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> There is still time for a pop once governments decide things are normal again after covid. While thats true on its face, in practice trying to make that bet

by girvo 5y ago

> There is still time for a pop once governments decide things are normal again after covid. While thats true on its face, in practice trying to make that bet is a fools errand at this point. People have been telling me that for a decade plus, now. It still hasn't happened, and the Australian economy (and household wealth) is inextricable intertwined with real estate -- I can't see any government deciding to let it "pop", personally.

denkmoon 5y ago
If you were to use one word to describe governance in Australia, it would be reactive. They won't let it pop, but that doesn't mean it won't. Of course, timing it is the big bet, not predicting if it will happen.
- hnick 5y ago
  As a naturally risk averse Australian it's been incredibly frustrating. Even 15-20 years ago I was thinking this can't keep going. Turns out I just should've invested everything I own.
deleted 5y ago
[deleted]
nl 5y ago
People need to be much stricter on what they mean my "pop". Australian property prices are cyclic with an upward trend. There are (substantial) cyclic decreases in prices, especially in Sydney[1]. But people who talk about "popping" property prices seem to believe there will be a massive (50%+?) fall in prices. But there are fundamental reasons why this is unlikely. The 2008 GFC causes a 16% decrease in prices in Australia[2], and it's hard to imagine something being worse. Prices recovered 10% the next year, because Australia avoided a recession and there is fundamental demand for living areas in out major cities. The GFC caused a 18% decreases in prices in the US[3]. Given that Australian mortgage rules are different (there is no ability to walk way from a mortgage in Australia, unlike the US) it's unlikely a bubble in Australia will "pop" worse than that. But 10% decreases occur relatively often. For some reason these are ignored, but the truth is these are the "pops" that take the froth out of the market. [1] https://cdn.propertyupdate.com.au/wp-content/uploads/2021/03/Price-growth-by-city.png https://cdn.propertyupdate.com.au/wp-content/uploads/2021/03... [2] https://www.theguardian.com/money/2009/jan/06/house-prices-fall-in-december https://www.theguardian.com/money/2009/jan/06/house-prices-f... [3] https://money.cnn.com/2008/12/30/real_estate/October_Case_Shiller/index.htm https://money.cnn.com/2008/12/30/real_estate/October_Case_Sh...
- Clewza313 5y ago
  By "pop", people mean something like the impact of the GFC on many parts of the US, where houses were underwater on their mortgages and getting repossessed left and right. There's also reason to believe that the Australian property market has decoupled from the rest of the economy, and that's because tax breaks like negative gearing incentivize buying properties even when it makes no financial sense otherwise. This could change overnight with the stroke of a pen, but it would take an awfully bold politician to do it.

by girvo 5y ago

denkmoon 5y ago

If you were to use one word to describe governance in Australia, it would be reactive. They won't let it pop, but that doesn't mean it won't. Of course, timing it is the big bet, not predicting if it will happen.

hnick 5y ago
As a naturally risk averse Australian it's been incredibly frustrating. Even 15-20 years ago I was thinking this can't keep going. Turns out I just should've invested everything I own.

deleted 5y ago

[deleted]

nl 5y ago

People need to be much stricter on what they mean my "pop". Australian property prices are cyclic with an upward trend. There are (substantial) cyclic decreases in prices, especially in Sydney[1]. But people who talk about "popping" property prices seem to believe there will be a massive (50%+?) fall in prices. But there are fundamental reasons why this is unlikely. The 2008 GFC causes a 16% decrease in prices in Australia[2], and it's hard to imagine something being worse. Prices recovered 10% the next year, because Australia avoided a recession and there is fundamental demand for living areas in out major cities. The GFC caused a 18% decreases in prices in the US[3]. Given that Australian mortgage rules are different (there is no ability to walk way from a mortgage in Australia, unlike the US) it's unlikely a bubble in Australia will "pop" worse than that. But 10% decreases occur relatively often. For some reason these are ignored, but the truth is these are the "pops" that take the froth out of the market. [1] https://cdn.propertyupdate.com.au/wp-content/uploads/2021/03/Price-growth-by-city.png https://cdn.propertyupdate.com.au/wp-content/uploads/2021/03... [2] https://www.theguardian.com/money/2009/jan/06/house-prices-fall-in-december https://www.theguardian.com/money/2009/jan/06/house-prices-f... [3] https://money.cnn.com/2008/12/30/real_estate/October_Case_Shiller/index.htm https://money.cnn.com/2008/12/30/real_estate/October_Case_Sh...

Clewza313 5y ago
By "pop", people mean something like the impact of the GFC on many parts of the US, where houses were underwater on their mortgages and getting repossessed left and right. There's also reason to believe that the Australian property market has decoupled from the rest of the economy, and that's because tax breaks like negative gearing incentivize buying properties even when it makes no financial sense otherwise. This could change overnight with the stroke of a pen, but it would take an awfully bold politician to do it.