Monday, May 8, 2006

Negative equity for Aussie property investors

Property investors hit hard

This article reports on Australian property investors in Sydney who bought at the peak or the property boom. They are now facing negative as prices drop.

Posted by Webmaster @ 09:18 AM (678 views)
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5 thoughts on “Negative equity for Aussie property investors

  • This is interesting to watch.

    As far as I can make out, Australia has not become anything like as economically dependant on MEW as has the UK. The country has a budget surplus and little govt. debt, giving them plenty of scope for getting out of economic difficulties.

    If UK prices fell by 10%, MEW would come to an abrupt standstill, causing insolvencies to go into orbit and recession to take hold – part of the chain of consequences that make a UK property crash impossible to avoid.

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  • I’ve said it before, and will say here again, that the Aussie housing market was the blueprint for the UKs. We are a few years behind their cycle, but Australia has been the market most closely observed by those wishing to predict the likely outcome of ‘structural reform’ here.
    Over the last few years I have read many news articles, chat room debates etc. from Australia, and have always been amazed at quite how similar all OECD (US) Countries have become in their socio-economic policy.
    New Labours policies have mostly been trialed first in Australia/New Zealand (japan?) prior to their implimentation here, and pretty much the same problems have emerged in each. Race riots and the rise of the far right in response to growing economic migration, cheap and plentiful credit leading to asset bubbles, huge personel debt and record insolvancies, rising homelessness following the removal of council housing and the arrival of housing associations (or REIT funds), the under 30s without hope of buying a home, and the over 60’s without hope of keeping theirs, as they are forced to sell up to pay for overpriced care homes which are also owned by REIT funds. ( as are – Hospitals, Prisons, hotels,casinos, business parks, shopping centres, huge residential and commercial portfollios, trading estates, docks, toll roads etc )

    Also of note is the statistic that since ‘liberalising’ gambling laws in OZ (as we are now doing too) those classed as ‘problem gamblers’ have risen to 2.6% of the entire population! I think that the UK statistic is about 0.6% at present, but it will be interesting to watch this grow in coming years by way of a comparrison.

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  • Autopilotengage says:

    My only reservation with using the Australian example as a blueprint is they have much more available land than here.

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  • Markdrasdo says:

    Yes, one point that is often put forward for the increase in house prices here being maintained is our lack of available land, but that argument gives rise surely to the question as to why countries like the US and Australia, where land is presumably a lot easier to find, have had similar booms. If this isn’t a contributing factor there is it really enough here to sustain the boom (although I don’t doubt it is a factor here as we have so many people on one relatively small island)?

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  • Retiredbanker says:

    The property asset bubble originated in the United States, and was then exported to Australia, Ireland, UK etc.
    According to many blogs ( e.g. Bay Area Property Crash ) the US bubble has now been “pricked”.
    My daughter who lives in a prosperous area in the East Midlands, has had to reduce the sale price of an investment
    property from the expected £120k down to £105k, in order to attract even one potential buyer.
    I must admit that for the past two years I have been expecting house prices to tumble, and cannot see how they
    can continue to defy gravity.
    I have been following the comments on this site with considerable interest for quite some time, and can no longer
    resist adding my 2p’s worth.
    The thought occurs to me that whilst Britain is assisting the US in Iraq, the international ( read American ) banking
    community will avoid speculating against Sterling.

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