4 ms·

Hah, they said "property bubble." Would like to know if that was from their own reading of the numbers or just repeating one of the story's local sources.

cyberferret 10y ago
Just curious - you don't think housing prices are too high in Australia? At least when compared to local wages? To me it seems like a giant house of cards, waiting for the just little breeze to bring it toppling down. And I am not speaking from a point of chagrin here - I own my own home and am glad that it is valued at what it is now, but I also know that it is crazy, and really, should housing prices be going up at something like $100,000 per year?? Because that is what is happening here...
- timcederman 10y ago
  In general, I agree, but I thought the same thing in the early 2000s.
- tajen 10y ago
  Every city in the world believe they're in a housing bubble. People can't just fathom the fact that there are many, many people richer than them, and the fact they can't afford a house is just that they don't earn enough compared to their neighbors. It's especially good to say "housing bubble" because it sounds smart as a market analysis from someone who has a lot of data, and it can only be proven wrong years later (when the comment is long gone) when the bubble is not burst, proving the new housing prices just reflect your neighbors' average wealth. "but the bubble is around the corner", they'll still say. Every city in the world. Housing prices grow according to people's wealth; there are also more and more people in every city, that increases the pressure on prices and it's rarely a bubble.
  - falsedan 10y ago
    Downvoting for the massive sense of entitlement shown, which is high even for HN! Lots of global cities do have bubbles from foreign investment parking wealth in property, driving up prices and squeezing out locals looking to buy. Here's how it works: Foreign investors buy luxury properties Top-tier locals can't buy luxury properties, buy the next highest property class Second-tier etc. Lower-rung locals have no properties to buy. Not: they don't have enough money; but the property type they would traditionally occupy isn't available, and no alternatives have been built since it's always in a developer's best interest to aim at the top, in the abscesses of government incentives.
    - tajen 10y ago
      Ok, I understand and I reckon (Note that I belong to the people who can't afford a property, btw, but I've lived in a few cities in the world). What you describe doesn't sound like a bubble to me: It's not something that blows then bursts. That's just that foreigners are richer than locals.
      - sprafa 10y ago
        Lots of countries don't allow foreigners do buy property in this way to prevent exactly this sort of Bubble. What might be happening (I think, seen no evidence yet) is that asset managers in banking have moved "safe" money from treasury debt to real estate, because return from treasury debt has moved to close to 0 since 2008. The result is billions of dollars have moved into real estate across the world, fueling what seems to be an increasingly global real estate crisis.
      - falsedan 10y ago
        The bubble pops when property is not as safe/lucrative of an investment as other instruments, and the foreign investors sell up. House prices go down, but no one can move because their mortgages are underwater (proceeds from selling the house don't match the outstanding debt). Developers stop building because no one will buy the new-builds at a price which will leave them with a profit. The situation is as before the bubble pops, but now everyone is poorer since their (inflated) home equity has vanished. Usually this happens when interest rates go up, because then it's better to keep your wealth in a more liquid investment like cash. Mortgage payments go up as well, turning the (imaginary) loss of equity into concrete loss of income.
        XorNot 10y ago
        The bubble pops once the big development firms start going under. At some point, the highly leveraged property developers will stop being able to clear out the apartment blocks they're putting up presuming $1m+ sale prices. They're the ones who pop the bubble, since a few bankruptcies are very likely to cascade into panic selling.
  - nimchimpsky 10y ago
    I agree with you, I live in sydney. Everyone I know over 30 owns a house, and some bought quite recently. Except me (due to a variety of reasons, finance not one of them)
- spangry 10y ago
  It is a giant house of cards. [1][2][3][4][5][6] Oh no wait, "Australia is different". Lol. [1] https://static1.squarespace.com/static/524e8cb8e4b0bd80688f4b57/t/58d300faff7c50807c66ee3a/1490223358498/ https://static1.squarespace.com/static/524e8cb8e4b0bd80688f4... [2] https://www.macrobusiness.com.au/wp-content/uploads/2017/03/Australian-house-values-to-Income-660x504.jpg https://www.macrobusiness.com.au/wp-content/uploads/2017/03/... [3] http://www.whocrashedtheeconomy.com/graphs/housepricetoincomepricetorentratio_australia_sep2012.png http://www.whocrashedtheeconomy.com/graphs/housepricetoincom... [4] http://www.whocrashedtheeconomy.com/graphs/DwellingsUnderConstructionSep2017.png http://www.whocrashedtheeconomy.com/graphs/DwellingsUnderCon... [5] https://edge.alluremedia.com.au/uploads/businessinsider/2017/03/Debt-to-income.jpg https://edge.alluremedia.com.au/uploads/businessinsider/2017... [6] https://2.bp.blogspot.com/-R8UWx7QRj-c/WNoXKoRaeMI/AAAAAAAAivs/dvxijL2Fq8QIIvGEZ9tXu1t1IrVOO7lHgCLcB/s1600/RESI.jpg https://2.bp.blogspot.com/-R8UWx7QRj-c/WNoXKoRaeMI/AAAAAAAAi...
- ryankennedyio 10y ago
  I moved to Sydney 3 months ago (from interstate) to study and pursue a slightly different line of work. I don't think I'll ever be able to own a house anywhere closer than 20+km to the CBD unless prices come down at least 30%. Rents seem higher than Chicago, comparable to parts of NY, and wages seem to be a lot lower (anecdata though). If I want to build a decent nest-egg it's likely going to require spending a considerable amount of time overseas. That said, healthcare and affordable education is pretty cool.
- rukuu001 10y ago
  The glib answer is that whatever the buyer pays is the right price. But I don't own a house because I don't see value in them at current prices. What's got me curious is the amount of foreign investment in Australian property. Are they so keen because our market looks like value to them, or just because some spruiker showed them a graph of house prices over the last 20 years.

cyberferret 10y ago

Just curious - you don't think housing prices are too high in Australia? At least when compared to local wages? To me it seems like a giant house of cards, waiting for the just little breeze to bring it toppling down. And I am not speaking from a point of chagrin here - I own my own home and am glad that it is valued at what it is now, but I also know that it is crazy, and really, should housing prices be going up at something like $100,000 per year?? Because that is what is happening here...

timcederman 10y ago
In general, I agree, but I thought the same thing in the early 2000s.
tajen 10y ago
Every city in the world believe they're in a housing bubble. People can't just fathom the fact that there are many, many people richer than them, and the fact they can't afford a house is just that they don't earn enough compared to their neighbors. It's especially good to say "housing bubble" because it sounds smart as a market analysis from someone who has a lot of data, and it can only be proven wrong years later (when the comment is long gone) when the bubble is not burst, proving the new housing prices just reflect your neighbors' average wealth. "but the bubble is around the corner", they'll still say. Every city in the world. Housing prices grow according to people's wealth; there are also more and more people in every city, that increases the pressure on prices and it's rarely a bubble.
- falsedan 10y ago
  Downvoting for the massive sense of entitlement shown, which is high even for HN! Lots of global cities do have bubbles from foreign investment parking wealth in property, driving up prices and squeezing out locals looking to buy. Here's how it works: Foreign investors buy luxury properties Top-tier locals can't buy luxury properties, buy the next highest property class Second-tier etc. Lower-rung locals have no properties to buy. Not: they don't have enough money; but the property type they would traditionally occupy isn't available, and no alternatives have been built since it's always in a developer's best interest to aim at the top, in the abscesses of government incentives.
  - tajen 10y ago
    Ok, I understand and I reckon (Note that I belong to the people who can't afford a property, btw, but I've lived in a few cities in the world). What you describe doesn't sound like a bubble to me: It's not something that blows then bursts. That's just that foreigners are richer than locals.
    - sprafa 10y ago
      Lots of countries don't allow foreigners do buy property in this way to prevent exactly this sort of Bubble. What might be happening (I think, seen no evidence yet) is that asset managers in banking have moved "safe" money from treasury debt to real estate, because return from treasury debt has moved to close to 0 since 2008. The result is billions of dollars have moved into real estate across the world, fueling what seems to be an increasingly global real estate crisis.
    - falsedan 10y ago
      The bubble pops when property is not as safe/lucrative of an investment as other instruments, and the foreign investors sell up. House prices go down, but no one can move because their mortgages are underwater (proceeds from selling the house don't match the outstanding debt). Developers stop building because no one will buy the new-builds at a price which will leave them with a profit. The situation is as before the bubble pops, but now everyone is poorer since their (inflated) home equity has vanished. Usually this happens when interest rates go up, because then it's better to keep your wealth in a more liquid investment like cash. Mortgage payments go up as well, turning the (imaginary) loss of equity into concrete loss of income.
      - XorNot 10y ago
        The bubble pops once the big development firms start going under. At some point, the highly leveraged property developers will stop being able to clear out the apartment blocks they're putting up presuming $1m+ sale prices. They're the ones who pop the bubble, since a few bankruptcies are very likely to cascade into panic selling.
- nimchimpsky 10y ago
  I agree with you, I live in sydney. Everyone I know over 30 owns a house, and some bought quite recently. Except me (due to a variety of reasons, finance not one of them)
spangry 10y ago
It is a giant house of cards. [1][2][3][4][5][6] Oh no wait, "Australia is different". Lol. [1] https://static1.squarespace.com/static/524e8cb8e4b0bd80688f4b57/t/58d300faff7c50807c66ee3a/1490223358498/ https://static1.squarespace.com/static/524e8cb8e4b0bd80688f4... [2] https://www.macrobusiness.com.au/wp-content/uploads/2017/03/Australian-house-values-to-Income-660x504.jpg https://www.macrobusiness.com.au/wp-content/uploads/2017/03/... [3] http://www.whocrashedtheeconomy.com/graphs/housepricetoincomepricetorentratio_australia_sep2012.png http://www.whocrashedtheeconomy.com/graphs/housepricetoincom... [4] http://www.whocrashedtheeconomy.com/graphs/DwellingsUnderConstructionSep2017.png http://www.whocrashedtheeconomy.com/graphs/DwellingsUnderCon... [5] https://edge.alluremedia.com.au/uploads/businessinsider/2017/03/Debt-to-income.jpg https://edge.alluremedia.com.au/uploads/businessinsider/2017... [6] https://2.bp.blogspot.com/-R8UWx7QRj-c/WNoXKoRaeMI/AAAAAAAAivs/dvxijL2Fq8QIIvGEZ9tXu1t1IrVOO7lHgCLcB/s1600/RESI.jpg https://2.bp.blogspot.com/-R8UWx7QRj-c/WNoXKoRaeMI/AAAAAAAAi...
ryankennedyio 10y ago
I moved to Sydney 3 months ago (from interstate) to study and pursue a slightly different line of work. I don't think I'll ever be able to own a house anywhere closer than 20+km to the CBD unless prices come down at least 30%. Rents seem higher than Chicago, comparable to parts of NY, and wages seem to be a lot lower (anecdata though). If I want to build a decent nest-egg it's likely going to require spending a considerable amount of time overseas. That said, healthcare and affordable education is pretty cool.
rukuu001 10y ago
The glib answer is that whatever the buyer pays is the right price. But I don't own a house because I don't see value in them at current prices. What's got me curious is the amount of foreign investment in Australian property. Are they so keen because our market looks like value to them, or just because some spruiker showed them a graph of house prices over the last 20 years.