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Australian Housing Market Facing 'bloodbath' Collapse: Economists

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http://www.smh.com.au/federal-politics/political-news/australian-housing-market-facing-bloodbath-collapse-economists-20150622-ghu8a6.html

The Australian real estate market is in the grip of the biggest housing bubble in the nation's history and Melbourne will be at the epicentre of an historic "bloodbath" when it bursts, according to two housing economistsLindsay David and Philip Soos, who have written books on the overheated housing market, have berated the housing industry and politicians who refuse to acknowledge the existence of a bubble due to a perceived shortage of housing in the major capitals.

A bloodbath in the housing market, however, appears a near certainty due to the magnitude of falls required for housing prices to again reflect economic fundamentals

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Treasurer Joe Hockey sparked a national debate on house prices this month when he rejected the existence of a bubble, saying people would not be buying houses if they were unaffordable.

Sounds like Bernanke!

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People have being predicting this for a decade now.

If it collapses then surely it will be because of some global deflationary collapse in the price of commodities - iron, copper, etc, etc, - that the Oz economy is now so dependent up on.

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People have being predicting this for a decade now.

If it collapses then surely it will be because of some global deflationary collapse in the price of commodities - iron, copper, etc, etc, - that the Oz economy is now so dependent up on.

Hasn't that already started ? mind you they have pulled some impressive rabbits out of the hat ,which im sure George & co are in the process of cloning

Edited by long time lurking

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Australia is hugely dependent on mass-expansion in China, which has been slowing down for some time. The housing market is bound to catch up with this sooner or later - unless they use the UK playbook of course.

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Like the UK/London bubble and others. The nature of bubbles is that they burst. They don't deflate gently , as politicians would love and they try to manage. The Oz govt have kept the plates spinning and spinning....much like Cam and Gidiot.

I was staying in a flat in Sydney, on business , in 2011. A Polish tv repair man came to fix the LCD that was on the blink. He'd live in Oz for 15yrs. Already had one BTL and was buying another. He reckoned he'd be a millionaire and retire at 50. Was amazed that I wasn't into anythign "like that" as you "couldn't fail with property". Jeez, I'd travelled to the other side of the globe and was hearing the same shoeshine boy stuff as on home soil :lol:

There's a lot of Chinese hot money tied up in Oz property. I imagine a Chinese collapse is already underwayy and should hit Oz hard.

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If it collapses then surely it will be because of some global deflationary collapse in the price of commodities - iron, copper, etc, etc, - that the Oz economy is now so dependent up on.

This is most definitely happening now - look at iron ore and coal prices over the last few years for confirmation.

It's worth noting that Sydney and Melbourne are quite separate markets to the rest of Aus. We spent our last few years in Aus in regional QLD (until year before last) and it's a very different story there - they had a fairly major correction post GFC from which prices have not recovered. Perth starting to feel the heat of the commodities slow down, down 11% yoy with much, much worse in the mining towns of WA.

Sydney makes London look sane at the moment - they are still in the middle of a BTL and foreign buyer fuelled frenzy, with > 5x as much mortgage lending in Sydney going to BTL than FHB. I believe it will go at some point - if I was to guess, I reckon maybe some severe AUD issues (it's about 30% off its highs already), which may trigger inflation and some need to raise rates to defend the $. That and maybe less Chinese investors would probably put a stop to things pretty smartish.

Edit to say: It's a long, long way down for Sydney and Melbourne. Most properties in Sydney right now would not be cheap at half the price..

Edited by mattyboy1973

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By that logic, bubbles are impossible, as there mere existence of buyers means they are 'affordable'

Why is it utter evil is the staple of governments across the west?

The evil is nicely complimented by the stupidity of the masses though?

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For those who don't follow this other thread:

http://www.housepricecrash.co.uk/forum/index.php?showtopic=101429&&gopid=909338158&&page=218#entry909338158

As we've discussed on there a number of times, a major, major mover in Sydney and Melbourne is the Chinese money rushing in. Only once that problem is dealt with will that market collapse - but when it does it will be massive. This is not about multiples of Sydney based earners, it's all about the foreign money setting prices at the edge.

So - what would cause that stop in Chinese money?

i) crackdown in China (unlikely in my view as the ruling party and their families are major players in this)

ii) crackdown in Australia on foreign buyers (some signs of this now, with a couple of forced sales due to breach of FIRB laws recently - but a good while off any real action)

iii) collapse in AUD (negative for a HPC - just means the Chinese can buy more)

iv) collapse in Yuan (positive for a HPC, slows new money coming in)

v) collapse in mining/other industries (doesn't matter. It's not Australian money freshly earned that is buying this stuff - it's Chinese money or equity from sales at crazy prices.

That's it. None of them particularly likely, in my view. My guess is less and less transactional activity which is by 'native' Australians, but prices to continue to grow until there is some crack up boom.

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but prices to continue to grow until there is some crack up boom.

You don't think we are in that phase now? I think we might be..

There is no doubt the China influence is massive - the last year we lived in Sydney (2010), every single house that sold on our road (4 in total - not a big road) went to Chinese buyers, sight unseen. Scale that up across the city.. But whether China is the be all and end all, I don't know - BTL certainly has a role, and takes up a huge % of the domestic purchases.

One thing you missed off your list is a big slowdown/housing collapse in China, and this is probably more likely than your other points (although v) is already happening). What the exact effect would be I don't know - would Chinese need to sell up to free cash, or would it encourage more to get their money out of China?

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23 million people, just shy of the land mass of Europe with 600 million people and with no real geographical barrier to building...it might be desert but t's flat unlike Japan.

Also they are rather good at keeping the population in check having no qualms about setting up off shore concentration camps for illegals. So its all about Anglo Saxon enthusiasm for property and not a lot else.

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23 million people, just shy of the land mass of Europe with 600 million people and with no real geographical barrier to building...it might be desert but t's flat unlike Japan.

Also they are rather good at keeping the population in check having no qualms about setting up off shore concentration camps for illegals. So its all about Anglo Saxon enthusiasm for property and not a lot else.

Reading my Twitter feed, growing realisation that Boomers have stolen the gains of the commodities boom in the form of a red hot housing market. Could get quite nasty.

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I thought owners didn't want HPI. Always being told off that there is no limit to HPI desire.

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This was the above link. Anyway, get some more HPI down ya lads.

Mum writes perfect letter to Australian Treasurer Joe Hockey about his 'out of touch' comments on house prices

House prices in Sydney rose by 12.4 per cent in 2014, and have continued surging, putting homes out of the reach of most first-time-buyers, regardless of whether they have a "good job" or not.

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23 million people, just shy of the land mass of Europe with 600 million people and with no real geographical barrier to building...it might be desert but t's flat unlike Japan.

Also they are rather good at keeping the population in check having no qualms about setting up off shore concentration camps for illegals. So its all about Anglo Saxon enthusiasm for property and not a lot else.

Australia has crap soil, Diamond's book on Collapse argues that the population is too big for the current farm land to sustain and there is plenty of damage being done to the eco system there.

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I just don't understand how house prices can keep going upwards in Oz. It makes no sense. Everything is lined up against the Australian economy but house prices are still grinding upwards?

We have graphs all over the place telling us that terrible things are going on that should be hurting. Commodities are falling, China economy is weakening, Baltic dry is on the floor, private debt is through the roof. The banks seem to be the only thing keeping this party going!

Look at the state of this -

AUSVUS-Assets-1024x617.jpg

Source: http://blog.australiaboomtobust.com

What else is going on here? Is it just a credit bubble or is there a genuine economic reason for HPI seemingly forever?

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I thought owners didn't want HPI. Always being told off that there is no limit to HPI desire.

I think Tony really let the cat out of the bag there (if there was one to let out :P). We want the rich to stay rich, F*ck poor people :P

Russel Brand pretty funny!

Edited by renting til I die

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