By Unconventional Economist in Australian Property
| 70 comments
Sydney house prices continue to shrug of the Reserve Bank of Australia’s (RBA) interest rate hikes, with values up 0.13% so far in March, which follows February’s 0.3% increase.
This is according to CoreLogic’s Daily Dwelling Values Index.
In fact, since bottoming on 7 February, values across Sydney have rebounded 0.6%, as illustrated below:
In turn, the quarterly rate of decline has decelerated sharply, from -4% at the beginning of February, to only -1.9% currently:
CoreLogic’s head of research, Tim Laswless, believes the price correction should resume on the back of rising mortgage rates and a softening economy.
“There is a good chance housing values will continue to trend lower from here as the economy weakens and sentiment remains low”, Lawless said.
“Although mortgage arrears have held around record lows, it’s reasonable to expect delinquencies will trend higher through the year, as more households find they can’t continue to service their debt under such a high interest rate environment as well as keep up with the high cost of living”.
It is a view shared AMP Capital’s chief economist, Shane Oliver, who believes the sharp reduction in borrowing capacity would drag prices lower.
“Interest rates are still a lot higher than they were a year ago and people’s borrowing capacity is substantially lower than last year, so it still points to more downside in prices”, Oliver said.
Rich Harvey, chief executive of buyer’s agency Propertybuyer, also warned that the number of forced sales is likely to rise as mortgage rates rise.
“There’s a lot of people in mortgage distress at the moment. While most are still managing somehow, we could see some motivated sellers in the coming months as the impact of rate rises filter through”, he said.
The above dwelling value data obviously does not capture Tuesday’s interest rate hike from the RBA, which is expected to be followed up with additional increases over coming months.
These rate hikes will lower borrowing capacity further, which should logically translate into lower house prices.
To add further insult to injury, nearly 900,000 borrowers, or 23% of Australia’s total mortgage book by value, will this year switch from cheap pandemic fixed rates to variable mortgages with rates that are more than double current levels.
The below chart from Morgan Stanley highlights the extent of this fixed rate “mortgage cliff”, with the volume of fixed rate mortgages expiring rising precipitously from April, peaking in May, and then remaining at high levels through the remainder of this year:
Many thousands of borrowers risk being pulled underwater as their fixed rate terms expire over coming months.
Accordingly, Australia’s housing market is likely to see a significant increase in forced sales, which will also pull house prices lower.
The OECD last year released data showing that
The 2023 Demographia International Housing
The 10 consecutive interest rate hikes from the
CMBS and CRE loans are in the gun in the US. JPM
Can only assume primed and ready immigrants are pouring into Sydney. Ugly one day, rancid the next.
Yeah. Boom times.
hay reus I just discovered where your guys store all their mattresses for the conversions!
2 guys were just loading a van with single mattresses and carpentry gear from a double garage off New Canterbury Road!
you cnvt.
Not me bloke. I buy mine off a guy who makes them in Cabramatta using cheap illegal labour. Like I said, everyone is doing it. If you’re a landlord and you’re not kicking out low yielding families and replacing them with freshly imported human capital units in as many bunk beds as you can fit in well you’re an idiot!
Not just an idiot, but a xenophobic traitor! Those tenants aren’t just our future source of slave labour, they are critical to meeting our diversity and vibrancy quotas, providing a roof & a warm (all be it thin and small) mattress is the patriotic thing to do!
What was it Keating said about not living in Sydney?
Not Keating, but a truly great Australian once told me the best way to see Sydney is in the rear view mirror.
Sage advice.
.
.. out of Sydney ur just camping out ( or words to that effect)
If you’re not wealthy, you’re camping?
Is he still living with Annita or does he have a new girlfriend?
Just when you thought living in tiny-houses was gaslighting from the powers that be.
Along comes …
https://www.stuff.co.nz/life-style/homed/houses/131435717/this-uk-man-lives-in-a-skip–and-he-loves-it
Cue jokes about Skip Row…
Chortle
“I reeee-member poooooh
“Ohohohoh
“Remember yesterday, sleeping Glad (wrap) in hand
There doesn’t seem to be a garbage bin in that kitchen
No toilet either.. unless that is what the neighbours bins are for
Nothing worse, after a night on the P!ss, than climbing into the wrong bin.
🤢
Worse – you find one of Reusa’s dirty mattresses in.
This is normal in markets, there are always corrections. We could easily see a few months of a bounce.
I know you give me a hard time but I’ve had enough credibility on my calls
On big astrological events you often see extreme moves,
Last time we had the huge solar fare.
If you’re self aware many of you would have felt out of sorts from 6th into 8th peaking on 7th, not sleeping well agitated, angry frustrated
The big sell,off last night was related to the FULL MOON,
Big shift in the solar system, Saturn moved out and Pluto moved in.
This is a very good 2/3 years ahead for a few signs especially Aquarius
We are in the Age of Aquarius.
I’m telling you that jolt & aggressive in markets was a reaction to the intensity of the shift, fear & panic
What does give me hope of better times ahead is being in the age of Aquarius
The big sell off in house prices is bringing fairness back.
I’m actually trying to teach you to be open minded to understand everything is connected in the solar syste.
Don’t be surprised to see some reversals as full moon subsides
The next few months is going to be a positive shift, we could see stabilisation & bounces in many things.
People will react on their emotions
I’m telling you markets are affected by solar & astrological changes
Look what happened last year on that major flare in the sun, was a big move too.
I told you as we moved in into solar cycle 25 the virus would disappear, the sun cools on solar min and the colder period breads virus
The bext major minimum is around 2030, there will be a catastrophic even as solar cycje 25 ends
“We are in the Age of Aquarius” So house prices back to the 1970s? That’ll hurt.
Solidly under water.
I’d say 1970s prices in the 2030s
https://youtu.be/giyzHTM0p58
Very possible we don’t make it past 2032
Possibly dark ages after nuclear war cleanses the plane
You can’t do what we are doing to the monetary system & planet through complete greed
I know he’s FOS but Andrew Txte talks about the matrix
We are in just one big lie
Good! Let’s do it! Thanos was right!
Erm
You think 19% was bad 29% very possible
Jeebus bcnich, humans will not become a ‘multi planet species’. Plague or famine will get us long before we put a handful of people on Mars. Homo sapiens have been around for only 200,000 years, the Industrial Revolution started less than 250 years ago, and we’ve increased human population 6-fold in the last 120 years. Populations will crash like all other species that experience exponential population growth. What will that do to house prices?
Who knows what they do to house prices in late 2020s with a new monetary system
Interest rates will surpass 1980s
Possibly 30% or more for a period
They’ll have to do something, have no idea what
You may be right
No one exactly knows
They will intentionally inflate the bent away long before we get to 30% interest rates.
1970s Boomer style.
You have never told me what is the best angle to position myself towards the sunrays for a good perineum tanning!
Reusa no change
Tamarama beach with baby oil on your ass
Reusa I’m an INDIGO ADULT we can see things that others can’t see
I’m just a bloke that has lots of relations
Bcnich, I want to know more about the solar flares, I know the indigo children were drawing pictures in school about people jumping out of windows of tall buildings just before 9/11
I’ve watched the cosmic secret……
MPPT (Maximum Perineal Point Tanning) – is given by a 90 degree incidence angle of the sun rays on your perineum plane.
It is best when the sun is aligned with Uranus. What a stupid question.
You can always draw a straight line between any two points! Hence the Sun is *ALWAYS* aligned with Uranus.
Kiss Mars
Even better for the Taureans……..JUPITER!!
Raise The Rates.
erm……close teh gates?
I live in a Sydney apartment building, a lady jumped to her death early yesterday morning from the highrise Meriton block next door to me, RIP. I did wonder if it was triggered by the last interest rate rise or old Highrise Harry jacking up the rent.
Very sad
As we head into the biggest financial crisis in history bigger than 08 and 1930, it will be common
Gonna do just what I please
Gonna wear no socks and shoes
With nothing to do but feed
All the kangaroos
I lived in a Meriton apartment block around 15years ago and someone fell to their death from the 12th storey. What is going on with this. Unless pushing is happening, then a lot of people must be living their lives under extreme stress for these situations to occur. I wish society would focus more on exploring the causes and addressing them. Have we finally shifted from a society to just an economic zone, where nobody cares.
“On Wednesday, March 08, 2023, the current average interest rate for the benchmark 30-year fixed mortgage is 7.11%,
Oh, Sunny boy, the rates, the rates are rising
From shore to shore, and down the mountain side.
The buyer’s gone, and all the prices falling,
(…)
We’ve got a long way to go
Very possible we are heading there
The boom is back, corelogic daily is rocketing up now, 3 massive up days in a row. Like liberals before them labor has saved the capital owners. Take note that all of this is happening while rates are going up, when they pause, and then go down the boom is going to be one for the ages.
This.
Though there is a strong probability that the current price spurt will be short-lived. For it to keep running, rates have to stop going up next month (either no rise, or .25% with “mission accomplished” guidance).
Please don’t say spurt.
Did it Jamica feel horny baby?
Squirt?
Thanks I’m good.
I’d say a strong possibility.
When this little spurt makes the news how many people who are waiting to buy start to FOMO? We’ve seen this time and time again in Australia and everyone knows what immigration is doing. The rental crisis being front and center every day helps remind people too.
I don’t think the rates really matter now, there is too much outside competition and everyone knows that they will top out very soon. I strongly think Australia is fvcked once again. Thanks Labor.
Labor and Liberals – the left wing and right wing of the same buzzard.
yep
Note how rising house prices have almost no effect on inflation. By design.
Australia is corruption.
So it’s off to the races again. Thanks Albo!!
Yep, and this next period of housing disaster is 100% Labor’s fault. Just a reminder for anyone who still thinks they care about the workers.
Yeah life won’t be easy under Albanese
It sure isn’t. Libs would have done the same of course.
https://www.dailymail.co.uk/news/article-11837295/Some-Indian-degrees-recognised-Australia-new-deal-struck-Anthony-Albanese.html
good on you albo
this should save the day
MIT (Mumbay Institute for Technology) graduates here we go!
They got nothing on the alumni of South Hyderabad Institute of Technology!
The anecdotes I hear here are that people view buying, even in this market with these rates, as the less bad option to the horrible broken rental market. I know a couple that was being forced out of their rental (landlord selling), so looked at a few places that had like 60 people lined up even though they were overpriced and nope-d out and decided to buy instead. They commented that the auctions seemed “less competitive than the current rental scrum” and they didn’t want to be forced out again with little notice.
That means the government’s plan is working and that we are at a bottom in property prices.
Buyers in Sydney are paying to acquire an asset that will survive the unknown.
These are not ordinary times, all sorts of value ratios make no sense, so whatever the price you pay, it’s a bargain if it secures you a surviving asset. Today’s AUD is just monopoly money it’s nothing to worry about and certainly nothing to save, save how? seriously how?
In difficult times we save by securing surviving assets. Having these assets in our name is saving, now we just have to figure out how to get around the board and collect another $200, keep doing this until this crises resolves itself.
It’s a gamble but it’s still the best possible bet given how miserable most of the other alternatives are.
But what do you do if owning RE Investment property is not your thing?
For what it’s worth, most of my recent investments have been in defense focused startups. I believe we’re seeing the beginnings of a reinvestment phase in local defense technology, I’m especially interested in autonomous weapons and autonomous surveillance technologies. For Australian defense this means Autonomous aerial drones and autonomous vessels (both surface and sub surface) with real reach, able to operate without intervention 1000’s of Km’s from our coast line and remain deployed for 3 months, 6 months or even 9 months at a time.
Australia desperately needs this technology, so I expect to see it get properly funded and supported in up coming budgets.
Anyway, that’s where my time and my money are invested.
Interesting. Any firms in particular look promising?
Promising? anyone that is willing to invest in Australia technology is probably delusional so I’m certain I wouldn’t take their advice….
But since you ask, here’s a list of companies/ organizations with interests in the area of Autonomous vessels.
https://www.amsa.gov.au/news-community/news-and-media-releases/autonomous-technology-taking-seas
From a startup investment perspective what you need to be looking for (in my opinion) is small companies with unique / differentiated technology who are positioning themselves to be taken over by the larger defense industry players.
The big guys (on our side of the upcoming conflict) are companies like Boeing, Thales, Lockheed Martin, BAE …
If you can identify technology that they’ll need and aren’t developing themselves than it’s worth taking a punt on the startup. In the Private Equity game this is called “Exit Opportunities”
To be honest from an investment perspective wizz-bang technology is worthless without exit opportunities, so I tend to focus on the available exit opportunities and work backwards to identify the startup technology providers.
yep. a lesson I learnt living through 70’s inflation.
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