Aussie property values surge toward new peak

The Australian Bureau of Statistics (ABS) has released data showing the total value of Australia’s dwelling stock as at the September quarter of 2020.

Australia’s dwelling stock owned by households was valued by the ABS at a whopping $6.95 trillion as at 30 September 2020, whereas the total housing stock was valued at $7.28 trillion.

This is slightly above CoreLogic’s $7.1 trillion total housing valuation as at October 2020:

As shown in the next chart, the total value of Australia’s dwelling stock owned by households was 3.54 times as at September 2020, up from last year’s trough of 3.28 times, but still below the peak of 3.66 times GDP in the June quarter of 2017. The total housing stock was valued at 3.71 times GDP in the September quarter, down from a peak of 3.84 times GDP as at June 2017:

When divided by Australia’s estimated resident population, Australia’s dwelling stock owned by households was worth $271,470 per head of population in the September quarter, up from last year’s trough of $255,934, but down from a peak of $275,897 in the June quarter of 2017 in real inflation-adjusted terms:

Finally, the total value of Australia’s dwelling stock owned by households only rose to 7.28 times employee incomes as at 30 September 2020, up from June 2019’s trough of 6.98, but still below the 7.76 times incomes at the peak in June 2017. The total housing stock was valued at 7.63 times employee incomes in September, below the 8.13 times incomes in June 2017:

A breakdown of valuations by state, albeit only to the June quarter of 2021, is available here.

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Comments

  1. “Residential Real Estate Underpins Australia’s Wealth”.

    Lol. Only a lunatic would believe that to be true. How many people actually own that wealth, and how much of the “wealth” is “owned” by people who owe xx% of it to financial institutions? How many of those “wealthy” people are busting their ar$es paying off million dollar debts that are 10 or 12 times their income to live in some sh1thole in Sydney or Melbourne?

    It’s all a giant wankfest built on bankers [email protected], withful thinking and the hope that greater fools lie in the future to take over the debt one day.

    • A few weeks back my son told me he’d bought Tesla shares. Words to the effect to “Are you mad!” came from my mouth.
      Some days later they ‘eased off’ by ~30% and I felt justified. But…he just held on, ‘knowing’ that the price would go up again as it always does.
      He sold out on Friday and doubled his money.
      The World might just have gone nuts, but it’s hard to argue against ‘success’.
      It’s the same for our property markets.
      (NB: The risk, (as many of us found out over the last few, relatively sane, decades) is that ‘one day’ it just keep falling, and falling and falling. But will that be allowed to happen? I honestly don’t know.)

      • I’ve seen a bit about tesla lately because there’s a fund i wanted to buy into that has it as their biggest holding (10%). I baulked, but invested anyway given if it halved, it’d only be a 5% hit.

        Tesla could end up running the entire world’s internet via satellite, along with other enormous income potential. The fund predicts $20t market share.

        Don’t get me wrong, I’m not completely sold, given what the price has done, but that’s why I buy funds; I don’t know what I’m doing.

          • Ha, true, that’s what I’ve learned over many decades of trading stocks. So, I go for predominantly value-investing funds. It’s just too hard to accurately value a stock as a pleb, and it’s too hard to own enough diversity. Way too hard to know everything going on in the background that affects the price.

          • Thanks, I couldn’t work that out. A mate is always talking about Musk, mostly because he’s obsessed with Rogan who interviewed him and smoked a bifter with him. Either way the $20t stands, that’s from the fund who describes tesla as a technology and engineering company who happen to make cars.

            Bit of a worry that a company that important relies on the survival of one guys genius.

          • Musk appears to be heading down the same well worn path of having too much money and doing too many drugs. He’ll end up the same way as Tony Hsieh. (Google if you don’t know who he is, or what happened to him).

    • Completely agree, but there are always greater fools, just very occasionally are there temporary absences of them in ‘the market’. And it’s for a bl00dy home so if you have any sort of economic wherewithal then you have to participate, even if it is buying a cheap bush block in the back of beyond. Urgh this is too depressing for a Monday morning when I’m still exhausted.

      • Unfortunately the greater fools are in charge and are helping their foolish followers to load up on more and more debt. Problem is that it may take years before this all blows up in a deflationary bust – even a pandemic did not end the maddness

        • Yup. Well I’ve turned into a believer in the 18.5 year property cycle with a mid-cycle downturn (we had a double dip mid-cycle downturn this time with the royal commission and Covid). According to the cycle in the second half it is the regions that boom while the major cities that outperformed in the first half of the cycle will under-perform. I think we’ll get another commodity boom due to the electrification of the world and global infrastructure stimulus investments, but it’ll be in different minerals to last time. Plus I think the RBA has shown it is incapable of fighting the currency war so we’ll have a higher dollar despite becoming a designated CCP enemy. Some parts of the economy and some segments of society in lucky Straya are going to do very well and others will get absolutely crushed. I think the can will be kicked for another few years and then I think when it becomes obvious the debt can’t be repaid we’ll move to central bank digital currencies which opens up a whole new world of monetary and fiscal tools and that’s the reset of the system. I’m trying like mad to ensure that my single, low income with a debilitating invisible disability butt somehow doesn’t end up in abject poverty in this world that we live in. Interesting times and a challenge that focuses the mind and all efforts.

          • How do you think this will reset – will delinquent mortgages all go into a some SPV bought by the RBA and we all become perpetual debt slaves or a full blown debt jubilee. I suspect the former.

          • Diogenes the CynicMEMBER

            Home ownership with some self sufficiency built in would seem a big part of that solution. Vegetables/solar/water tanks/decent insulation etc. It shouldn’t have to be that way…but that’s how it is.

        • I have no idea about how they’ll deal with the debt but I’m guessing thelittle people get stuck with theirs. I just think that we’ll move from the current system when it becomes inoperable or too much of a drag on economic activity to something that involves central bank digital currencies (and private developed crypto could find a niche in that world) and by having a truly digital currency all sorts of possibilities open up. Money with an expiry date. Money that can only be spent in certain ways or for certain purposes. I haven’t thought too much about it yetbut that’s the way I think we’ll go.

          • The thing about controlling money like that, if the people don’t like it, they’ll find and use alternatives. There really is only limited scope for this before people start using gold/US dollars/whatever else they can get their hands on instead.

          • If that happens (money with an expiry date) people will go back to physically trading gold and metals.

          • I heard an interesting theory about digital currencies – since they are code, they can be programmed, and AI incorporated into pricing mechanisms. So when you go to buy something, if you have too much money in your account the price you see displayed will be higher than someone who has no money.

    • happy valleyMEMBER

      And, Scotty from Marketing hasn’t even flung open the international borders to warm foreign bodies yet?

      • Thanks for that.

        Sooo…68% are homeowners with a mortgage. If, on average, they own half their house and the other half is debt, then around one third of the residential real estate underpinning Australia’s “wealth” doesn’t exist. It’s debt. If you have nothing and then borrow a million dollars that doesn’t make you a millionaire, it just makes you a bloke with nothing who is holding a bag full of somebody elses property. If you borrow your neighbour’s fancy BMW that doesn’t mean you own a fancy car. Etc etc..

  2. Goldstandard1MEMBER

    If everybody planted Tulips in their yards (those that have them), they would be worth at least double and total value in Australia would exceed 14T!!

  3. Oh well looks like we will be waiting another decade for the housing “crash”. All the while the bears on MB will be sitting around saying “18 months”. Meanwhile house prices will have gone up by so much that any crash will be insignificant.
    I’ve been a bear for over a decade now, all the while friends and family thought I was a loon. If a pandemic virus which shuts down Australia’s economy, increases unemployment and stopped immigration, all the required ingredients needed to crash house prices can’t pop the bubble then nothing will. Straya truly is different!

    • It’s not that oz is different. It’s more a case that the housing bubble IS Australia. Everything will be sacrificed at its alter, whatever the consequences.

      • Good one.
        Literally synonyms that can easily be swapped as they share meanings, like Frigidaire, Xerox etc.

    • ErmingtonPlumbingMEMBER

      Our highly regulated land “market” exists to favour land bankers and in combination with our, relatively, very low population in comparison to the rest of the world, our high standard of living (in spite of decades of decline) also by comparison to the rest of the world and our stable and predictable political system and property rights means we will probably maintain the highest house prices in the world for generations to come.
      Without the majority of those left behind rising up in revolt and taking political power (Democratically) then nothing here will change.

      Even if China was to one day conquer Australia completely it would still have some of the most overpriced real estate in the world Due to them probably Making OZ a kind of gated community for CCP loyalist wanting to hide their extravagant lifestyles from the envious eyes of the Peasant and working classes masses at home.

      • Even if China was to one day conquer Australia completely…

        That’s too much even for Stephen King or Mueller.
        Not one country is insane to do that and the insanity has to go even further for Chinese to “invade” the estate we already sold all of it to them to spend on a good holiday.

    • FUDINTHENUDMEMBER

      Well if interest rates drop another 7 percent in the next 10 years it’ll be boom times forever!

      • Very droll, but relative change is what counts, if interest rates halve another few times, would be the actual equivalent…

        • FUDINTHENUDMEMBER

          True. Goes both ways though.. A small increase in rates would smash a lot of folks mortgages and bond positions.

          • But if we are being realistic then the odds are rates will go down further and not up anytime soon. They won’t put rates up until wages rise and if things look shakey anytime soon they will just print more money. The second things start to ease next year then it will be everyone can access super, or more housing stimulus. What’s to stop them tweaking mortgage terms 40? 50 year mortgages? Government and banks have shown their hand now and will stop at nothing to keep prices high.

            Ultimately what the bears think is moral, want to happen or should happen actually has no bearing when we have people in charge that will stoop to new lows. Which is why I’m no longer bearish on house prices and think that if you’re sitting on the sidelines today you could still be waiting in a decades time. Can’t beat ’em then join ’em I say…

          • Kevin I came to that same conclusion prior to Covid-19. It sucks, but it is, what it is. Once you accept it for what it is, you can work within that paradigm and make your decision.

          • So, do you think the government/RBA/whoever have the desire or balls to Smash the place and burn it to the ground by raising interest rates? OR Do everything they can to maintain the status quo?
            This is the decision that matters, everything else flows from it. I know which way I’d bet.

          • @Kevin @Gavin – same here (*high five*)
            All the ingredients for a crash were in the pot but someone forgot to turn the stove on. It makes no sense to wait any longer if you can afford it.

          • FUDINTHENUDMEMBER

            No of course Govt will do what they can. But this year we’ve already had:

            *jobkeeper jobseeker
            *Super withdrawls
            *relaxed lending standards and further muzzling/capturing of regulators
            *Multiple grants and incentives rolled out and expanded (homebuilder, FHB, stamp duty, ect)
            *Ignored 95% of Royal Commission findings

            And there was plenty more, but i forget. Any way they’ve thrown the book at it already. And while i get they’ll pull other rabbits out of the bag for a while, how long can it last?

            I’m not totally negative on housing, and you should own one in this country with all the tax incentives and such (if you can afford it). But its a pretty crowded trade already if you’re planning on going all in with the biggest purchase of your life at this stage. Especially if you’re overleveraged and undercapitalized. Plenty of room to get wrecked if it goes wrong. Real interest rate rise in a few years or similar a serious risk.

    • The economy is being artificially propped up by the government via Jobkeeper and other government spending.
      The halt to immigration flows hasn’t been as dire as first thought because 80% of temporary entrant workers and overseas student stayed here during the virus.
      Interesting year coming up.

      • Meh. Certain elements of the economy have been propped up by artificial means for decades and now somehow another rainbow has been shot up our @rse with the upcoming mining boom 3.0.

    • Usually the crash begins when the last bear capitulates and becomes a bull. Its only when the most skeptical amongst us decide that this time “really is different” that market conditions are set up for a leg down.

      • Well you’ll be waiting a long time yet for that crash because uber bears like bcn haven’t changed their tune. Maybe another 18 months…

  4. Update on the 3 units in my street.
    All went to auction and passed in 1 month ago
    2 sold now in the past week after 8-10 weeks on market at about 15% below peak.
    1 removed from market.

  5. Kevin.
    A similar situation existed about 40yrs ago when I was starting out in the workforce re Taxi Operators Licences. In my state they were about $12K then. A few years ago they had reached $450K or so. Now with the companies like UBER and others
    providing a better service at a lower price the licences are only a fraction of the peak price.

    Posters like “ANON” reckon Uber functions by not following the “rules”. Trouble is rules like the “demarcation rule” where a cabbie cannot pick up passengers outside a designated area and has to drive around empty to get back into that area make the whole industry look silly.
    Suing UBER for lost income is like horse and buggy delivery drivers suing Henry Ford. Doomed to fail.

    Real estate will correct but I dare not predict when.

    • ErmingtonPlumbingMEMBER

      There is nothing particularly innovative about Uber or any of its clones at all.
      Its just a centralised booking system that takes payment and tracks vehicles and ranks drivers.
      For the sake of efficient public transport Their should be one centralised State Government run “Uber” clone that manages all individuals engaging if providing this taxi service.
      Run at cost only, with no Public transport “profits” being syphoned off overseas as a form of private Taxation apon Australian citizen owner operators by foreign corporations.
      It is such a no brainer to have the govie take over the booking, payment and regulation of this kind of service where individual owner operators, the drivers are the ones making the lion’s share of the price charged.
      The biggest problem with the old system based on Taxi plate licences worth 100s of thousands of dollars was that the vast majority of drivers were not owner operators. That’s the biggest reason the Taxi experience is nearly always worse than an Uber or equivalent one.

      • The biggest reason the Taxi experience is nearly always worse than an Uber or equivalent one is because it is a “one centralized State Government run” system, with ridiculous rules and restrictions put in at the request of the operators to limit competition and improve profits.

        • ErmingtonPlumbingMEMBER

          You miss my point.
          The “Operators” of the current taxi booking system Are not the Government nor are they the Labor doing most of the driving.
          but the Same goes for Uber.

          The Govie should operate a system near identical to the current Uber style booking and payment system for the reliability, availability, safety and benefit of passengers across the state and for the protection of the working rights and min rates of pay of owner drivers.
          My argument is that their should be no “Employees” or sub contractors allowed to drive another person’s taxii/Uber vehicle in this system.
          Once set up all other ride share systems should be outlawed.

          • Well said.
            No need to outlaw, it is enough to not provide insurance and other safety nets to non member drivers. They will be disincentivised.
            I particularly like the idea for owner-operated taxi services.

  6. Home ownership in Australia is rigged in favour of the participants. It’s really the only game in town. Reusa and Pe^ches were right all along. The problem is rates have dropped so far in the past decade, jumping in now may mean it’s not as profitable as it has been.

    • FUDINTHENUDMEMBER

      Rates going down is exactly why it’s all up. Pointless (perhaps dangerous) keeping cash in the bank plus super-“cheap” to service a mortgage (until it ain’t).

      Risk free rates are being held ridiculously low so everyones out there blowing bubbles. Aus property no different, but again, where else are you gonna park your (increasingly useless) cash..

        • Depends on how much cash you have, A mil or 2 in cash isn’t all that useful, especially as it gets inflated away on you.

        • FUDINTHENUDMEMBER

          True that. But yes i was thinking more the entities that have EXTRA cash and/or good lines of credit. The rich are getting richer, and all that, and they’ve got the extra cash or debt to slosh about.

    • It doesn’t have to be profitable, just serviceable – that’s why this is an Owner/Occupier boom.

      • Hence a valid perspective that this boom can fizz out as soon as the majority of FOMO mob enters the Arena.

  7. Ailart SuaMEMBER

    I guess the ‘big sharp spike’ is interest rates pushed northwards as a result of inflation. You need at least a 3 point increase to hose down inflation and similar to stimulate a dusty economy. Imagine what that would do to the property Ponzi. IMO, inflation is a real possibility, particularly if there’s a delay in bringing back all the cheap off-shore labour. On the other side of the coin, how far negative do we have to go to please the donors? Oh what a horrible f….ng mess they’ve made.

  8. I had a conversation on Saturday with a customer who’s also my bank manger.

    She’s said the banks loan approval department is massively overloaded. Its normally 3 days to go through the approvals process but its now blown out to 9 days. Its not just her bank either, its all of them.

    Also people from down south are buying houses site unseen, simply going by the images on the internet.

    Here in Darwin property prices went up 11% last month. She was kind of shocked by it all and bewildered because as she said “there’s no reason for it, no big gas or mining projects or another major triggers”

    We talked about it for a while and decided the current spike was because of Covid refugee’s, money in the bank is going backwards with inflation, the stock market is too risky for many people and interest rates are at crazy low levels. The only “safe” investment for Aussies was the one we know best – housing.

    • Oh dear, so glad I bought 12 months ago. I’d be utterly mystified right now otherwise and annoyed. (Since prices are up $200k on average in my area)..

      • Yeah, even the bank manager said she’s thinking of buying right now.

        I suspect that once the JK and JS money stops in March, there will be a shake out. For Darwin though, we then have the peak time of the Dry season, so next Build up – September – I expect things to get messy.

    • ErmingtonPlumbingMEMBER

      2.69m wide x 50m long so you could use it for parking cars in.
      No right to “build” though so no carport.
      Seems like an odd fkup.
      It would be interesting to know the story behind this.

    • It seems to be one of those lane ways that ends up with teens running through it, creating chaos and avoiding the police. That area of Coffs near Park Beach has been full of junkies and drunks for decades. I suspect the council is selling it off to get rid of a problem.

      The most logical buyer would be the house or apartments on either side, who would incorporate it into their block. For $64K that would be a good deal, but I think they would be able to get it for less with a bit of hard bargaining.

      • I rented a place with such a lane running beside it. Overgrown, trash just teens (and the odd junkie) passing through as you say. Concertina sprawls of barbed wire anchored to star pickets mysteriously appeared at each end one night. Worthy of a forward observation post in ‘nam it was (if I do say so myself). Never another peep and it seems the delinquents were not versed in ways of complaining to council so stayed in situ for the duration.

    • There was a squatting case like this in Sydney, where two town houses had back to back courtyards with a tumble down fence between. One of the owners rebuilt the fence onto the others land and the absentee owner didn’t complain about it.

      When the absentee owner sold a few years later, the new owner thought his back yard was a bit smaller than his neighbours and had the place surveyed. He found out he’d lost a few meters of his yard to the rear neighbour. Conversations were held, lawyers were called and long story short, the shady neighbour got some very valuable land through adverse possession.

      Shame the property owners on either side of this Coffs harbor strip didn’t do this. All they had to do was lock the gates and pull down their fence and 12 years later, they own it.