Australian Housing Affordability Discussion

[Cool Cat Phil]

Put an offer on a house we liked yesterday. An offer we considered reasonable given the market and the listing. Sellers countered with something ridiculous. We moved up, and still they have said no. For now.

Place has been empty and listed for several months, and their expectations don't seem to match the market.

Our offer - which we know is right in the ballpark for the area and listing - was subject to sale, which for us the only way we can do it. They don't want that. Whatever.

But oh well. No emotions on our part. We'll keep looking until things line up in our favour.

Would not be surprised if the listing stays untouched for a while. And if they come back to us in the future, we might even knock a bit off our offer too.

If your looking for real estate in Perth, as your profile suggests, you may wish to continue to take you time looking for the right home. As i'm sure you already know, Perth is the only city presently in Australia with negative growth in the real estate market and appears will continue for the time being at least.

 

[cove]

A half a percent interest rate rise together with the big 4 banks fees going up may shake more than 3% of mortgage payers off the edge of the cliff. Often the problem that occurs is one of the two income earners lose their job.

 

[GarrettM]

A half a percent interest rate rise together with the big 4 banks fees going up may shake more than 3% of mortgage payers off the edge of the cliff. Often the problem that occurs is one of the two income earners lose their job.

We're a one income, one new small business family. Thankfully my employment is secure.

Cool Cat we won't rush into anything. Will seek the deal that works for us, both buying and seliing.

Our budget will dictate our choices, but we won't let our hearts overrule our heads.

 

[blackcat20]

Put an offer on a house we liked yesterday. An offer we considered reasonable given the market and the listing. Sellers countered with something ridiculous. We moved up, and still they have said no. For now.

Place has been empty and listed for several months, and their expectations don't seem to match the market.

Our offer - which we know is right in the ballpark for the area and listing - was subject to sale, which for us the only way we can do it. They don't want that. Whatever.

But oh well. No emotions on our part. We'll keep looking until things line up in our favour.

Would not be surprised if the listing stays untouched for a while. And if they come back to us in the future, we might even knock a bit off our offer too.

People seem to have overly high expectations; house down the block from us was on the market for 18 months with an asking price of $2m. Didnt sell and seems to have been taken off the market now. I think they were hoping for a quick buck but didnt actually need/want to sell and move, but would have if the offer was right.

Hoping we can find something reasonable by the end of the year. People are asking a lot of money for not much house these days.

 

[GarrettM]

People seem to have overly high expectations; house down the block from us was on the market for 18 months with an asking price of $2m. Didnt sell and seems to have been taken off the market now. I think they were hoping for a quick buck but didnt actually need/want to sell and move, but would have if the offer was right.

Hoping we can find something reasonable by the end of the year. People are asking a lot of money for not much house these days.

We were apart by about 20k. The difference is I don't need to buy the house, but I know from the agent that they need to sell.

People get strange advice though. Our little 3x2 villa was valued at $450k eight months ago. But I know in this market we'll do well to get any offer with a 4 at the front.

 

[cove]

Don't ever think the general public are "normal" GarrettM. Never underestimate stupid and you will be ok.
It won't be a huge issue if you are trading up as the bigger places will have tumbled by about the same percentage. You could end up feeling you are winners in these price changes in Perth.

 

[TomVexille]

Don't ever think the general public are "normal" GarrettM. Never underestimate stupid and you will be ok.

You can say that again

 

[dajop]

People get strange advice though. Our little 3x2 villa was valued at $450k eight months ago. But I know in this market we'll do well to get any offer with a 4 at the front.

Aaah, RE agents, tell the sellers they'll get $900K, tell the buyers they can expect to pay $700K. Although I notice some are being prosecuted in Victoria for these sort of practices.

 

[blackcat20]

Aaah, RE agents, tell the sellers they'll get $900K, tell the buyers they can expect to pay $700K. Although I notice some are being prosecuted in Victoria for these sort of practices.

It's that kind of REA that has left us "homeless"; promising big money so that we suddently have to vacate.

 

[burmans]

A half a percent interest rate rise together with the big 4 banks fees going up may shake more than 3% of mortgage payers off the edge of the cliff. Often the problem that occurs is one of the two income earners lose their job.

+1 on this. I'm not about to make any predictions on where interest rates are going aside than suggesting that anyone who thinks interest rates are going to remain at record low levels for ever is probably fooling themselves. And from a very low base with a very large mortgage, it doesn't need to move far for things to hurt a lot really quickly for some people.

 

[Jeffrey O'Neill]

Should people outside of Inner Melbourne and Sydney (houses not apartments) be worried buying a home now and the value of that home dropping?

Ask yourself a few questions like

* What jobs will replace the loss of jobs with the car manufacturing shutting and resource construction completing? What is the income hit to wages?

* How long can house price inflation outstrip wages growth?

* What is the likely impact to rental returns if unemployment rises (something I think very likely)? In the USA markets that had very low vacancy rates became saturated with large number of properties people could no longer afford to rent. People rent out the spare room or move in with family.

* At what point does the market go back to "fundamentals" where the income of the property determines it's value? Is a gross 3% yield sustainable?

The Govt and RBA will sell out the rest of the economy to prob up house prices for as long as they can.

 

[cove]

I do think that residential real estate in Sydney and Melbourne is being supported by State Government stamp duty collections on sales , negative gearing and Federal Government capital gains tax. Why would they want to change this? It seems a lot of politicians and their supporters are in on this game and there is a feel good thing when you buy a home and it quadruples in value.
With wages stalled and our big 4 banks getting funds from overseas you might think this cannot go on forever.

 

[whatmeworry]

The Coalition refuses to rule out tax deductible mortgages...

Housing economics experts have warned the government against a proposal to make owner-occupiers’ home mortgages tax deductible after the new assistant minister to the treasurer left the policy option on the table.
The Grattan Institute’s chief executive, John Daley, told Guardian Australia the deduction would cost the budget $19bn a year and do little to improve housing affordability, compared with tackling negative gearing and capital gains tax concessions.

https://www.theguardian.com/austral...es-after-coalition-refuses-to-rule-out-option

 

[farstar]

Negative gearing is hear to stay as it make people save.
Also if stamp duty was abolished tomorrrow prices would go up the same amount. People will always bid to the max they can afford and if stamp duty goes they will bid the extra on their bid, and then the government will not get the revenue so pontless as taxes actually pay for something. Its like giving rebates for first home buyers, prices will always adjust for any rebates.

 

[jrod]

Aaah, RE agents, tell the sellers they'll get $900K, tell the buyers they can expect to pay $700K. Although I notice some are being prosecuted in Victoria for these sort of practices.

But they're such highly regarded members of society! Don't get me started

 

[Jeffrey O'Neill]

Negative gearing is hear to stay as it make people save.
Also if stamp duty was abolished tomorrrow prices would go up the same amount. People will always bid to the max they can afford and if stamp duty goes they will bid the extra on their bid, and then the government will not get the revenue so pontless as taxes actually pay for something. Its like giving rebates for first home buyers, prices will always adjust for any rebates.

Negative gearing will be curtailed once the govt doesn't have more palatable options available.

A broadly based land tax will eventually be introduced by the states as the feds get more stingy.

A broadly based land tax would limit the increase in prices since it would be another cost just like interest out strata levies.

 

[whatmeworry]

International survey has Sydney second most unaffordable city in the world. Melbourne sixth most unaffordable.

It's the 13th edition of the report, which links median house prices to median household incomes otherwise known as the "median multiple."
A value 3.0 or under is deemed affordable. Vancouver's median multiple is 11.8.

1. China, Hong Kong, 18.1
2. Australia, Sydney 12.2
3. Canada, Vancouver, B.C. 11.8
4. N.Z., Auckland 10.0
5. U.S., San Jose, Calif. 9.6
6. Australia, Melbourne, 9.5
7. U.S., Honolulu, Hawaii 9.4
8. U.S., Los Angeles, Calif. 9.3
9. U.S., San Francisco, Calif. 9.2
10. U.K., Bournemouth & Dorset 8.9

Vancouver housing ranked 3rd most unaffordable by international study - British Columbia - CBC News

By the end of 2016, Sydney’s median house price climbed more than 10 per cent to a record $1,123,991, Domain Group’s rental and house price report released on Tuesday found.

https://www.domain.com.au/news/sydn...cord-11-million-domain-group-20170123-gtryjd/

This week is Chinese peak investment week with Chinese New Year.

Of the 120 Chinese consumers surveyed, 26 per cent plan to travel internationally during Chinese New Year next weekend and almost half say they’ll look for property to buy during their trip.

https://www.domain.com.au/news/aust...rest-during-chinese-new-year-20170120-gtuotk/

 

[whatmeworry]

Just reading about Chinese New Year property tourists in Melbourne this week.

During golden week, Ms Yan planned to show properties in Balwyn, Balwyn North, Canterbury and Kew in the $3.6 million to $5.5 million price range.

Many of her prospective buyers would have a temporary visa, which allowed them to purchase one established property to live in as their residence.

There was growing interest in house and land packages in the northern and western suburbs because more agents were promoting them in China, she said. Agents felt house and land packages were easier to sell.

Mid-price range properties — less than $1.5 million — were still in good demand because it was easier for buyers to finance, he said.

https://www.domain.com.au/news/tigh...feathers-this-lunar-new-year-20170127-gu01b9/

 

[JohnK]

Should people outside of Inner Melbourne and Sydney (houses not apartments) be worried buying a home now and the value of that home dropping?

Should I sell now or wait until the market picks up again? I may wait until I have no income as the capital gain tax reduces considerably.

It may also be worthwhile to live in the investment for 4-5 years to get a prorata refund on capital gain?

Need to read up on how to maximise profit on sale of investment property.

 

[Jeffrey O'Neill]

Should I sell now or wait until the market picks up again? I may wait until I have no income as the capital gain tax reduces considerably.

It may also be worthwhile to live in the investment for 4-5 years to get a prorata refund on capital gain?

Need to read up on how to maximise profit on sale of investment property.

all depends on what what you think the sale price would be now compared to in a few years, what the CGT would be at both times, the likelihood prices drop further than any tax savings you might make.

looking at the the latest release by the ABS of export - import prices it looks like we'll have a +12% jump in the ToT for the Dec 16 qtr, which should help to slow the fall in real incomes for a bit. According to the ABS, the surge in export prices was driven by the prices received for coal, coke and briquettes (+59.9%); metalliferous ores and metal scrap (+11.3%); and gas, natural and manufactured (+10.7%).

Some can kicking by China has allowed some more can kicking by Australia.

I see it all like one of those jenga games. Have been amazed at how many blocks we've been able to remove without the whole edifice toppling. the sad truth is there's not much left as a foundation for the strayan economy.

I'm starting to think it will be a cut back on immigration that will prick the bubble. You can't have 11% house price inflation with economy wide wages growth at a 22 year low of approx 2% (and on a long term decline). You also can't gear rents, as perth landlord are finding out the hard way.