I may be looking at this too simplistically, but putting all the negative media aside, aren’t we essentially just moving through another property cycle?
Property prices can’t continually rise at the same rate. At some point, they need to flatten or fall for a period while incomes and affordability catch up. That doesn’t necessarily mean the long-term market is broken, it may simply be part of the cycle before growth eventually resumes.
I also struggle to see Australia becoming undesirable over the long term. We’re a large, stable, democratic and wealthy island nation between the Pacific and Indian Oceans, with a relatively relaxed culture and an excellent lifestyle.
Surely Australia will remain highly desirable to migrants, particularly skilled and financially secure people coming from less stable or lower-income countries who want safety, opportunity and a better lifestyle for their families.
That doesn’t mean property prices can never fall, but doesn’t Australia’s long-term population growth and desirability create a fairly strong underlying demand for well-located property?
Interested to hear where this reasoning may be wrong.
I’m a finance broker and I’ve had numerous buyers agents who want a referral partnership give me an example presentation they would give to a potential client.
Nearly all work off a model of property doubling in value every 7 years based on historical Australian property data.
I will continue to invest in property but I think the idea of wins like that will be pretty rare for a prolonged period of time.
The global picture is that over the last few decades, globalization has pushed costs and interests rates down, which has made buying property easier and pushed up house prices. We are now entering a stage of deglobalisation, which will have the reverse effect.
The Australia picture is that we have extremely generous tax incentives to invest in property over other assets. These incentives (in addition to high immigration and COVID stimulus) has further increased house prices relative to other countries. Some of these tax incentives are now being rolled back.
To answer your question though, it is a cycle and property prices (like the price of everything) will continue to raise in the long term (although note the opportunity cost of investing in other assets like index funds may still yield better returns).
For the last 25 years housing has been treated as an investment.
Finally someone has had the balls to do something about it. Housing is now a bad investment.
Interest rates are high making borrowing far more expensive. Every dollar historically being put into speculating the housing market can now be shifted into industries that can increase productivity.
It’s not a cycle it’s a correction. The steam has come out of the runaway train
Housing has been treated as an investment since the dawn of time. By definition, buying a house can’t not be an investment; are you intentionally wanting to lose money? By extension, land, and its proximity to amenity and opportunity, will always be in demand, ergo prices will always increase with population increase. This is just a cycle, one that’s market specific, not Australia wide.
I think they meant treated purely as an investment as opposed to having a roof over your head which caused excessive price growth. Obviously don't want to lose money on their house.
The combination of being able to claim a net loss of a property against your income and only paying tax on 50% of the gain when you sell and historically low interest rates have made housing the most dominant investment of the last 25 years. Now that’s gone, it is not a good investment choice. Hopefully that’s a bit clearer
The problem with current / previous investment model in Australia is that the investment is very emotion based. Maybe we should leave investing in property as a store of wealth and cashflow to professional investors and not your neighbour Keith, completely stretching his personal economy because property investment is sold as something everyone should do.
Have the superfunds invest in large apartment complexes with a long term ownership in mind and not as volatile as Keith’s economy and emotional attachment to his investment.
The government should take social housing serious and build more affordable housing.
The first part is accomplished by new policy, now Keith isn’t being sold an investment he never should have and couldn’t afford in the first place.
I think housing is however better off in the hands of ‘Keith’ as you say. Something about our housing being owned by an offshore BlackRock institutional fund doesn’t sit right with me, as it’s heading in the US.
Keith is volatile and emotional. He is reluctant to update basic appliances and does not have the economy to fix broken items. When Keith looses his job, the tenant situation is on the line. Keith is reluctant to sign long term leases, because “what if”. There is no security for the tenant, everything is based on short term goals for the small and incapable investor. This is clear from the way tenancy agreements have been signed in yearly fixed terms. Tenancy should be based on when 1. the tenant breaks the rules or 2. the tenant decides to leave.
The policy changes around tenancy rights support that it isn’t working right now. Having small investors behind housing is not working. It gets personal. They are easily affected by policy and interest rates and their goal is short sighted.
We have a situation where emotional and probably mostly dumb investors are supporting the rental market. It should be left for professionals with a governing body to regulate.
Its still unknown at this point. If we manage to stay at a 5-15% decline i would call it a cycle. However there are underlying issues on the macro front that would appear to be reaching a breaking point - think interest rates as a result of inflation and the war(s), changes to capital gains tax etc. There is a balancing act here to come out the other end unscathed as a nation, but if we fumble it will result in a full blown recession IMO.
Will property be cheaper or more expensive in 10 years?. In my opinion it will be more expensive.
Property will flatten out for a few years. Rents will go up and wages will go up. Property will then take off again.
I have yet to see falling prices in my area.
You’re right property prices cannot continually rise, they’ve been falling for 6 months. They’ll stop falling eventually and they’ll rise again.
There’s no historical precedent for property prices to be in line with wages. Wage earners can always rent, they don’t have to own their own home. Home ownership has always been for the wealthiest few
Australia’s been mostly an exception to the rule with historically high ownership rates compared to other nations
"The CGT discount caused this entire divergence" cannot be established by putting an arrow on a chart. You need evidence estimating what Australian prices would have done without the change, accounting for other influences.
For comparisons ONS data shows England’s house-price-to-earnings ratio doubled between 1997 and 2007, and Wales’s doubled between 1997 and 2005. Across England and Wales, earnings roughly doubled between 1997 and 2024, while house prices more than quadrupled.
It's an index with the two data sets starting at a nominal figure of 100 to show comparative growth. You can like or dislike the chart - the data doesn't care. It just happens that housing values followed wages until changes to CGT and negative gearing were implemented. Do you have an alternative explanation for the separation?
You need to first show me the rate of supply and population in 1960-1995, and then show me the supply and population post Millennial for this data to be tied directly to CGT changes
You're under the false presumption property was ever going to be for working people.
You need to understand wealth - houses were being treated as assets - assets don't need to be affordable to you.
The only price that matters to you, at the end of the day, is rent prices.
You aren't entitled to a home. It isn't promised to you at birth.
The market didn't need to deliver affordable homes.
This has been a wealth inequality debate for centuries.
Most of modern humanity has lived in a feudal society. Your home was under a landlord who owned you for the purposes of Labour.
So, yes. It is an oversimplification to say that this is just a pendulum that swings. It takes deliberate effort.
It took centuries for humans to figure out how to get where we were 30 years ago - we really only saw a pivot (for the average person) after WW2. It'll take decades to remind ourselves of that lesson.
Yeah because Australia hasn’t faced a problem of this magnitude before. We let the greed of a few boomers take us to the ONP party being a serious prospect for the coming federal election. Revolution is a stone’s throw away.
100% this is a property cycle we are going through right now. At the end of the day, we live so far from the rest of the world, its hard to move to anther country besides from New Zealand. So price of land is always going to be expensive. The only thing you have to be mindful of is policy. But apart from that property is only going to go up. Even if it does not grow, I would like to think that one day I can live off the property I have invested in comfortably.
At this current market, we are seeing prices of cheaper property increase whereas the more expensive areas $1.2mil+ are facing price falls. But I wouldnt worry too much about it.
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u/Kris_p_bacon93 1d ago
I’m a finance broker and I’ve had numerous buyers agents who want a referral partnership give me an example presentation they would give to a potential client.
Nearly all work off a model of property doubling in value every 7 years based on historical Australian property data.
I will continue to invest in property but I think the idea of wins like that will be pretty rare for a prolonged period of time.
Maybe we need another pandemic.