 give you hints. You might want to google and download it to have a look. If Trump really close the door of FREE trade and massively reduce the U.S. current account deficit with China. China and its trading partners will be immediately thrown into a recession. Interest rate will rise sharply, quickly, across the globe. Property price across the globe will fall. In fact, i just read the fiscal budget released in HONG KONG today, we have $935,700,000,000 HKD and we will still insist to use it to defend the HKD against global uncertainties. They know when interest rate rise, Hong Kong property will price falls. They just try to be conservative. Sydney housing won't be an exception in that environment, because it is a function of China and Hong Kong. Then people will realise it is not so much about the auction rate in Kensington, not so much about the population growth in Parramatta, not so much about BS like Sydney price will always goes up, that dictate the direction of the property market, but credit expansion and contraction. If those pillars above are removed one by one, i hope that you have a lot of cash.
At 11 a.m. today there will be a live stream on the future of penalty rates in Australia: https://www.fwc.gov.au/ Watch the whole jenga set fall in a heap if they remove any of them. I know plenty of people who can only afford to invest because of shift allowances and weekend penalty rates. I don't think they will, but there will be a panic if they do.
In Perth yes. That's been a falling market for a quite a while now and probably hitting the bottom this year. Generally when people speak about an "Australian RE bubble" it's only ever in reference to mainly Syd and partly Melb. Somehow all the other capitals and regionals get blanketed with that statement even though there's no signs of a bubble in any of them.
Or the rising market slows and slightly drops off to stagnate for x number of years. No need for dramatics but that's what reading MSM headlines does for you.
I don't take much notice of what MSMs say about financial matters, or much anything else for that matter.
