Total Meltdown of the Aussie Housing Market

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“Dude…those drugs are messing with your head. You should step away from the typewriter and get your mind right,” a friend told us last night. “You haven’t really been reckoning…you’ve just been kind of wandering. It’s sad to see. Take a nap.”

The “drugs” he’s talking about are antibiotics, and your editor choked down the last of them this morning. Hopefully, we’ll be less infected from now on. So we’re going to push on and hope our mind clears up enough to figure out if the easing of one emergency can actually cause another.

We’re talking about the total meltdown of the Aussie housing market, which is, after all, just a matter of time. Next Wednesday will see the release of the national accounts for June. Those figures will probably show the economy being less bad than previously expected. That might lead to the end of the “emergency setting” of the RBA cash rate at 3%, which will precipitate the decline and fall of ridiculously high Australian house prices (although this could be good for equities).

Hang on a second though. The GDP numbers will be tough to read because they’re distorted by government stimulus spending, which spits in the soup of the economy. In other words, it’ll be hard to tell at a glance how well the economy is really travelling on its own momentum versus how much of it is Kevin Rudd, Lindsay Tanner, and Wayne Swan with their hands on the boot of the economy pushing it down the road. Will the engine catch or sputter?

Right now, it’s coughing a bit. Figures yesterday from the Australian Bureau of Statistics showed that business investment was up 3.3% in the June quarter. Most of the increase came from a 5.3% rise in investment in machinery, plant and equipment. It looks like businesses are taking advantage of Federal tax break to front-load future investment now. Whether they really need it now, who knows?

For instance, we received this note yesterday from a reader who paints a different picture:

Good Afternoon. I am a subscriber to your Daily Reckoning newsletter and thank you for this great service. I subscribe to the Grays online website for their daily online auctions and lately I have noticed a substantial increase in the amount of capital equipment auctions and often for equipment that are still under service agreement.

Here is an example of one of today’s listings…

This might not be an accurate measure of what’s going on with business in Australia, however, I just wanted to bring to your attention for further investigation. Thank you again for your daily newsletter. Much appreciated.

Best Regards

M.

You’re welcome M. And who knew it was a bull market in forklifts!? Maybe it’s not as surprising as you first think. You’d need a forklift to carry away the amount of BS being shovelled out by free-spending Keynesian politicians and the brainless economists who give them covering fire in the spineless media.

But we’ll have to take it is a given that the June quarter GDP figures are distorted in a way that makes it nearly impossible to find out how well the economy is doing. That uncertainty (government intervention diminishes the quality of our knowledge because it interferes with price signals) may prevent the RBA from raising the cash rate. Or it may not. We won’t know until the bank does something. Or nothing.

We’ve been saying all along, though, that the biggest threat to Aussie housing prices is the beginning of the tightening cycle in interest rates. The Aussie dollar was up overnight near 84 cents versus the greenback, partially in anticipation of the growing interest rate differential between the two countries. The U.S. dollar also fell against oil, which took a dip below US$70 on the front-month crude futures contract and then decided it liked it back above $70, which is just where it went.

You can take your pick of reasons for rising Aussie dollar strength…growing economy, yield difference versus the greenback…commodity currency benefitting from secular decline of the USD. But after you pick, you have to ask the next question: will the RBA raise rates because the economy here is healing? If it does, it will send the Aussie higher. But what will it do to house prices?

If you’re in the real estate industry, you’ll say “Nothing! House prices go up in all markets at all times regardless.” But if you have a brain and use it from time to time, you would have to at least entertain the possibility that climbing interest rates and the end of the first home buyers grant spell real trouble for the housing market and the marginal buyers who support it.

The housing market requires a constant stream of new buyers and a fresh supply of credit to keep demand for mortgage finance up. That’s the only way for new buyers to bridge the gap between stupidly high median house prices and real wages that are not keeping up with home price inflation. Yet as we pointed out yesterday, the government-backed mortgage finance operations are nearing the legislative limit on funding. Something is going to have to give.

Our guess is that it will be house prices. But you know that already since we’ve written in before. And besides, our main beat here is not property, but stocks. And it’s possible stocks – on the back of more energy deals and continue Chinese demand (see Baosteel’s prospective $300 million investment in coal and iron ore hopeful Aquila today) – could do a runner and sprint ahead of the property market (and bank stocks and listed property trusts at the end of their own little nice dead-cat bounce).

Don’t forget gold, either. It’s never far from our mind, nor our heart. Obviously the stronger Aussie dollar is bearish for Aussie gold bullion prices. On the share market side of the gold market, however, gold and explorers and producers may benefit from increased demand for ye olden yellow metal. Investment demand for gold stocks as U.S. dollar hedge is back.

Reuters is reporting that on Wednesday, ETF Securities, one of the backs of a gold metal exchange traded fund, saw its largest one-day inflow ever. The funds, “holdings jumped 7% or 211,500 ounces to 3.190 million ounces of bullion on Tuesday, from 2.978 million ounces the day before.” In the last week, the fund’s inflows are up 18%. Yowza.

And for those of you who began following (and suffering along with us) on the rare earth metals story, a new development today. Our story first began in June of last year when, writing a guest article at the Australian Small Cap Investigator, we tipped two Aussie rare earths shares. One was a producer, the other prospective.

Both got shellacked in the credit crunch, especially the more mature company that ran into a financing problem. But the underlying case for non-Chinese suppliers of some of the most essential and expensive elements for the modern technology and aerospace industries was still strong. Still is today, in fact. Even stronger, apparently.

The Times of London is reporting that China is ready to slap an export ban on rare earths in order to choke off any non-Chinese consumers of the elements. This affects Japanese, American, German, and South Korean companies to name a few. China has systematically and quite cleverly made itself the key global supplier of these elements. So what now?

For the consumers of rare earths, we have no idea. They are at the mercy of a limited supply. There’s no such thing as just in time lanthanides production. But for punters and strategic investors who have their eye on well-shaped rare earth ore bodies in Australia, or owned abroad by Aussie-listed companies, the story is playing out quite nicely, after a few bumps and bruises at the start.

Incidentally, ASI editor Kris Sayce is having lunch with the honchos of one of the rare earths shares he follows in the ASI portfolio. It’s not until the second week of September. But we’re keen to read his next report on the subject.

The China strategy on rare earths is still playing out. But you see another strategy playing out in solar cells. Today’s Australian reports that Chinese solar cell producers are selling their product into the global market at below the cost of production in order to gain market share and drive even low-cost producers in competitor countries out of business. Can it last?

You can sell your product below the cost of production for awhile, especially if the national government is subsidising the endeavour as part of a long-rate market strategy to own the bulk of the world’s manufacturing capacity. And for consumers – provided the product quality is good – it means low prices for awhile. But it’s also an unfair trade practice that could be taken up other countries with the World Trade Organisation, prior to resorting to less legalistic forms of conflict resolution.

Your editor got a note from an old friend who is running for Congress in the States. He asked, “With this current crisis and our long-term prospects bleak, why not move toward a more protectionist trade stance? Economically, what are the repercussions of attempting to level the playing field between America and countries that systematically under cut our workforce and product base? If Japan and china consistently strive to under bid is in all areas, why not close the gap at home through trade policies? Are we afraid they will call our loans?”

Our answer on Monday. Until then…we’re pleased to let you know our discussion of debt and what it does to a country – its economy, housing market, and stock market – is now available on DVD with a written transcript. There was quite a bit of discussion the Aussie property market that night. So if you’re interested in property, you’ll want to have a look.

Dan Denning
for The Daily Reckoning Australia

Dan Denning
Dan Denning examines the geopolitical and economic events that can affect your investments domestically. He raises the questions you need to answer, in order to survive financially in these turbulent times.
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94 Comments on "Total Meltdown of the Aussie Housing Market"

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Pete
Guest
Dan – Regarding the solar cells and your Congress friends comment – how does that translate for Australia? See, loans repayments aren’t what Australia is currently offering. Whilst the US may not have much to offer China in the way of trade “to” China besides money, Australia is completely relying on China for many different trade agreements. So if we both start getting protectionist, surely that will not assist good trade relations between our two countries? Unlike your friend, we in Australia appear to have much more to lose. I believe protectionism will cause an end to the lifestyles we… Read more »
jake
Guest

Dan— another story about the housing meltdown in Australia– A bit of waffling through the fundamental orifice !

Well I tell you what , over here in the WILD WEST the prices are taking off again .
Maybe in the rust-buckets that are Victoria and NSW there is a meltdown but in the engine room of the nation prices are on the UP and UP .
Dan could I suggest you are spending to much time in the cloistered atmosphere of the OLD HAT FACTORY and are out of touch with the real Australia .

jake ,

Perth W.A.

beyondtool
Guest

Fair go cop! $49 for a DVD in this day and age! Maybe we should wait and see if the Chinese step in with a budget version…

Biker Pete, Granville NS, Canada
Guest
Biker Pete, Granville NS, Canada

Yeah, have to agree, Jake. It’s olfactory all right. On the nose! ;)

Greg Atkinson
Guest

Dan, DR predicted that the whole global financial system was about to meltdown and that paper money would be basically useless…seems you are narrowing down your doomish view to just Australian housing now?

Please define “meltdown” a little more: for example what % prices will fall and by when. Otherwise your calls are meaningless.

Also are you willing to take a long walk with Steve Keen if you are wrong?

Brian
Guest
Dan, I think you need to get away from your keyboard a bit and just walk the streets and look at the very thing you are talking about. Plunging Aussie housing market? I don’t think so. In fact the biggest risk right now is hyper-inflation. We are about to have the perfect tsunami of a new and bigger resources boom combined with reckless stimulus spending that until now hasn’t really even started to take effect. In fact the only thing likely to have a meltdown will be our cash because there will be so much of it flying around in… Read more »
Justin
Guest

Brian, I agree with the risk of inflation, even hyper, but that doesn’t mean already overvalued property will be the prime beneficiary.

A shortage of housing? I don’t think so, and property developers have been the beneficiaries of the governments ‘stimulus’. Funding is not a problem for them when the government buys their ‘bills of exchange’.

High immigration may create housing demand but changes the social fabric of the nation in a short period of time, potentially leading to other problems, particularly in a hyper inflationary scenario.

Greg Atkinson
Guest
Justin I am not sure many property developers are doing very well at the moment and most of the listed property developers (Australand, Sunland etc) are having a hard time. The reason there might be a supply problem in the future is that investment in residential property has actually fallen as developers simply cannot get the funds to start up a lot of projects that they have in the pipeline. If there were truly an oversupply of homes in Australia then I would expect rental yields to have dropped off significantly but that has not happened. I am aware rents… Read more »
Justin
Guest

But Greg, where would these property developers be if the government was not using yours, mine and everyone else’s ‘money’ to prop up the market for mortgage securities and thus the real property market?

The price of everything else hasn’t gone down so why should rents? And don’t say petrol cause it’s still way more expensive than it was a few years ago.

Greg Atkinson
Guest

Justin I am not fan of the first home buyers grant and I agree the property market is being supported. As for rents, they would go down if there were an over supply of homes just as prices food food go down if there is a bumper harvest. If you want to see a good example of supply and demand in action then have a look at the wine industry…a glut in wine production has seen prices plummet and many wine producers have gone under. I just don’t think we are anywhere near a property glut in Australia yet.

Justin
Guest

I haven’t noticed the price of bread, milk or meat going down. As for wine, it’s a speculative bubble if I’ve ever seen one.

Pete
Guest

A good article about the housing shortages myth can be found here:
http://cij.inspiriting.com/?p=706

Biker Pete, Digby, NS, Canada
Guest
Biker Pete, Digby, NS, Canada

Many myths are perpetuated on this site. Checking that material is correct just _isn’t_ happening. Take Bill’s parable about the ‘clever’ parking attendant at the Bristol Zoo:

Here’s the true story:

http://www.thisisbristol.co.uk/homepage/Urban-myth-Bristol-Zoo-parking-attendant/article-1073841-detail/article.html

Now, after a couple of years predicting the meltdown of the Australian property market, Dan has, at last given us something specific. It will begin next Wednesday. Dan you’ve never written anything more true than your opening sentence, above… . ;)

Tom Sugar
Guest

Hello

I have looked at the “housing shortage”.

According to Wikipedia, Australia’s population grows about 330,000 people per year.

The ABS publishes “New Dwelling Commencements”, and this shows approx 150,000 per year, except 2009. 2009 looks like it will be significantly less, maybe 100,000.

150,000 new dwellings for 330,000 people would indicate there is definitely no shortage of new housing for Australia’s population growth. On the other hand 2009 may change the story….

Claytonator
Guest
NAB predicts RBA int rise in November higher interest rates = downward pressure on house prices and upward pressure on all other consumables higher interest rates = wage rise pressure and unemployment pressure which also hinder house price growth Massive stimulus spending = upward pressure on interest rates. Don’t pin your hopes on Gorgon saving the day. I’m more certain of Steve Keen’s forecast with every mention of the words rate rise. In case Greg’s not sure what this means I’ll extend myself. higher interest rates = higher foreclosures and lower demand, simple isn’t it? Higher interest rates = higher… Read more »
Biker Pete, Digby, NS, Canada
Guest
Biker Pete, Digby, NS, Canada
Claytonator, I guess you figure rents will fall, too(?) I’m sure you can also create an argument for this outcome! We’ve been hearing this ‘simple’ (your word) logic for a couple of years now. It is just that, simplistic… . ;) The most likely outcome of falling house prices, if it happens in _some_ areas, as property bulls and others have conceded, is that those with the wherewithal will snap up any bargains. Since you’re unlikely to “…borrow some money from the future…” (hard to borrow it from anywhere else, mate!) I can’t see you getting much out of this.… Read more »
Greg Atkinson
Guest

Tom, as I mentioned elsewhere we need to know what the total capacity of the new dwellings were/are to work out if there is a shortage or not. 150,000 one bedroom inner city pads are not going to house 330,000 people. I agree there might be have been an oversupply at times but with the number of developers that have gone under recently I would suggest that any oversupply will be worked out of the system.

Even in recessions babies are born, people move out of home, get married etc. Life goes on..it really does.

Pete
Guest
Biker: You still argue that rents will rise forever and ever? Talk about trying to will the future into existence. Claytonators post is spot on. The problem with your posts is that they don’t actually show any logic whatsoever. I don’t see how you can argue with logic if you cannot supply any yourself. Saying that house prices will go up and up forever because “i’ve seen it” and “this strategy is working for me and my family” doesn’t actually mean anything. Let’s consider what kind of economic forces would push rents higher: – high demand (including high wages) –… Read more »
Tom Sugar
Guest
Greg Atkinson I am no expert, but I don’t think there is a major shortage of housing. The figures I quoted seem to show that residential building is meeting the demand caused by population growth (assuming 2.2 people per dwelling). I agree with other comments that a vague prediction of a house crash is useless. A prediction MUST have a timeline and specific amount eg 25% drop by 2012. My prediction is there will be a property crash….. in 2030. Thats when all the baby boomers are moving into nursing homes (or cemetaries). Property will drop by 25%. You can… Read more »
Biker Pete, Mahone Bay, NS, Canada
Guest
Biker Pete, Mahone Bay, NS, Canada
TOTAL MELTDOWN OF THE AUSSIE HOUSING MARKET is the headline, Pete. As a tenant, your hopes are built of wishalloy (look it up… similar to unobtainium). This element of flawed logic colours your thinking, even when it’s apparent your reasoning has been failing you for years now. Long-winded essays to defend a belief _because you wish it to be so… _. Hasn’t happened. Here’s a short response: If interest goes up, rents will go up. It’s cause and effect. While ADR perpetuates myths like this ‘Total Meltdown’, I’ll pick up the precious metals theme. Buy unobtainium and wishalloy, Pete. You’re… Read more »
Greg Atkinson
Guest

Tom your 2030 call sounds about right unless of course something changes :) That is always the problem with trying to look ahead, something always changes.

I don’t think there is an overall shortage of housing either, rather I suspect there is a shortage of housing in good locations at reasonable prices. But that is another story….

Brian
Guest
I can only comment about the WA property market and it has definately picked up in the last 2 months. Boards are going up and getting under offer stickers within a week. The number of properties for sale is down to 12,000 from approx 20,000 in November last year (when nobody was buying). 15,000 is considered normal. So with the momentum from 20,000 back to 12,000 within 10 months its about to take off. Us West Aussies live in a different environment to you Easterners. Ours is a small boom and bust town that ebbs and flows with the mining… Read more »
Biker Pete, Mahone Bay, NS, Canada
Guest
Biker Pete, Mahone Bay, NS, Canada

” I must say I do have a laugh a bit where I see comments about an impending property price crash. ”
Spot on, Brian. :)

Ned S
Guest
In the past I’ve tended to think in terms of recessions leading to housing price declines. But what I’ve also seen is that sub-prime lending followed by interest rate rises can lead to housing price declines. Which then lead to recessions. I’m really not getting the feeling we have huge sub-prime issues in Australia – Yet. Or that the RBA wouldn’t do a quick about face (again) to prop up house prices here by dropping interest rates if necessary. With inflation being only a very secondary consideration. So that pretty much leaves me to consider the possibility of whether Australia… Read more »
Richo
Guest
I sold my investment property in 2006. Outlaw bikies were increasingly frequenting the suburb. I sold on (at the time) a peak in property prices. It was a 3 small bedroom house, perfect for a first home buyer. If I had hung onto and sold a few months ago I may have got the same sort of price (dependant on how the biker situation was going). But I would have been much more nervous about the bottom falling out of the market if I didn’t sell quickly. So I have no regrets about selling when I did. I am certainly… Read more »
Pete
Guest
Biker: I choose to ignore your jibes, they are pretty pathetic. “Here’s a short response: If interest goes up, rents will go up. It’s cause and effect.” I have responded to that in the past too. And I am happy to do it again: Rents correlate to wages, not interest rates. Have a look at what happened to rents throughout the 80’s and 90’s: Pretty flat. Why? Because rents are paid fortnightly. You don’t pay rent using credit. Rents have to be a portion of a person’s wage. On the other hand, mortgages are vulnerable to interest rate changes. Get… Read more »
Paul
Guest

Biker Pete, why is that you seem to do nothing but post asinine comments on this website. Read the article and move on. And if you don’t like what Mr. Denning writes, leave. Leave your condescension and pompous negativity behind, ‘mate’.

As for you, Mr. Denning, keep writing about what you know, and believe in, sir. You provide an extremely valuable perspective in a mainstream world where, unfortunately, one argument – the official propaganda – is often the ‘only’ perspective. Keep up the good work, Dan.

kylie
Guest
Rents rising? In my little corner of the city (6 k from the city centre rail & bus connections, local shopping etc) rents have remained stable or gone down over the past 12 months. It is an area of mostly older (well kept up) houses and brick six packs. While houses, particularily on the better streets, are around the $1 million mark, units are obviously cheaper, but they are not renting and not selling that well either. for lease signs have been known to hang around for 6 months. A whole flurry of ” investment” properties have suddenly gone up… Read more »
Biker Pete, Little River, NS, Canada
Guest
Biker Pete, Little River, NS, Canada

Well, here’s something to brighten ya day, Peter & Paul:

http://www.realtor.ca/propertyDetails.aspx?propertyId=8260606

As for posting asinine statements, Paul, whenever DRA feels my comments are too close to the mark, they simply don’t print ’em… . ;)

rick e
Guest

Biker Pete, hi
Sometimes when you change your name or title it might be like a new post so it gets edited.
Maybe it is the timing of name change and content you write or the length of your post.
Just a thought.

Biker Pete, Lunenburg, NS, Canada
Guest
Biker Pete, Lunenburg, NS, Canada
Thanks for the suggestion, Rick. I’ll admit anything’s possible. Length isn’t the issue. Even Pete will admit that his is bigger than mine! ;) How about it, Dan? Am I being ‘edited’? Learning a great deal about property and the application of stimulus programs to maintain the Canadian and US economies. Investigating ‘renovation grants’ right now. Seems like a whole raft of different programs exist across the Canadian provinces and down into the states. Perhaps it’s time for the Australian government to look at these ‘bigger impact’ programs. We’ll give credit where it’s due: subsidies for solar HWS, rainwater tanks… Read more »
Claytonator
Guest
Hey Biker Pete, Just thought I’d clear up a few assumptions you’ve made about me and indulge myself in making some regarding you.. I am paying off a mortgage at the moment and last time I checked my house wasn’t made from “unobtainium”. I have nominal cash savings and 1 free gram of gold with bullionvault. My LVR is about 85% so my interest in property prices regards myself and family. You seem to have portrayed me as some sort of uberpessimistic doomsday conpiracy subscriber. This is typical from someone living in the wonderful world of “Egophoria” where property, rents… Read more »
Biker Pete, Lunenburg, NS, Canada
Guest
Biker Pete, Lunenburg, NS, Canada
Nah, you’re easy game, Claytonator. Accusing me of child porn and paedophilia is fairly typical of a small crew out there who would do _anything_ to see Australia’s property market fail. I suspect that if your mind is right down there in the gutter, you’re possibly involved in that kind of activity yourself. For your benefit, we’ve used past interest falls to install air-conditioning in all our properties which lacked that inconvenience… and to have heat reducing film fitted to all windows affected by the morning and afternoon sun. We’ve also maintained the current rental rates, rather than increasing them,… Read more »
Dan
Guest
As always, it’s great to see some lively discussion! (But taking things too personally isn’t nice to see) It’s a very curious thing indeed that there hasn’t been the predicted crash in Australia. I myself am not sure who to thank for that yet, or whether the lack of catastrophe will inevitably lead to catastrophe. Pessimism can become quite tiresome after a while. But how this fits into the big picture is most interesting, and I suspect we’ll get the answer to the riddle in the next couple of months. I, like everyone else, am always watching the house prices,… Read more »
Claytonator
Guest

Hey Biker Pete,
– I’m not a tenant –
Do you – a) Engage in WAR driving (hard on a pushbike I’d imagine) or
b) Take tenancy in motels with wireless along your travels or
c) Already own a house in every suburb?

Biker Pete, Lunenburg, NS, Canada
Guest
Biker Pete, Lunenburg, NS, Canada
Thanks for your response, Dan. What we’re learning here is that the need to keep the construction business rolling, through stimulus programs, is fairly universal. The diversity of programs is astonishing. What seems common is government emphasis on creating and maintaining employment in a variety of housing and accommodation spheres… across different continents. We both felt rather guilty accepting our stimulus payments initially, considering the number of incomes we draw, five in all; but quickly realised that putting this money into construction was maintaining employment. Y’know talk is cheap… in one case above, very cheap. Theory is fine… and going… Read more »
Rob
Guest
Thanks for your thoughts on housing and bogus drug research Dan. My view on the matter is that with the twin supports of low interest rates and low unemployment house prices will remain stable and may even rise a bit however we will not see the double digit returns of the last decade for the forseeable future. It will be interesting to see what the effect of an aging population will have on this amongst other things. As for myself I own a property in Melbourne which I am furiously paying off at the moment and this should be done… Read more »
Richo
Guest

This whole mindset of spending money as a charitable act to create employment concerns me.
Surely this is proof that capitalism is broken.
Shouldn’t an economy be self sustaining without consumers and governments having to borrow to spend just to prop up the economy?

Richo
Guest
Stimulus spending does not just creates jobs, it enriches senior managers and shareholders who may have made bad investment decisions leading to the businesses shedding jobs or closing down. If companies saved the profit they made in the good times instead of distributing it to their executives, many would not be in such bad shape now IMO. And for those who didn’t do anything wrong directly, its still important to undertake long term strategic planning and risk management. Many companies just paid this lip service over the last 10 years. How have those excutives justified their rewards when they have… Read more »
Claytonator
Guest

My apologies Rob, Biker Pete and others – DR is a rarity and should stay that way – If I were able I would edit my post – so sorry again and I will keep my shots above the belt in future.

Fred
Guest
Try a simple search of residential rentals in Domaine.com.au. Everything with these post codes: 2011, 2018, 2019, 2021, 2022, 2023, 2024, 2025, 2026, 2027, 2028, 2029, 2030, 2031, 2032, 2033, 2034, 2035, 2036, which is sharply defined tract of land in coastal Sydney, east of Southern Cross Drive and the Eastern distributor. It includes a good spread of desirable properties from the extremely wealthy, to industrial, to working class and housing commission. Today; 2 Sept 09, there are 1793 properties listed for rent in that space. Let’s see how that goes over time. The change over time of the sum… Read more »
Biker Pete, Lunenburg, NS, Canada
Guest
Biker Pete, Lunenburg, NS, Canada
Apology accepted, Claytonator. To answer your second question: We hold properties in just three suburbs. Common features of all three locations: high(er) incomes; 1% rental vacancy rates; close to ocean; high employment rate; great tenants (by application); one-year renewable leases. Downside: Repair costs high (tax claim); longish wait for some tradespeople (so I do some myself); travel 105 km to third location (around 65c/km tax claim). Latest ‘find”: 4.5 acres dual 160 m waterfront(s), own harbour. One D/S house. Subdivision likely… ie., two houses each on two acres plus, each with waterfront. I could provide the URL, but we very… Read more »
Pete
Guest
Fred: The guys at Bubblepedia did the similar such surveys using Domain.com in the past too. They often compared the figures from Domain with the information they were getting from the Real Estate Institute of Australia (and other such biased entities). Turns out the REIA was waaay off with some of their figures they published in papers (very hard to get a reprint out of people like that too, even when you can get them to admit the figures were wrong). Things to keep in mind: – re-listings. Eg, people who take the property off the market and then put… Read more »
Coffee Addict
Guest
Any major collapse of the Aussie housing market (say -30% in capital cities) will result in major aftershocks elsewhere. So called retail investors will pull their horns in on all fronts — equity investment —- retail expenditure — holidays etc.etc. Unemployment will jolt upwards for a while. If you beleive the property market will tank, it may be wise to rebalance your investment portfolios to aviod exposure to Aussie consumer discretionaries (in my narrow & possibly ill informed view). Such an economic shock would also hit my small portfolio of Aussie based energy, gold and mining service stocks BUT these… Read more »
Pete
Guest

Here is a scary article about banks giving people mortgage holidays:
http://www.news.com.au/business/money/story/0,28323,26001514-5013952,00.html

I wonder how long they can afford to holiday?

It is also interesting how banks could use these ‘holidays’ to avoid having to realise losses on their books – which means healthy reporting for July (just gone) and somewhat deceived investors.

Vish
Guest

Keep up the good work Dan.
Time is coming near when Credit will dry up, Interest Rates go up. That will be the day of reckoning.

fred
Guest
oh my gosh, so many brainwashed ppl here too… you guys in aussie have the worse housing ive seen. poor quality and you pay huge amounts of money for those brick temples. when do you all wake up that you cant be the only country who can beat a bubble? dubai got fukced this year, property down by 50%… your housing doubled within the last 5yrs but the income didnt even go up by 20% !!!! and now u talking about another doubling in next 10yrs? but the mop is so brainwashed by the main stream media, so no point… Read more »
fred
Guest

i took a long walk on st.kilda rd in melbourne last week.

there where so many for lease/for rent signs on this road alone that i stopped counting…

and this is going on every where.

the big kaboom is waiting around the corner guys… it always takes a few years until things arriving here from the USA…

latest 2012-2013 you can buy property here for 30-40% less than it is now!!!

i bet my ass on this!!

rick e
Guest

Fred factor this in (this could be true) that 70 % of ozzys rent only, 30% own homes.
This makes property investing high. How long would it take for these people to succumb and lose there investment houses?

Is this any different to the UK and USA % wise to oz?

fred
Guest

rick, 70% of aussies rent? where do you get this number from?

all the people i know are wannabee home owners… cos the bank owns the home not them!!

i would say that 65% are wannabee home owners and 35% are renters here.

aussi is very simular to the usa in many ways. they adopted their system years ago , this also applies to the banking industry.

main stream will not tell you …

wpDiscuz
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