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JockinTas

Australian housing bubble

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The first one is nice, as for the second one, it takes a special talent to make a house that looks so good on the outside and make it so crap on the inside!!!

 

 

 

Loved the fountain.

 

 

Is interior design a listed occupation? It should be. I hate to knock my own people, but give an Australian a nice house and there's about an 80% percent chance of bad taste, 15% chance of white everything and 4% chance of magnolia.

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Timeline flag?

 

You could lose 5% a year in Perth over the next four years and not even notice it.

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You don't get it do you? Why would 'common' folk stop buying when enough still believe in the power of property, regardless of how far they have leveraged themselves. Feeling wealthy through inflated property encourages people to spend. Perceptions matter. You may have noticed no takers for Dick Smiths and 3,000 jobs to go?

 

That's because Dick Smith is a terrible business model that was ruined by Private Equity...

 

See you are in doom and gloom world again! Pretty sure JB Hi fi/ Harvey norman will pick up the slack after they have gone...

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We have low inflation, low interest rates, low unemployment, our banks are the most stable and profitable in the world so I don't see any similarity to what happened in the US and UK during the global financial crises of 10 years ago. Prices in the inner suburbs of Sydney and Melbourne are out of control but there is still plenty of good affordable housing in the outer suburbs. In the long term real estate is the safest investment.

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You just don't get it Lambeth!

 

Flag has been calling a recession for 5 years or so, he's far more in touch with what's going on...#doomandgloom

Edited by Guest

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Well, we are still renting. We have been tempted to buy on several occasions recently, even so far as scoping out mortgages. But, we have decided to be cautious and wait for 6-12 months to see whether I still have work or a new job, or the housing prices hit a ceiling or not. Demand in Sydney still seems very high, houses near us seem to be on the market for 2-3 weeks and sold quickly.

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The banks are the most profitable because they rely so heavily on Australian real estate. It may not happen this year, it may not happen next year, but at some stage there will be a recession in Australia and the unemployment rate will rise. Then we'll see if the capital requirements banks have are sufficient or not. Are they better run than USA and Ireland? Probably. Are they immune to a large fall in house prices? Certainly not.

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Actually CBA apparently would lose less than their latest interim profit if unemployment doubled and houses crashed by 30% if their stress test is accurate...

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A $5bn loss I would say is not immune. Where did you get a summary of its stress test? I'd love to see the results of a test with unemployment & house-price falls that were seen in the GFC. 12% unemployment and a 30% fall seems like the mythical 'soft landing' to me. I'd love to see the scenario with 20% unemployment and a 60% fall.

 

But yes, if that stress test is accurate then that is a relief. Pretty big IF though.

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http://www.afr.com/business/banking-and-finance/a-shortsellers-guide-to-the-australian-property-market-20160224-gn29z4

 

Obviously tests and reality may be different. I certainly wouldn't be speculating in property right now but the massive statements of 30% this and 50% that are just extreme in order to drive clicks in a world that loves to overreact...

 

Mention a 10% drop over 3 years and nobody would care to read the article.

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You just don't get it Lambeth!

 

Flag has been calling a recession for 5 years or so, he's far more in touch with what's going on...#doomandgloom

 

A bit harsh there lastonealive, you need to give flag the benefit of the doubt here, oh! and time.


Enjoying life in Queensland

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Flag has correctly predicted 13 of the last 3 recessions, so he knows what he is talking about.


I want it all, and I want it now.

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A broken clock has a better strike rate...

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A broken clock has a better strike rate...

 

But given two chances would he guess which way the elevator was going?:wink:


Enjoying life in Queensland

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http://www.afr.com/business/banking-and-finance/a-shortsellers-guide-to-the-australian-property-market-20160224-gn29z4

 

Obviously tests and reality may be different. I certainly wouldn't be speculating in property right now but the massive statements of 30% this and 50% that are just extreme in order to drive clicks in a world that loves to overreact...

 

Mention a 10% drop over 3 years and nobody would care to read the article.

 

Those drops are extreme but they are based on real events since the GFC, so I think it is prudent to include them. Ireland had a 60% drop in house prices. The US was a 33% drop, with >50% in places. Japan fell 45%. Any comprehensive stress testing process would have to include them. Naturally, media outlets will jump on them and overblow the risks, but they are realistic.

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Again while anything is theoretically possible, I wouldn't link the Aussie market to the basket cases in Ireland and Spain. For starters Australia controls its own interest rate and most of the building is occurring in inner established cities not chucking up new towns in the middle of nowhere.

 

Could it have a UK like contraction? why not? But as pointed out earlier places like Brisbane have already had a correction.

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We have low inflation, low interest rates, low unemployment, our banks are the most stable and profitable in the world so I don't see any similarity to what happened in the US and UK during the global financial crises of 10 years ago. Prices in the inner suburbs of Sydney and Melbourne are out of control but there is still plenty of good affordable housing in the outer suburbs. In the long term real estate is the safest investment.

 

Our banks actually are under considerable duress. A big reason the government and assorted parties will be loathe to allow housing market to correct towards something like true value. Some 60% of bank loans tied up in the housing market. The largest in the world as far as I am aware. Really complicates matters dramatically.

No house prices are not affordable. The banks I understand have returned to giving out easy loans. Really Oz is in a league of its own in mortgage lending.

I'd side both sides of politics have woken up to the fact, hence noises being made with regards negative gearing, something that would not have been whispered just a few months ago.

 

The Sydney Morning Herald had some articles on the matter today. An interesting article among others from UK's Jonathon Tepper.

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Again while anything is theoretically possible, I wouldn't link the Aussie market to the basket cases in Ireland and Spain. For starters Australia controls its own interest rate and most of the building is occurring in inner established cities not chucking up new towns in the middle of nowhere.

 

Could it have a UK like contraction? why not? But as pointed out earlier places like Brisbane have already had a correction.

 

Building is primary for speculation. First home buyers lowest ever on record in market. 40% of new builds in Melbourne going to overseas investors wanting to park money. A lot of self funded retirees ploughed money into housing in recent years as well, believing the hype. Fair chance many will end up skint. A little contraction? We are set for one of the biggest bubble bursts anywhere. Can it be managed? Not the way we are going. Banks need to be reigned in from given out confetti loans and drastic action required to cool the market forth with.

Yield is exceptionally low in most places so the continued purchasing of houses/flats is in the expectation prices will continue to go up. Insane. Not only insane but highly dangerous not to say irresponsible to our economy and nation.

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The banks are the most profitable because they rely so heavily on Australian real estate. It may not happen this year, it may not happen next year, but at some stage there will be a recession in Australia and the unemployment rate will rise. Then we'll see if the capital requirements banks have are sufficient or not. Are they better run than USA and Ireland? Probably. Are they immune to a large fall in house prices? Certainly not.

The collapse of house prices will severely damage the financial system. Guess who will be paying for the excesses? Loaning foreign money as they do will likely prove very costly.

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You just don't get it Lambeth!

 

Flag has been calling a recession for 5 years or so, he's far more in touch with what's going on...#doomandgloom

 

I have not been calling recession five years. I've been calling a correction for about that time, to which I was certainly right about in the North of the State. Massive falls in property. Even in QLD, same thing do you know anything at all about that? $900,000 houses going for $200,000. You are right I am in touch with what is going on though. Shame so many have their heads stuck in the sand.

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I have not been calling recession five years. I've been calling a correction for about that time, to which I was certainly right about in the North of the State. Massive falls in property. Even in QLD, same thing do you know anything at all about that? $900,000 houses going for $200,000. You are right I am in touch with what is going on though. Shame so many have their heads stuck in the sand.

 

Property boom and bust due to a surge, followed by a fall, in mining activity in a localised area is somewhat different to a more general collapse in the housing market which is what you are predicating and have been for several years.

 

There are tipping points where properties become plain unaffordable but this tends to lead to price stagnation or a small correction. For a major correction of 30% or more nationwide there needs to be some significant external trigger. What are you anticipating the form this trigger will take.


Timeline: 309/100 Sent 7/8/13, Money Taken 9/8/13, CO appointed 3/9/13. Med 3/12/13. Police check 4/12/13. VISA GRANTED 8/4/14, Subclass100. Recce August 2014. Arrived 30 July 2015.

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Again while anything is theoretically possible, I wouldn't link the Aussie market to the basket cases in Ireland and Spain. For starters Australia controls its own interest rate and most of the building is occurring in inner established cities not chucking up new towns in the middle of nowhere.

 

Could it have a UK like contraction? why not? But as pointed out earlier places like Brisbane have already had a correction.

 

Interest rates? Control? Really? Just what good as low interest rates done for Europe. What it has done it feed a frenzy of leveraging that feeds on itself, that in turn takes the power to do anything but repeat the cycle of ever lower interest rates even zero, while increasing them endangers the entire pack of cards. The correction in cities is yet to come. As relayed government policy may well defer. Prices may well rise more. All are clueless as to how the scenario that should never have been allowed may be normalised.

Why not believe the hype and do a Kate Maloney (I think was her name) They'll know to whom I refer surely, being a switched on dude, in matters of economic concern. Of course it would work for you though. Like those folk that walk on hot coals, just gotta believe in it, to be able to perform walking on the hot coals yourself.

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Well I look forward to seeing who hasn't got their shorts on when the tide goes out!

 

Plenty people in flash houses and flash cars living the high life..........fuelled by debt.

 

I think Tapper's reasoning is sound. People going on about their multi million pound portfolios. They own maybe 10% of that at best and are often stuck into negative gearing. Note a tax advantage only for those who are losing money and still earning enough to survive.

 

All the apartments being built in Adelaide and Eastern Suburbs, mainly aimed at investors. We went to nosey and the agent was astounded that we might actually want one to live in ourselves! Still rents will be lower and son might finally be able to move out................


So many wineries ......so little time :yes:

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Property boom and bust due to a surge, followed by a fall, in mining activity in a localised area is somewhat different to a more general collapse in the housing market which is what you are predicating and have been for several years.

 

There are tipping points where properties become plain unaffordable but this tends to lead to price stagnation or a small correction. For a major correction of 30% or more nationwide there needs to be some significant external trigger. What are you anticipating the form this trigger will take.

 

 

Several things as if you really need to ask.

The government making speculation less attractive through changes however small to the present policy. Remember speculators are 60% of the market.

 

China restricting flow of money being sent abroad.

 

A tightening up on interest only loans by banks, some 40% of loans I believe, way out of whack with reality.

 

Self funded retirees feeling the heat with property investment and disengaging and/or less likely to partake in first place.

 

Ever more First Home Buyers unable or unwilling to partake in the rip off, as already record high in numbers not buying, becoming an increasingly political force over time.

 

Less immigration to Australia as the big money fades, along with the resource boom and wages stagnate.

 

Stagnating wages. A question of unaffordability. Sydney is already out of the average citizens reach.

 

I have not been predicting for several years. I haven't been on this forum that long. If you can't see the signs your business. You may well see changes to the super entitlements favouring the rich changing as well. I reason you migrated here, if I'm not mistaken.

Money will certainly need to be sourced by the government from avenues not expected a couple of years ago.

 

Anyway I'm close to done with this forum. Think and do what you all want. I know I'm keeping the powder dry.

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Well I look forward to seeing who hasn't got their shorts on when the tide goes out!

 

Plenty people in flash houses and flash cars living the high life..........fuelled by debt.

 

I think Tapper's reasoning is sound. People going on about their multi million pound portfolios. They own maybe 10% of that at best and are often stuck into negative gearing. Note a tax advantage only for those who are losing money and still earning enough to survive.

 

All the apartments being built in Adelaide and Eastern Suburbs, mainly aimed at investors. We went to nosey and the agent was astounded that we might actually want one to live in ourselves! Still rents will be lower and son might finally be able to move out................

 

Low interest rates creating massive personal debt in order to carry the Ponzi scheme. Amazingly so many believe in tooth fairies on here.

For those that claim I've been on a similar tirade for sometime, the message is clear. It could have been done and dusted if normal free market economics had been allowed to run its course. Instead constant government intervention along with vested interests (including the printed media, that make a lot of money from real estate) have pushed this far to long and allowed the bubble to inflate to enormity.

Lets see how it pans out from this point.

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