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Australian Housing Crash


Jimmy123

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The question I have been asking and am still asking is: if all these stocks are lying near death, and if they are near death because of poor market condition, etc... is it logical to believe the Aussie residential market is booming?

 

I guess there are a lot of Mums and Dads too, I pass them on the freeway. Week to week land values are judged more from the Mum & Dad sales and they are a bigger portion of the market I would have thought (guess).

 

The bigger companies need to borrow (reborrow) lots of money, something they are finding harder to do. The spooked market for M&D's is going to lag. Unemployment will do that.

 

EDIT - NW - I don't have a clue about the socio eco outlook out there.

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Nohoper,

 

Without wanting to sound rude, try reading the last couple of posts. They part explain the conditions that caused the US/UK to crash and why the same type of crash didn't occur in Australia. It's not a case of simple lag either, if the Australia market does crash it will be due to a different set of factors (i.e. high unemployment)

 

I don't think you'll see anyone claim the market is booming and there are areas (like the NW of Melbourne) that have serious over supply issues. That said it's about averages, the serious over supply in one area doesn't equate to the whole state or country market.

 

"probably suffering from debt over hang, poor demand, poor result and generally are starved of Vitamin M(oney)..."

 

I think you've summed it up nicely. IMO a number of these projects where borderline uneconomical from the start. It's worth remembering that poor management and bad lending practices can cause projects to fail even in a growing market.

 

Cheers

Matt

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mm,

 

The last couple of posts? I have read them but... I don't necessarily agree with the view. The Aussie market may yet reach that point of collapse, who can tell? If the Aussie recession is lagging behind the US and UK, the property sector could very well be following the same pattern, as pointed out that unemployment could be a trigger. I think it's still early day to jump to any conclusion.

 

I have listed a couple of material suppliers - they are not doing well because? I reckon they are not doing well because demand is weak, construction is down. Is it mainly due to slowdown in the commercial property and/or the residential sector? Whatever it is, they are doing badly, this is a fact, not opinion.

 

Cheers.

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Last week we had a large construction firm (Alpine) collapse here in Adelaide.

 

Ironically one of the sub-contractors was on the news saying if he didn't get his entitlements in two weeks he'd loose his home.

 

Every Monday morning on one of the more popular Adelaide radio stations one of the larger RE agents has a little segment on how the past week has been and the auctions. The last few months have been fairly ho-hum. You can tell it's not going like it was before, but a brave voice tells us that there's no reason not too.

 

UNTIL TODAY. His main comment was aimed at sellers. It was:

GREED IS NOT GOOD!

 

Read that how you will, but to me it's an indicator that things have reached a balancing point.

 

I believe the next few weeks/months will be crucial. If we can support the current prices we may get away unscathed. If we can't.....Lord only knows where it will end.

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I think the lower end of the market will hold up not to badly due to the first home owners grant and after all not everyone loses their job in a recession. As usual however the medium and upper end of the market will be flogged and will be for a while yet.
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"I have listed a couple of material suppliers - they are not doing well because? I reckon they are not doing well because demand is weak, construction is down. Is it mainly due to slowdown in the commercial property and/or the residential sector?"

 

Demand and supply don't have to be 1:1

 

Demand can remain static (or even grow) while a market over supplies... the end result is a excess (which is where we are now IMO). The real question is, is demand falling or is supply simply falling to match demand ?

 

Personally based on the stats I've seen supply is falling to match demand while demand remains pretty much static.

 

I don't see any major new excess being created (most planned projects are now being canned) and that IMO is being reflected in the SP of the material suppliers.

 

Cheers

Matt

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Immigration is to be cut from 133.5k in 08/09 to 115k in 09/10. What will this mean to the Australian housing market? You just need to look at what happened when immigration was cut in the early 90s.

http://www.smh.com.au/national/immigration...90315-8yy2.html

 

And those who believe that the low end of the market will hold up, rememeber that if unemployment were to rise a lot through this year and next, the ones to feel the brunt of the slowdown will be those in the less affluent suburbs due to their heavy reliance on retail and manufacturing jobs.

http://www.smh.com.au/national/red-alert-o...90316-8zy4.html

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You guys are analyzing too much, Australia follows whatever USA does by 2-3 years, we will crash and it hasn't started yet.

 

 

Mortgage belt jobs 'in peril'

 

ÃÆâ€â„¢ÃƒÆ’ƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚· Peter Martin

 

ÃÆâ€â„¢ÃƒÆ’ƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚· March 17, 2009

 

VAST swathes of Victoria's mortgage belt are vulnerable to rapidly increasing unemployment and disadvantage as the financial crisis hits the job market.

 

An index of job vulnerability to be released today by the Centre of Full Employment and Equity at Newcastle University finds that newer suburbs, including Narre Warren and Pakenham, are set to join older "battler" suburbs in a pattern of disadvantage that will spread further than in previous recessions.

 

The index has identified 100 "red-alert high-risk" suburbs in Victorian cities where job losses are set to be the most severe. Victoria has a higher proportion of such suburbs than any state apart from Queensland and South Australia.

 

"These new red-alert regions have high debts, high casualisation and industries such as construction and light manufacturing at risk of going under," said Bill Mitchell, co-creator of the index and the centre's director.

 

"Their families have needed two earners to service their debt. In order to stay solvent, the wife has had to work in low-skilled, low-paid but plentiful casual jobs.

 

"As under-employment climbs before unemployment climbs, these families will be threatened immediately, whereas in the 1991 recession there was less debt and causal work."

 

Dr Mitchell's team developed a website that lets people check their suburb for employment vulnerability and the characteristics that put it at risk.

 

Melbourne has the highest geographical concentration of potential job losses outside Adelaide. Dr Mitchell believes this makes it especially vulnerable to sustained unemployment.

 

"You used to have the old industrial belt around 15 to 20kilometres out from the centre, all the way around in a sort of circular pattern - Dandenong and Clayton out to the south-east, Broadmeadows out to the north and then Sunshine out to the west, Dr Mitchell said.

 

"They are still disadvantaged, but what we are predicting is new growth outside of that ring, say Narre Warren and Pakenham and those sort of areas in the south-east and places like Lilydale ... and also places out near the airport, around the northern ring road. They are new, typically highly indebted areas - ones that are vulnerable to major job losses."

 

Dr Mitchell said people in low-risk suburbs who lost their job had a better chance of finding a new one.

 

"But if you are in a red zone surrounded by other people who are unemployed, you get very little quality labour market information coming from anywhere. We have studied 15 to 19-year-olds who grew up in jobless households during the last recession and found they are now typically unemployed themselves."

 

Ballarat, Bendigo and Geelong are also vulnerable. "The outlook for Geelong's north shore is terrible, as well as Geelong's east," Dr Mitchell said. "Most of Ballarat where the manufacturing is concentrated looks pretty vulnerable, most of Bendigo similarly."

 

Mildura, Shepparton, Traralgon and Wodonga are at less risk. The centre expects Australia's unemployment rate to soar above 10 per cent if the global recession lasts the rest of the year, with total "underutilisation" rising to 20 per cent.

 

Under-utilisation also counts people who would like more work than they have. The centre believes 1.2 million Australians are under-utilised. It has proposed an "Employment Guarantee" under which the government commits to pay the minimum wage to anyone willing to work. "We would abolish the dole," Dr Mitchell said. "Anyone who wants pay would have to work for it."

 

The centre has costed the project at $8 billion to $10 billion, modest by the standards of today's stimulus packages.

 

"We have asked local government how many people they could take on quickly and we have identified the on-costs and spending on the equipment that would be needed. For $10 or so billion we would cut the unemployment rate to 2 per cent."

 

Dr Mitchell says the Coalition examined the idea as unemployment climbed in 2001. "The then employment minister Tony Abbott came to Newcastle to talk to me and was sold on the idea for all long-term unemployed. He had it costed but then he left and became minister for health. His replacement Kevin Andrews wasn't interested."

The Employment Vulnerability Index can be viewed at:

http://e1.newcastle.edu.au/coffee

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"emotion" is the elephant ridden by "reason"

 

"reason" hasnt lost control yet

 

but more "for sale" signs appearing at prices too high for the market as they are not clearing

 

RE agents always tend to stroke your ego regarding the worth of your house as they simply want to sign you up

 

then after a month - price reductions are recommended

 

some who need to sell go along with it, others withdraw the house from the market

 

RE agents dont care about the price as much as the transaction - every sale is good for them so they are hurt more by the lack of transactions

 

still early days - how much more money will KRudd be able to borrow to fill the GDP gap ? - in competition with every other western nation trying to maintain the "old" consumer lifestyle and services economy

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