This is the only way prices are going to come down if more people need to sell. It’s sad, but unfortunately prices can’t rise forever.
Won’t they just downside to a cheaper house? Or enter a crowded rental market?
Those are both better options for Australia than pumping house prices forever. Either we get better rental laws or more cheap housing built.
It’s sad, but it was obvious that interest rates were going to rise. I refinanced in 2020 with the longest fixed-rate available (and paid a penalty to do so) and dropped my amortization length by 10 years when it became painfully clear we were going to see high inflation from government policies overlapping over each other and there was a chance of the return of high interest rates as a result.
A lot of people will get burned on the way down, but it’s good for society if housing is cheaper.
I just don’t see a way that prices can drop without a massive increase in supply. Even if the average joe stops buying they will have to rent somewhere. There will always be investment interest or property moguls who have the money keen to buy a source of guaranteed rental income.
We’re starting to see institutional money leaving housing markets.
The money comes from debt, so as debt costs increase, the profit margin of buying homes decrease. As well, as the amount of money available to a common customer drops as interest rates rise, house prices will have to drop as a function of the laws of physics and mathematics – The only way to keep increasing prices is to keep finding people who can afford higher prices.
The fact that there are still buyers doesn’t mean prices can’t drop, it’s about the balance of buyers and sellers, and if people are dumping their houses at a loss because they can’t afford to keep paying then that’ll drive prices down by increasing sellers and decreasing buyers.
It’ll play out in a bunch of ways because there’s a bunch of stuff out there totally reliant on sucking up debt. Real estate bubbles around the world, zombie businesses, even the rich used debt as a tax vehicle for consumption since you can take out debt without paying taxes.
I hope it doesn’t crash too hard. I just bought something on Saturday :/
I hope the whole bloody thing burns to the ground.
I’ll never afford a house :/
Typically it’d mostly just go sideways and wait for inflation to catch up.
A lot of the build to rent tax concessions seem to be trying to pull in more institutional investors. I would think that individual homeowners would be the ones more affected by interest rates.
I agree that we definitely need more supply, but there are a few things that could happen as prices increase, eg people downsizing from large places to smaller places, and people sharing accommodation.
Also, hopefully some people will sell their Air BnBs, increasing the property on the market, they’ll probably become Air BnBs again, but maybe it will help with prices.
Again, more supply is needed, and rich investors will probably have a field day, but even if prices don’t drop, they should at least stop sky-rocketing.
I honestly worry for my kids’ future, and whether they’ll ever be able to afford buying their own property. Hell, I’m not even sure they’ll be able to rent, the way things are going.
As someone who is financially “comfortable” right now, I worry about the next year. We just got our insurance quote (home and auto) and it went from 2200 a year to 3500 a year because “COVID” caps have been removed and now everyone is free to jack up rates again (or so our agent told us, we will be shopping around). Wife just hurt her knee bad and now the 20k we have set aside to remodel our kitchen could vanish inside 6 months because of the horrifically predatory health care hell we live in.
I can’t imagine what this would be like with no money set aside. I would be absolutely terrified. As it is now I’m just only slightly scared.
Yeah, same boat. Financially, we’re doing well. We’re lucky I work in a good, secure technology role, and I earn well in my particular market. One additional benefit I have is that I work for an org that pays for top shelf health cover as part of my package.
Our total insurance went up at renewal time (March) - house, two cars and a caravan, and they went up by around $1200 for the year. They (RACV) had increased the replacement value on my car, but there were no other major changes. I called them up and said that I’d have no choice but to look around the market - I can’t justify a $1400 increase when I haven’t made a single claim myself, and the cost of living itself was going up so much too.
They took me through a bit of a detailed questionnaire for the house and car policies and, with some tweaking on excesses for the cars, got the increases down to around $300 for the year across all four policies. Still a hit, but nowhere near as big a hit if I hadn’t made the call.
I’m expecting them to go up again next year - I think I’ll be looking for an insurance broker at that point.
I feel this. I’ve rented pretty much my whole life. My parents did buy a house when we used to live in Adelaide but they ended up selling when we moved to Brisbane. But other than that, renting is all I know. Whereas my partner has lived in the house their mum bought, and only recently rented back in like 2018 but had a pretty bad experience with that. So they’ve wanted to buy their home ever since.
But I worry that we probably won’t be able to afford our own home, even if we buy a plot of land. I’m so happy that I finally have a job so our dreams of living together are more attainable, but I don’t know if we’ll just have to rent to be able to live together or live with our parents for the rest of our lives…
Shit stinks!
Yeah, it does stink. I’ve told all our kids (oldest is in uni, nearly 20yo) they’re welcome to live with us as long as they need to, if it helps them save enough to eventually head out on their own.
But… they’re active kids, with active social lives. Who in their right mind would want to spend their best years living with their near-50yo parents?
It’s a shit sandwich alright, and none of our governments have done anywhere near enough to stop it. If anything, they keep making it worse.
Seeing these reports happening more and more cant help but feel sad those who got FOMO’d into the market. Banks threw money at people and real estates kept pushing for higher prices. Houses market is really really broken to the point its beyond repair with the amount of money in the market.
What’s wild is, instead of banks turning off the tap and telling people they can’t borrow more they were enabled and allowed to continue becoming oberindebted.
This is the reason why we should be strengthening and not weakening responsible lending laws.
House prices can’t go up if you’re literally not allowed to overpay for them.
aww yeah its crazy, even during 2022 we went back to the bank for pre-approval and yeah we had more money saved for a deposit but what they offered us was way above what they offered us the year before. And then is when economists were saying we need to reign it in or the market will pop.
Every time I see an article like “they paid 1.4 mil for a 1 mil property” I ask the question, how were they allowed to overpay that much? I’d actually argue they shouldn’t have been allowed to.
Because at the time, everything was overpriced. Easy to make judgements with hindsight
They came in with 10% deposit that mum and dad helped with and in some cases mum and dad were the guarantors.
In a lot of cases they were spending mum and dad’s money too, or nepositism to a senior position at daddy’s work.
