Australia Real Estate Bubble Talk (Part I)

[House]

Great assumption. How do you know i am not doing it. lol

It is not so much of a secret. 99% of the people will just sit in their office to earn a paycheque anyway.

Even my post is talking about Australia Real Estate Bubble, i never say the opportunities are no more. You need to just "do it". Take actions.

In fact, if you know what you are doing, you can make money whether the market is up or down.

I challenge you to do a small exercise, print 2000 flyers tonight, saying you want to BUY property and you are not real estate agent.
In the flyer you should specifically say you are looking for people are going through a divorce, a financial mess, or anything that want to settle quick. Don't worry about whether you can buy it or not. Just go out there and put theses flyers into as many mail box as you can tonight in your neighbourhood.

Let us know if you receive any calls tomorrow

Hi Cincalo, I dont need you to tell me the sellers outnumber buyers right now and your saying you have a way of making a profit in real estate in a falling market - good luck.

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.

 

[willrocks]

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.

 

[SilverDJ]

Even if all the cost is $700,000 it is still $300,000 profit.
30% reward and low downside risk.

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.

 

[SpacePete]

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.

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.

 

[SpacePete]

I saw these stats recently. Note that its 2015 interest rates which have gone down since then.

 

[willrocks]

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.

 

[clear]

Great assumption. How do you know i am not doing it. lol

It is not so much of a secret. 99% of the people will just sit in their office to earn a paycheque anyway.

Even my post is talking about Australia Real Estate Bubble, i never say the opportunities are no more. You need to just "do it". Take actions.

In fact, if you know what you are doing, you can make money whether the market is up or down.

I challenge you to do a small exercise, print 2000 flyers tonight, saying you want to BUY property and you are not real estate agent.
In the flyer you should specifically say you are looking for people are going through a divorce, a financial mess, or anything that want to settle quick. Don't worry about whether you can buy it or not. Just go out there and put theses flyers into as many mail box as you can tonight in your neighbourhood.

Let us know if you receive any calls tomorrow

Hi Cincalo, I dont need you to tell me the sellers outnumber buyers right now and your saying you have a way of making a profit in real estate in a falling market - good luck.

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.

That's not happening in Perth house prices here have fallen and continue to fall, 25% of Commercial Property in CBD remains vacant.

 

[Cinvalo]

if it is like this, every one just speculate on property, why would everyone work anymore...

Downpayment = $1m
Borrowed $0.8m OPM (e.g bank).

1 year later,
Sold for $2.8m.

Paid back the back $0.8m.
Net $2m.
Profit = $2m - $1 (downpayment) = $1m (profit)

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.

 

[Cinvalo]

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.

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.

 

[Topherclaus]

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.

 

[JulieW]

Private-sector wage growth has slid to a record low of just 1.8 per cent, throwing into doubt budget projections and confounding the Reserve Bank, which would prefer not to have to cut interest rates again and run the risk of reigniting house prices.

Reserve Bank governor Philip Lowe identified house prices as a block on further interest-rate cuts on Wednesday, telling a business gathering that he hoped current rates would "generate stronger growth and we can avoid a further upward pressure on housing prices".

"We would like the economy to grow a bit more. If we were to try to achieve that through monetary policy, that would encourage people to borrow more and it probably would put more upward pressure on housing prices" he said. "At the moment, I don't think these two things are in the national interest."

http://www.theage.com.au/federal-po...h-hits-fresh-alltime-low-20170222-guifjc.html

Interesting video on the link.

 

[House]

Hi Cincalo, I dont need you to tell me the sellers outnumber buyers right now and your saying you have a way of making a profit in real estate in a falling market - good luck.

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.

That's not happening in Perth house prices here have fallen and continue to fall, 25% of Commercial Property in CBD remains vacant.

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.

 

[Skyrocket]

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.

That's not happening in Perth house prices here have fallen and continue to fall, 25% of Commercial Property in CBD remains vacant.

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.

All bubbles pop.

 

[House]

That's not happening in Perth house prices here have fallen and continue to fall, 25% of Commercial Property in CBD remains vacant.

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.

All bubbles pop.

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.

 

[Skyrocket]

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.

All bubbles pop.

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.