Australians have bet the house on rising property prices

Above is an interesting graphical summary of Australia’s housing market by ABC News. Here’s the excerpt accompanying the video presentation:

Australia has experienced one of the world’s biggest home price booms, driven by near world record levels of household debt.

This house of cards looked to be teetering, with double-digit price falls in Australia’s two biggest cities — Sydney and Melbourne — over the past couple of years.

But now policymakers have pulled out all the stops to halt the market slide — interest rates have been slashed to record lows, lending restrictions loosened and the Government is offering to help first home buyers buy with a very low deposit.

The early signs are that this is working, with price falls easing, and now even reversing, in the two biggest cities.

But house prices in these cities remain out of reach for many aspiring buyers, while debt levels around the country remain at record highs.

This has many analysts worried that Australia’s house of cards only needs to see a run of economic bad luck to come crashing down.

Leith van Onselen


  1. Bubbles eventually generate their own bad luck and demise….so many commentators discuss our housing as if the bubble and the ability to service it are sufficiently separate, when the reverse is actually true.


    • nexus789MEMBER

      Reminds me of a quote….”It would be some consolation for the feebleness of our selves and our works if all things should perish as slowly as they come into being; but as it is, increases are of sluggish growth, but the way to ruin is rapid.” Lucius Anneaus Seneca, Letters to Lucilius, n. 91

  2. JunkyardMEMBER

    Careful ABC, you’ll have your funding cut again if you say bad things about Straya property market.

    Minister for property Michael Sukkar says just jump in and snatch up a bargain, and I definitely trust an ex finance industry lawyer with two investment properties on his honest and impartial assessment.

    • BubbleyMEMBER

      According to a Get Up email (begging for yet another $12) The LNP government has declared “the ABC is the enemy”

      That seems a bit harsh to dear old aunty.

    • mikef179MEMBER

      And didn’t they say they want properties to be more affordable? Yet now they are implicitly acknowledging that their policy is likely to make housing more expensive.

  3. small bounce only…people have now felt the horrid affects of capital depreciation, they have not experienced such wealth loss before in the last few years, always been one way bet…this will play hard in peoples minds before they jump in and most investors will have properties that are still underwater or have had their feelgood capital gain smashed….the pain of losing money outways the joy of making it and that feeling once felt changes the way how you view investments….

    • DominicMEMBER

      The bit I’m most looking forward to is watching the value of our members of parliament’s assets slide into the abyss after the inevitable global recession takes root. Cue vast quantities of taxpayer loot thrown at schemes to prop up the rotting edifice.

      Oh, and specufestors sobbing into the camera during yet another current affairs program highlighting the misery of negative equity. “The Gubbermint must DO something!” lolololol

    • Or it just proved to them that politics has the greatest effect on house prices in reality and all they need to do is “ride out the blips”. You could see auction results plummeting when Labor was “sure to win” and the bounce back when they didn’t in a month or so. On the ground you could see it as well.

      The “faithful with patience” will be rewarded with long term benefits. It’s almost a religion here in Australia.

      Jobs that are in the future secure or needed will benefit from inflation generally. Of course any wage gains coming or the loans written won’t happen across the board (we are becoming a more unequal intellectually skilled society) so these gains will be offset by massive declines in traditional industries that actually do something. It’s a global sickness really.

    • mikef179MEMBER

      Yeah, I think you are correct. People are starting to catch on that it is a giant ponzi scheme. It’s like that old saying about how people think in herds and go mad in herds but only come to their senses one by one. Well, eventually that coming to the senses becomes an avalanche.

  4. In ten years time prices will be higher than today. Either buy a home to live in that you can afford or quit whining.

    • > buy a home to live in that you can afford
      thats the problem kids are facing.. comprehension skills much?

      • Nice try. Kids don’t buy houses. Adults work, live on a strict budget, save for a few years, and then buy houses. Sigh.

    • DominicMEMBER

      This is the dilemma isn’t it: sit in cash waiting for a price correction, all the while the purchasing power of cash evaporates or just fall in and be exposed to something that protects from rampant inflation.

      • People on here complain about house prices and investors profiting, but the fact is many of them have cash to buy but are waiting so they can grab a bargain and guarantee the price never falls from the day they buy. They’re as bad as the specufestors, and it’s been a failing strategy. Buy what you can afford and pay it off. Dead easy.

    • And what if you bought to live in was Mascot Towers or Opal Towers…..?..or the plethora of future building disasters that will rear their head….

    • BubbleyMEMBER

      sigh… when someone contributes nothing to the topic and relies on insults as a response they are simply proving they are a troll – yes Andrew, this is directed at you.

      • Tks Bubbley but i read andrews comment as the buyers of those towers were morons…which i think is still a bit harsh as they were basically lied too and put faith in Australia’s building standards and laws that would make these events impossible to happen in Australia..

      • All you have to do is look at the things to realise they’ll blow over in a stiff breeze.

    • RecessionImminent

      You would have said the exact same thing two years ago. You would have said exactly the same thing in Perth 10 years ago, but now it’s retrospectively become a sh!tbin since the house prices didn’t go up. Like Sydney is a picnic, haha!

      • Perth? Uh, no. And for the matter not Moranbah or any other dodgy boom and bust mining town.

      • RecessionImminent

        Sure mate, sure. And if Melbourne doesn’t come back and Sydney does then Melbourne will be a sh!tbin soon enough, along with Brisbane, if it ends up the same way et cetera et cetera. Nothing sh!t about Perth — except its housing market.

    • In line with wage rises and job security? Look at Japan, mate of mine bought an apartment in Kawasaki in 2005, 15 years after their crash started and paid around 1/3rd of the original price. Sold last year for a bit less than he paid for it. ie thats nearly 30 years after Japans crash started. Thats what booms and busts are about. From the 50’s to the 90’s we had mini booms and mini busts but wages rose in proportion to house prices. Post 2000, slack lending, mega immigration, money laundering from foreigners, developers drip feeding the market, neg gearing and cap gains discounts priming the ‘investors’, interest rate drops to the point they are bellow real inflation, What more can ‘they’ do just to keep prices stable?
      Nothing more than handing out free money will prop it up any more and that will ultimately fail.. Good luck with 10 years.

      • Well then just never buy. Right? Because you can always say that there’s a bubble and prices in Japan took 30 years to recover. Genius.

      • I own outright, but not in the land of OZ and wont even dream of moving back there this side of a better government and a slide in house prices, dont care either way for myself, can take the place or leave it, not the country it was, just have to keep visiting for family reasons, not the best place on earth by any measure…. good luck with your investments.

    • Yes, and if prices are 20% higher in 10 years time definitely don’t buy then either.

      • RecessionImminent

        Since houses are supposed to double every 7 years, that would be some very poor performance!

      • RecessionImminent

        I’ve done the calculations: 20% higher in 10 years amounts to a 1.84% gain each year.

        If a share was performing like that for me, I would sell it. That wouldn’t even beat inflation some years. it wouldn’t beat mortgage interest or holding costs. House spruiking is NOT what it used to be!

      • A house is a home not an investment. But you’ve really helped to prove the point I’ve been making, that commenters on here are praying for a crash and a bargain house so they can “get ahead”, instead of buying a home they can afford now and paying it off. Thank you sir.

      • RecessionImminent

        Why would I bother to buy a house so that I can actually lose money? There’s a reason the real estate agents don’t spruik 1.84% p/a “gains” — it’s because most people aren’t so financially daft as to fail to realise that their money may actually do better in the bank never mind invested. I would be better off waiting for retirement, investing my savings in absolutely anything that isn’t sh!t, and then buying in cash when it’s time to retire.

        Then again, there’s a reason negative gearing is such a sacred cow in this country.

        No sh!t the people here are trying to be financially savvy — if they just wanted a house, any bl0ody house, they would have already bought. But most people aren’t that completely stupid in the real world. Is there some sort of moral obligation to make sub-par financial decisions in your mind? I hope that isn’t something you expect to save this housing market.

      • Thanks again. I agree with you 100%. People on here can absolutely afford to buy homes. They don’t want to buy homes. They want certain desirable houses in certain desirable areas, with outperforming capital growth returns after they buy. This is despite the fact they bleat on about houses having gone up in value since other people bought them, whilst they held on looking for a crash so they could buy a magic money machine. That’s clearly been a failed strategy. I’m advising against repeating the same failed strategy, and certain people on here are starting to see the light. I for one want to fix my housing costs today, not eat 30 years of rent escalation, and have a paid for home by retirement. Getting old is scary enough without having to subsist on dog food.

      • RecessionImminent

        Yes, fully understood, you are hoping that the sheer terror of FOMO and “rent escalation” (rent inflation) will cause people to buy now even if it’s not necessarily actually a good financial decision.

        I don’t blame anyone who does that — after all, those are actually two of the most major fundamental reasons to buy a house. Sure, those things scare me too; if they did not, then there would be little reason to invest my relatively scarce financial resources because I’d have no worries for the future.

        Sometimes I even see some of the more well-off people on this site and wonder why they don’t just buy already — even if they get it wrong, it’s not such a big deal for someone making over $200K p/a. So I understand your sentiment to an extent.

        However, I am not as well-off as that, and in our completely debt saturated society, more indebted then the USA, Ireland or Spain before their crashes, I am willing to take a punt that we cannot become much more debt saturated before the falls resume. That’s the risk I’m willing to take to buy a property with better value. And anyway, when one is retired, they don’t need to live in Sydney or Melbourne. If the bull-case happens, I am confident I’ll still be able to find a home — outside of a Melbourne/Sydney ghetto. And if house prices soar then no doubt share prices will too — I won’t miss out on the gains, just the leverage.

      • No, it doesn’t affect me if they buy or not. The value of my home is completely irrelevant. You’re an adult, you get to take a punt if you choose. For most people they should be using common sense to buy a home they can afford in a location they can afford, not gambling with the future.

  5. Just received my rate notice for 3150. Capital Value (actually Site Value) down 10 % on last year (which was 10 % down on year before).

    There are many speculators sitting on old house blocks and empty blocks purchased 2-3 years ago who have to be 20-30 % down – where is their equity and what is their financier saying?

    • Seen it many times, especially with developers. Dunno how they sleep at night, but drugs and alcohol clearly help.

      • Based on the development blocks close to me, the cash laundering happened 5-6 years ago.

        The follow-up buyers who bid the prices to the top would have been geared so are enjoying the negative upward movement 🙂