Australian house price fall.

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    bubble

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    It's happening around the world and some countries e.g. New Zealand are taking steps to address it.
    Australia already has some of the most expensive housing in the world.

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    baby boomers are retiering with record amonts in super and their homes are worth a million is part of the story of what is driving the boom in realestate prices in coastal towns and acerage in the hinterlands .Australia has the best beaches food and climate in the world is another reason why regional coastal real estate is booming , the only low risk investment that gives you control of your investment, income, negative gearing tax concessions and capitol gains is realestate .

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    Bubble then burst, .01 will be a curse.

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    bubble

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    Wealth/death tax to be implemented world wide aoon imo.....

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    that's why all the super rich hide the assets in trust and not-for-profit funds

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    Do you suffer from dimentia ' sandunes ' sitting in your chair blowing bubbles all day

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    probably anxiety in case a short is missed , LOL

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    It is important to understand, that people buy not only houses, but also cars. I can't call myself so rich, but even it occurred to me to invest my money in auto. For example, the last purchase is https://www.bestpeoplemovers.com.au/our-vehicles/mitsubishi-make/delica-model/. You can look at it and understand that now, during a pandemic, is the best time to buy cheap things that will soon become very expensive.

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    Barmy Palmy: Beachside prime site spikes $1 million in three months
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    VIVA HYDE | 14 JUNE 2021
    Gold Coast Bulletin

    Up $1 million in three months: Jefferson Lane development site sold under the hammer to a Melbourne developer.

    A vacant block fronting Palm Beach’s prized Jefferson Lane has sold under the hammer for $2.4 million — $1 million more than veteran Coast developer John Potter paid for the site just three months ago.

    Throngs of residents lined the streets as the 549sq m lot with dual frontage at 1079 Gold Coast Highway went under the hammer on Saturday following a marketing campaign by Harcourts Coastal Commercial directors Jared Johnson and Lachlan Marshall.

    The opening bid of $1.4 million was swiftly dwarfed as auctioneer Rob Forde fielded play by four registered bidders, with a Melbourne-based developer placing the closing bid by phone.

    The site was one of the few vacant blocks remaining along the exclusive stretch.

    Mr Johnson said the “outstanding result” reflected heated demand for luxury apartment living in the area, with the prime development site one of few remaining along the southern beaches’ most exclusive strip.

    “The appetite for development sites right now is extremely high, and I think it just speaks about the demand for beachside high-end residences in Palm Beach, and not just Palm Beach but right across the Gold Coast,” Mr Johnson.

    “Our residential department has had so much inquiry from NSW and Victorian residents who are looking to relocate to the Gold Coast.”

    An artist’s impression of the nine-level tower Mr Potter had designed before shelving plans for the site.

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    Mr Johnson said around 100 spectators turned out for the on-site auction to see the rare vacant block just 140m from beach access go under the hammer.

    “People rode down on their skateboards and on their push bikes and brought their dogs. It’s such a community vibe there by the beach; everyone knew it was happening.”

    A village atmosphere and world-class surf break are part of Palm Beach’s appeal for sea-changers driving the luxury apartment market.

    The buyer’s identity or plans for the site have not been disclosed.

    Mr Potter, CEO of the Potter Group and a former Villa World head, acquired the site for $1.4 million in March in partnership with fellow local developer, Mark Howard.

    At the time, Mr Potter touted the addition of the blue-chip parcel to his portfolio as, “a jewel in the crown”. Plans were drawn up for a nine-level apartment building at the site, but were shelved as the owners made the call to go to market in order to free up capital for another opportunity.

    The site was marketed by Harcourts Coastal Commercial.

    Mr Potter is chasing another big ticket sale of a nine-title parcel in Broadbeach spanning 6,438sq m at 2709-2723 Gold Coast Highway.

    The high-profile holding has approval for two 68-storey towers with 458 residential units and 418 serviced apartments, plus 2096sq m of retail and office space.

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    CommBank cracks down on risky mortgages amid $23.77bn threat

    https://au.finance.yahoo.com/news/commbank-serviceability-test-increases-063609836.html

    who didn't see that coming ( apart from Blind Freddie )

    and who was pushing for easier entry into the housing market

    shame Australia shame

    1 like
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    ‘Triple crisis’: Meteoric house price rises risk devastating Aussie economy

    https://au.yahoo.com/finance/news/house-prices-unsw-report-020310822.html

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    Banking regulators poised to tighten lending standards to cool market
    By Shane Wright and Clancy Yeates
    June 19, 2021 — 5.00am
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    The Reserve Bank and the nation’s prudential regulator are poised to tighten lending standards in the face of soaring property prices and growing household debt as Treasurer Josh Frydenberg says higher house prices are good for the economy.

    The Commonwealth Bank, the nation’s biggest lender, revealed it would increase the interest rate it uses to assesses new loan applications, while the RBA and the Australian Prudential Regulation Authority are considering ways to temper some of the heat across the national market in coming weeks.

    Hot auctions and surging house prices are poised to force the hand of banking regulators into tightening lending standards to cool the market.
    Hot auctions and surging house prices are poised to force the hand of banking regulators into tightening lending standards to cool the market.CREDIT:PETER RAE

    Sydney’s median house value has climbed more than 15 per cent through the first 5 months of the year to $1.2 million while in Melbourne the median price is now at $908,000.

    CoreLogic’s daily dwelling value index shows Sydney property values have increased by another 1.5 per cent through the first 17 days of June while in Melbourne they are up by 0.9 per cent.

    Mr Frydenberg said on Friday that he has talked to both Reserve Bank governor Philip Lowe and APRA chair Wayne Byres about the housing market and the sharp run-up in prices.

    He said higher house prices were a global issue as prospective buyers benefited from record low interest rates as well as government stimulus programs including the federal government’s HomeBuilder program.

    In the case of Australia, owner-occupiers rather than investors were entering the market with a surge in first time buyers.

    “It’s a good thing when the price of their home goes up, [it] gives them more confidence to consume, gives many small business who mortgage their home [the chance] to invest in their businesses. Overall it’s a good thing for the economy when house prices go up as opposed to going down,” Mr Frydenberg said.

    But the Treasurer signalled there were limits to the benefits of such a lift in prices.

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    “We do need to monitor prices, we need to ensure it’s not over-heating and that is what APRA and the RBA are doing,” he said.

    “I think it is important to monitor it closely and to ensure that we can continue to keep the focus on owner-occupiers because that’s what we’d like to see coming into the market.”

    APRA chair Wayne Byres will oversee any changes to lending standards aimed at the property market.
    APRA chair Wayne Byres will oversee any changes to lending standards aimed at the property market.CREDIT:DOMINIC LORRIMER

    This week, RBA governor Philip Lowe said while the bank did not target house prices it did maintain a close watch on household borrowing levels, which were already high because of the large amount of debt carried by many households. He said regulators have started discussing possible responses to a run-up in household debt.

    Those responses include increasing required loan-to-value ratios on mortgages or directing banks to reduce their exposure to mortgages for investors.

    This week the Reserve Bank of New Zealand, which has been directed by the Ardern government to take into account house price sustainability in its decision making, announced it was looking at a debt-to-income ratio limit on the size of mortgages.

    This would allow first home buyers to continue buying into the property market but make it more difficult for those purchasing high-end properties and investors who are traditionally more highly leveraged.

    The CBA is moving ahead of regulators, lifting its assessment rate from 5.1 per cent to 5.25 per cent, a move that is likely to pare back the maximum amount some customers can borrow.

    Even though banks are promoting interest rates of less than 2 per cent, lenders must use higher rates when they are deciding whether a new borrower can afford a loan.

    CBA said its decision took into account “the external environment and our regulatory commitments.”

    “As part of our regular monitoring and review of our policies and services, we have made the decision to review our serviceability floor rate to ensure we continue to lend responsibly in the current low rate environment,” it said.

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    While the move will crimp some customers’ borrowing capacity, the bank said the “vast majority” of customers would be unaffected by the change.

    Westpac chief economist Bill Evans on Friday said with the jobs market improving rapidly he believes the Reserve Bank will start lifting interest rates in early 2023.

    Official interest rates, currently 0.1 per cent, could be at 0.75 per cent by late 2023.

    Soaring house prices is also affecting federal government programs aimed at helping people enter the housing market.

    Assistant Treasurer Michael Sukkar on Saturday announced an extra 30,000 places will be added to the government’s First Home Loan Deposit Scheme, its temporary New Home Guarantee program and the Family Guarantee system from July 1.

    The government is also increasing the price caps under which the First Home Loan Deposit Scheme operates, in a sign that high prices are making it more difficult for people to get into the property market.

    In Sydney and Melbourne the cap will be increased $100,000 to $800,000 and $700,000 respectively while for Brisbane it will increase by $125,000 to $600,000.

    Recognising the lift in regional markets, the cap will be lifted by $150,000 in regional NSW to $600,000 while in regional Victoria it will be increased by $125,000 to $500,000.

    The Morning Edition news

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    Negative gearing will save investors from high interest rates, meaning the price boom won’t end anytime soon
    Interest rates look set to rise but it’s unlikely the heat will come out of the property market and there’s a crazy reason why.

    Tarric Brooker

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    What $1M buys you in Australia's biggest cities
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    As auction bidding continues to soar, here's what $1 million in property can net you in Australia's biggest cities.
    When the Reserve Bank of Australia last raised interest rates in November 2010, it marked the end of an era for Aussie mortgage holders.

    In the decade that followed, the once ever present threat of rising interest rates consuming a greater portion of household budgets all but disappeared, as the RBA cash rate fell from 4.75 per cent to just 0.1 per cent.

    But now, after almost 11 years of rate cuts leaving mortgage holders better off, the hazard of rising global inflation is threatening to force the RBA to raise interest rates long before it’s scheduled to.

    As a result, bank funding futures markets are now pricing in four interest rate increases in the RBA cash rate by June 2024. With concerns about inflation continuing to mount, further pressure may build for even greater rate rises, as bank funding markets price in a more inflationary future.

    RELATED: Rising house prices an economic ‘time bomb’

    Mortgages have become more affordable as interest rates fell. Picture: Joel Carrett/NCA NewsWire
    Mortgages have become more affordable as interest rates fell. Picture: Joel Carrett/NCA NewsWireSource:News Corp Australia

    What would happen if interest rates rose?

    Based on the average new mortgage size for an owner occupier of $478,822 and the RBA average rate payable on new loans, if rates rose by 1 per cent monthly mortgage repayments would rise by $264 per month.

    For most borrowers a 1 per cent increase in interest rates can be taken in their stride relatively easily. But the big question is, what if the analysts predicting higher inflation for longer, are right and this is just the beginning of a multi-decade inflationary cycle?

    In late 1970, Australian home loan rates sat just under 6 per cent after decades of being relatively low following the Second World War. Over the coming 20 years, mortgage rates would ebb and flow, before finally peaking at 17 per cent in 1990.

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    Average standard variable mortgage rate from 1970 to 1990.
    Average standard variable mortgage rate from 1970 to 1990.Source:Supplied

    While it’s extremely unlikely rates would get even close to double digits, let alone 17 per cent, it’s easy to see why many analysts are seeing a strong chance of history once again repeating itself.

    Despite growing concerns about a potential rise in interest rates, the nation’s property investors are increasingly keen on getting into the market.

    According to figures from research firm Digital Finance Analytics, the number of investors looking to buy a property in the next 12 months has rocketed from its pandemic lows to the highest levels since 2018.

    RELATED: Huge clue houses will skyrocket further

    Investors are getting back into the property game.
    Investors are getting back into the property game.Source:Supplied

    While first home buyers are increasingly dropping out of the market in droves, the same rocketing prices forcing them out are enticing investors to throw the dice on entering the market, to chase the outsized capital gains currently on offer.

    With the near certainty of housing prices continuing to rise in the short term, there is still plenty of scope for more investors to enter the fray before getting close to approaching the record levels of interest that defined 2014 and 2015.

    In other parts of the world property investors may now be thinking twice about diving into a hot property market, amid the prospect of multiple rate hikes and a new cycle of higher interest rates.

    In the United States, consumer perceived conditions for buying a home have plummeted to the lowest levels in 37 years, as rising interest rates and rocketing prices begin to significantly impact American households.

    Sentiment for buying a house in the US is low.
    Sentiment for buying a house in the US is low.Source:Supplied

    The elephant in the room

    But there is a uniquely Australian element that significantly alters the calculations that define property investment decision making, negative gearing.

    If interest rates were to rise significantly, resulting in more investors finding themselves staring down the barrel of losing money on their property, the federal government will effectively foot part of the additional cost through negative gearing tax deductions.

    According to the latest figures from the Australian Taxation Office (ATO), out of the 2.2 million taxpayers that own at least one investment property 1.3 million declared a net rental loss in the 2018-19 financial year.

    The 58.6 per cent of landlords claiming a net loss is actually the lowest proportion of investors to be losing money since records began back in the 2003-04 financial year.

    Consistently losing money week in, week out may seem like the exact opposite of what an investor would want from an asset. But for Australian property investors, losing money in the hope of strong housing price growth has become a way of life.

    Do you think the number of properties an investor can negatively gear should be capped?
    Yes, it's not fair
    No, negative gearing is great
    Cast your vote

    Negative gearing means investors are happy to lose money on investments. Picture: Tim Hunter
    Negative gearing means investors are happy to lose money on investments. Picture: Tim HunterSource:News Corp Australia

    While owner occupiers would likely find a rising interest rate environment much more challenging, through negative gearing the federal government effectively provides a safety net for property investors, should net rental losses increase significantly.

    The psychology of the Australian property market is arguably one of the most nuanced and complicated in the world. With various cultural, political and financial factors all combining to make Australians relationships with the property market a complex one.

    But what isn’t complex is what is likely to happen next.

    As housing prices continue to rocket higher, investor interest in the market is likely to continue to grow, as the allure of strong capital growth draws in more buyers.

    While higher interest rates are likely a factor in the back of the minds of many investors looking to potentially buy in this market, negative gearing provides them with a strong incentive to pull the trigger anyway.

    But perhaps the bigger question is, what will it take to stop the current runaway growth in property prices? Especially when investors supported by favourable government policies may have only just started dipping their toes in the market.

    Tarric Brooker is a freelance journalist and social commentator | @AvidCommentator

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