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Australia Faces Its Demons


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51 minutes ago, Silverfinger said:

Australia's Luck Has Run Out

Gaudy numbers mask serious flaws in the country's economic model.
By 
Satyajit Das

Man, I was sure it was different this time.

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I'm not sure whether to post here, or on the China thread*, but I was listening to World Business Report last night on the World Service (I know it's the bbc, but there's not a lot to listen to when lying awake at that hour), and there was an article on Australian property.

The burden of the piece (as far as I can dredge up from the ragged edges of consciousness) was that Chinese property developers are pulling out of Autralia, because the Chinese buyers have vanished. I'm not sure why there would be Chinese developers in Australia, so that part might not have made it out to daylight intact. However, I'm more sure of the discussion afterwards, which was about increasingly stringent controls on capital flows out of China.

Did anyone else catch the programme? I guess this isn't going to panic the horses on its own (WBR is like putting the facts on display at the bottom of a locked filing cabinet stuck in a disused lavatory with a sign on the door saying "beware of the leopard"), but interesting to hear this on the "sort-of-mainstream media", nonetheless.

 

*Reading what I've just written, probably the correct answer is "neither".

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I no longer track Aus house prices as it's no longer a place of interest for my early retirement.  One of the statistics I used to track though was from the Australian Bureau of Statistic and it's catalogue number is 6416.0 Residential Property Price Indexes: Eight Capital Cities, Jun 2017.

I've just had  a quick look and it's still showing places like Sydney and Melbourne going silly with annual price changes of 13.8%.  Places like Perth and Darwin have however now gone negative and are at -3.1% and -4.9% respectively. 

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  • 1 month later...
5 hours ago, Sugarlips said:

Those still following the Aussie nightmare to come will want to bookmark this, long but fascinating reading and uber bearish...

 

https://www.macrobusiness.com.au/2017/11/freelancer-ceo-matt-barrie-goes-nuclear-australian-meltdown/

Thanks for that link! It's one of the best I have read for years & not just for those interested in Australia but also for those interested in the future of work and the short sightedness of many current politicians trying to pump money into dead industries like coal.

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House prices based on undersupply myth, ANU says:
"increasing housing supply by itself is unlikely to put significant downward pressure on prices ... We did find a very small correlation, but it was less than 10 per cent ... that means looking at whether interest rates have been too low for too long, and also reviewing "generous" tax breaks for property investors, such as negative gearing and the 50 per cent capital gains tax discount."
http://www.abc.net.au/news/2017-11-20/house-price-growth-based-on-undersupply-myth-anu/9167688

Paper: Regional Housing Supply and Demand in Australia
http://csrm.cass.anu.edu.au/research/publications/regional-housing-supply-and-demand-australia

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On 11/15/2017 at 9:18 AM, GeordieAndy said:

Thanks for that link! It's one of the best I have read for years & not just for those interested in Australia but also for those interested in the future of work and the short sightedness of many current politicians trying to pump money into dead industries like coal.

Agreed. Brilliant link to really interesting article. Great work Sugarlips.

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4 hours ago, Society of fools said:

I think Bloomberg has nailed it in this one.

Excellent article on Australia facing the abyss

https://www.bloomberg.com/news/articles/2017-11-23/australia-faces-housing-hangover-twice-size-of-u-s-subprime-era

 

Well worth watching the video.............

Mish chimes in

https://www.themaven.net/mishtalk/economics/australia-s-housing-market-over-4-times-size-of-economy-us-is-under-2-AMaSekfT20GxRHFBAsmYOg

Congratulations to Australia for having the biggest housing market relative to the size of its economy.
 

BusinessWeek notes the value of the Australia's homes has ballooned to A$7.3 trillion ($5.6 trillion) -- or more than four times gross domestic product.

Not even the U.S. and U.K. markets achieved such heights at their peaks a decade ago before prices spiraled lower and dragged their economies with them.

“The risk is that it leaves the Australian economy extremely exposed, and a minor shock could become far more significant,” said Daniel Blake, an economist at Morgan Stanley in Sydney.

For How Much Longer?

 

Rapidly cooling house prices in Sydney and the sudden withdrawal of Chinese investors from the property market may lead the Reserve Bank to cut interest rates, according to investment bank Credit Suisse.

"Over the past few months, the Sydney housing market has not only cooled down, but has arguably turned cold," Credit Suisse wrote.

"Over the past year, Chinese capital flows have fallen considerably, in part reflecting the impact of stricter capital controls.

"This fall foreshadows weakness in NSW housing demand in the year ahead."'

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45 minutes ago, Sancho Panza said:

Well worth watching the video.............

Mish chimes in

https://www.themaven.net/mishtalk/economics/australia-s-housing-market-over-4-times-size-of-economy-us-is-under-2-AMaSekfT20GxRHFBAsmYOg

Congratulations to Australia for having the biggest housing market relative to the size of its economy.
 

BusinessWeek notes the value of the Australia's homes has ballooned to A$7.3 trillion ($5.6 trillion) -- or more than four times gross domestic product.

Not even the U.S. and U.K. markets achieved such heights at their peaks a decade ago before prices spiraled lower and dragged their economies with them.

“The risk is that it leaves the Australian economy extremely exposed, and a minor shock could become far more significant,” said Daniel Blake, an economist at Morgan Stanley in Sydney.

For How Much Longer?

 

Rapidly cooling house prices in Sydney and the sudden withdrawal of Chinese investors from the property market may lead the Reserve Bank to cut interest rates, according to investment bank Credit Suisse.

"Over the past few months, the Sydney housing market has not only cooled down, but has arguably turned cold," Credit Suisse wrote.

"Over the past year, Chinese capital flows have fallen considerably, in part reflecting the impact of stricter capital controls.

"This fall foreshadows weakness in NSW housing demand in the year ahead."'

Subsititue London for Sydeny and you could have the same article

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  • 2 months later...
On 15/11/2017 at 3:15 AM, Sugarlips said:

Those still following the Aussie nightmare to come will want to bookmark this, long but fascinating reading and uber bearish...

 

https://www.macrobusiness.com.au/2017/11/freelancer-ceo-matt-barrie-goes-nuclear-australian-meltdown/

Wow that’s a novel.. very interesting and alarming in the similarity of world leaders to pump asset prices and have no clear future on what our actual economy is.. apart from banks, assets and population increase to continue to ponzi scheme.. 

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There is a glint of hope for Australian youth today

Maybe Sydney has finally topped out at around 24x sole annual gross income, Sydney down 3.1% since June (paywall):

http://www.afr.com/real-estate/house-prices-fall-in-sydney-and-melbourne-in-january-as-total-returns-slide-for-investors-20180131-h0rmg7

If there is a GE this year Labor should win and a central policy is to grandfather negative gearing, if they get that through both houses the game could finally be up!

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17 hours ago, Sugarlips said:

If there is a GE this year Labor should win and a central policy is to grandfather negative gearing, if they get that through both houses the game could finally be up!

I'd prefer they just axed it, but from a house prices perspective grandfathering in those already on it should have the same effect.

Here's an article that isn't paywalled: http://www.abc.net.au/news/2018-02-01/home-prices-dragged-down-by-sydney-property-falls/9382270

Could this finally be it for Sydney?

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17 hours ago, mattyboy1973 said:

I'd prefer they just axed it, but from a house prices perspective grandfathering in those already on it should have the same effect.

Here's an article that isn't paywalled: http://www.abc.net.au/news/2018-02-01/home-prices-dragged-down-by-sydney-property-falls/9382270

Could this finally be it for Sydney?

Really hope it is it for Sydney. Enquiries about price of some townhouses on lower north shore - guide of around $2m - for a townhouse!!! It’s crazy crazy.

Feels like there’s no hope left. Would love to move back to Sydney but no hope at these prices...

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1 hour ago, When??? said:

Really hope it is it for Sydney. Enquiries about price of some townhouses on lower north shore - guide of around $2m - for a townhouse!!! It’s crazy crazy.

Feels like there’s no hope left. Would love to move back to Sydney but no hope at these prices...

When?? are you based in U.K. right now and looking to move back to Sydney? I believe despite the broken housing market in the U.K. it's still better than Sydney. It's crazy, isn't it!

I'm in the same boat, can't afford to go back to Sydney.

 

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2 hours ago, When??? said:

Really hope it is it for Sydney. Enquiries about price of some townhouses on lower north shore - guide of around $2m - for a townhouse!!! It’s crazy crazy.

Feels like there’s no hope left. Would love to move back to Sydney but no hope at these prices...

Yeah. We were there until 2012 and we left because we thought we'd never be able to buy there (OK - that was only one reason of a few). It has since gone up 75%, and certain areas by much more. You are really looking at 1.5-2m now for just a "reasonable" house in a half decent area, which defies any kind of logic. If they really do get rid of negative gearing for new investors then the rug is going to be pulled out from under this market as investors are really the only ones buying - I think even foreign buyers are swindling now for various reasons. Prices could halve in Sydney and they would still be expensive.. but if they did fall 50% and the AUD$ took a battering as well then it could be attractive again and we all have our citizenship.

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