Australia housing bubble

[Citroënbender]

Originally Posted by BENT_8

Something tells me if they've turned to the credit card to get through week to week they wont be paying it off each month as that moneys gone on rent or mortgage increases.

As I said recently, upping interest rates wont slow spending as people are addicted to living life as they have for far too long, they'll just run up the cards till they can no longer and end up bankrupt.

Then the relationships will start breaking down as they blame each other for not being able to support the lifestyle they're use to.

Dig in people, its gonna get ugly.

To an extent I agree; it is a policy structure that’s likely to “break” people who don’t seek meaningful change in a timely fashion. But I also believe that it’s only going to bring some of those events forward in lives - they are likely to have happened at some later point anyway.

[b0son]

Money doesnt buy you happiness, but I'd rather be miserable in comfort.

[Syndrome]

RBA will not be increasing interest rates in April and I suspect this cycle of continually increasing interest rates may have come to an end.

As said above, things have the potential to get very bad. The GFC never ended. It was cheap credit offered by global banks which has masked the real situation. And as can be seen any attempt to wean the economy of cheap credit will be almost impossible. They will keep creating money with cheap credit which will eventually result in hyper inflation.

[T3rminator]

Originally Posted by Syndrome

RBA will not be increasing interest rates in April and I suspect this cycle of continually increasing interest rates may have come to an end.

As said above, things have the potential to get very bad. The GFC never ended. It was cheap credit offered by global banks which has masked the real situation. And as can be seen any attempt to wean the economy of cheap credit will be almost impossible. They will keep creating money with cheap credit which will eventually result in hyper inflation.

Saw the Ross Greenwood update this afternoon. There is a 11% probability that rates will increase in April, so 88% it won't.

2 year government bond is below the cash rate.

Analysts now predicting US might have to drop interest rates twice over the next 6 months, which contradicts what the US Feds had come out and said just over a week ago. 3 US banks collapsing in the last week may have changed things.

[zilo]

Originally Posted by T3rminator

Analysts now predicting US might have to drop interest rates twice over the next 6 months, which contradicts what the US Feds had come out and said just over a week ago. 3 US banks collapsing in the last week may have changed things.

Nope...up another 25 points...banking crisis subsided they reckon.

https://www.bankrate.com/banking/fed...ggest-winners/

Ross Greenwood is a spruiker...not an expert in my opinion.

[T3rminator]

Originally Posted by zilo

Nope...up another 25 points...banking crisis subsided they reckon.

https://www.bankrate.com/banking/fed...ggest-winners/

Ross Greenwood is a spruiker...not an expert in my opinion.

Ahhh the perils of watching sky news.

Yeh saw a bit of the Powell speech overnight. They want to bring inflation back to 2% good luck with that. By the sounds of it, Feds will be raising rates faster and harder the next few months.

The rate rises in the US won't affect most exiting mortgage holders, most are on 5-10-30 year fixed terms. It'll just slow down uptake of new credit.

The speed in which this has been done has got to have some unintended consequences i.e. SVB (or is it intended??). They reckon there is another 200-300 smallish banks in similar position. But not to worry, they'll just use tax payers money to bail them out.

[kevino]

Retirees of course face a situation where their Super basically just goes backwards be it covid Ukraine War Bank contagion Rising interest rates the weather football results whatever etc etc. And of course if you draw down a pension from your super down it goes.

[FTE217]

got to agree on Greenwood, he sold out yonks ago.
Hardly one to take note of.

[Polyal]

I so sick of companies being bailed out, yes the fall out is harsh but where is the risk?

[T3rminator]

Originally Posted by Polyal

I so sick of companies being bailed out, yes the fall out is harsh but where is the risk?

Its interesting. SVB depositors were not your ordinary mums and dads, most of the clients there had WAY over the 250k guarantee limit. Biden was quick to come out and extend the guarantee to over the limit when it was in strife. So basically, tax payers bailing out the millionaire depositors.

I guess the risk that everyone panics and starts pulling their deposits out of banks in general, then you create a run on banks that might actually have been doing ok. Then the dominoes.

[blueoval]

For people like me, this was a satirical video to watch

https://www.youtube.com/watch?v=boyMtIcGmew

[T3rminator]

Bank of England followed with a 0.25 increase.

[T3rminator]

OPEC+ just announced they are cutting oil production by 1.2 million bpd.

Lets go for 20 raises in a row.

[FTE217]

I see the housing bubble in northern and north west sydney is still very strong imo.
Went to another open house (townhouse) for the son and daugther inlaw Saturday.
2bed/2floors/1bathroom/2 toilets/good size balcony/2car garage - been owned for over 10yrs nicely renovated few years ago. The viewing was packed.
Its going to pull sub $1M easily imo.
They missed out at a auction 2wks ago, Oatley, another townhouse with just 11 in the strada.
This was a 3bed/2floors/courtyard/2car garage. Wasn't bad actually butbutbut....
Prior to auction last open house we went, the entire complex was having render cancer repair work done lol.....
6 registered parties, nudged and sold $970K.
Wasn't worth that $$ to me but there is always a buyer willing to pay.

[blueoval]

Not really housing bubble related but some of us here may have Super investments that involve houses.

This is the projected tax reform Labor is preparing to introduce which will hit retirees and those with Superannuation. Designed to tax your Super even further when you retire and to destroy intergenerational inheritance wealth.

https://au.news.yahoo.com/super-tax-...173005879.html

Tax breaks for retirees will soon cost more than the age pension, requiring a rethink in the federal budget, a new report says.

The Grattan Institute report showed superannuation tax breaks cost the budget $45 billion a year, or about two per cent of GDP.

Two-thirds of their value benefit the top 20 per cent of income earners and retirees with large super accounts pay much less tax per dollar of earnings on them than younger workers do on their wages.

The government has already flagged reform in the area, announcing in February it intended to reduce super tax concessions available to people whose total balances exceeded $3 million.

The changes - which are now open for public consultation via Treasury - would apply from July 1, 2025, and save about $2 billion a year.

There is strong evidence suggesting much of the boost to super balances from tax breaks is never spent.

By 2060, one-third of all withdrawals from super will be via bequests, up from one-fifth today.

"Super has become a taxpayer-funded inheritance scheme," report lead author Brendan Coates said.

"Reining in super tax breaks is a responsible way to boost government revenues in a world where the government has committed to higher spending on defence, health care, aged care, and disability care."

Reforming the system could save the budget more than $11.5 billion a year, the report said.

Measures could include:

* Raising "Division 293 tax", which curbs tax breaks to high-income earners on their pre-tax super contributions, from 30 per cent to 35 per cent, and lowering the income threshold at which the tax applies from $250,000 to $220,000 a year ($1.1 billion a year in budget savings).

* Lowering the cap on pre-tax super contributions from $27,500 to $20,000 a year ($1.6 billion a year in budget savings).

* Abolishing carry-forward provisions and government co-contributions, which were intended to encourage catch-up contributions but facilitate tax minimisation ($1.1 billion a year in budget savings).

* Taxing all superannuation earnings in retirement at 15 per cent, the same rate that applies to super earnings before retirement ($5.3 billion a year in budget savings).

* Taxing earnings on super accounts with more than $2 million (rather than $3 million under the government's reforms) at 30 per cent ($3 billion a year in budget savings).

Mr Coates said the superannuation system was "unfair and unsustainable" and changes would make it fairer and boost the budget.

Prime Minister Anthony Albanese said the government was looking to provide responsible cost of living relief rather than a "cash splash" in its second budget, to be delivered on May 9.

"If you just have a cash splash, which is what happened in the coalition's last budget, that actually added to some of the inflationary pressure that was there in the economy," he told ABC Radio.

The budget will include $1.5 billion of energy price relief that passed parliament in December as well as investments in cheaper childcare and medicines that Mr Albanese said would not fuel inflation.

Finance Minister Katy Gallagher said funding key budget items due to expire, such as Australia's online library database, was also part of the government's budget challenge.

On Monday, the government announced $33 million across four years to help save the Trove database from a "funding cliff".

"We've obviously only been in government for 10 months, and we're having to clean up a fair bit of mess that's been left in the budget," Senator Gallagher told ABC Radio.

Those who are for a socialist style regime will be laughing. This will be a nail in the middle class coffin.

[b0son]

Originally Posted by blueoval

Designed to tax your Super even further when you retire and to destroy intergenerational inheritance wealth.

That inheritance is needed now more than ever, given how much more those still working have paid for their houses, and consequently, how much further behind they'll be at retirement age as a result.

[blueoval]

Originally Posted by b0son

That inheritance is needed now more than ever, given how much more those still working have paid for their houses, and consequently, how much further behind they'll be at retirement age as a result.

I agree. It's going to crush a lot of people into the ground.

[ToryMikey]

Originally Posted by blueoval

Not really housing bubble related but some of us here may have Super investments that involve houses.

This is the projected tax reform Labor is preparing to introduce which will hit retirees and those with Superannuation. Designed to tax your Super even further when you retire and to destroy intergenerational inheritance wealth.

https://au.news.yahoo.com/super-tax-...173005879.html



Those who are for a socialist style regime will be laughing. This will be a nail in the middle class coffin.

Labor punishing the public!? Surely not!!

Unless you’re a public service lifer or Centrelink lifer I have no idea why anyone would vote for them.

[FTE217]

Even though the Libs were double dipping into the self funded retirees - because you know they never paid enough tax in the first place haha yer right these hippocrites are always worse.
Cash splash Rudd, even those 6' under and abroad got a splash lol......damn fools.

[CyberWasp]

and how much do politicians get in their retirement again.....

[T3rminator]

Red team blue team, doesn't matter, both knocked up enormous debt and someone has to pay. Super was originally designed as a fall back to support retirements, it was not designed to be a tax haven for the wealthy to funnel their assets into. Technically speaking, we are already paying a 4% bonus tax on our super with the delay in the 13% rate, except this tax will be compounded for the rest of our working lives. If you've been paying attention with recent announcements, you will realise our debt is only going to spiral upwards in the next 10-20 years, so gov will need to invent new ways to pay.

Shav, I think our gen will take a moderate hit but still come out relatively ok, but the next gens are going to have to pay up big time.

Back on the housing front, builders are going down left, right and centre. Homes aren't getting built. People who recently listed their homes and aren't getting the price they want, are pulling out and holding on. The immigration drive is in motion. The laws of supply and demand tells us house prices are likely to go one way. I'm seeing it in the neighbourhood now, houses that were going for $1.1 to 1.2m during covid are now fetching $1.5m. Its freaken crazy when you consider that banks have to assess new loans with a +3% buffer for serviceability.

[blueoval]

Originally Posted by T3rminator

Red team blue team, doesn't matter, both knocked up enormous debt and someone has to pay. Super was originally designed as a fall back to support retirements, it was not designed to be a tax haven for the wealthy to funnel their assets into. Technically speaking, we are already paying a 4% bonus tax on our super with the delay in the 13% rate, except this tax will be compounded for the rest of our working lives. If you've been paying attention with recent announcements, you will realise our debt is only going to spiral upwards in the next 10-20 years, so gov will need to invent new ways to pay.

Shav, I think our gen will take a moderate hit but still come out relatively ok, but the next gens are going to have to pay up big time.

Back on the housing front, builders are going down left, right and centre. Homes aren't getting built. People who recently listed their homes and aren't getting the price they want, are pulling out and holding on. The immigration drive is in motion. The laws of supply and demand tells us house prices are likely to go one way. I'm seeing it in the neighbourhood now, houses that were going for $1.1 to 1.2m during covid are now fetching $1.5m. Its freaken crazy when you consider that banks have to assess new loans with a +3% buffer for serviceability.

I view the 2 parties as 2 heads of the same body. Both sides create divisive policies and it all depends on what side of the coin you fall under based on how it affects you in the long run.

Yeah Gen X's will take a hit. But ultimately we all get hit by the big elites until a CBDC and one world gov comes in to 'save the day'. (Don't get me started on that topic).

Anyone who has a contract with Porter Davis or Lloyds will be copping it right now. I heard people with half built homes are taking the brunt of vandalism from tradies not being paid. Terrible to take it out on them.

[Citroënbender]

Shows them as the bunch of man-babies they are. Without evidence, I wonder if it’s possible there were heavy cash incentives trickling down to these infants and now they’re having tanties because the book income is all they’ve got to show and it’s not looking good as creditors.

[T3rminator]

1st Feb...

https://www.realestate.com.au/news/h...caution-grows/

What a disgrace!

[John 13]

Originally Posted by Citroënbender

Shows them as the bunch of man-babies they are. Without evidence, I wonder if it’s possible there were heavy cash incentives trickling down to these infants and now they’re having tanties because the book income is all they’ve got to show and it’s not looking good as creditors.

Does anyone recall when the index of affordability for domestic housing was a guide frequently quoted. The ratio of house prices to the average annual wage. I recall that 4 was regarded as a safe upper figure.

[Itsme]

Originally Posted by T3rminator

Red team blue team, doesn't matter, both knocked up enormous debt and someone has to pay. Super was originally designed as a fall back to support retirements, it was not designed to be a tax haven for the wealthy to funnel their assets into. Technically speaking, we are already paying a 4% bonus tax on our super with the delay in the 13% rate, except this tax will be compounded for the rest of our working lives. If you've been paying attention with recent announcements, you will realise our debt is only going to spiral upwards in the next 10-20 years, so gov will need to invent new ways to pay.

Shav, I think our gen will take a moderate hit but still come out relatively ok, but the next gens are going to have to pay up big time.

Back on the housing front, builders are going down left, right and centre. Homes aren't getting built. People who recently listed their homes and aren't getting the price they want, are pulling out and holding on. The immigration drive is in motion. The laws of supply and demand tells us house prices are likely to go one way. I'm seeing it in the neighbourhood now, houses that were going for $1.1 to 1.2m during covid are now fetching $1.5m. Its freaken crazy when you consider that banks have to assess new loans with a +3% buffer for serviceability.

This kinda of sounds the same as the early 80's when there was doom & gloom in housing market, history repeating itself.

[blueoval]

https://www.dailymail.co.uk/news/art...pril-2022.html

Australian borrowers have been spared a rate rise for the first time in a year but the relief is likely to be short lived because inflation is still too high.

The Reserve Bank of Australia has left the cash rate on hold at an 11-year high of 3.6 per cent, marking the first pause since April 2022 - although Governor Philip Lowe has hinted another rate rise was likely.

This month's pause has followed 10 consecutive monthly interest rate rises, the most severe pace of monetary policy tightening since the era of the RBA target cash rate began in 1990.

Dr Lowe acknowledged the full effects of the previous rate rises were yet to be felt, noting the RBA needed to look at the effects of an economic slowdown.

'The board recognises that monetary policy operates with a lag and that the full effect of this substantial increase in interest rates is yet to be felt,' he said.

'The board took the decision to hold interest rates steady this month to provide additional time to assess the impact of the increase in interest rates to date and the economic outlook.'

Treasurer Jim Chalmers said the pause days before the Easter holidays didn't end the pain for home borrowers.

'While today's decision will come as a relief for a lot of Australians, we know people will continue to struggle,' he tweeted.

Inflation has moderated from last year's 32-year high of 7.8 per cent with the monthly measure for February showing a consumer price index of 6.8 per cent.

But this measure, from the Australian Bureau of Statistics, is still well above the RBA's 2 to 3 per cent target.

Dr Lowe hinted at another rate rise, with inflation not expected to return to the target range until mid-2025.

'The board expects that some further tightening of monetary policy may well be needed to ensure that inflation returns to target,' he said.

'The central forecast is for inflation to decline this year and next, to around three per cent in mid-2025.'

The RBA noted inflation was moderating in Australia as a result of global supply pressures easing and a slowdown in local demand.

'Goods price inflation is expected to moderate over the months ahead due to global developments and softer demand in Australia,' Dr Lowe said.

The Commonwealth Bank and Westpac both correctly predicted a pause in April but they are expecting another 0.25 percentage point rate rise in May that would take the cash rate to 3.85 per cent.

Mortgage repayment rises since May 2022
$500,000: Up $892 monthly and $10,704 over the year

$600,000: Up $1,071 monthly and $12,852 over the year

$700,000: Up $1,249 monthly and $14,988 over the year

$800,000: Up $1,428 monthly and $17,136 over the year

$900,000: Up $1,607 monthly and $19,284 over the year

$1,000,000: Up $1,785 monthly and $21,420 over the year

Gareth Aird, the Commonwealth Bank's head of Australian economics, said one more rate rise would see monetary policy in 'deeply in restrictive territory'.

'The RBA board is less convinced that they will hike the cash rate again,' he said.

'To be clear, the board has still retained a hiking bias, as we anticipated.

'But it is a more watered down version of the previous statement.'

AMP senior economist Diana Mousina said one more rate rise risked plunging Australia into a recession - potentially repeating what happened in 1991 following a series of rate rises.

'Another interest rate hike would risk sending the economy into a deeper slowdown and risk a recession which is not necessary to get inflation down - as it is already slowing,' she said.

The 3.5 percentage points of rate rises since May are the most severe since the RBA introduced a target cash rate in January 1990.

Dr Lowe on Tuesday said more rate rises 'may well be needed', a subtle change in tone from March when he said 'further tightening of monetary policy will be needed'.

One more rate rise means a borrower with an average, $600,000 mortgage would see their monthly repayments climb by $95 to $3,472, up from $3,377.

Monthly repayments are already 46 per cent higher than the $2,306 level of a year ago, as a Commonwealth Bank variable rate climbed to 5.42 per cent, up from 2.29 per cent.

Annual repayments on a typical loan have already increased by $12,852 since the rate rises began in May, ending the era of the record-low 0.1 per cent cash rate.

On top of that, Australia's 880,000 borrowers with a fixed-rate mortgage face severe increases as their ultra-low two per cent fixed rate loan periods expire in coming months, which will see many forced on to 'revert' variable rates of more than seven per cent.

They made up 35 per cent of all borrowers during the peak in 2021 and early 2022.

Shadow treasurer Angus Taylor said the worst was yet to come.

'Many mortgage holders still haven't felt the real and very painful impact of the increasing cash rate but it will eventually hit home and when it does, it'll hit like a freight train,' he said.

But Tim Lawless, real estate data group CoreLogic's research director, said the end of the rate hikes by May was likely to spark a property market recovery as consumer sentiment improved, with national property price rising by 0.6 per cent in March despite the previous rate rises.

'We know that consumer sentiment and housing market activity have a close relationship, so any upwards movement in spirits could see more buyers and sellers returning to the market, although we would need to see sentiment lift materially before returning to average levels,' he said.

Dr Lowe noted the RBA board would be 'paying close attention to developments in the global economy' following the collapses of the American Silicon Valley, Signature and Silvergate banks, and the near death of Credit Suisse in Switzerland.

Deloitte Access Economics partner Stephen Smith said the Reserve Bank could reconsider another rate rise if something unforeseen happened.

'The heightened uncertainty in the global financial system following the collapse of multiple banks has increased the chance of a black swan event shaking the global economy,' he said.

The Australian Securities Exchange's 30-day interbank cash rate futures market had anticipated the RBA would stop raising rates, before Tuesday's announcement.

[blueoval]

[T3rminator]

Originally Posted by blueoval

image

Its a systemic problem. Not sure if I misheard, but thought I did hear on radio that 1500 builders have gone under in the last 12-18 months. That is a lot!

[MITCHAY]

There's only so much buffer you can realistically factor into a contract and well the environment has drastically eroded that.

Materials, labour, weather. You want the house finished you have to pay and well that is more difficult to get the money to do so.

So the RBA have paused rates but won't be surprised if lenders jack it up anyway

I'm glad that I negotiated a payrise as part of my promotion last week for about $100/wk before tax