Monday, Aug 21, 2006

Spectre of negative equity haunts Sydney property market

Sydney Morning Herald: Housing crash puts sellers in debt crisis

Negative newsflow is clearly rising in the Australian market. Auction clearance rates in Sydney are hovering around 48 per cent since the recent interest rate rise, but plummeting property prices have meant many vendors are confronting negative equity, where they owe more on the property than it is worth.

Posted by james @ 10:42 AM (519 views)
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4 Comments

1. Gregzki said...

In the recent global bubble, Australia led the way followed by Britain. It is ineviatable that we will follow suit. The UK will have a similar headline soon. Also, city bonuses aside the UK market peaked in June 2004 - last years artificial reported rises were heavily skewed and the current BTL support is a classic dead cat bounce.

Monday, August 21, 2006 11:38AM Report Comment
 

2. d'oh said...

Interestingly, the house in the article will cost the investor a total of AU$300,000 before they can rent it at $270 p/w = a yield of 4.68% before maintenance, insurance, vacancies. Base rate in Australia is presently 6%. Even with this precipitous drop of 43% of the value of the house it is still overpriced for what the rental market will bear.

Monday, August 21, 2006 12:36PM Report Comment
 

3. Geed said...

On-line instant access ING account in Australia currenty at 5.85%, they were quick to raise after the bank of Australia base rate decision unlike bad debt ridden UK banks.

Monday, August 21, 2006 12:45PM Report Comment
 

4. Bigwave said...

I've spent a fair amount of time in Oz over the past couple of years. I saw the same "house boom" madness at work Down Under as back home in the UK. Everyone seemed to admit that prices were insane but the usual suspects were at work in Australia, as they are here, saying: "Yeah mate, but they keep going up! There's still the demand...can't see them coming down..." Blah, blah. Well it didn't take much for the party to end did it? Just a little nudge up in interest rates and reality bites. We will see the same "negative equity" headlines here. I will try not to laugh too loud.

Monday, August 21, 2006 09:16PM Report Comment
 

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