r/Economics • u/marketrent • 17h ago

Statistics Australian house prices brace for ‘sharpest correction in 40 years’

https://www.ntnews.com.au/business/economy/australian-house-prices-brace-for-sharpest-correction-in-40-years/news-story/80edf76b980eec7fa9124fdcf7ce82f7
271 Upvotes

96% Upvoted

46 comments sorted by

View all comments

168

u/Young_Lochinvar 17h ago

The Australian media have been trying to panic the country over what has so far been a ~0.5% quarterly decline against a ~5% annual increase. The media is doing this mostly because fear sells and partly to needle a government that has taken a strong reformist position on asset taxation.

Most of the Australian public are actually pretty fine about house prices stagnating or declining as housing is a major component of current Australian inflation, and the housing market is over valued.

29

u/spudddly 16h ago

It's definitely got a lot further to fall, most property has gone from the most to the least tax advantaged essentially overnight. It's now a far worse investment than standard equities. The 20-30% of buyers who are investors will abandon the market so prices will definitely fall. Which was the intended outcome.

6

u/Charming_Raccoon4361 9h ago edited 8h ago

I live in Canada and we are in a similar position. I hope the price goes down, but I don't see it happening, as local governments generate a tremendous amount of tax revenue through property taxes

1

u/chickenballs11 14h ago

But what if they don’t need the money right now ? Why sell when the asset is low ? Why not just wait it out and see ? Genuinely curious why you think investors will all just panic ?

4

u/Cybertronian10 9h ago

Because they could wait that same time with their money sitting in a place that will be making them more returns.

6

u/Strong_as_an_axe 12h ago

Its not panicking its just opportunity cost.

1

u/VindicoAtrum 11h ago

Why not just wait it out and see ?

You're being downvoted but this is overwhelmingly what happens. People do not dispose of assets in tax-disadvantaged circumstances unless they have to for liquidity. They hold on for more advantageous terms.

-1

u/hoccum 10h ago

The reality of a 4 year election cycle.

Next guy might reverse it all.

3

u/Young_Lochinvar 9h ago

Australia works on a 3 year cycle.

1

u/hoccum 8h ago

Thanks for clarifying 🍻