Aussie housing a “once in a lifetime” buying opportunity

With the downside risks around Australian housing growing by the day, Domain has stepped up the “buy now” propaganda:

In the midst of pandemic pandemonium, Australia’s apartment market could stay afloat from young buyers with a deposit and job stability, as plummeting interest rates and cheap stock spark “once-in-a-lifetime” buying conditions…

“Post-election it was like a light switch for the apartment market,” [Natalie McAsey, of Buxton St Kilda] said.

“The amount of people attending open homes was incredible and the prices being achieved were incredible.

“But now is one of the best times you could possibly buy a property if you have that security.”

Yeah right.

Australian dwelling values are only a whisker below their 2017 peak:

Mortgage rates have hit their lower bound with no further room to fall.

Unemployment is projected to surge into double digits, with huge chunks of Australia now reliant on welfare.

Household incomes are facing a significant haircut.

And net immigration into Australia will likely plummet, lowering housing demand.

If this looks like a “once in a lifetime” buying opportunity, I’ve got a bridge to sell you.

Leith van Onselen

Comments

  1. Oh yeah?
    You think housing isn’t a good buy?

    I’ve got a once in a lifetime chance for you to hold cash/AUD instead

    -RBA is directly monetising government debt
    -every Industry is getting a handout/bailout
    -nationalisations are out of the question
    -Mark to fantasy bank valuations
    -foreclosures now illegal
    -no one has to pay their mortgage anyway
    -government paying the wages of every worker
    -even the aged pensioners and disabled got some extra money? What for? Who cares !

    Now please exchange your real assets for my worthless digital confetti . Selling to get cash is the best investment you’ll ever make !

    keep “saving” instead

    I’m sure the asset price collapse is just around the corner, and cash is only getting more valuable – they aren’t making anymore of it , you know!
    Oh wait…maybe they are

    But seriously
    If oil stocks can get a fking bid, I don’t think it’s outrageous that property can

    • DominicMEMBER

      Still won’t do anything to boost housing — might persuade a few idiots to hang in there for a while, allowing the smarter folk to exit before the stampede. Other than that, no job no mortgage, no job security no demand for mortgage. Watch the IP deluge as the global economy implodes and every bunny tries to ‘cash out’.

      • I think we need to define stampede.

        Who is going to exit en masse?

        Marginal IPs, yes. And other IPs.
        Some OOs.
        OOs in some trouble – forced divestment, essentially (even if offered mortgage payment relief)

        But what about the I suspect not insubstantial number of OOs with low-middling LVRs

        I’m not saying what will happen either way, but there are lot of people who still want / need a roof over their heads

        • darklydrawlMEMBER

          Cannot put a number on it, but I suspect there will be an increase in divorce rates after this lock in. That often leads to forced sales of the family home.

          • +1
            Many jokes about this on my FB but it’s a serious issue. Being cooped up with someone all day and night (especially with kids) can and will put a strain on marriages then chuck in unemployment and bills to pay and relationships can unravel very quickly.

          • True.

            Divestments of this nature will take some time. Break up, find somewhere to live, kids, courts etc….

        • Zombie Apocalypse

          Anecdotally…FHB’s are also pulling out of contracts and losing deposits over concerns that their newly purchased asset will be worth less in coming months/years. Logically it probably doesn’t make much sense if they’re in it for a longterm roof over their heads but the poor darlings are so conditioned by the mantra “you can’t lose with real estate” that they can’t bear to be losers.

          • BubbleyMEMBER

            Better to lose $35 – 50k deposit now, than buy a property that’s going to be worth $100,000 less in 6 months.

            Or end up long term unemployed with 11-17% of the population and lose the house due to bankruptcy.

        • Swampy the line that “people still need somewhere to live” is a favourite of agents but the reality is that demand for housing is elastic. Meaning yes you need somewhere to live but it doesn’t need to be in a house you own. You can go live with Mum, or in a caravan, or just rent (which will be getting cheaper by the day) and so the fact “people need somewhere to live” doesn’t mean a housing market can never fall. After all housing markets in many places have fallen heavily in the past, even though people always still needed somewhere to live.

          • Yes, if a sizable proportion of people become trapped in negative equity the market activity will be reduced & it may take many years for people to escape, that was the experience of my parents in the UK, they were in negative equity for about 8yrs, though other areas closer to London recovered quicker.

          • I didn’t mean it can’t fall at all

            I am skeptical of a stampede (but have no interest in either outcome )

        • MountainGuinMEMBER

          It’s not nice saying this, but if we get a high death count, there will be estate sales too.

    • Venetian Mask

      Pity, like, you can’t buy a house with your savings to protect them from inflation but you actually need a mortgage and therefore a way to repay your mortgage.

        • Except when it rains, because you need – I am not making this up – really a very large amount before you can actually build a roof with it.

          • I don’t get why people always say “But you can’t make x out of PM!” like you could build a house out of stocks either
            You’re just trying to protect your savings from being destroyed by inflation by purchasing something that will hopefully retain it’s value, something that can’t be conjured out of thin air

          • It’s a joke roff.

            Although there is a kernel of truth to it. Gold might be more valuable than a house, but shelter is something you actually need.

          • A joke here perhaps, but I’ve seen that comment a lot elsewhere, and likely not a joke
            Imagine when this becomes an issue on the news like bog roll, the dealers are already sold out as is without any help from MSM

    • $$$ MR INFINITY $$$ QUANTITATIVE EASE ME

      Who ever you work for is getting good value for money houses are gone move on we run that race have guests who won lol

      • $$$ MR INFINITY $$$ QUANTITATIVE EASE ME

        Cash is not king spread is king metals utilitys some cash for vultureing is king in12 months

    • Ajaydee73MEMBER

      Bingo. There will be some forced sales at discounted prices which will be the opportunity in the short term. But the virus won’t last forever. There will be plenty of Chinese wanting to move here after what happened in their country. All the pent up demand among younger families will come back quickly. …But feel free to keep waiting for the eighteen months that never ends.

  2. Tell me more about how I don’t have to pay my mortgage. I’d love to know how I can stop throwing money at the bank every month.

  3. darklydrawlMEMBER

    HAHAHA. I literally LOLed when I read that title. What sort of self serving idiots actually believe that? Call me in 12 months and I will reconsider your offer. 😀

    • Whilst I agree the bubble will burst. I’m not sure I’d feel any better with a large amount of cash in the bank right now either. I certainly wouldn’t be using $300-$400k of debt to buy property right now either.

      • darklydrawlMEMBER

        Yeah, Good point Gav. Makes me think maybe Crytpo isn’t such a bad idea (althought that is highly volatile too!). Nowhere seems safe.

      • Mining BoganMEMBER

        Well that’s just wishy-washy jibber-jabber. This site is about loud declarations of intent, not hedging your bets like some economic girly-man.

        • Haha, thanks I had a good LOL. I’m far too conservative in my bets. I prefer to keep my balls in place. Rather than hang them on the line. 😃

        • darklydrawlMEMBER

          😀 “economic girly-man” That about sums me up!
          Manling! Homunculus! <– Thanks Harold for that one 😉

  4. Most Australians that will read this will actually believe it. The psychology of real estate in Australia is astonishing.

    I joined the Property Road Facebook group for a bit of light entertainment and was in shock at the genuine stupidity of property investors. Many of whom have several IPs and millions in debt. Many are also no doubt millionaires from pure luck.

    Double digit unemployment is going to be no good for property prices. You’d probably consider it to trigger a “crash” (50% plus falls) from current prices. But the psychology and mindset of Australians in relation to property prices and real estate investment is just astonishing. I really don’t believe that double digit unemployment rates will change that psychology. When people are effectively brainwashed / addicted they will make all kinds of excuses and hamster wheel rationalisations in their minds and truly believe in illogical and unreal things.

    The MSM will be going extremely hard with this type of propaganda over the coming months.

    • Narapoia451MEMBER

      While I agree that there is an astonishing lack of rationality from the Aus public when it comes to housing there was a recent dip of 15-20% when banks started being just slightly more realistic in their mortgage issuance.

      So I really don’t see how even Australia’s world leading mania for property bubbles can compete with banks in crisis mode and millions of people suddenly unemployed or on welfare.

    • Great observation – I too have been completely nonplussed by the Australia’s obsession with property as an investment – it is buried very deeply in the average Australian’s DNA. A very rude shock is coming, but both federal and state governments will do all they can to try and stave off any property collapse – their financial dependence being just one factor

  5. Also Tourism. AirBnB now being listed For Rent. Asking rent for inner Sydney Apartments are falling fast. Apartment prices are going to cop a pineapple.

    • Mining BoganMEMBER

      The furniture in these stupid AirBnB joints, is it owned or leased so as to keep up with the times?

      • darklydrawlMEMBER

        Likely leased as you can claim the cost of the furniture lease as an expense and just replace it when it is showing wear and tear or looking dated / out of fashion.

        • Mining BoganMEMBER

          Okay, so are these moron owners holding on to the furniture just in case tourism jumps off the stretcher and rejoins the game or it would cost too much to break the lease?

          ‘Cause I’m thinking they should just cut their losses.

          • Mining BoganMEMBER

            Well see, I’m watching a heap of them come onto the market up the coast and I’m trying go determine when the best time is to lay out some completely unreasonable offers. That moment when you see their spirit is broken.

          • How do you know that their spirit is broken? When they start crying and then undressing…

    • How many were there a month ago? Three months ago?

      While I agree with the sentiment – rents and house prices to fall drastically – a single number is rarely as instructive as two or more that can be compared. Trending ftw.

      • Total number of furnished & unfurnished apartments in central Melbourne is 1715. Therefore 60% are furnished (i.e., ex-Airbnb) which seems very high to me.

  6. david collyer

    Auctions are out and inspections severely curtailed. Organising a mortgage will be very hard when banks are focussed on providing life support to the business of the country.

    We are in a property trading halt and price discovery is impossible. Nobody – NOBODY – knows the market price of property after CV-19 clears out the ‘Gearers and grannies, leading to an abundant supply of heavily-worn dwellings, ex-rentals and deceased estates.

    Natalie McAsey is definitely a buyer for your bridge, Leith. Give her a call.

  7. SnappedUpSavvyMEMBER

    been watching house prices in southern Sydney, some are going for 400k less then what you would have expected at the 2017 top

    • not familiar with South Sydney but be aware not all areas in Sydney recovered. Last 12 months price rises were driven by wealthy areas. My guess is smart money looking for safety exited equities and moved into RE.
      Southwest Sydney prices hardly moved.
      but yeah.. your comment was inspiring enough for me to start..

  8. mikef179MEMBER

    lol, Australians have been so indoctrinated in the religion of propertyology for so long they literally are unable to see anything else.

    Now everyone sing with me…
    “Property doubles every 7-10 years”
    “Safe as houses”
    “Rent money is dead money”
    Hallelujah, praise the lord.

  9. So much money has been splashed around. Hospitality workers are practically no worse off despite almost all of them hitting the dole queue. If the economy is still slow come October the government will extend the $550 per fortnight Jobseeker and $1500 Jobkeeper for another 6 months. At this point what’s another $200 billion.

    As long as the borders stay shut the virus isn’t going to spread rapidly.

    No-one is spending, everyone is saving.

    When everyone wakes up from how 6 month hibernation, I think we get the mother of all booms.

    All those Scomo bucks are going to be burning a hole in everyone’s pocket come mid-year.

    There’s going to be a newfound optimism and recklessness when the virus is controlled because the populace will realise that they never ever have to be cautious about their spending ever again. The government will always have your back and there will be no limit to what they’ll spend.

    We’ve probably reached the ASX lows.

    And let’s be realistic. Japan, US, UK have far worse debt and no-one stops lending to them.

    • Interesting point of view. I agree this is why the punters need to be punished. To learn a lesson but lessons are easily forgotten.

    • Narapoia451MEMBER

      Given that the median time from bull to bottom bear market from the start of financial crises is 17 months – why do you think it’s been reached in under 30 days or so?

      • This isn’t a banking crisis, it’s caused by a virus.

        Governments have an open cheque book.

        • Narapoia451MEMBER

          Sure – one that has shut down countless businesses, will probably double unemployment and cut off immigration to fuel the debt ponzi that the banks rely on to stay solvent. It’s not a banking crisis, yet. Governments have an open cheque book of sorts.
          But do you really think they are going to print enough money to maintain an average house price of 1 million dollars plus? Wages will be crushed, will banks still go a head with loan to income ratios in the 20s? How do they stay capitalised if every single mortgage they write is sub-prime?

          I mean I know this govt is all about property prices but there’s never been an asset bubble that hasn’t burst despite govt intervention. It’s a pretty big call to think that a 1 in a 100 year viral pandemic + depression isn’t going to have some kind of impact on the biggest property bubble that’s ever existed.

          • I think property will drop, but it won’t fall through the floor. Maybe lose gains from the past 9 months.

            Apartments might take a beating.

            In 18 months negative rates, you’ll have an emboldened populace knowing they don’t have to worry about their financial security because they government will always bail them out.

    • Everyone’s saving?
      Maybe on petrol/public transport.

      But: food, power, insurance, internet/phone, rent/mortgage, repayments on [insert item here]. That doesn’t stop.

      Don’t know about you but the grocery shopping inflation for us s astonishing.

      I don’t disagree with the broader points though – it’s interesting to contemplate the ASX, housing etc with your thoughts overlaid (and Coming’s.)

      • darklydrawlMEMBER

        Grocery shopping is wildly more expensive than it was. Where Mr Rabbit and the code of conduct when we need him??!!

    • Jumping jack flash

      Interesting angle.

      My take is we all become QE-cheapened debt-fed battery hens, cowering inside while our endless panic buying keeps the economy ticking over. We peasants can’t be trusted to take on the volumes of debt that are required to keep this pile of debt called an economy afloat, so the government has to step in and do it for us, and dole out this debt by way of a thinly-veiled UBI.

      Utopia!

    • A total rational thought. But the great toilet roll panic of 2020 has taught me that when crowds panic they are not rational When punters are starting to see prices going down even with ultra low-interest rates then the fear to exit is going to make the toilet roll panic look tame.

      • Jumping jack flash

        no price falls! There’s over two trillion dollars at stake and the banks tell the government what to do, not the other way ’round. The government will simply borrow whatever amount of debt is required from the banks to bail out the banks.

        • You’re onto something here, JJF.

          I think I will patent it as the Peachy Prudential Play:
          1) Government borrows $10b from ANZ
          2) Government uses the $10b to subscribe for new shares in ANZ
          3) rinse and repeat for CBA, NAB, WBC
          4) rinse and repeat for ANZ, too, if required.

          What’s not to like? Banks have more loans on the books. Banks have heaps of new capital. Government has ”investments” that pay for themselves.

          If we want to pretend that markets are still intact, we can have a Peachy Prudential Play – Pro Ponzi Masking Version:
          1) Govenrment borrows $10b from ANZ
          2) government subscribes for $10b equity in CBA with the money from ANZ
          3) borrow $10b from CBA
          4) subscribe for $10b equity in NAB
          5) borrow from NAB
          6) buy equity in WBC
          7) borrow from WBC
          8) but equity in ANZ

          …..this is fkn brilliant.

          • Peachy Bagholder

            + 1000 dude, I always follow you, Reusa (not ironically), that bat eating dude, doctorX – the leader of XMen and I used to love that 3D1K dude…. you guys are the best and I’m f&*king flying m8!

          • Jumping jack flash

            yes, take it to the XTREME!!

            At the end of the day the *only* thing that matters is that the debt grows fast enough so it can repay its own interest so the “productive” money doesn’t get all sucked into the banks causing the economy to shrink.

            To achieve that we now see the government stepping in and becoming “borrower of last resort”.

            As an aside, for someone who claimed to be an expert on the great depression, Bernanke surely didn’t do much to avert the one Greenspan started in the late 90’s. Bernanke was a fool when compared to the obtuse cunning of Greenspan.

          • +1

            I remember reading an article on a bank lending money to top shareholders to buy bonds to increase tier 1 capital ratios. This sounds like a similar scheme.

      • I think housing will struggle going forward.

        The falls won’t materialise though while everyone is locked down, no-one is being evicted, no-one has to make repayments.

        Migrants going home, less coming in will push prices down.

        But interest rates will go negative, Scomo will throw another few hundred billion at the problem come October if still stagnant. I can’t see a massive crash in housing.

        The dream of a 40% crash in prices won’t happen.

        • $$$ MR INFINITY $$$ QUANTITATIVE EASE ME

          No mate 20%30% will be in the range who is the obtuse prick that called 40% bich won’t s to be w0ke

    • buttzilla twenny

      nah, most with same-state family are/have/will move home within a month.

      people will just save, all plebs adverse to debt for 2 decades.

      it’s done. accept Neo-liberalism is fail..

      • Jumping jack flash

        can only hope. Its not nearly bad enough yet though. It needs to get to great-depression style levels of bad before people get epiphanies.

    • Totally agree. As I prepare for my next massive BAS instalment I see most of society having cash rained down on them.
      There seems to be little point in prudence or caution because when it all turns ugly the government increases your income and you needn’t pay your mortgage and your landlord can’t evict you.
      And if you are in a 5 star hotel at the taxpayers’ expense you just complain about the food.

    • $$$ MR INFINITY $$$ QUANTITATIVE EASE ME

      Crazy horse your time has expired nothing will be the same

  10. Narapoia451MEMBER

    Given that the median time from bull to bottom bear market from the start of financial crises is 17 months – why do you think it’s been reached in under 30 days or so?

    • darklydrawlMEMBER

      Serious question. What makes you think we’re anywhere near the bottom of this thing yet? Seems to me like we have a long way down still…

      • Narapoia451MEMBER

        Sorry this was a double post in error – it was in reply to Bat Eater’s comment that he thinks the ASX has bottomed.
        I don’t think we are anywhere near the bottom – it would be a statistical and historical anomaly of the highest order if we are. I wanted to understand his reasoning for why he thinks we are at the bottom.

        • darklydrawlMEMBER

          Thanks. All makes sense. With the sheer volume of comments right now I get that it’s hard to post them all correctly – foul ups will happen. In short though – it seems we agree it’s likely the begining of this shtshow rather than the end.

  11. A wee bit of tightening after the Banking RC and house prices fell by 15% in Sydney.

    But global pestilence, mass unemployment and a collapsing real economy with rising geo-political tensions and angry calls for ‘change’ are all bullish for Aus property prices…..

    It’s the final desperate squeak of a parasite as it realises the host is dead, and the life-giving juices it fed upon are putrefying.

    • Exactly. The people on this site have gone insane.It’s bear capitulation. And you know what that means.

  12. Once in a 100 years is the virus, thats more than the average lifetime…..and a once in a 100 year event changes the past mentality of thinking….people globally will value things in their life way differently then what they do now..

  13. Zombie Apocalypse

    Double top. Let’s hope young buyers aren’t stupid enough to follow the spruikers advice.

    • and this arbitrary detention is going to last

      what dumb leader would give away so easily this sweet power to control everything

      • BoomToBustMEMBER

        Yep, this is a practice run to get people used to the idea of the government with this power. Think of Covid-19 as the new war on terror. Both are unseen enemies with no defined end, both required continued control of the population for our safety.

  14. Hill Billy 55MEMBER

    When the Budget gets launched in October will be when the chooks come home to roost. Wonder if Scomo and Joshie sneak in a little election beforehand so that they get themselves another 3 years. Power is power, and they won’t want to waste the crisis.

    When the debt is tallied up and the “payment plan” is drawn up will be the light bulb moment.

    • They don’t plan to pay it back. Japan has 7x our debt. It’s been a zombie economy for 30 years. Everyone still lends money from Japan.

      • Jumping jack flash

        This!

        They don’t need to. They just need to pay the interest. Banks like that better anyway.

    • Scomo has more power than any leader of Australia ever had (including most of the colonial period)
      why would he give it up, why would he “sneak in a little election” when he can keep everyone in detention for long long time ???

      • elasticMEMBER

        Dutton must be creaming himself, having so many people in detention at the one time.

    • Not sure they will be electable once we have a chance to look back at their decisions made during the early part of this crisis.

  15. happy valleyMEMBER

    Just doing Scotty from Marketing’s bidding and morally bankrupt at the same time?

  16. I believe that Corelogic (at least for Victoria) use settlement data, so it’s very much a lagging indicator.

  17. TailorTrashMEMBER

    When 6 million Australians have been dumped on to government funded wage/ welfare of $36 K pa for six months ( if not longer ) that is aindeed a once in a lifetime opportunity ……..and it’s not to pump already ridiculous dwelling prices ……….

    • Jumping jack flash

      “and it’s not to pump already ridiculous dwelling prices”

      Not initially. Its initial purpose is to sure up the banks. All roads lead to the bank eventually.

  18. BoomToBustMEMBER

    Well they are correct, it will be a once in a lifetime opportunity, however the time frame is incorrect, wait around 24 months then pick up bargains.

  19. BoomToBustMEMBER

    How much of a beating will commercial property take as well, huge amounts of workers are successfully transitioning to working from home. No need to pay for expensive offices, no need to travel to work on public transport or on the roads, all decentralized via the NBN. This will be a game changer starting with the likes of Solomon Lew and the Just Group are refusing to pay rents. Likely most these retail businesses will take the opportunity to transition online.

    • Hill Billy 55MEMBER

      You are correct. Commercial property bad loans just about killed off Westpac in the 90/91 recession. I suspect that it’ll be the death knell on them this time.

  20. ChristopherMEMBER

    It is a once in a lifetime opportunity as the debt jubilee will make everyone home owners, spend big guys!

      • Narapoia451MEMBER

        If you aren’t enslaved by debt you might save money, invest in starting innovative new businesses, not be terrified of bucking the system and insisting on change in response to the ever more rampant corruption and cronyism on display in Australia.

        It’s not in their interest to grant a jubilee.

      • Let’s begin the debit jubilee with the trillion dollars we owe to foreign lenders. 😎

  21. I dont see any notes regarding the latest stimulus package to front $1500 per fort-night to give to employees and allow them to continue paying their debts. This is effectively another government method to ensure the property market doesn’t get hurt.

    I think the biggest issue is access to credit. If we have 10%+ unemployment and banks are clamped down because they have people dumping loans/failing to pay/defaults etc i don’t see banks happily taking on high risk mortgage debts and lending out more than they are already (they must lend more in order to continue property rises) under this new envionment.