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I agree with BayView.
What we haven't seen yet, is the full extent of the lower AUD. Imagine if it drops even further, what effect will this have on foreign buyers? Suddenly everything is half price.
Couple this with the lower cost of Australian education, which is a big drawcard. There will be more parents in the market to buy somewhere for their kids to stay. FIRB be damned.
love the positiveness on Somersoft, everything is a boom lol.
if there is a recession prices will go down.
If people are losing their jobs, confidence is shattered, banks are tightening lending standards, house's being foreclosed etc etc, property ain't gonna go up..
I'm sure there will be hundreds of people saying that they will use a recession to buy bargains and make lots of cash, but the story will be different when it actually happens. As their LVR's and their banks willingness to lend will change.
When people are unsure/concerned about the future they usually do nothing/hibernate/stay put. I'd say turnover will fall, the few who must sell may have to cut prices. Banks will still lend, but maybe have higher servicing/deposit requirements, OTOH they will all be fighting for the reduced amount of new business. The REAs will return calls & there may be the occasional bargain for cash buyers (inc those from O/S as the AUD$ will probably be lower making assets here better value).just wondering what peoples opinions are on what would happen to house prices IF Australia went into recession.
My understanding is that APRA has told the banks to reduce their growth in Investor Lending to below 10% or face tighter regulation. The big 4 are currently at v. close to 10% anyway (CBA slightly below, NAB at 13%, WBC & ANZ at 10.2%ish). APRA is also insisting on servicability calcs using IR of 7% (or current+2%) & no IO loans to OOs & a couple of other things.And this combined with the new APRA regulations??
List of Australian Recessions:
Start Finish
1 Apr 1961 30 Sep 1961
1 Oct 1971 31 Mar 1972
1 Jan 1974 30 Jun 1974
1 Jul 1975 31 Dec 1975
1 Jul 1977 31 Dec 1977
1 Oct 1981 30 Jun 1983
1 Oct 1990 30 Jun 1991
Interesting to note how little time a recession runs for - approx 6 months only (apart from the 1981-1983 one).
I'll do some extra research when I get some time, to see how property prices were affected.
I've been spruiking economy d&g for a while.love the positiveness on Somersoft, everything is a boom lol.
Yes. Maybe not as much as folks assume - not from my experience anyway; it'll be wise to keep a close eye on a particular area, and wait for the inevitable distressed sales.if there is a recession prices will go down.
This is occurring right now as we speak - and has been for a while - from my anecdotal experiences (the tightened lending is new; fuelled by the recent booms in r/e after the last 2 IR drops. And another tomorrow?)If people are losing their jobs, confidence is shattered, banks are tightening lending standards, house's being foreclosed etc etc, property ain't gonna go up..
True; it is a good time to use these IR drops to lower LVR's, build up cash buffers, and get ready.I'm sure there will be hundreds of people saying that they will use a recession to buy bargains and make lots of cash, but the story will be different when it actually happens. As their LVR's and their banks willingness to lend will change.
LOL!!The REAs will return calls
They may not run for long, but it takes a while for folks to warm up and start to spend afterwards.List of Australian Recessions:
Start Finish
1 Apr 1961 30 Sep 1961
1 Oct 1971 31 Mar 1972
1 Jan 1974 30 Jun 1974
1 Jul 1975 31 Dec 1975
1 Jul 1977 31 Dec 1977
1 Oct 1981 30 Jun 1983
1 Oct 1990 30 Jun 1991
Interesting to note how little time a recession runs for - approx 6 months only (apart from the 1981-1983 one).
I'll do some extra research when I get some time, to see how property prices were affected.
Also have to add the Paul Keating resession, the one we had to have.
List of Australian Recessions:
Start Finish
1 Apr 1961 30 Sep 1961
1 Oct 1971 31 Mar 1972
1 Jan 1974 30 Jun 1974
1 Jul 1975 31 Dec 1975
1 Jul 1977 31 Dec 1977
1 Oct 1981 30 Jun 1983
1 Oct 1990 30 Jun 1991
QUOTE]
I just had a quick look at some Adelaide historical data ('cause I like to live in my own little bubble)
1981-1983 saw 22.6% growth with the median house price increasing from $39,100 to $47,950 (interest rates hit 13.5%, and inflation was 11.8%, hhhmn, so on face value looks good but actually only just kept up with inflation).
1990 - 1991 saw 5% growth with median house prices going form $63,100 to $66,400 (March of 1990 standard variable interest rates hit 17% and inflation 5.3% so in real terms your investment went nowhere)
People love to paint these things as some catastrophe. We've had two world wars in a century and more regional wars. What happens? Life goes on.
I just had a quick look at some Adelaide historical data ('cause I like to live in my own little bubble)
1981-1983 saw 22.6% growth with the median house price increasing from $39,100 to $47,950 (interest rates hit 13.5%, and inflation was 11.8%, hhhmn, so on face value looks good but actually only just kept up with inflation).
1990 - 1991 saw 5% growth with median house prices going form $63,100 to $66,400 (March of 1990 standard variable interest rates hit 17% and inflation 5.3% so in real terms your investment went nowhere)
....however if a depression does come around, which is part of the deleveraging in a long term debt cycle, then property prices will really take a big hit.