Our property markets are unaffordable! Really? | Property Insiders [VIDEO]

I spent some time over the recent long weekend responding to a number of trolls on our YouTube channel who keep telling me that the property market is about to crash.

So I asked them to look back at these weekly discussions Dr. Andrew Wilson and I have been having over the last three years – but it was a worry. Sell And Buy Property

It was a worry because of how accurate many of the forecasts Dr. Wilson made in these sessions were, and how wrong much of the mainstream media was.

It’s also a worry that at a time like today when there has never been as much information freely available about our property markets, there is even more financial misinformation than ever.

Of course, the good news about these regular weekly chats I have with Andrew Wilson, Australia’s leading housing economist, is that we were right on the economic recovery, beating the recession, unemployment coming under control faster than many expected, and the resilience and strength of our property markets.

Interestingly I’ve been having similar discussions with Negative Nellies for decades and over time I’ve decided it’s just not worth trying to persuade the perpetual property pessimists.

But the media keeps feeding their fears – so today we discuss a recent 60 Minutes program that told us that our housing markets are one of the strongest yet most unaffordable in the world and how they can suck the life out of first home buyers with frustration, heartbreak, and hopelessness.

By the way… this is the same story I’ve heard for close to 30 years now – it comes around every time our markets start to rise.

So here we are again, the same stories doing the rounds again.

Watch this week’s Property Insider video to get our thoughts.

Watch this week’s video as we discuss what happened in our auction markets over the weekend as they give a good “in time indicator” of what’s happening on the ground.

Auction clearance rates remained strong this weekend despite being the Queen’s Birthday long weekend.

Sydney Auction Market

Sydney’s record Queen’s Birthday results reflect the still-booming Sydney market.

Another big Saturday of auction results for the Sydney market despite the usual distractions for buyers and sellers of the Queen’s Birthday long weekend holiday.

Sydney clearly smashed the record for the number of auctions conducted on a Queen’s Birthday holiday Saturday and also set a new record for the number and value of sales reported for that day.

Sydney recorded a clearance rate of 77.9% on Saturday which was just below the previous weekend’s 80.8% but higher than the 61.5% recorded over the same holiday weekend last year.

Although the weekend result fell below 80% for the first time this year, given the holiday circumstances and record listings, it continues to reflect strong underlying local market conditions.

Sydney reported a Queens’ Birthday record Saturday 578 auctions which were predictably lower than the previous weekends 1048 was well above the 313 recorded over the same holiday weekend last year.

Sydney Auction Trends

Melbourne Auction Market

Melbourne auction clearance rates were lower again at the weekend, dragged down by the typical holiday distractions of the Queen’s Birthday long weekend.

Although some local covid restrictions remain in place, auction withdrawals again were relatively low – particularly compared to other lockdown periods – indicating the market adaption to shutdown conditions Melbourne reported a record Queen’s Birthday Saturday auction day indicating continuing interest from sellers in recent strong market conditions.

641 auctions were reported which, although predictably well below last weekend’s June record 1379, was well above the 143 reported over the same holiday weekend last year.

Melbourne reported a clearance rate of 69.0% which was lower than the 72.2% recorded the previous weekend and again the lowest result since the 66.9% recorded over October 24th last year – also impacted by lockdown at that time.

Melbourne recorded a median price of $975,000 for houses sold at auction on the weekend which was lower than the $1,046,000 recorded over the previous weekend but 17.0% higher than the $833,000 recorded over the same holiday weekend last year.

Melbourne Auction TrendsNew Listings Fall as Subdued Winter Housing Market Approaches

The supply of properties for sale just can’t keep up with demand.

Capital city demand continues at a vigorous rate, with buyers out in force – owner-occupiers, investors, and first home buyers – at a time when available supply struggling to keep up.

The number of newly listed homes for sale has predictably fallen over recent weeks as seller interest declines with the onset of the typically quieter winter selling season.

The National Newly Listed Homes Index, exclusive to My Housing Market, that tracks newly advertised listings on a daily basis, reveals trend growth has declined by 6.0% over the five weeks ending June 10 and is now 7.9% lower than this year’s Index peak so far of 113.2 recorded in March.

New listings activity however remains well ahead of the results recorded over the same period a year ago – higher by 39.6% and reflecting the impact of Covid shutdowns on seller sentiment through Autumn 2020.

New Listings Daily Index

New Listings Monthly Change

First home buyers

In 2018 60 Minute’s ran a controversial show which was apparently their top rating show for the year which scared homeowners when it ran a headline “Aussie housing prices could fall by as much as 40% in next 12 months”.

Recently they ran a show and told us that the housing market in Australia is one of the strongest – and most unaffordable – in the world.

And it can suck the life out of anyone who’s spending every single Saturday dragging themselves from one auction to the next, being outbid at each turn.

They gave a case study of a Melbourne family who’ve been hunting for a house in Melbourne for 4 years without finding one.

Interestingly this family has a budget of $1.5 million and couldn’t find a home. Really!

Watch this week’s video as Dr. Andrew Wilson and I explain…

  • There have been recorded levels of first home buyers getting into the market this year
  • There have never been more incentives for FHB’s
  • The couple used in this show for a scaremongering story clearly had unrealistic expectations. And if they’ve missed out on dozens and dozens of auctions over the last 4 years, they should have employed a buyer’s agent to help them guide them and even the odds in their favour.

Abs Home Loans Market.jpgAbs Home Loans

NSW to offer a $25,000 grant for first home buyers in stamp duty overhaul.

First home buyers in NSW could get a $25,000 grant to help them enter the market as the NSW government moves to overhaul property tax.

The grant would replace existing stamp duty concessions for first home buyers under the property tax reforms, which would initially allow buyers to choose to pay stamp duty or an annual “Land Tax” levy.

Watch this week’s video as Dr. Andrew Wilson gives his thoughts on this matter.


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Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and one of Australia's 50 most influential Thought Leaders. His opinions are regularly featured in the media. Visit Metropole.com.au

'Our property markets are unaffordable! Really? | Property Insiders [VIDEO]' have 20 comments

    Avatar for Michael Yardney

    June 2, 2021 Mike Schwarz

    Dr Andrew Wilson – Question on Interest Rates
    It is said that the banks have been receiving cheap funding from the reserve and this ends in June. They will then need to source funding on the global market which is markedly higher. This would suggest they will have no option but to raise interest rates.
    Had you factored this into your view on interest rates?


      June 2, 2021 Michael Yardney

      Great question Mike. I know Dr Wilson has taken this into account from our private discussions. The banks will have to borrow overseas, but look what interest rates are overseas. Of course the value of the Australian dollar will be a factor.
      Remember, the RBA is keen to keep interest rates low to stimulate the economy, increase business activity and jobs growth and eventually get unemployment down. They are not not going to pull the rug out from under us


    Avatar for Michael Yardney

    April 25, 2021 Mark

    Its interesting to watch the FOMO effect on purchasing real estate at higher prices than they are worth as real estates are elevating prices during the demand. I also recently read an account of a person at auction in Sydney saying I felt like I had won lotto just because he secured the winning bid !
    Now the prices are rising so quickly and people are borrowing way to much to purchase at historically low interest rates its not difficult to work out what happens next when interest rates rise again !
    See household debt in Australia
    Another concern is the misdemeanor of good debt and bad debt lets face it all debt is bad but it portrays a certain air of its ok because its good debt .. but good debt can turn bad too ie negative equity
    We see the occurrence every decade or so the debt delinquency increases this last happened when interest rates were increased
    I have been in a position where I have not only seen this occur but almost been burnt too .. not a good feeling but you learn by your mistakes very quickly
    The oracle Buffet says be fearful when others are greedy and greedy when others are fearful
    I am standing back and waiting for this supposed pandemic mayhem to cease ….


      April 25, 2021 Michael Yardney

      What you say is correct – some people are making poor decisions driven my FOMO – but that doesn’t mean it’s the wrong time to make a wise investment decision


    Avatar for Michael Yardney

    April 2, 2021 Mary

    Your comment about “Australia heading towards Japan” and being over 1T in debt

    Have you seen this link lately?


    Australia is doing AMAZINGLY WELL compared to the rest of the world.

    I suggest to try removing the lens of pessimism and looking at life in general with a more realistic and optimistic outlook

    People are angry when prices go down
    People are angry when prices go up

    Can’t seem to win either way eh?


    Avatar for Michael Yardney

    March 3, 2021 Jennifer

    90% of jobs recovered? I I don t think so. The tourism and travel sectors have been decimated and the education sector is not far behind. It s a shame that 9-5ers forget that these sectors even exist. I personally have been getting by on menial casual jobs for over a year and it looks like that will continue for most of this year as borders remain closed. Some of us have had our lives turned upside down for the foreseeable future, so No, it is not back to normal. I m lucky as I had some money and a mortgage already but I can t even go to the bank to access a better rate through refinancing as I don t tick a single box right now. And I work for a very reputable company normally – stood down definitely through no fault of theirs or mine. Not all of us are back to normal!


      March 3, 2021 Michael Yardney

      We quoted the Australian Bureau of Statistics latest figures. Of course for the many people like you who are still without a permanent job and the situation is terrible and we are not wanting to belittle that.


    Avatar for Michael Yardney

    February 4, 2021 Raj Thakrar

    Hi Michael,
    It is too early to be generalist and say property prices will hike. There are number of factors in play here.
    1 Due to lock down some sales were on hold
    2 Government Incentive in play
    3 Relaxed lending rule
    4 Government incentive
    Cost of new build artificially inflated by builders and developers sending cost of new build to new level making house price higher. The buyers technically are not benefiting for these Government incentives they are going in to builder and developers pocket. Housing in Australia is still young growing market so bubble will burst scenario does to stack up. It is always demand and supply simple economics.


    Avatar for Michael Yardney

    December 10, 2020 Philip Lee

    The property market didn’t collapse because the government is throwing everything at it to keep it afloat. Our property market is not a free market driven by market fundamentals. It is manipulated by the government cutting interest rates to zeo, stamp duty concessions plus first home buyer grants, and government guarantees for deposits all sucking in the financially unsophisticated into putting themselves into a life of mortgage stress. It’s just kicking the can down the road.


      December 10, 2020 Michael Yardney

      Philip. You are correct, our property markets have never been a “free market”, they have been manipulated by the Reserve Bank and APRA. Remember a couple of years ago when investors were dominating the market pushing up prices, the RBA raised interest rates and APRA made it much harder for banks to lend to investors and this slowed down the markets.
      Currently intervention has supported our markets and that’s good. It’s the government’s job to protect its constituents – you and me and one way of doing that is providing stability to our housing market. They are too big to fail and no one will let them fail.


    Avatar for Michael Yardney

    October 16, 2020 Joseph Battaglia

    Michael your optimistic views irrespective of the true underlying data is disconcerting.
    The government is covering up the reality of the situation, throwing money against the wall at all costs (hoping some will stick) and falsely propping up the economy whilst kicking the can down the road. The rhetoric from parties with bias/interest in the real estate market are also contributing to the propaganda that “things are ok and sentiment is up” – whilst reality is different.
    We are not leaders on the world stage, for our real property obsession, in fact we are almost ridiculed that we are a nation that increases their wealth through selling properties to each other increasing the price at each transaction.

    Its fiscally clear, we should allow the reset button to deflate this overvalued bubble and get back to reality. I mean seriously, some of these prices are ridiculous!

    Are we going the way of Japan?
    This QE is just irresponsible on all counts.
    Over $1T in debt for such a small economy… come on, who are we kidding.


      October 16, 2020 Michael Yardney

      You are right Joseph, many of our industries are on life support from the government at the moment. And while the property market was being supported by loan deferrals, they seem to be cleaning themselves up nicely. What is the alternative? Do you really want to see businesses go broke and people go hungry? Our government and those around the world have learned how to handle economic downturns. And spending our way out of a downturn is a valid economic argument


    Avatar for Michael Yardney

    October 2, 2020 Dave

    Dear Michael. Your articles are interesting
    and usually very well written . However this one is full of a lot of spelling and sentence construction mistakes that in parts make it hard
    to follow . Take a look at where it says sh-t (Let me know if you need a proof reader ) 😉


      October 2, 2020 Michael Yardney

      Thanks for the heads up Dave – you are right lots of errors in this one. As I can talk faster than I can type I usually use voice to text, and it is pretty accurate. But clearly I missed a couple of bad bloopers this time.


    Avatar for Michael Yardney

    July 24, 2020 Martin

    The RBA will print money. And has printed plenty of it already to fight covid-19. It just doesn’t give the money directly to the government. It prints new money and uses it to buy government bonds on the secondary market so that institutions can take a cut as they buy the newly issued bonds from the government So that the government can pay for jobkeeper and Then these institutions onsell them to the RBA for a markup.


      July 25, 2020 Michael Yardney

      There has been a lot of discussion recently about Modern Monetary Theory, which suggests central banks should print more money and then give (lend) it to the government, to help pay for it debts.
      This week RBA governor Philip Lowe said that he won’t do that (print extra money) instead the banks should borrow on the open market at the prevailing low interest rates because they can afford it.
      Rather than print more money he gave the Morrison government the green light to increase debt levels and lock in a larger budget deficit to support the economy during its recovery from the virus crisis


    Avatar for Michael Yardney

    June 26, 2020 Alex P.

    While Dr Wilson may say that more sellers entering the market is an expression of confidence, the flip side is that it may be the smart money taking the opportunity to exit while prices are still holding up. If you drill down in the data is there a way to differentiate whether these are investment properties or owner occupied properties being sold and how does that relate to historical data. Second point is that government intervention has done a good job of addressing short term liquidity over the crisis but there have been no measures on a similar scale to address solvency, and solvency is what really matters after the liquidity tap has been turned off.


      June 26, 2020 Michael Yardney

      Alex, you are right on both counts.

      Our experience on the ground speaking to buyers, sellers and estate agents, is that there are very few distressed properties coming on the market at present.

      Similarly we do not believe the government is going to pull the rug out from under us in September after he’s gone to such an effort to support the economy and our markets


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