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Australian Housing Crash, Has the bubble burst?
triage
post Posted: Feb 4 2019, 06:50 AM
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The day is starting off appearing to be an absolute horror for the housing sector.

First up, today we get the final report of the Kenneth Hayne banking royal commission. Anything less than an excoriation of the lending mentality of the banks will be a shock and a profound disappointment. Any idea that the banks can go back to their old loose lending ways is or should be a fantasy. What has been going on in the housing market in the last six months will become the new norm.

https://www.reuters.com/article/us-australi...SKCN1PS0M3?il=0

https://www.abc.net.au/news/2019-02-04/bank...making/10771612

Then there's this. A fire has broken out in a high rise apartment block in the Melbourne CBD at about 5:00 this morning. The ABC is reporting that firefighters believe that it is spreading through the combustible cladding on the building. From all reports there are thousands of apartment blocks in Australia where combusible cladding was used in construction. The problem (plus a few others not typical in modern Australian buildings) was highlighted by the Grenfell fire in the UK. Up till now no action has been taken for most Australian buildings but to remedy the problem will cost individual unit owners tens of thousands of dollars. Besides who wants to invest in or live in a fire-trap?

https://www.abc.net.au/news/2019-02-04/spen...bourne/10776018



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"The market can stay irrational longer than you can stay solvent." John Maynard Keynes

"The crisis takes a much longer time coming than you think, and then it happens much faster than you would have thought." Rudiger Dornbush

Mozart fixes everything and Messi is a dog

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Mags
post Posted: Nov 15 2018, 05:04 PM
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In Reply To: nipper's post @ Nov 15 2018, 12:09 PM

QUOTE
And as an aside: "18/24 months of falling prices. ..we're ~ 6 months off a federal election..."
.... anyone might suspect the coalition would be unfussed if it loses the next election


It's amazing how quiet Canberra is on this: both sides, Labors not even beating the drum. I suspect 2 reasons:A: They know the gig is up: politically increasing prices will be suicide with voters from these levels.b: They are prepared to support the banks, not the mortgage holders. The bail in laws were passed in February, with barely any noise at all.
As for the current PM, I see him as nothing more than a nightwatchmen. Nightwatchmen: Wikipedia


 
nipper
post Posted: Nov 15 2018, 12:09 PM
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In Reply To: Mags's post @ Nov 15 2018, 11:48 AM

Cash is King 👑

And as an aside: "18/24 months of falling prices. ..we're ~ 6 months off a federal election..."
.... anyone might suspect the coalition would be unfussed if it loses the next election



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
Mags
post Posted: Nov 15 2018, 11:48 AM
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This is only just getting started.
We are over 12 months into falls now.Car sales falling for 7 months.Consumer confidence in the gutter.
And the kicker: This is the first time, EVER, Australian house prices have fallen with out central bank intervention: It is falling under it's own weight.
Now the double kicker:Understand that time on market is growing, stock on market is growing, $$$$ turnover at auction is halved.... etc. etc.
And then learn that we have just set another record for crane numbers in Australia.
1 in 10 is employed in construction..... There's a hell of a drop off in approvals and starts that's coming down the pipe line. Just as all these apartments hit the market... against 18/24 months of falling prices.
We're ~ 6months off a federal election....
None of these things will give buyers any confidence: this is the worst case scenario we could have dreamt up. Just as ~$700b of IO loans roll over, and $500m of liar loans continue to float about......
Those leveraged too hard will lose it all. Those who avoid the fall out will be part of the greatest wealth transfer in our countries history.
Hold on.



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early birds
post Posted: Nov 14 2018, 07:38 PM
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Lendlease is offering buyers of apartments at its signature $2.5 billion Melbourne Quarter project in Docklands discounts of up to 5.5 per cent as it battles a slowing market and an exodus of overseas investors.

The embattled construction and development giant's discounted offer, through stamp duty rebates, are for all remaining apartments being sold in the Melbourne Quarter East Tower and runs until the end of the year.

A spokeswoman for Lendlease said the majority of the 719 apartments in Melbourne Quarter East Tower had been sold with remaining apartments priced from $525,000 for a one bedder up to $1,552,000 for a three bedder.

"Stamp duty rebates have been incorporated in the marketing campaign from time to time since the project was launched in 2016. The value of stamp duty saved ranges up to 5.5 per cent of the purchase price," she said.

News of the rebates follow a torrid week for Lendlease, which has seen its share price plummet from $17 to $13 after it announced a surprise $350 million writedown related to infrastructure projects and abandoned a $500 million bond issue.

Related Quotes
LLC
LEND LEASE STAPLED (LLC)
$12.780.060.47%
volume 6515650value 84310265.2
5 YEARS

1 DAY
Last updated: Wed Nov 14 2018 - 8:32:24 PM
View full quote
ASX Announcements Expand
With the Lendlease AGM scheduled for Friday, the board and CEO Steve McCann may have to answer shareholder questions about the outlook for earnings across its residential development business, given rebates impact on profit margins, in addition to the woes in its construction arm.

Banks tighten rules
The latest Lendlease offer is running alongside a 5 per cent discount offered to first-home buyers across its projects in Docklands through the developer paying half of the 10 per cent deposit.

However, the same buyer cannot take up both the stamp duty and first-home buyer offers.

Tony Kelly, Melbourne managing director at valuers Herron Todd White, said banks now paid close attention to rebates and expected valuers to disclose them, whereas they may have been hidden in previous market downturns.

"If there's a rebate in a contract it might have a negative impact on the valuation. Banks will lend on market value, not something propped up by the incentive," Mr Kelly said.

"We always base our valuations by looking at realisable value in the secondary market. The question the valuer needs to answer is "would the property sell for the same amount if the rebate or incentive was not offered?"

Mr Kelly said higher settlement risk was about to happen in the market as banks changed their credit rules.

"Some borrowers might have to re-apply for finance," he said.
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SOME BORROWERS MIGHT HAVE TO RE-APPLY FOR FINANCE!!!! that will be the killer blow for some speculators imho.



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nipper
post Posted: Nov 9 2018, 10:09 AM
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In Reply To: joules mm1's post @ Nov 9 2018, 09:49 AM

Yes, it's all a load of tosh, really.



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 


joules mm1
post Posted: Nov 9 2018, 09:49 AM
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fixed the editorial to being positive-biased rather than emotively-negative-biased (designed to keep your eyes on the media)

"Sydney house buyers are being forced to buy at steeper discounts as properties languish longer in a better-bargains residential market."



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. . . . . . . . everything has an art.....in the instance of the auction process, the only thing, needed to be listened to; price

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nipper
post Posted: Nov 9 2018, 09:17 AM
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In Reply To: early birds's post @ Nov 9 2018, 07:55 AM

Willing buyer, willing seller. That's not discounting, it's price discovery !



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne

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early birds
post Posted: Nov 9 2018, 07:55 AM
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https://www.afr.com/real-estate/sydney-sell...y_Sent=08112018

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Sydney house owners are being forced to sell at steeper discounts as their properties languish longer in a weakening residential market.

Houses in Sydney were discounted by an average 7 per cent in September, according to Domain Group's latest State of the Market report.

That figure is up from the previous month's discount of 6.9 per cent and has been increasing steadily over the past year, with the extent of discounting gaining 37.3 per cent in the past 12 months.

At the same time, the average days that Sydney homes sit unsold on the market is steadily rising. By October it was 71 days, up 57.8 per cent over the past year, according to the Domain report.

"We're seeing heavier discounting. Vendors are accepting a bigger discount than they were the month before and also the year prior as well," said Domain data scientist Nicola Powell.

"It's pretty significant for houses and units. It's something that looks like it's gaining pace. It indicates that homes are being priced to meet the market. Buyers are certainly wanting more than they did a year ago."

Domain is majority owned by Fairfax Media, publisher of The Australian Financial Review.

The discounting figures are calculated on homes sold by private treaty. At the same time, more homes are passing in at auction or being withdrawn. Clearance rates in Sydney fell to 44 per cent in October. A year ago the rate was 58 per cent in Sydney.

"So we're naturally seeing vendors sway to selling by private treaty," Dr Powell said.

"That is a common dynamic in the Sydney market when we start to see a slowdown in price growth."

Price growth, the number of homes that sell by auction as well as clearance rates are all correlated

Median prices for the September quarter are down 6.5 per cent in Sydney on a year ago, according to Domain. The median for a Sydney house is now $1,101, 532. In Melbourne, the September median for houses has fallen 3.2 per cent in the past year to $852,980.

A panel of economists surveyed by The Australian Financial Review this week all expect prices to fall further in 2019, both nationally and in Sydney. AMP's Shane Oliver predicts Sydney prices to fall another 7 per cent in 2019.

The volume of properties sold in September is down by more than 31 per cent year-on-year in both Sydney and Melbourne, on Domain figures.

New listings in all capital cities have increased over the previous month, a seasonal effect due to the spring selling season.

"What we are seeing is a build up of stock, not only over the month but over the year," Dr Powell said.

"What that says is there's fewer buyers in the market, there's fewer transactions taking place. Homes are taking longer to sell.

"In Sydney we are seeing all those market indicators point to further weakening and slowing in the market."

This week, Macquarie Securities economists cut their outlook for Sydney and Melbourne dwelling prices. In June they had predicted a fall of 10 per cent from peak to trough. They now expect prices in Sydney and Melbourne to fall by 15-20 per cent peak to trough.
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looks it's coming....

 
nipper
post Posted: Oct 29 2018, 08:55 AM
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In Reply To: Mags's post @ Oct 29 2018, 08:26 AM

what about "tightly held" , then?



--------------------
"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne

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