澳洲Australia property Housing Prices in the future??? | Sydney


在澳大利亚 The pool at of an IP needs to be resurfaced (or so the pool doctor says), the cost was estimated to be $10K ($10,000), after recoverying from my impresssion of a cat coughing up a fur ball, it just seems far too much. Its just a standard poo I need some advice regarding a property purchase. Property - semi-detached house Bedrooms - 2 Condition - average needs internal reno to modernise Street - one of the best in suburb Location - excellent Close to schools - yes Transport - 50m


Hey everyone,

I just wanted to hear people's thoughts on where housing prices will be in the future?

I have always heard the typical property cycle is 7-10 years and in the past values of propertys have doubled during this time frame. But I wonder when will these prices become unsustainable?

I know population growth is one of the main factor that people think prices will bounce back and continue to increase in the future. As well as the unique Australian market.

But I am still worried about the oversupply and typical Australian being unable to afford to buy a house in prices continue to increase? Are we expected to see rents increasing more so than capital gains?

Was rambling on a bit there but basically: Do people feel that if someone was to buy a 500k well located property in todays market that in 10-12 years it would be worth 1 million dollars?

Won't it get to a point that people just can't afford to spend that much.

Thanks for your input,

YPG  

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this is a bit of a crystal ball question you asked...no one knows, especially in todays turbulent market, how the market will be even in 2 yrs time let alone 10-12 yrs.

Going solely based on historial prices and stats in th past, it seems that prices will experience significant growth in 10-12 yrs time.  

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I predict that in the future, houses will be worth between $0 and $10 trillion dollars.  

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YPG said: ↑
Hey everyone,

I just wanted to hear people's thoughts on where housing prices will be in the future?

I have always heard the typical property cycle is 7-10 years and in the past values of propertys have doubled during this time frame. But I wonder when will these prices become unsustainable?

I know population growth is one of the main factor that people think prices will bounce back and continue to increase in the future. As well as the unique Australian market.

But I am still worried about the oversupply and typical Australian being unable to afford to buy a house in prices continue to increase? Are we expected to see rents increasing more so than capital gains?

Was rambling on a bit there but basically: Do people feel that if someone was to buy a 500k well located property in todays market that in 10-12 years it would be worth 1 million dollars?

Won't it get to a point that people just can't afford to spend that much.

Thanks for your input,

YPGClick to expand...
It's a valid question that has been asked on this forum many times.

I remember buying a house in Perth around 1986 for $30,000 ..... We sold a few years later (1990) for $110,000 and then about 2 years ago I saw that it sold for $660,000 ... in exactly the same condition as when we sold it back in 90. Did I ever imagine that people could afford a mortgage of over $600k back then ... never in a million years.

At the time of buying any property its difficult to imagine people paying more in the future, but looking back 10, 20, 30 years gives you an indication of the power of growth in everything, ... population, wages, infrastructure etc

I have no idea if future prices will double every 7-10 years, and no one else can either, but if history shows us anything then I wouldn't bet against it.

Mystery  

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Thanks for your replies - and yeah ewww I guess it was a crystal ball question.

Probably just trying to seek some assurance for myself haha.

And thanks for your response Mystery - was exactly what I was after. Cheers  

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The old 64 dollar question that one . Personally I think we'll see stagnation especially with world troubles and possibly our own yet to come. 10 or 15 yrs and then off it'll all go again but hey who knows . You can only set up in accordance with the way you think thing's will play out.

Cheers  

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If you look at what has happened in recent history and what caused rapid house price increases:

70's and 80's -rampant inflation, not just in housing, but in everything

90's and 00's - interest rates reduced and credit made easily available, people take on huge debts. Housing increases faster than wages.

Future - all that reserve banks care about is curbing inflation. This is the basis of modern economic theory. In an environment where all they care about is ensuring price and wage stability, there is no chance of prices doubling every few years, unless this focus changes. Credit availability is now under scrutiny and interest rates in Australia cannot become permanently lower than where they have been the last few years.  

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Just a few thoughts from my own experience:
I remember buying my first property in the very early 1980's. Mortgage interest rates were 13.25% and went to 13.5% in the period between exchange and settlement. It cost around $32,000. Worth around ten times that now.
I built a house for $50K & land for $20K for a grand total of $70K and then (stupidly) sold it 12 months later for $132K. Interest rates were 18 - 19%. That same property today would be worth over $400K.

I could give you some other examples, but my point is this, that over the long term, property has always done well, and all of this in times of recession, high interest rates, GFC, low interest rates, Liberal governments, Labour governments, negative gearing in, negative gearing removed, tight credit, loose credit (loved those 95% LVR no docs :)), FHOG of $2K (as it was for my first home), FHOG of $7K and FHOB of up to $14K .........and still the RE market marches ever upwards.

There will always be a reason not to invest. BUT if you delay, the you do not take advantage of the compounding effect of TIME in the market.

Just my 2c.  

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Slower growth throughout Australia no doubt. I don't think you'd see doubling in 10 years. Sydney's almost at the 10 year mark. Hasn't doubled.  

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Deltaberry said: ↑
I don't think you'd see doubling in 10 years. Sydney's almost at the 10 year mark. Hasn't doubled.Click to expand...
You're right. Sydney has not doubled in the last 10 years.:(
A few examples,
(2001 median, 2011 median, % increase in last 10 yrs):
Redfern houses: $454K, $860K, 89% increase
Tempe houses: $385K, $710K, 84% increase
Summer Hill units: $290K, $502K, 73% increase
Marrickville houses: $439K, $750K, 71% increase

Of course there are quite a few Sydney suburbs that would have only had a 50% increase in the last 10 years.

However, we have come through an extraordinary 10 years if you consider a Depression (GFC) as one of those black swan 'events'. All the same I'd rather have purchased 10 years ago and missed out on doubling my houses' price and only achieved an 89% increase instead. :rolleyes:

Deltaberry said: ↑
I don't think you'd see doubling in 10 years.Click to expand...
You know the market does not really care what you (or I) think, right? :cool:  

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Propertunity said: ↑
You're right. Sydney has not doubled in the last 10 years.:(Click to expand...
Why the glum face, Prop? Looks to me that Sydney is overdue & will enter a "catch-up" phase in the near future. I'd be thinking it's the place to buy.  

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mattnz said: ↑
If you look at what has happened in recent history and what caused rapid house price increases:

70's and 80's -rampant inflation, not just in housing, but in everything

90's and 00's - interest rates reduced and credit made easily available, people take on huge debts. Housing increases faster than wages.

Future - all that reserve banks care about is curbing inflation. This is the basis of modern economic theory. In an environment where all they care about is ensuring price and wage stability, there is no chance of prices doubling every few years, unless this focus changes. Credit availability is now under scrutiny and interest rates in Australia cannot become permanently lower than where they have been the last few years.Click to expand...
I agree it is unlikely prices will double every ten years. I think housing prices historically grow at a few percentage points above inflation in Australia on average. If inflation is high then growth will be high. In the future, if we still get 5% or 6% growth on average, and inflation is kept around 3%, over the long term it's still an inflation-proofed investment, especially when you add rents to the equation.
Cheers Ali  

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Ms Jade said: ↑
Why the glum face, Prop? Looks to me that Sydney is overdue & will enter a "catch-up" phase in the near future. I'd be thinking it's the place to buy.Click to expand...
Not glum - but it would be nice to have it double in 10 :)

I happen to agree with you that it is in a catch-up phase, just to get back on track, which is why you see me sometimes scratching my head when other posters on the SS forum reckon it is a bad time to be buying right now as we have reached a peak. :p  

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YPG said: ↑
Hey everyone,

I just wanted to hear people's thoughts on where housing prices will be in the future?

I have always heard the typical property cycle is 7-10 years and in the past values of propertys have doubled during this time frame. But I wonder when will these prices become unsustainable?

I know population growth is one of the main factor that people think prices will bounce back and continue to increase in the future. As well as the unique Australian market.

But I am still worried about the oversupply and typical Australian being unable to afford to buy a house in prices continue to increase? Are we expected to see rents increasing more so than capital gains?

Was rambling on a bit there but basically: Do people feel that if someone was to buy a 500k well located property in todays market that in 10-12 years it would be worth 1 million dollars?

Won't it get to a point that people just can't afford to spend that much.

Thanks for your input,

YPGClick to expand...
I'm 51.

Ever since I can remember, house prices have gone up.

If you want to look at a 2-5 year "window" you may be disappointed though.  

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YPG said: ↑
Hey everyone,

I just wanted to hear people's thoughts on where housing prices will be in the future?

I have always heard the typical property cycle is 7-10 years and in the past values of propertys have doubled during this time frame. But I wonder when will these prices become unsustainable?Click to expand...
Depends on the property, especially the location. I don't believe the cycle as described is a hard and fast rule. Some properties will do better, some worse.

YPG said: ↑
I know population growth is one of the main factor that people think prices will bounce back and continue to increase in the future. As well as the unique Australian market.

But I am still worried about the oversupply and typical Australian being unable to afford to buy a house in prices continue to increase? Are we expected to see rents increasing more so than capital gains?Click to expand...
Depends on whether there is really an oversupply. Some areas have too few properties (e.g. Canberra), and some have too many (some country towns). Well located areas with high demand will, by definition, not be oversupplied (at least not usually). Choose the right areas and it's a non-issue.
YPG said: ↑
Was rambling on a bit there but basically: Do people feel that if someone was to buy a 500k well located property in todays market that in 10-12 years it would be worth 1 million dollars?Click to expand...
Quite possibly, especially if you get a good deal when you purchase initially.

YPG said: ↑
Won't it get to a point that people just can't afford to spend that much.Click to expand...
Yes, but not for a while yet. People are currently saving and reducing debt (in the macro sense), and if they weren't doing that they'd be continuing to buy consumer goods (Australians already buy a lot of this crap), meaning they have money that could otherwise be used for housing. Sure, people aren't happy about it, but plenty of people are not doing it tough.

YPG said: ↑
Thanks for your input,

YPGClick to expand...
Pick property that has a decent yield, and is well located, and within a couple of years the neutral / positive cashflow position will mean that you can sit back and be paid to wait for capital gains.

This is just my opinion. Others here have differing opinions, which are just as (if not more) valid. Consider the various opinions you get, and don't be afraid to form your own.  

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BayView said: ↑
I'm 51.

Ever since I can remember, house prices have gone up.

If you want to look at a 2-5 year "window" you may be disappointed though.Click to expand...
So you are part of the baby boomers who have profited at the expense of all the later generations...terrible terrible :)  

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The cycle is typically a 7 to 12 years cycle. That DOES NOT not mean it WILL double in that time frame, it just means MOST well located properties will. Some will still take longer. If my properties are going up at 5% per annum, I'm more than happy using leverage and compound growth. Still getting rich, albeit slowly! Buy when you can afford to, don't overpay, and I agree with many others here, it seems Sydney and Brisbane are the current best bets.  

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ali said: ↑
If inflation is high then growth will be high.Click to expand...
Inflation is only one growth driver and not a very significant one at that.

ali said: ↑
I agree it is unlikely prices will double every ten years.Click to expand...
Oh yeah, it is all going to "be different this time".:rolleyes:

ali said: ↑
I think housing prices historically grow at a few percentage points above inflation in Australia on average.Click to expand...
Averages are such useless statistics :)
Here's what happened CG-wise in (one of my favourite suburbs) Summer Hill for the last 15 years:
1995 8.1 %
1996 3.4 %
1997 30.8 %
1998 -13.2 %
1999 31.2 %
2000 3.6 %
2001 15.3 %
2002 9.8 %
2003 15.3 %
2004 -0.9 %
2005 -5.0 %
2007 9.1 %
2008 0.3 %
2009 18.6 %
2010 8.9 %
2011 19.5 %

Now, I don't remember inflation ever being anything like those CG numbers EVER.

Cheers,  

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great stats there Propertunity, gives me some hope for one of my suburbs. :)

I think long term 10 years we will still see the same rate of growth, 2 - 4 years though it might be a bit slower due to the world economy issues.

There is a lot of reasons why there is a strong housing market in this country though, including benefits for tax and here is an interesting article I came across today: http://www.heraldsun.com.au/news/mo...5b-in-tax-breaks/story-fn7x8me2-1226148403832

but at the end of the day I think it depends on the house and the location.  

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Aaron_C said: ↑
So you are part of the baby boomers who have profited at the expense of all the later generations...terrible terrible :)Click to expand...
Well, yes and no.

On the cusp of the B/B era, and I'm sure all my purchases have made someone else a profit. (I know one of them didn't make the previous owner much of a profit, however).

I arrived on the gravy train very late in the piece, and mostly by accident.

Bought the first PPoR in 1985, bought the 2nd, 3rd and 4th by 2000.

Didn't buy the first IP until 2002, and am about to move into PPoR no.5 (new build) in a month's time.

Every gen can make a profit, but the current young batch think the houses are only expensive NOW. :rolleyes:

yeah; I'm ashamed AC. :D  

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