Is The Australian 30-year Property Super-cycle Over?

Richard Wiles from Morgan Stanley after the budget on Tuesday suggested that the Australian 30-year property super-cycle is likely over, with significant impact on Bank valuations because of weakening credit demand. Years ago, Richard and I use to work on the JP Morgan Property reports, which for years were jointly published with DFA, so I respect his views. And as I highlighted in the earlier show, the latest credit stats from the ABS on new lending were weaker before the budget, as higher interest rates, with more to come, hit home. This week’s federal budget may have shattered a critical assumption that Australia’s housing market has long been built around if you can buy an investment property, the tax system will help you hold on to it. But what are the implications for the market. Join me for a live discussion with Leith van Onselen on Tuesday, where you can ask a question live, and I will also be discussion this thorny question with our property insider Edwin Almeida on Monday. We suspect there will be some losers, but also some winners, and the question is who and where? Commonwealth Bank’s Trent Saunders estimates prices will be about 3 per cent lower than they otherwise would have been and estimates the changes to negative gearing are equivalent to up to a 1.5 percentage point increase in investor mortgage rates in terms of their effect on a prospective buyer’s immediate cash flow. In analysis contained in the budget, Treasury found the 50 per cent discount overcompensated high-return assets like houses for inflation, but often undercompensated lower-return units, meaning they could be more attractive under the new system. Weirdly, the tax changes may push up the prices of existing homes in some areas as the owner-occupied home is now the last bastion of a tax shelter. This could stimulate more demand for owner-occupier housing, particularly from older, wealthier investors who could put more money into homes for their children to live in. Owner-occupier housing is now the standout asset option. I think we need to take a chill pill and wait to see how this shakes out. Yes, there will be some further price falls, and the markets will remain weak, but with migration still running close to 300,000, and an undersupply of property, it won’t be all doom and gloom. Go granular, as I say. But indeed, it could be that the massive 30-year super-cycle in Australia is indeed ending. This could change everything! If you are buying your home in Sydney’s contentious market, you do not need to stand alone. This is the time you need to have Edwin from Ribbon Property Consultants standing along side you. Buying property, is both challenging and adversarial. The vendor has a professional on their side. Emotions run high - price discovery and price transparency are hard to find – then there is the wasted time and financial investment you make. Edwin understands your needs. So why not engage a licensed professional to stand alongside you. With RPC you know you have: experience, knowledge, and master negotiators, looking after your best interest. Shoot Ribbon an email on [email protected] & use promo code: DFA-WTW/MARTIN to receive your 10% DISCOUNT OFFER. Find more at https://digitalfinanceanalytics.com/blog/ where you can subscribe to our research alerts Please consider supporting our work via Patreon: https://www.patreon.com/DigitalFinanceAnalytics Or make a one-off contribution to help cover our costs via PayPal at: https://www.paypal.me/MartinDFA We also can receive bitcoins at: 13zBL1oRib9VJu8Uc9zUGNhxKDBBgUpDN1 Please share this post to help to spread the word about the state of things.... Caveat Emptor! Note: this is NOT financial or property advice!! 🚨BEWARE OF SCAMMERS🚨 As there are accounts impersonating Walk The World in the comments on YouTube, note that our comments will have a distinguishable verified symbol. And remember that we will never message you asking you to give us money or talk to us on other platforms such as WhatsApp or Telegram