Is the housing bubble going to pop here? To our eyes, the prices seem hugely unsustainable…
What think the dopers? I realize that all of you on the big bad internet are relative strangers, but I’d still like your (hopefully) informed opinions
Thanks,
NB
It’s a hard time to predict - I work for a bank and we’re predicting a couple of interest rate drops over the next year or so which could encourage buyers back into the market - combined with the hypercompetitiveness in the mortgage market with Nab’s recent activity (CBA and Westpac in particular are suffering) could keep prices up a little. But there’s also been talk of the sharemarket recovering value, which may mean less interest in cash and property.
But then again, we’ve been checking out auctions around our suburb (Northcote) for a few months and the clearance rates at auction are really low. Many properties we expect to sell aren’t even getting a bid (apparently selling post auction though) - so buyers are using any apparent downturn to their advantage. I think Cunctator is right though - it really depends on the area you want to buy. Some suburbs have had pretty good median price increases, while others have been falling slightly.
It will be interesting to see what the market does in the next big seasonal sell - Spring (Sept-Nov) is a prime time for people to sell property, and I expect the banks will come in hard to try to encourage sales. But if there is enough noise in the market about low prices seller who don’t really have to sell may not enter the market and low supply will keep things competitive.
I don’t think there is a great investment potential for real estate right now in Melbourne in terms of flipping houses. There hasn’t been such potential for the last decade. You are right in thinking that land/houses are at unbelievably high prices, but this particular bubble is not because of the same kind of lax bank lending that happened in the US with sub-prime loans - it’s a bubble of people who have money and are willing to buy property.
So it’s not a bank lending issue, it’s more of a money to spend issue - as more people come to Melbourne because they have money to spend and want to live in Melbourne, the housing prices go up. Property prices have been steady for the last 5 years or so, but they are still high and don’t show any sign of lowering.
Prices will stay high because demand will stay high. Increasing Australia’s population is policy for both major parties, and we’re not building enough new housing to meet the needs of all those new people.
Barring anything major and unforeseeable, the Melbourne property bubble isn’t going to burst any time soon.
I’m not sure if there will be a burst, but I do think there will be a dramatic slow or decrease in property prices for the next 5 years in Melbourne. In terms of investment potential I would put my money in mining shares before property!
A lot of what is keeping Australia out of the GFC is mining - but Melbourne itself is not one of the greater impacts of this, other states (WA, QLD) are more influenced.
(of course … I’m not a financial advisor and am not an expert in anything!).
