News Limited is today warning first home buyers to hold off buying now, spreading rumours the Australian property bubble is about to pop.
How irresponsible!
Maybe they hope to increase the number of listings in their newspapers and part owned RealEstate.com.au.
» Australian property prices ready to pop? – News Limited, 23rd April 2014.
Either you RE agents buy your advertising quota, or we will increase our revenue through increased circulation – by becoming relevant to our readers as we retire from presstitution.
Anything could happen, but I think we’re getting close to another RBA board meeting. Can’t be seen to be crowing from the rooftops, forcing a necessary increase in interest rates that will torch every specufestor out there. Crowing to resume the day after the next meeting.
with exceedingly expensive property prices and still people willing to pay.. to you investors: sell, sell your investment property now, wg file you still can get a high price, there has never been a better time to SELL
Comment from MB:
“Strange Economics
April 24, 2014 at 11:33 am
There is no boom. No bubble. Not overpriced. Not unaffordable. Not 9 times earnings (instead of 4)….there are no foreign buyers. there are no SMSFs. Negative gearing doesn’t increase prices. Real FHBs will come back soon (not just use parents/negative gearing).
The govt doesn’t need to do anything about tax or NG or SMSFs.
Get a job as a RE agent. Keep it going then flog at the peak to the last resort,. buyer (before the Chinese property market crash spreads to those buyers).”
Yep it’s like hypnotizing chooks.
Maybe News Limited might try their hand at High Frequency Trading in the property market.
All they need do is create the numbers of transactions to front run which shouldn’t be too hard.
Any moment now, I expect our Fed. Guvmint to announce “the SECOND home-buyer’s grant”.
Should solve all our problems and keep the bubble going for quite a while longer.
It’s all good until its not. We will soon have a ‘Minsky Moment’ or a ‘Crack Up Boom’.
Buy what you can’t afford today as you won’t afford it tomorrow.
> “If the pace of capital gains doesn’t slow, we may see higher interest rates realised much earlier than previously expected.”
And there you have it – the last paragraph is the entire reason for the existence of this article: housing bulls wearing bear skins – so that they don’t get Glennanke thinking about shaking that wet lettuce leaf in their direction.
It’s like people slowing down before a radar camera – after doing 3 times the speed limit. We’re so awesome!
Prices in Fitzroy increased by 20% last year (http://theage.domain.com.au/real-estate-news/north-versus-south-house-prices-in-melbourne-20140425-zqzg0.html).
At this rate, ($1,080,000 x 20%), prices in Fitzroy are rising by $18,000 per month (that’s right, PER MONTH!).
Get in now people, because in under 3.5 years the average home in Fitzroy will cost you $2m. In just over 5 years, the same home will cost $3m.
Anybody who is not buying property is missing out. This market is going gangbusters and anybody who’s not in it is a mug. M. U. G.
There’s $2m to be made in 5 years and renters are sitting on their hands waiting for a pop. It’s not happening people, wake up and smell the Fitzroy.
I bet the market will go down due to the Chinese housing bubble. Look at china. It looks very close to pop.
http://www.adelaidenow.com.au/news/south-australia/family-selling-home-in-reverse-reducing-price-by-5000-a-week/story-fni6uo1m-1226896932644
From the same ‘tabloid’. I feel you certainly would not be getting reverse auctions in a rising market.
@John – I believe the same thing, China doesn’t look very stable. It’s only a matter of time.
I also think this Federal Budget will dent consumer confidence. So far everyone thinks we have a miracle economy, the envy of the world. Now there is a realisation the economy is no longer sustainable and we need to made some decisive changes before it plunges of the cliff.
I would like to see a Financial System Instability Levy come into legislation. At the end of the tax year, if your outstanding household debts are greater than three times your household income, you and your financial institution should both be hit with a levy proportional to the debt over three times income to fund a bank bailout war chest.
Just always stick to yield and you always win. So so many mom & dad investors and forign buyers who are buying based purely on speculation it’s insane. But that’s not how you make real money 😉 sure it works for a while but eventually * crack *
I would most certainly expect to see a new first home owner boost of $30-40k in the new budget. And with any boost expect to see prices rise immediately by 30-40k lol
Did I hear right that stamp duty is getting axed for investors now too? That’s another 30-40k that prices will rise.
I’d say Australia has another 2 years at least of prices rising/flatlining before they crash.
Everyone seems to forget… Housing accounts for something like 80-90% of Australia’s assets and anyone’s super.
The government will do everything to protect it not like the car industry becuase it’s how you win votes so sit down shut up and let the politicians sacrifice gen y to the wolves and turn them in dual income 30+ year childless slaves to buy investment properties back off them
Close to ‘pop’, yeah?
A $1 million ‘Third Home Owners’ Grants Scheme’ will fix that.
Higher prices! More highly leveraged investors and young households! More property exposure for banks! Everybody wins!!
IF the government continues to encourage house prices to rise further and the voter approves them then Australians fully deserve the consequences of these actions.
I know I wont be touching the first home owners grant. Most people I associate (Professionals from mid 20s to mid 30s) who arent already debted up are doing the same. Just sitting and waiting for the pop. I am a patient person and will continue to wait until prices come good relative to wages. The worse that could happen is I dont get an over priced house in the city, the best being a whole lot of bankruptcy and defaulted loans dropping housing prices dramatically and coming away with a steal. The latest data on loans in arears is very promising.
If this rot of supporting the bubble at all cost’s continues we may prolong the bubble until we get taken down with the collapse of the USA FIAT system.
Of course then those that get burnt will blame the USA, not their own stupidity.
If they axe stamp duty, the states will have no income. apparently house stamp duty is a major cash cow upon which the states are totally dependent!
They just need to drop the rates again and allow anyone to pump their super in. That will keep things going for a bit longer.
Another spot-on MB comment
“We should focus on lower hanging fruit like our world famous tax breaks. We wouldn’t need as much welfare if housing costs were fair (~40% lower). But instead, the government creates a problem and proposes punishing those in hurt as a fix.”
This upcoming budget may be the final straw that pushes me to leave this place…middle class families taxed into oblivion with nothing to show for it but expensive houses, mediocre education and zero vision for the future
@ Baconated grapes
It took you until 2014 to see this?
Don’t let yourself be part of the middle class. It’s the only solution. Difficult, hard work and requiring huge sacrifice (read no personal life, work, work, investment and risk).
@Bacon and all
Yer we actually are moving to Houston 🙂 we sold our house in Australia which was a 3×2 70’s brick hot box and bought a 2 story lovely 4×3 on triple the land in the US 🙂 with about 200k to spare! Which is like living costs for 10 years lol everything’s so cheap.
Were so happy we’ve been back and forth 3 times in the last 2 years.
We started looking at buying at the start of this year and we are outta here since we got approvals with work yay!
Australia is about to be in a world of pain. Capital losses of 20-50%. Loss of population.
Collapse of production. Debt ceiling of 98% that can’t go higher. How are you going to have confident growth when no one has jobs or ability to grow. Everyone’s working in cafés or nursing not creating any wealth but draining the existing capital. Bad bad shape for an economy when it protects the wrong industry and mismanages laws that keep funds tied up in non productive assets. What’s even more worrying is the 70-80% of assets being australian housing. And more particular. Land. In one of the least densely populated continent on the planet. Land has no value. It really doesn’t. It’s the services that the land provides or has access to and most of it doesn’t have a train or an airport or major hospitals or views.
I mean honestly… 50% tax on top of 10% gst and then god knows how much hidden taxes. I think we clear maybe 30% of our pay to live in a place like this?
Plus the kids love Disneyland and skiing in Canada. And New York. And camping out the mid west that was great. As long as you have a job living there is awesome!
See you later Australia thanks for the ride but you’ve taken too much and now you’re about to take even more and make my life savings worthless if your property values crash. No thanks.
New Levy will light a fire under investment properties to get taxable income under $80,000
The can is sooo dented from being kicked down the road, we need a new one.
Big government, big banks, big taxes – what a great society!
The budget night will be fun. Hope the world’s best treasurer does a cameo appearance. Maybe he can consult with Joe how to wreck our country even more!
@ Matty:
How do you do it? (stop being middle class)
@ Trcec Decenas
I’ll tell you when I know 🙂
No seriously. We’re in a capitalist monetary system (not to be confused with consumerism)
Avoid debt: Housing and cars are hard to avoid: Especially at this point in the cycle: Rent if you can. I’m a car kind of guy, but all of mine are old enough to drink in the USA, so they aren’t new, and definitely no finance involved.
Ok, so that covers the bad side, now the good side. You need capital to work for you: Something like 85% of millionaires are first generation, ie. self made: What’s stopping you? (If only it were that simple) So basically you need to get into business. A long slow road with lots of risk and disappointment. That I can tell you first hand! Again, wrong end of the cycle to be going into business in general, but if your serious about it you need to get started.
Read good, serious books: Not stupid motivational stuff (these are ok) but proper books based on research:
Millionaire next door.
Good to great
Great by choice
etc
These are based on extensive studies and will provide incredible insights: You will see things through a different perspective: You’ll see where you’re friends are going wrong, where other businesses are going wrong etc. Mistakes are expensive, so avoid them by using someone else’s experience. That said mistakes are part of the development process you need to go through to become successful.
And of course for this to happen you need to commit. This will likely mean your personal life changes radically. You’ll stress, you’ll worry, loose sleep, work ridiculous hours, forget about sport, hobbies, run into trouble with family and friends.
By god, doesn’t it sound terrible? To me it sounds pretty similar to ending up broke, in debt and working three jobs: But if you choose you join the 1% there is light at the end of the tunnel: Where as if you let the system own you, well…..It own’s you with little chance of making it out.
Wonder when they’re going to announce the “Second Home-Owner’s Grant”?
Then that can be followed by the “Third Home-Owner’s Grant” to keep the bubble up.
After all, we have to look after the poor old property speculators, don’t we?
@Trece:
Exercise your inner bogan, fixed!
Aussie Aussie Aus…
I have a feeling that there are a lot of people who have left like you… and there will be more in the future.
We moved to Japan over a year ago. Didn’t buy property, and not sure if we want to.
I have had the pleasure of meeting a few people here who have put me off a market like Australia’s for life.
Wanna be 50/60yo one day… with stress related disease, trying to figure out how to manage your red bank book? Just buy some property in Australia… I should say… it’s maybe not so bad if you just buy the one to live in… but for those who have bought, or plan to buy for investment… oooooooh boooooooy ur in for a treat.
One after the other… guys here who borrowed up to a million during the bubble (one guy has 6 properties)… their properties are now worth less than half what they paid… to make it even better… the rent doesn’t cover the repayments… they are all screwed.
We may buy a property one day in the future, but we’re not in a rush. I mean, why buy when you can just rent and move somewhere new every 5 years for the same price? Maintenance, fees, taxes… they are all expensive and really make you think hard and long before buying. I don’t now why people in Australia don’t question themselves a bit longer before deciding to buy a house. One of the deal breakers for me in Australia, was the strata fees and other maintenance expenses. Don’t people realise that they increase too? (and that their $”#$ing salaries don’t!).
We live in a very modest apartment.. a simple life.. but the standard of living here is so much better than Australia. I may not be making more money… but I am more comfortable, have good (#$%”ing brilliant actually) public transport, excellent medical institutions, cheap rent, good food, the list goes on.
Australia, you have left a bitter taste in your people’s mouths. Shame, shame, shame.
@ AussieAussieAus…no thanks.
One line that is so important with what you said is.
“As long as you have a job”
living there is awesome!
prepper
@Jj Nice
I love Japan when I visited but the conformity was a little too much for me. Everyone was a little too robotic. The place is awesome though. Its like another world
@ AussieAussieAus…no thanks.
We’re in the process of moving to the US too! Except we’ll be up top in big ole New York 🙂
We make the same money but will pay 10% less tax and about 40% lower living costs
Australia just doesn’t work. Crazy land banking. They should have made land supply more elastic 10 years ago. A few well placed campaign contributions put a nail in that coffin.