Domain summons first home buyer patsies

You can see the desperation in Domain’s eyes, running articles like the one below urging first home buyers (FHB) to jump into the market before they miss out:

Similar guff is being published at sister Domainfax publication The AFR:

COVID-19 has opened up a six-month window for Sydney buyers to get into 139 middle-ring suburbs that have become affordable, but will quickly move out of reach again if Australia can shake off the pandemic and the economy recovers….

“Sydney and Melbourne buyers roughly have about six months before prices move again,” Dr Mardiasmo said…

“At the moment several cities have taken a little bit of a battering, but as soon as things stabilise we should see a great recovery for capital city markets.”

An unbiased observer would ask: what’s the rush?

The Australian economy is in free fall, unemployment is likely to remain elevated for years, and incomes will remain stillborn (if not outright fall).

Immigration is likely to remain low for years as the international border remains shut.

Dwelling values are falling and renting is becoming cheaper by the day as vacancies surge and rents fall.

And interest rates are already at rock bottom, meaning they will not come to the rescue this time around.

Once temporary income support and mortgage freezes are unwound from late September, there is likely to be a significant numbers distressed sales.

Rather than being gripped by FOMO, FHBs should take their time and negotiate hard for a ‘bargain’.

Leith van Onselen

Comments

  1. Reus's largeMEMBER

    In other news, barber standing in empty barber shop says you need a haircut …. it would be insane to buy now unless you have too, in which case I would lowball so low the agent would get whiplash looking down on my offer.

  2. “COVID-19 has opened up a six-month window for Sydney buyers to get into 139 middle-ring suburbs that have become affordable..” Emphasis on “become affordable” – LOL
    No Real Estate is affordable in any Australian town with over 50k residents. And Syd and Mel are the biggest bubbles in human history. Prices barely moved down with over 1m people losing their jobs and these shills are saying some suburbs are now affordable.

    • Jumping jack flash

      Since houses are primarily bought and paid for using debt, “affordability” is therefore governed by how much debt you can get – or “debt eligibility”. If there is an affordability problem in the age of debt, that more succinctly translates to a debt eligibility problem.

      I propose there are no affordability problems at all, and never really were any affordability problems after the time when houses stopped being paid for using savings, and started being paid for using debt.

      And debt needn’t be so difficult to get. When the correct amounts of debt are created and issued by the banks, there is absolutely no risk thanks to the diabolical asset valuation system that is used. There’s no reason at all why the banks wouldn’t and shouldn’t just let it rip and get the joint jumping again.

      The banks need to trust the system they carefully created.

  3. A friend and I are both in the FHB market. I have close to 20% deposit, he’s around 12%. Both of us are still employed. Neither of us is looking to even begin searching until December at the earliest, but more likely Feb or March.

    I’m expecting 30% minimum falls in Sydney.

  4. Two colleagues of mine both realestate agents working for big firms told me to wait until the start of next year to start looking for a property

  5. Have started seeing listings for Melbourne apartment dogboxes for under 150k. Cheapest one around 118k, advertising that tenant is in the country and paying the rent! Looks like a trickle at the moment, but could turn into a flood.

  6. FOMO is well and truly in effect for new builds/vacant lots in WA due to the combined federal and state building grants (25k 20k 10k fhog stamp duty concessions). Lets hope this stimulus truly is temporary.

    • Ian ArunMEMBER

      That’s in total about 10% of the house price in Perth…so its for you to live in and have a job not a bad idea to get in. Unlikely the falls will be as bad in Perth Compared to East coast. we have already lost around 20%.

      • Yep, considering it. But the clincher is that in order to qualify for the federal grant construction must commence within 3 mths of entering the contract….and given that it seems most builders are now at capacity this deadline will be hard to meet. Not to mention that builders and land vandors have jacked up prices too, eroding the benefits.

        Also bad quality/dodgy builds are endemic to WA (due to a combination of greedy project builders, incompetent building supervisors and meth head tradies) – this building frenzy is only going to exacerbate the problem.

        • Yes and every family building a new house is one less buying existing stock, which I believe had taken a hammering already. Might be like stopping the music in musical chairs…bit of frenzy…but they everyone looks around and there are lots of empty seats around. Not sure how well it would work the second time around (should the govt extend) or once those new places are built, for all the older stock.

  7. mikef179MEMBER

    Plus, if they are struggling for buyers they will always introduce some new scheme, so no need to rush into this particular one. Kind of like crying wolf one too many times. People are beginning to understand the government’s game.

    And also, house prices can potentially fall by more than the scheme is offering.

    Buy now or miss out, lol!

  8. Jumping jack flash

    What’s the rush indeed?

    To make matters worse, banks are raising the bar on debt eligibility so even if you wanted to grab a massive, soul-destroying pile of debt and rush out and buy something before they all fell in price, chances are you couldn’t get it anyway.

    Someone I work with is currently experiencing that first hand. They have a heap of savings after selling a few things including a house, but the banks say no. I don’t know any other details though, but on face value it seems like the banks are being rather stingy with their debt.

    Come on, banks.
    You’re hurting yourselves more than anyone.
    If you hadn’t noticed, and I’m sure you have, the debt is what is keeping the prices high. Take away the debt and they fall… and what does that do to the precious LVR? What does that do to your risk profiles? What does that do to your funding costs when you try to roll over?

    What does that do to the… *gasp*… interest rates?

    I implore you to rethink. RETHINK!

    • CBA were very reluctant to lend to me, end of last year. Despite 80 % down and a couple of years of 6 figure take home in my deposit account.
      Iam self employed however

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