Sunday, Nov 12, 2006

Sydney on edge of insolvency?

Sydney Morning Herald: Suffering in silence: a city on the edge of insolvency

ONE in three Sydney households is beset by financial worries and almost one in seven is teetering on the edge of insolvency, a church survey has found.

The study commissioned by the Wesley Mission warns financial stress is greatest in the south-west and outer west, but is also pervasive across all parts of the city, including its more affluent suburbs.

Families reported forgoing family activities, borrowing from relatives or friends, failing to pay bills on time or being unable to make minimum credit card payments.

Posted by mudhut @ 09:02 PM (415 views)
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3 Comments

1. Bruce said...

Perspective from an Aussie...

First thing most people think of Australia is Sydney. However, the city is about as representative of Australia as New York City is of the US. It's a cramped (by .au standards), chaotic, badly planned, greedy, corrupt, shallow place that happens to be on a nice harbour and has some good beaches (if you can get to them). I grew up there and never wanted to settle there and hate visiting it. (I've lived in Canberra for the last 20-odd years).

For decades Sydney has had housing prices way above anywhere else in Australia, ('though not to London proportions) and real estate speculation has been the major pass-time of its inhabitants. They've led the way in making paper fortunes; easy money from real estate and lots of it, the Sydney dream!

Too bad they also led the way to housing getting unaffordable for people who actually wanted to live in it. A couple of years ago the Sydney boom peaked, and it's been on a slight decline since then. Lo and behold, without speculation to push it along Sydney's service-based economy has been in the doldrums ever since.

Meanwhile, over in Western Australia, they're having an incredible boom largely based on their mining industry selling primary produce to China. Perth real estate prices have gone through the roof in the last couple of years and will soon overtake Sydney's.

Our Reserve Bank is concerned about the boom in WA and some other resource exporting areas upping inflation and so is raising interest rates. This is the coup-de-gras for the Sydney property market...

So a lot of Sydney-siders are getting hoist by their own petard. In the western suburbs a couple of Herald reports have had properties selling for c. 40% of what they were bought for three-four years back. There are reports of forclosure sales being done on the quiet to avoid panicking the market.

I'd be enjoying it all immensely if it weren't for the fact that the worst affects are being felt where people over-extended themselves to buy a property to live in, not closer to the city where the big speculative money went. But it'll catch up with them in time...

Monday, November 13, 2006 05:00AM Report Comment
 

2. Boarder said...

The SMH is anti-John Howard so it's going to highlight and stretch any bad news for the Govt.

Monday, November 13, 2006 08:00AM Report Comment
 

3. This comment has been removed as it was found to be in breach of our Blog Policies.

 

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