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Australian Housing Crash


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Thanks for that


My computer seems to fail in the Share Scene search form so I couldnt find your previous posts re Housing Debt


Surely the RBA data is outstanding Credit ? I have to admit that their arcane catalogue of statistics can provide whatever answer you want


so irrespective of country differences our 93% is significant or not ? I guess it may just be a characteristic of our economy - "love of housing"


wouldn't a lower figure be better considering that housing is necessary but not productive for our export income

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Sorry without wanting to sound rude, comparing "Housing Debt" with the GDP doesn't really show anything.


It's like walking into coffee shop, asking all the staff what they owe on their home and then comparing that against the shop's yearly turnover.


Debt isn't a "bad" thing, the issues is (IMO) the ability to service that debt. A better stat would be to compare "Housing Debt" and "Household income" between the two countries.





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Thought this was a decent article considering its from the herald sun




Wether you're bullish or bearish on property, I think anyone would have to admit that they are bringing a lot of people into the housing market that really shouldn't be there. Two of those 'deposits' were less than a nice TV. Once people bring forward their purchases, then what?

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The latest credit figures indicate that, were it not for the First Home Vendors Boost (letÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s call it what is really is), private debt in Australia would now be falling. The increase in debt for the month of April was a mere A$776 million, with a A$6.5 billion increase in mortgage debt almost offset by a A$4.8 billion fall in business debt and a A$1 billion fall in personal debt. The change in private debt is therefore on the cusp of reducing aggregate demand, whereas for the past 17 years, it has been adding to it.

The run up in private debt since the recession of 1990 has been so great that changes in government spending are simply too small to neutralise the impact of de-leveraging by the private sector. The next graph shows the contribution that change in debt makes to aggregate demandÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã‚¡ÃƒÆ’‚¬Ãƒâ€Â¦ÃƒÆ’¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã¢â‚¬Å“defined as the sum of GDP plus the change in debt. Deleveraging has only just begun in Australia, and yet already the reduction in the rate of growth of private debt has sliced about 8 percent off aggregate demand. The governmentÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s attempts to counter this, though huge by historical standards, are trivial compared to the scale of private sector de-leveraging.



So the cost and availability of credit canÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢t be the only reason for the widening chasm between housing and business in Australia, but itÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s an important one


Will it be resolved by an improvement in business investment because of the global green shoots or by a housing downturn caused by rising unemployment, the end of first home-buyers grant and tighter home lending?


That, of course, is the big question. I suspect it will be the latter, but then two years ago, like many, I found the property bears' predictions of a house-price slump convincing. These arguments, for Australia at least, now look to be completely wrong.



Two interesting views. I'm inclined to think this confirms that housing is a bubble, as the figures says so, but the confirmation is when people like Kohler begin to believe the hype.

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  • 2 weeks later...

And in this innocuous looking chart 328 lie the seeds of the next crisis.


Littke wonder KRudd is getting hot under the collar as the Commonwealth Bank DARED

to increase its mortgage rate--all banks will have to follow suit whether he likes it or not.


Surely our leaders understand where mortgage funds are sourced and rates set from.


Its not the general public's fault they gave first home buyers such a present to court political favour,

which could likely turn out a poisoned chalice for the recepients.


Expect increasing invective from our leaders as THE REAL WORLD dawns on them!!!!


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Flower, I think I see what your trying to explain. I would appreciate a bit more explanation on that chart. I assume that's a candlestick chart with a long handled hammer. Been a long time since I studied them.
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Mags ---forget about the candlestick format--that was just the formation

I had to hand.


What I was trying to illustrate is this:


Oz banks scource mortgage funds from the world bond market being of a longer term nature.


In the US short term rates are effectively MINUS 2, but that doesnt affect mortgage funds


On the other hand long term rates are RISING dramatically hence the Bonds fall in

value dramatically


So its my way of illustrating the RISING long term interest rate structure, which will

derail housing--once again round the world---IMHO.


This is a weekly chart--the two lines are the 2008 low of 115, which is now under threat

the other is the 2007 low of 105.


Any drop below support at 105 would be really disastrous--IMHO


So in summation: Chart is intended to show how close we are to rising interest rate trouble

whilst the public mantra is to keep dropping rates.


You certainly cant do BOTH!!!

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I see Victoria are subsidising housing (on top of the federal grants).


And now Queensland? are cutting stamp duty in half......But removing the fuel subsidy.....

OMG...all road users have to pay more tax while home owners get relief..........Nope, no bubble or concerns here people.


In less than 8 months first home owners average loan has increased by $50,000....


Anyone that says the housing market is not distorted is looking through a foggy set of goggles.

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