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Australian Housing Crash, Has the bubble burst?
nipper
post Posted: Jun 7 2019, 04:23 PM
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In Reply To: mullokintyre's post @ Jun 7 2019, 02:34 PM

Buying something for $706k isn't necessarily silly; if it's the case of using a financing facility of, say, $500k, it definitely is.
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PS Mick: when people ask why I live in Canberra, my answer is, "To get my taxes back".
PPS: Also the gooses that give Canberra a tarnished reputation come from your electorates. They merely meet here.




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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
 
mullokintyre
post Posted: Jun 7 2019, 02:34 PM
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In Reply To: triage's post @ Jun 7 2019, 12:42 PM

QUOTE
But back to the hard grind of reality I just saw that a very average 4 bed house with no usable garage and only one bathroom in an average Canberra suburb sold at auction the other day for $706k.
That is just silly.

I would have said that just living in Canberra was plain silly ......

Mick



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sent from my Olivetti Typewriter.
 
triage
post Posted: Jun 7 2019, 12:42 PM
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In Reply To: Mags's post @ Jun 7 2019, 09:53 AM

Phillip Soos is an independent economist and commentator. I watched a recent interview of him where he claimed that the the "debt accelerator" (annual change in the amount of mortgage debt) and the sales to new listings ratios are the two most reliable leading indicators he knows of for house prices, with about a 6 to 9 month lag. He said that even after the election those two metrics were indicating not only a continued fall in property prices but that the falls would begin to accelerate.

He appears to be of similar thinking to Steve Keen and also often refers to the analytical work of Martin North so it may be that he resides in the housing bears echo chamber. Martin North keeps pointing to what happened in Ireland in 2008 as the best guide for what may well happen in Australia in coming months (though as John Hempton points out, Ireland was tied to the euro whereas Australia has the free floating AUD which normally acts as a cushion for the domestic economy).

On the other hand the two main bloggers at macrobusiness, David Llewellyn-Smith and Leith van Onselen, have recently done pretty much a 180 degree turn by saying that now is the time for owner occupiers to buy as there is a new but weak cycle forming (something to do with housing not being about economic fundamentals but more to do with political economics and if the powers-that-be want the housing market to recover then it will).

But back to the hard grind of reality I just saw that a very average 4 bed house with no usable garage and only one bathroom in an average Canberra suburb sold at auction the other day for $706k. That is just silly.



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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
 
Mags
post Posted: Jun 7 2019, 09:53 AM
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In Reply To: mullokintyre's post @ Jun 6 2019, 06:40 PM

The panic from Canberra says otherwise. APRA, RBA and ScoMO all throwing fuel on the fire to keep it going, BUT!!!
The real issue is house prices have never fallen in Australia with out an external economic shock, interest rate rises, or unemployment going skyward, until 2017.
2017 was the pivoting point, 3 things all line up in late 2017:Mortgage growth died.RBA base currency growth diedOur dollar continued to slide, even without RBA increasing supply
And what happened in 2017? Housing topped.
*** Also very important to note, this was well before the royal commission was even created **** This is a good old fashioned, debt fuelled bubble bust *****

Now we have investors leading the way in arrears. All the 'bulls' myths have been blown apart.My favourite being 'theres cash on the sidelines that wont allow prices to fall'.Of course, that cash didn't exist, and the investors what would buy into a falling market have vanished.
*** Again, this was before royal commission, nothing to do with 'lending changes' *****

Even though the bulls said lending was sound, the banks admitted it wasn't and then self regulated.
We've now completed a 9 month per GDP recession. Amazing. It's barely even been in the news.

Retail figures are terrible, car sales are dire (and mostly dual cabs which are 'business purchases').
I doubt there'll be any life in the housing market for the rest of this year, and then next year when ScoMo's FHB insurance scheme fails to push prices significantly higher, the masses will realize we are half way into a multi year bear market that wont recover to 2017 prices anytime soon.
The real concern (for me) was does RBA protect the dollar and our economy, or do they protect the banks bottom line.They chose to protect the banks, with disregard to the dollar, and pin their hopes on Iron Ore keeping our dollar stable.
Fancy cutting rates as your country posts a record trade surplus... That alone is telling.



Said 'Thanks' for this post: early birds  mullokintyre  triage  indeficit  
 
mullokintyre
post Posted: Jun 6 2019, 06:40 PM
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From ABC NEWS

QUOTE
Problem home loans are now at their highest level since the aftermath of the global financial crisis, according to the credit ratings agency Standard and Poor's Global.

Key points:
High levels of household debt and underemployment, as well as low wage growth, are leading to rising levels of mortgage arrears
Standard and Poor's says interest rate and tax cuts, as well as easing credit conditions, are unlikely to help much
Investor arrears are rising faster than owner-occupier arrears
Concerningly, Standard and Poor's said little relief is in sight.

"Tepid wage growth, high household debt and a softening economy are likely to keep arrears elevated for some time," Standard and Poor's analyst Erin Kitson said.

"Tougher refinancing conditions will continue to hold down prepayment rates by restricting borrowers' ability to self-manage their way out of mortgage stress."

Mortgage delinquencies are on the rise, house prices are still tumbling and borrowers are falling into the quicksand of negative equity in their property. It's bad.
Prepayment rates relate to normal repayments on home loans, unscheduled amounts above normal repayments and refinancing loans.

The report found the Australian residential mortgage-backed securities (RMBS) sector deteriorated in the first quarter of 2019 as debt serviceability pressures mounted.

Unusually, arrears have been rising toward previous highs, despite stable employment conditions and low interest rates.

However, Standard and Poor's said, as long as employment did not deteriorate, the creditworthiness of the RMBS sector was unlikely to be severely affected.



On the surface , this seems like a fairly ominous statistic.
However, when you drill down and look at the accompanying graph, it seems less ominous.

The graph can be seen at the original article, for reasons known only to themselves, Sharescene does not allow posting these types of images.

The total arrears make up about 1.5% of all loans, the 90+ ones are about 0.75%.
In the last 20 years it has varied between 0.75 and the high of 1.6% in 2011 and 2012.

Yes, its a worry for those involved, but unless that percentage goes up significantly, I don't think there is a need to panic just yet.

Mick



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Said 'Thanks' for this post: nipper  Mags  early birds  
 
early birds
post Posted: May 15 2019, 02:16 PM
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In Reply To: nipper's post @ May 15 2019, 11:07 AM

so, banks not necessarily the bastards (just prudent)?

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ask RC . seems they have the answer you wanted nipper.
it is a chaotic world out there. i for one not gonna bet my bottom dollar on it----it's just too risky. unsure.gif



 


nipper
post Posted: May 15 2019, 11:07 AM
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In Reply To: early birds's post @ May 15 2019, 10:51 AM

QUOTE
by their non-bank lenders.....
so, banks not necessarily the bastards (just prudent)?



--------------------
"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
 
early birds
post Posted: May 15 2019, 10:51 AM
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https://www.afr.com/real-estate/residential...y_Sent=15052019

Sydney developer Mark Bainey has pooled $50 million from wealthy investors to bulk buy newly-completed apartments at up to 30 per cent discounts as oversupply fears and high funding costs start to bite projects amid the weaker market conditions.

......

“We have been fielding approaches from concerned developers who have been unable to sell due to oversupply concerns in suburbs such as Epping, Parramatta, Mascot, Macquarie Park and Waterloo,” he said

....

Alongside apartment fires sales, developers are also coming under pressure to sell whole projects by their non-bank lenders.
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i reckon it just start. the distress will run a lot deeper and further.

 
early birds
post Posted: May 13 2019, 09:49 PM
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http://www.wenxuecity.com/news/2019/05/13/8305560.html

hope you guys can get someone to translate it.
basicly it says " no trees grow to the sky" it is long and painful housing bear market with aussies.

well, we still have someone hold bullish view with our beloved housing market from those "housing gurus".
i'm in the bear camp/

.



 
nipper
post Posted: May 1 2019, 12:24 AM
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In Reply To: mullokintyre's post @ Apr 30 2019, 06:42 PM

QUOTE
About 108,000 millionaires migrated across borders last year, a 14 per cent increase from the prior year, and more than double the level in 2013, according to Johannesburg-based New World Wealth.

Australia, US and Canada are the top destinations, according to the research firm, while China and Russia are the biggest losers. The UK saw around 3000 millionaires depart last year with Brexit and taxation cited as possible reasons......
... goes on to point out that there are no Inheritance Taxes in Australia.
https://www.afr.com/leadership/afr-lists/au...20190430-p51isy

- housing is often and rightly thought of as a lifestyle choice not an investment asset; people make decisions for a variety of reasons that can be emotional as much as rational

((And interestingly, Australia, Canada and USA are the three nations most accepting of refugees, with the numbers running at 6, 4 and 3 respectively, last year. In terms of sentiment, more than just a coincidence I would think ... <..... and one at odds to the leftist mush about our lack of resettlement generosity> ))



--------------------
"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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