Ridiculous Australian house prices.

[red750]

There is a two bedroom, one bathroom, one carspace unit with a small yard for sale two streets from my place. The asking price - $1,149,900. You see mansions advertised in the US for half that.

[onetrack]

What gets me is, there was an article on the economy on the ABC News site today - and it stated that there had been a 25% fall in house prices in some areas?? Where?

 

I've seen nothing that looks like house price falls anywhere, they just keep going up and up. Maybe the journo was talking about the people asking an unrealistic $10M for their mansion, and they had to settle for a miserable $7.5M instead.

 

Around here, a house comes on the market, and its sold in a week for a new record price. I don't understand where the money is coming from. Are most of our homeowners multi-millionaires today?

And around the corner from me is a new house, built just before the pandemic hit in 2019. It was occupied by some young Asians for a few months, then they disappeared and the house has stayed locked up for nearly 4 years.

 

Only once in that 4 years have I seen someone come and tend the overgrown grass out the front. The owners must be paying the rates, or the council would have sold it for outstanding rates by now. I reckon they must be Chinese, based in China.

 

I'm thinking that before long, I'll be able to organise an old mate, who doesn't own a home, to move into this place, and claims squatters rights.

 

It's disgusting that a new house can stay empty for 4 years, while people are fighting over an inadequate available number of rental homes. The Govt should introduce a special "empty home" tax for these people.

[willedoo]

Things are getting back to normal here. Prices have come down a little bit but instead of an average three week sale time, most are back to the pre-covid boom norm of about three months average to sell. Seems like the Victorians are not in such a panic to flee the state as they were before. Victorians make up the bulk of our real estate sales, followed by NSW, mainly from Sydney. Some people were saying the boom prices here were crazy, but it was really just a much needed correction as the area has always been undervalued. Even now it's still good value by comparison to a lot of other places. I guess that's why the population keeps growing.

[Jerry_Atrick]

I have been keeping an eyte on the property market for a few years and I can't see where values have fallen 25%. Some non-coastal regions have dropped - maybe 10% as the cityfolk who moved there during the pandemic decided rural life is not for them. But many don't sell their rural property on their return, so even there, property price haave not decreased as much as anticipated. Also what I am seeiung in more desirable rural areas is that quality housing is sellinjg very quickly still. @willedoo = I haven't been following the QLD scene, but I guess the Mexicans are repatriating from there 😉

 

I don't think you can compare US home prices to Aussie home prices except maybe in the big cities such as NY, Boston, San Francisco, and LA. Although the US has 10 times the population of Australia, I would hazard to guess that their habitable space is at least 20 times the size of Australia - ifg not more. There are few areas in the US where there is sparese population as it is outside the coastal regions - and even a hell of a lot of our coast is not really inhabited. As the Australian population concentrates its seatch in muich smaller areas, the prices are going to go up.

 

Also, with the US population spread out over a much denser area, the economies of scale is tipped well and truly in their favour, meaining the cost attributable to logistics, etc, is much less, meaning ultimately it is cheaper for them to build their houses.

 

You can f ind some real rural bargains in Aus, as well.  Not quite a mansion, but 6 bedrooms with moderate decor for less than you can buy a 1 bedroom flat in a half-decent 'burb in Melbourne: https://www.realestate.com.au/property-house-vic-kerang-142177836

 

And this statement of class in Shepparton - yours for $495K and not too far from K-Mart, nor the airtport: https://www.realestate.com.au/property-house-vic-shepparton-142757588

 

 

Looking for one with a pool (Ior as they say in that neck of thee woods.. pewell): https://www.realestate.com.au/property-house-qld-bongaree-142654844. Of course, the pool may be overfilled by rain occasionally...  While there is no price guide on the add, I was searching lowest --> highest price and the next one was offers above $320K. I think, though, this one would be a bit more than that.

 

$425K in Mt. Isa: https://www.realestate.com.au/property-house-qld-mount+isa-142297804

 

And of course, I could go on.

 

[old man emu]

My son told me this week that he was not thinking of purchasing a house in the current economic climate. He said that it would be stupid to pay upwards of $1M for a postage stamp-sized block with a 2-storey box made of ticky-tacky, only to have the bottom fall out of house prices and end up owing a million on a property worth, say $750K. He's on a good rental wicket at the moment. He's in my old place and the rent went up only $60 per week from what I was paying. The house was probably worth around $200K when the owner first bought it, so it is probably paid off by now. The owner hasn't had to spend much on the place over the years, only to replace the oven in the kitchen, the hot water heater a few years ago, and this week the air conditioning unit. The original wooden fences have been replaced with Colorbond after a tree in the park next door dropped a massive bough on it.

 

The main cause of high house prices in the outer Sydney areas is due to the massive development costs of the new suburbs. Developers now are up for everything from street signs to sewer works. That's why a house block of 300 sq m is selling for up to $800K. Then you have to stick a house on it. The Australian Bureau of Statistics (ABS) put the cost of building a house in February this year at $449,436. There's you $1.25M.

[red750]

Here is the link to the unit advert. Note how close the fences are to the building - no room to swing a cat. Note also the price at previous sales, admittedly 26 years ago. Appears to be half a block, address is 1A. Most houses in our area sell within 2-3 weeks of being listed, and a majority bought by Asians or Indians. Not many two plus generational Aussies. Many bocks/houses are being demolished and replaced with either two-storey houses, or two units on the block.

 

Unit in Vermont

 

On the other side of the coin, the house over our back fence has been up for lease for a few weeks, despite the shortage of rental accommodation. My daghter keeps an eye on these things, and says that the rent being asked has dropped 3 times. Must be a dump inside, althouh the ad has now gone off the internet.

[spenaroo]

so bit of background. and to show you the housing issue

 

12 months ago I purchased a 2 bedroom Unit. for 370k,

the government decided 6 months ago to compulsory acquire it for a new roadwork plan (because politics, and they cant leave the previous government's project alone - got to "fix it") at the time my borrowing capacity was 400k

 

now 12 months later.
government is paying approx. 470k for the property.
you would think happy days right? 100k for a deposit.

well not so fast, now the banks will only give a borrowing capacity of 260k from the same wage. (interest rate from 3% to 6%)
so total buying power is 360k 

and prices have increased 10%+

to make it even more difficult with the uncertainty around interest rates etc.. less property's are on the market.
12 months ago I looked at 10 property's in a weekend for inspections. out of the 30 or so listed each week.
now there is only 9 properties total listed in the area under 350k (rule of thumb here is to add 30k to the listing price) - area is basically anything south of Adelaide within an hours drive.

and of course I am not just competing with other owner occupiers.
oh no, everything in this price range is marketed as the perfect investment property.
not uncommon to get over 50 people lined up for the inspection, and 7-8 offers in before inspection.

Edited August 25, 2023 by spenaroo

[facthunter]

Prices will drop fast if there's any hint of a recession and we certainly don't want that. The prices of new houses underpin the market too but they might not be in such a well serviced location. Position Position.. I can't recall anytime getting a house was particularly easy but basic land prices are what's driving house prices UP mainly as so many costs are passed onto the subdividers. and we've never had a rate of building like what's happening now.  Nev

[Bruce Tuncks]

Just 20 years ago, our block of land near Adelaide was $32000 Providing services was  $20,000 a block. Adding inflation does not come near to modern prices....  I reckon the land price has gone through the roof to the benefit of speculators, and it has been driven by importing people faster than building new affordable housing

Until people are smart enough to vote out "pro-growth" pollies out then nothing will improve.

Edited August 25, 2023 by Bruce Tuncks

[facthunter]

The services are more extensive and therefore expensive, these days. Releasing more land for subdivision will lower prices. The value of Inner city locations is propped up by spending tonnes of money there to protect investment values.  Nev.

[spenaroo]

1 hour ago, facthunter said:

Prices will drop fast if there's any hint of a recession and we certainly don't want that. The prices of new houses underpin the market too but they might not be in such a well serviced location. Position Position.. I can't recall anytime getting a house was particularly easy but basic land prices are what's driving house prices UP mainly as so many costs are passed onto the subdividers. and we've never had a rate of building like what's happening now.  Nev

yeah... they have been saying prices will drop for the last 10 years that I can remember.

and the opposite is happening.

Honestly the market is too protected.
supply and demand means there will be no drop - as there is still far more people looking for housing then what is currently available.
and the biggest thing is the amount of super tied into the market. would be an absolute catastrophe with so many people having their retirement funded through property. almost every self managed super fund I know is invested in property.

no government is going to take the protections away as its guaranteed to kill any re-election.

Edited August 25, 2023 by spenaroo

[facthunter]

People have taken on debt to wage levels I'd never be game to do. A lot of the places I've lived in you wouldn't want to go into. NOIW is certainly difficult .  Nev

[old man emu]

2 hours ago, facthunter said:

Releasing more land for subdivision will lower prices.

What alternate Universe are you living in? More subdivision development simply means more profit for developers. That is why a 292.5 sq m block costs $679,000. In terms of comparison of land sizes, 295.5 sq m is one quarter of the old quarter acre block. 292.5 sq m is 1/16th acre.

[spenaroo]

I agree, its not a land problem.
releasing land is a 5-10 year solution at best, wont have any immediate effects.
and would be bottle-necked by builders capacity

[facthunter]

Having more blocks  available won't  change anything? Where does that bit of logic come from? Houses ate labour intensive but that can be worked on with a bit of organisation. Steel structure is a more common than it was and you could use precast walls.  Nev .

[red750]

[facthunter]

The block of land is most of the cost these days... That includes Roads, Kerbing, Water  Drainage power and NBN, Schools Main roads Rail or tram. etc.. BAck then wages were 10K a year. Nev

[nomadpete]

Reading the write up about the Intergenerational Report and stuff about rental unaffordability. (ABC opinion piece)

 

Seems the experts are saying that it's all the fault of the older generation.

 

They say that the tax system is broken because older people are placing a expensive burden on the system, whilst not paying tax in proportion to their medical and other needs.

I protest!

My view is that this 'failure' by oldies is overshadowed by international tax avoidance by the big end of town. If the resources sector (mining) paid their fair share of tax, there would be enough money available to build affordable social housing.

 

The rental tenancy people claim that a house should not be treated as an asset when there are renters unable to pay the rent.

I protest!

My view us that the rental house (and my home) IS an asset and it exists purely because it is an asset. House prices and therefore rent went up to cover the costs of building, owning and running a property.

 

Supply and demand is the cause of pricing. Demand for houses has outstripped supply. Population  growth is  the  cause  of demand exceeding supply.  Population  growth  is mostly  immigration. 

Therein lies a control that can be applied to reduce 'ridiculous housing prices'.

 

 

Edited August 25, 2023 by nomadpete
Typed, posted, had a cuppa, re-read, then clarified my indignation.

[facthunter]

You are now considered  LUCKY for skimping and saving to pay your house off. WHAT BS!. I've only had ONE set of proper curtains  in my entire life. Most new cars I bought had to be sold early because I couldn't keep up the Payments on them. I do all my own servicing and repairs. IF you want to own a house you might have to go without a few other things to get it. and it $#1ts me no end, to be considered LUCKY and a burden on others. I've lived in a Laundry and a shed lined with Newspapers in someone's muddy backyard and the first house I owned  was built in 1885 and when the wind blew the candles would blow out on the table. So called "friends" didn't come to see me but I owned the  "B" thing and that was something. Rewired it , levelled some walls and Poured some concrete floors for the shower and laundry .  Nev

[facthunter]

It's still standing and I got out of it 45 years ago. My current house was finally paid off about 3 years ago so now I'm one of those rich barstewards who OWN their OWN house. Trouble is IT's getting to need repairs itself.  Houses are TOO big a part of our lives  I'd be happy with a good shed part lined. Nev

[willedoo]

1 hour ago, facthunter said:

You are now considered  LUCKY for skimping and saving to pay your house off. WHAT BS!. I've only had ONE set of proper curtains  in my entire life. Most new cars I bought had to be sold early because I couldn't keep up the Payments on them. I do all my own servicing and repairs. IF you want to own a house you might have to go without a few other things to get it. and it $#1ts me no end, to be considered LUCKY and a burden on others. I've lived in a Laundry and a shed lined with Newspapers in someone's muddy backyard and the first house I owned  was built in 1885 and when the wind blew the candles would blow out on the table. So called "friends" didn't come to see me but I owned the  "B" thing and that was something. Rewired it , levelled some walls and Poured some concrete floors for the shower and laundry .  Nev

I know exactly what you mean Nev. I often cop the comment that I'm lucky to have such a nice block of land. Luck was never a factor. I took out a loan when interest rates were 17% - 20%, and worked fourteen hour days, seven days a week on six week hitches, and did that out in the desert with no social life to speak of for years to pay the place off. Maybe I was fortunate in being the first person to view the block when it came on the market and was able to secure it, but to get from that point to where I am now has had nothing to do with luck, just hard work and sacrifice.

[onetrack]

The problem stems from allowing too much money to be invested in housing - many people who don't consider themselves wealthy, own multiple houses for investment and income purposes, and the capital gains they make on them are huge - even after capital gains tax. Too much money goes into building 7 and 10 bedroom mansions, because the family home is tax free.

 

Around here, every older home is snapped up when it comes onto the market (usually only after the elderly owner dies) and the new wealthy owners promptly turn it into a 2 story, 7 bedroom mansion.

 

A mate says, eventually the Govt will have to tax the family home (over a certain modest value), but the Govt that does that will be voted out at the next election - that's where part of the problem lies, the inability to address the important long-term problems. Every country in the world has had a major property values crunch, which damaged their economies, it's only a matter of time, before it happens here.

 

You can't have property values increasing at 10% a year for 25 years or more, when the long term average property value increase is 3% annually.

[facthunter]

The Morrison Gov't conned and assisted people to get loans  they didn't have the capacity to pay for. Use their Super. "It's YOUR Money". That would end up being the most expensive money they would most likely ever see. .It was all done to make property values rise further and Bugger the people who lose everything. They are just collateral damage but it's part of a cynical plan to have a desperate workforce prepared to work for almost nothing available to exploit.   Nev

[nomadpete]

In that way, things have not changed all that much financially. When I was raising a family, I worked two jobs to keep ahead of the bills. Drove old cars (rings n bearings on Saturday  night, drive it ot work Monday morn). Holidays were under a tent near a beach. Spent most of those years sleep deprived. Should have been on easy street. Finally made the last house payment just in time for the marriage to fail. Started with nothing all over again. Without the guilt of being away from a wife, I worked long hours in remote places and once again I own the roof over my head.

 

These days it still takes two incomes to help your head above water. The difference  is that now it makes the news - people make headlines by crying 'it's tough'. When I did it it was just accepted as being 'the way it is'.

[facthunter]

it's supposed to build strength of character.. The  "System" is a bit rigged in  favour of those who know the right People. Not what you Know,. Its WHO you know.. There's another World out there. I found that out when I was Superfund Trustee. able to write big cheques..   Nev