All We Predict Is Coming True In Australia

[Wiseman]

The number of people who have borrowed 100 per cent staggers me," he said.

He said falling house prices relative to mortgages was putting pressures on young families, investors who owned multiple properties and empty nesters who had increased their mortgages.

...

"We do a lot of mortgagee sales. We're probably doing 10 to 15 mortgagee sales a month," he said. "All bought in 2003, 2004, can't afford it, couldn't get out and have been repossessed

http://www.theaustralian.news.com.au/commo...5E25658,00.html

[aclwalker]

The number of people who have borrowed 100 per cent staggers me," he said.

He said falling house prices relative to mortgages was putting pressures on young families, investors who owned multiple properties and empty nesters who had increased their mortgages.

...

"We do a lot of mortgagee sales. We're probably doing 10 to 15 mortgagee sales a month," he said. "All bought in 2003, 2004, can't afford it, couldn't get out and have been repossessed

http://www.theaustralian.news.com.au/commo...5E25658,00.html

<{POST_SNAPBACK}>

What's the consensus: has the Australian market been pumped up as much as the UK? More?

What kind of salary multiples, interest rate lows, etc were seen at the height of the Australian boom? Is Australian personal debt at record levels like the UK?

I'm genuinely interested and don't know. I'm not trying to pick holes or anything.

Thanks.

[Wiseman]

What's the consensus: has the Australian market been pumped up as much as the UK?  More?

What kind of salary multiples, interest rate lows, etc were seen at the height of the Australian boom?  Is Australian personal debt at record levels like the UK?

I'm genuinely interested and don't know.  I'm not trying to pick holes or anything.

Thanks.

<{POST_SNAPBACK}>

The boom was much bigger than here. The multiples were higher, and every man and his dog had a BTL flat to take advantage of some negative gearing tax breaks.

http://www.theage.com.au/ffximage/2005/08/...eb__200x265.jpg

So a crash there doesn't imply a crash here, but evry little elps.

[apom]

but look.. america saw less of a boom..

http://www.moneyweek.com/article/1245/inve...ing-bubble.html

And scotland has seen the cracks..

http://property.scotsman.com/news.cfm?id=1836512005

Its happening..

some deny it.

but..

yawn.. sorry i though a itirade again about debt levels, oversupply ..

and too damn expensive..

but.. I did a good rant earlier and I am all ranted out.. also I think it makes me look a little crazy..

[Elizabeth]

What's the consensus: has the Australian market been pumped up as much as the UK?  More?

What kind of salary multiples, interest rate lows, etc were seen at the height of the Australian boom?  Is Australian personal debt at record levels like the UK?

I'm genuinely interested and don't know.  I'm not trying to pick holes or anything.

Thanks.

<{POST_SNAPBACK}>

Someone I know bought a house for 250K three years ago. By Christmas last year it was worth 400K (he got an unsolicited offer) by May he was able to sell it for 358K. Is this a start. In terms of multiples his was around 4.5 on buying. Interest rates are historically higher, along with unemployment. He was borrowing at 7.2%. The repayments were killing him.

[apom]

Someone I know bought a house for 250K three years ago.  By Christmas last year it was worth 400K (he got an unsolicited offer) by May he was able to sell it for 358K.  Is this a start.  In terms of multiples his was around 4.5 on buying.  Interest rates are historically higher, along with unemployment. He was borrowing at 7.2%.  The repayments were killing him.

<{POST_SNAPBACK}>

those days are gone.

The country is going to enter recession.

again..

[Elizabeth]

those days are gone.

The country is going to enter recession.

again..

<{POST_SNAPBACK}>

Thats why he took the 358K!

[Odakyu-sen]

Damn! People are going to have to work to make money! (What a shocker!!)

[oracle]

What's the consensus: has the Australian market been pumped up as much as the UK?  More? LESS

What kind of salary multiples, interest rate lows, etc were seen at the height of the Australian boom?  Is Australian personal debt at record levels like the UK?

NO WE HAVE MORE.

I'm genuinely interested and don't know.  I'm not trying to pick holes or anything.

Thanks.

<{POST_SNAPBACK}>

So guess what we have coming!!!!!

[Nomadd]

The number of people who have borrowed 100 per cent staggers me," he said.

He said falling house prices relative to mortgages was putting pressures on young families, investors who owned multiple properties and empty nesters who had increased their mortgages.

...

"We do a lot of mortgagee sales. We're probably doing 10 to 15 mortgagee sales a month," he said. "All bought in 2003, 2004, can't afford it, couldn't get out and have been repossessed

http://www.theaustralian.news.com.au/commo...5E25658,00.html

<{POST_SNAPBACK}>

Spent the best part of the last year arguing with one of the Aussie's at work that "buying a big place now in Sydney" was not that great an idea. Only in the last 2 months has he finally come around to my way of thinking. He's decided to hang onto his cash for awhile. H.P.C. has saved him, as at least now he comes here to read the threads and Blog window links.

Nomadd

[GCS15]

What's the consensus: has the Australian market been pumped up as much as the UK?  More?

What kind of salary multiples, interest rate lows, etc were seen at the height of the Australian boom?  Is Australian personal debt at record levels like the UK?

I'm genuinely interested and don't know.  I'm not trying to pick holes or anything.

Thanks.

<{POST_SNAPBACK}>

Australian Housing Worlds most expensive 26/08/05

[Hino98]

In this neck of the woods ( North of Sydney ), prices more than doubled in just over two years, and the median house price was at about 8+ times local earnings.

The "crash" first started about a year to eighteen months ago, when prices stopped increasing. This was followed by a period of stagnation with prices falling gently but consistently.

For about six months now, we have been seeing real falls in both the asking and sale prices of all types of housing. Though in the last month, the flood gates seem to have opened. It's now looking like it's every builder, developer, BTL'er and wannabe 'empire builder' for themselves.

The real estate ads in the newspaper are full of "Desperate Vendor", "All Offers Considered" and "The bank Says Sell". Hardly anything is selling and hundreds more properties pour onto the market every week.

To add to the panic here, there are still thousands of units still being built, and hundreds of "Renovate and Prosper" jobs, fruitlessly looking for buyers.

About a year ago I was walking though our local city with a property owning friend of mine. We were discussing property prices and how much they had increased. I opined that there would soon be a crash, as local people could not afford to buy at the prices being asked, and that Sydney money could not drive the market forever.

She was confidant, that house prices would remain stable at the very worst. At the time we were walking past a terrace of 'Victorian' workman's cottages. Two-up, two-down, postage stamp back yard and on-street parking. At the time these were selling for 500k +

I said, that if anyone truly thought that a four roomed terrace with on-street parking, in need of repair in the middle of a city with little or no employment, was really worth over half a million Dollars, then they had lost touch with reality.

Today, you would be able to pick up that same terraced house, for about 350k, fully renovated and restored.

Your 'HPC' will start the same way ours did, when prices stop rising. When that happens, there are no short term capital gains to be made, and rents will probably not even cover the mortgage, much less all the ancillary costs.

You will then enter, the suspension of belief period, as prospective sellers shout at EA's ....."It's got to be worth more than that !"

When property is rising, the smart money gets in early, the bandwagon followers jump in next, and the poor bloody lemmings get in last. In a crash, the same exactly the thing happens, except this time the traffic is reversed. The smart money gets out first......

Due to a divorce, I've been renting for over four years now and have had to sit by helplessly as the housing bubble grew. Wondering if my capital would ever be enough to both buy a home outright and still leave me with a good standard of living.

Now I can buy a nice Federation cottage on a 1/4 acre block in a good area, and still have a lot of change from 200k.....and that's the asking price.

Tonight I'll sleep a happy man, and dream of the year I'm going to spend touring Australia and waiting for the market to hit rock bottom

[Nomadd]

Your 'HPC' will start the same way ours did, when prices stop rising. When that happens, there are no short term capital gains to be made, and rents will probably not even cover the mortgage, much less all the ancillary costs.

...And we've already reached that point. Just like your market, we've just had the "calm". The next year will be the beggining of the "storm". Time for many in the UK to snap back to reality.

Nomadd

[Elizabeth]

You will then enter, the suspension of belief period, as prospective sellers shout at EA's ....."It's got to be worth more than that !"

<{POST_SNAPBACK}>

The problem is that the homeowner side of the boom has been driven by EAs smiling like a begnign uncle and giving estimate 30% more than the seller would have guessed. Reap and Sow!

[Smurf1976]

In short, we've had a truly massive, virtually incomprehensible boom in Australia. And it seems to be a very common belief that no first time buyer could buy now. At the peak in Sydney prices were in the order of 12 times earnings which is just ridiculous.

The question now is how quickly it all comes crashing down. The local Real Estate Guide reeks of desperation this week. Not once but THREE times there's an advertisement saying "NOW is the time to buy". That ad was from the EA's "union" - the Real Estate Institute so things must be getting tight.

AND they've got a new trick that was pointed out to me only today. Historically, the guide listed every property for sale in the city and surrounds. Then it got to being 72 pages thick in a city with only 200,000 people which was starting to become a little obvious. Now it seems they've stopped advertising most of the properties that are for sale, but the guide is still 56 pages so if they put them all in it would be well over 100 pages I think. Somewhat misleading but it seems to be backfiring with the newspaper that prints the guide turning bearish all of a sudden...

And the New South Wales state economy is said to be in recession right now. (Those that disagree are arguing on technicalities about zero growth not actually being negative etc). And the Treasurer seems to be getting a bit more serious about wanting the Prime Minister's job before the election...

In terms of timing, the shift in sentiment has occurred in the past six months. Prior to that it was just that house sales volumes had slowed. Now it's becoming plainly obvious that sales of practically everything non-essential are slowing and house prices are falling. Various surveys show faltering business confidence and, more seriously, faltering business investment.

At the rate this is all going, and now with the fuel situation due to the storm in the US, I think it is only a matter of time before we start hearing about a recession in Australia. It's just moving incredibly fast IMO, especially over the past few weeks so it seems to be speeding up. My best guess is that the coming petrol price surge will be the final "shove" that gets things moving down in those parts where they're still experiencing the "soft landing" which is basically everywhere except Sydney which is already crashing according to the stats.

Pre-Christmas sales data should give the first real clues as to just how things are going after the fuel price rise (unless something truly dramatic and very obvious occurs).

I could be wrong, but there's a real lack of positive economic news GOING FORWARD in Oz at the moment. Plenty of "x was up 5% last year" etc. but looking forward there's not much that's positive. Even the banks say $1.30 will be the tipping point with petrol and it went up to $1.299 yesterday...

[Elizabeth]

The number of people who have borrowed 100 per cent staggers me," he said.

<{POST_SNAPBACK}>

And here we have 106% homeloans from the Australian Equivanent of rightmove (see bottom of page). Talk about a vested interest!!!

http://www.realestate.com.au/cgi-bin/rsear...&t=lan&is=1&o=p

[Nomadd]

In short, we've had a truly massive, virtually incomprehensible boom in Australia. And it seems to be a very common belief that no first time buyer could buy now. At the peak in Sydney prices were in the order of 12 times earnings which is just ridiculous.

And we've had the same thing in London. Problem is, the same stupid thinking has permeated across literally the entire UK in the last 5 years. House prices at 10-12 times local earnings and no FTB's are accepted as fact, and yet there are still - dare I say it sane - people who think that's sustainable! One or two posters around these parts spring to mind (V.I.s, of course. )

Nomadd

[oracle]

And we've had the same thing in London. Problem is, the same stupid thinking has permeated across literally the entire UK in the last 5 years. House prices at 10-12 times local earnings and no FTB's are accepted as fact, and yet there are still - dare I say it sane - people who think that's sustainable! One or two posters around these parts spring to mind (V.I.s, of course.  )

Nomadd

<{POST_SNAPBACK}>

yes indeed nomadd.If you take the average wage figure at 25k then we are at about 6* earnings.

...this figure however is just plain wrong.there are a disproportionate number of people that only get 15kp.a,and a few who get 500kp.a...it doesn't take a genius to work out that the 10% who earn 500k will have a distinct bearing on average earnings.

a lot of average couples are running a house on closer to 30k a year.I feel very sorry for them(that's 15k a year each or 10*earnings)...so who says our boom is out of kilter?,as always the ones at the bottom end of earnings/those that got in late will suffer.