Many people know we've seen 30% house price increases in Australia but I think it's still got some ways to go from here. The rises of 2021 were basically a bunch of people playing musical chairs, selling their home and adding a few hundred thousand to upgrade. What will drive the increases over the next 12 months? A few observations:

1) Monetary policy - RBA has said it won't raise rates just to control house prices. It is looking at wages and general price movements. By then the inflation genie will be well and truly out of the bottle.

2) Artificially suppressing the dollar will mean we have to pay more AUD for foreign goods, again importing inflation. But what about our domestically produced goods? They'll be fine right? No such luck. Foreign countries can now buy more Australian dollars (goods) with their dollars. As our goods are traded on world markets with world prices, those commodities will also rise in price. Grocery prices, manufactured goods, cars, will continue to rise. b

3) Australia's economy is heavily dependent on service industries including tourism. Obviously international tourism died during the pandemic, but state based lockdowns also killed domestic tourism. Once that starts up again money will start flowing into the economy. Unemployment rate is relatively low so employers will have to bid up wages to attract employees. Employees in service industries will demand higher pay for what they now see as insecure work. However this will largely impact at the lower end of the wage spectrum.

4) The return of foreign students (another big export earner) to major capital cities will drive up rent prices. Rents are high, but have stagnated. Vacancy rates are still low. More generally, the worker visa program will resume, as well as other visa classes. Renters will have a rough time.

5) The higher pressure on rents will pull investors back into the property market (together with continued low-interest-rate outlook). They have been sitting on the sidelines for a while now. Residential investors will demand higher rents as a result of the risk of any future eviction moratoriums. Baseline demand (and therefore prices) for entry-level properties including apartments is likely to increase.

6) Builders have been sitting on the sidelines with lockdowns shutting down construction sites. With the economy opening back up, prices for everything - from bricklayers and carpenters to steel and lumber - are going to go up massively as a backlog of construction gets underway, but the supply of new houses will not come on line for another 12 months.

TLDR - if you are too young to have experienced the ruble devaluation or the 80s oil crisis, ask you parents what it was like. Act accordingly.

Only way to survive this bubble is to start doing illegal business

Not paying tax on revenue is an instant 30% boost

Biden's Australia.

Sorry Aussie bro's I didn't vote for him, sorry his BS is creeping across the ocean.

Ameribrah here.

From what I'm seeing locally the whole scamdemic has been a massive opportunity for people who made key moves to massively increase their net worth. And it completely fugged over people that weren't prepared or weren't able to adapt in time.


A small portion of people I know have 3-5xed their net worth/holdings since January of 2020. But most people are just living their lives 'like normal'. I think its going to catch up with them in the near future.


I was fortunate to have no consumer debt. Really good cash-flow. And a bit of cash on hand. Made a few key moves (refi home + lots of moves in the market) and overall the Pandemic has given me a massive (and I mean massive) boost. Even with really high inflation I haven't been negatively effected.


I personally believe the biggest wealth transfer of our life-time is occurring. More wealth going to those at the top. Less middle class. More poverty to those at the bottom.

A lot of business are involved in fairly shady practices.


Entire system is designed to benefit people willing to risk it.

Covid has been a massive wealth transfer from young to old

-shutting down service industries that young people work in
-forcing a vaccine that only has net positive health impact for elderly; young people risking heart disease
-massive fiscal stimulus on borrowed money
-handing young people the debt at the end of it all to pay with higher taxes forever

If I was a millennial I’d be rioting in the streets

yeah right, you think low test soys are going to do anything other than bend over?

I think I’m the last birth year that qualifies

Anyway I’m not the one being harmed by all this (except to the extent that everyone is harmed). I have no skin in the game.

They could run for office.

You don’t need to be a millionaire here to be elected. In fact it can be seen as a liability.

Nobody wants to be the first to raise interest rates lol

UPDATE: Unemployment rate now below 5%. So pretty much everyone who wants a job, has one. Nothing left to do but bid up the wages to attract employees. Might start gathering steam faster than I thought.

I thought I was the only one that could have seen this exact same analysis. I would rep on recharge. This is exactly correct. The boomers are laughing all the way to the bank. On the younger people's dime. Japan has a culture that is 2 way. The west needs to adopt this asap if not their future is bleak.

Boomers be like "work hard and save money!", then ride a currency devaluation-fueled rocket to the top on their company stock and homes. JFL.

Yea.

Same with all areas of policy - tax (tax labour hard, capital is taxed less) environmental policy, natural resources royalties, the list goes on. Need younger politicians.
Still rustled I see

Spoiler!

act according to what

Agreed heavily with all content In thread. Need younger people in power. With a stake in the future

Agreed, although the government may just open the immigration tap to reduce pressure on wages.

Regardless, I wouldn’t want to be starting over in the current environment.

Act according to the incentives that are put in front of you.

For example if I was a renter I’d be trying to lock in a long term lease at a price I could afford, including sharing with people if necessary.

I would also be looking at whether my job was in high demand and using this as a chance to move up and get a higher salary (which should always be the mindset but now more so)

As for assets and investments, really depends on your outlook and risk appetite. I’m trying to get rid of significant cash holdings.

But immigration will increase demand further - for services, goods and housing.

Evidence is pretty scarce about the wage suppression effect, but the impact on demand is fairly clear.

Would suck if the immigration both dampened wage growth but at the same time caused prices to rise.

I think that’s exactly what will happen - stagnant wages (particularly at the lower end), increased demand for rental housing and basic goods and services.

I’m not sure about house prices (and have never been good at predicting this), as increased inflation will presumably result in the RBA lifting rates.

Yep, while people were focused on COVID bullchit, we experienced the greatest wealth transfer in the past 30+ years.

The top 7 Global companies by marketcap grew by $6 Trillion USD, they grew more in the past 2 years than in the past 19 years before that combined. Crypto went from $900bn total marketcap in the 2017/2018 giga pump to $3 Trillion in 2021.

Elon Musk's net worth was $20bn in 2019, it's now $297 billion.

COVID is the greatest marketing scam in history, SRS.

Age: 34

Got some bad news for you

Just wait until the ASX (XJO) Stock Market Crashes in febuary.

What’s gonna happen? How does movements in the stock market affect the real economy?

What game you in?

People invest their "Hard Earned $$$) to fund a company to "Grow"

Inflation + materials, consumer goods etc.

Means OPEX + CAPEX will require more capital raises or FOLD

World Is doomed

Guess that holds true if people are fundamental value investors (as opposed to share prices being future expectations of price movements)

Once a shareholder commits the capital though, that’s it. The company has the equity or the call on it (for partly paid).

Even if the market cap goes to zero, so long as the company remains solvent, wages are paid and goods and services sold. Shareholders are pissed but the actual economy is not harmed.

I accept it makes it difficult to raise new capital, though, so would limit growth.

I’ve heard that in times of aharemarket volatility there is a capital flight to perceived safer options (gold, property)

stake lol I probably was hungry but most likely I'm just an idiot.