Jump to content
DOSBODS
  • Welcome to DOSBODS

     

    DOSBODS is free of any advertising.

    Ads are annoying, and - increasingly - advertising companies limit free speech online. DOSBODS Forums are completely free to use. Please create a free account to be able to access all the features of the DOSBODS community. It only takes 20 seconds!

     

IGNORED

The dud Kangaroo bounce thread


sancho panza

Recommended Posts

12 minutes ago, Band said:

I do hope May is sacked next week and all hell breaks loose, we really need some of what the Aussies are getting, apart from the top end prices are slowly rising in any half decent area.

but they're doing so on lower volume.The game is up in the UK imho,for those who need to get out,there's a window before mid 2019 but by then,we'll b trickling down,probably on higher volume.

Link to comment
Share on other sites

  • Replies 251
  • Created
  • Last Reply
7 hours ago, Sugarlips said:

Heres a good deep dive into the Oz property market as it stands with comparisons to prior busts, the upshot  - dont buy now!

 

https://www.abc.net.au/news/2018-12-05/two-very-different-housing-market-downturns/10580614

Great article-Although I take issue with whther it will head off fincial catastrophe in Oz.They are a two trick pony economically-credit bubble and selling commodities to China.

'Despite what many economists argue, the single most important factor that determines home prices is credit availability.

The equation is simple — if banks now lend buyers 20 per cent less than they were before, that means those buyers will have about that much less to spend on their purchase.

There may be some buyers who have access to savings or existing housing equity that won't be affected quite as much, but clearly home prices will fall significantly.

The largest falls will be in the most expensive markets where people have to borrow more relative to their income — i.e. Sydney and Melbourne — and this is exactly what we're seeing.

This has reduced property prices but will also, if sustained into the future, cap household debt levels and gradually reduce risks in the financial system and economy.

It's a source of demand unlikely to rebound strongly soon, given that Labor is highly likely to be elected and implement promised restrictions to negative gearing and a reduction of the capital gains tax discount.

Foreign investors have also pulled back from the market, in part because of tougher enforcement of investment rules and increased state taxes on purchases by overseas buyers.

At the same time, housing supply has surged, especially of apartments in Sydney, Melbourne and Brisbane.

 

Interest-only reset the biggest domestic risk

Perhaps the biggest risk, though, is the hundreds of thousands of interest-only mortgages due to reset to principal and interest repayments over the next few years.

At the peak of the recent property boom, interest-only loans accounted for around 40 per cent of new mortgages being issued, and even more in markets like Sydney.

These loans became so prevalent that bank regulator APRA introduced a cap, so that no more than 30 per cent of any bank's new lending could be interest-only.

Most of these loans reset to principal and interest after five years, meaning the big roll-over started this year and will run until 2022.

Link to comment
Share on other sites

I remember the boom in interest only mortgages; amateur landlords went in balls deep as it was the cheapest monthly repayment product in almost all cases.

Sure going to be an interesting ride down under.  I wonder if I will pick up a cheap beach bach in 2022....

Link to comment
Share on other sites

1 hour ago, Sugarlips said:

"Last year more Australians bought their seventh home than those who bought their first"

https://www.abc.net.au/news/2018-12-08/queensland-rental-laws-on-cusp-of-change/10595628

Wow :o

As for this bit:

"Tenants Queensland would like to see a cap on any rental increase 20 per cent above the Consumer Price Index, while others have floated a much lower cap of 1 per cent."

 

Does this mean 20% of the CPI rate or the CPI rate +20% ? 

So for example CPI = 2%

2.4%

Or

22% 

Increases are what they hope for as a max ? If it's the second holy shite if they see that as a win. 

Link to comment
Share on other sites

On 08/12/2018 at 00:06, Sugarlips said:

"Last year more Australians bought their seventh home than those who bought their first"

https://www.abc.net.au/news/2018-12-08/queensland-rental-laws-on-cusp-of-change/10595628

Change looks imminent.ABC have withdrawn teh stat,link below

'But Ms Fanaika — along with hundreds of thousands of renters across Queensland — could now benefit from changing rental laws, with the State Government likely to introduce landmark reforms to the state's tenancy act by the middle of next year.

After an extensive nine-week feedback process, about 130,000 responses were submitted to the State Government about what should change, from making pet ownership in rental properties easier, to capping rental price increases.

Tenants Queensland CEO Penny Carr said after four decades of little significant change to the legislation, it needed an overhaul.'

 

Interesting they claim 2.1 mn landlords and then if you tally the figures you get over 1,555,804(could be higher given some people may own tens of houses,population 24.6mn so 10 mn households say.That'sa  lot of people in rented.

https://thenewdaily.com.au/money/property/2018/12/10/first-home-buyers-factcheck-did-more-people-buy-their-seventh-home-than-their-first/

The New Daily contacted Mr de Brenni’s office for clarification.

“The statistics referenced in that quote were misinterpreted from a Misha Zelinski article for the Huffington Post,” a spokesperson for the minister told The New Daily.

“The quote has now been removed from the relevant ministerial media statement, and we have contacted the ABC to get it removed from their article.”

The figures show that 104,068 first home buyers were approved for home loans in 2017 compared to 558,503 non-first-home buyers. 

How many Australians own rental properties?

The most recently available ATO data shows that around 2.1 million Australians owned rental properties in 2015-16.

Of those investors, around 1.5 million owned one rental home, 396,037 owned two, 122,696 owned three, 45,328 owned four, and 18,880 owned five.

And 20,023 investors owned six or more rental homes, according to the ATO.

Studies show that the Australian dream of home ownership is “increasingly out of reach” for many.

Nearly a third of Australians now rent – 31.3 per cent of the population in 2016, up from 28 per cent in 2001.

The transition from renting to home ownership has “become less common”, particularly among younger age groups, the 2018 Household, Income and Labour Dynamics in Australia (HILDA) study shows.

According to the ABS, home owners represented 70.6 per cent of all households in 1999-2000, a figure that fell to 67.2 per cent of all households in 2013-14.

Home-ownership rates are falling most dramatically among the young and the poor, a study by independent think-tank the Grattan Institute found.

“Younger Australians have always had lower incomes and less accumulated savings, and hence lower home-ownership rates,” Grattan Institute fellow Brendan Coates said.

“But between 1981 and 2016, home-ownership rates among 25-to-34-year-olds fell from more than 60 per cent to 45 per cent.”

At the same time, home ownership also fell for middle-aged households.

“For 35-to-44-year-olds, home ownership has fallen fast – from 74 per cent in 1991 to around 62 per cent today – and home ownership is also declining for 45-to-54-year-olds,” Mr Coates said.

This suggests that falling home ownership is due to higher dwelling prices rather than changing preferences for home ownership among the young, he said.

And there could be be “big consequences” should the trend continue.

“Whereas 30 years ago Australians of all income levels had a good chance of owning their home, now only wealthier younger Australians can expect to do so,” Mr Coates said.

“We estimate that just over half of retirees will own their own homes in 40 years’ time.”

 

 

 

 

 

On 08/12/2018 at 01:14, ccc said:

Wow :o

As for this bit:

"Tenants Queensland would like to see a cap on any rental increase 20 per cent above the Consumer Price Index, while others have floated a much lower cap of 1 per cent."

 

Does this mean 20% of the CPI rate or the CPI rate +20% ? 

So for example CPI = 2%

2.4%

Or

22% 

Increases are what they hope for as a max ? If it's the second holy shite if they see that as a win. 

I read it as the latter.Shwos what reams of MSM puff pieces on BTL can do for expectations.

Link to comment
Share on other sites

https://wolfstreet.com/2018/12/10/severe-collapse-of-home-prices-might-trigger-a-financial-institution-crisis-in-australia-oecd-frets-about-the-banks/

“Severe Collapse” of Home Prices Might Trigger a “Financial-Institution Crisis” in Australia: OECD Frets about the Banks

by Wolf Richter • Dec 10, 2018 • 56 Comments

“The authorities should prepare contingency plans.” The big four banks are too exposed to mortgages. Even if the banks don’t topple, the economy will get hit hard.

In its latest report on Australia, the OECD focuses to a disturbing extend on housing, household debt, what the current housing downturn might do to the otherwise healthy economy, and what the risks are that this housing downturn will lead to a financial crisis for the big four Australian banks, an eventuality that it says “authorities” should make “contingency plans” for.

The big four banks are huge in relation to the Australian stock market and the overall economy: Their combined market capitalization, at A$341 billion, even after today’s sell-off following the OECD report – accounts for 26% of Australia’s total stock market capitalization.

How they dominate the stock market showed up on Monday after the release of the report:

  • Common Wealth Bank of Australia (CBA): -2.98%
  • Westpac (WBC): -3.38%
  • Australia and New Zealand Banking Group (ANZ): -4.09%
  • National Australia Bank (NAB): -2.54%

The overall ASX stock index on Monday dropped 2.27%.

These big four are heavily owned by Australian pension funds, retail investors, and the like and form a big part of the retirement nest egg of the nation. So a banking crisis that involves the Big Four matters on all fronts – and the OECD report even pointed out that a collapse in the share prices of the Big Four would itself impact the overall economy negatively.

The report (PDF) starts by explaining just how strong the economy is in Australia:

With 27 years of positive economic growth, Australia has demonstrated a remarkable capacity to sustain steady increases in material living standards and absorb economic shocks.

The labor market has been equally resilient, with rising employment and labor-force participation. Life is good, with high levels of well-being, including health, and education.

It expects “continued robust growth of around 3%” in the near future. And the OECD’s “resilience indicators” suggest “that there is no emerging downturn at present.”

But then there’s the housing bubble, household debt, and the banks that have funded this bubble and that households owe this debt to.

The charts below are from the report. The first chart compares inflation-adjusted house prices of the two most magnificent housing bubbles, Australia (red) and Canada (green),  Spain (ESP), and the US. The index measures changes in price levels, adjusted for inflation. Clearly, Australia and Canada are in a world of their own, but Spain, whose bubble collapsed disastrously and led to numerous bank resolutions and bailouts, got close:

Australia-real-house-price-increases.png

The Australian and Canadian two-decade long housing bubbles make the old US Housing Bubble 1 look practically infantile. However, with the US housing market being so much larger, and with US banks and financial products such as mortgage-backed securities being so interwoven in the financial world, the US housing bust that morphed into the US Financial Crisis became the Global Financial Crisis.

This is not going to happen with Australia and Canada: If they get into a financial crisis, they’re not big enough to drag the entire world into it.

Australia’s household indebtedness, mostly tied to mortgages, and mostly owed to the above big four banks, reached 200% of net household disposable income, the highest ratio in the world. Even Canadian households can’t keep up with that. And US households, after the Financial Crisis, just fell of the mortgage wagon:

Australia-household-debt-to-net-disposab

All this household debt has been incurred by households and provided by the banks on the assumption that the housing bubble would continue to inflate forever. But late last year, home prices began falling in Australia’s two largest housing markets – with prices in the Sydney metro down 9% and prices in Melbourne down 6% by last month. That was never part of the plan.

The OECD’s chart below depicts house prices in the big five capital cities. House prices in Perth (dotted line) have been in decline since 2014 due to the mining bust:

Australia-real-house-price-increases-maj

The ongoing sell-off in Sydney and Melbourne is “a welcome cooling of house prices,” the report says, which also lists some factors that contribute to it:

  • “Prudential measures taken by the Australian authorities” to halt the “deterioration in lending standards.” This includes limits on interest-only loans, and many other measures.
  • “A sizable pick up in new housing supply” – with new construction now flooding both markets at a record pace.
  • “A fall off globally in the appetite for housing as an asset class,” which may, without naming names, refer to the sudden loss of appetite for Australian housing among Chinese investors.
  • “Domestic rule changes and alterations to state-level taxes that may have deterred some foreign buyers.”

But the price declines haven’t done anything yet to fix the situation. The OECD warns that “though house prices have eased recently, they remain high in level terms (they have more than doubled in Sydney and Melbourne since 2005).”

And this housing downturn is happening even as Australia’s central bank (RBA) has kept interest rates at a record low 1.5%, which stimulated the housing market until it didn’t.

First, the report holds out hope: “The current trajectory would suggest a soft landing, but some risk of a hard landing remains.” But then it takes that hope away: “Past OECD work has found soft landings are rare.”

So how will it impact the banks?

The Australian “authorities” are in denial, the OECD seems to say ever so politely in between the lines: “Direct risk to the financial sector from mortgage defaults, triggered for instance by a hard landing in house prices or interest rates hikes, is viewed as limited by the authorities (for instance, see, RBA, 2018).”

More denials from the “authorities” that encouraged this housing bubble to form in the first place:

  • “A particular feature of the housing loan market is that it comprises mainly variable rate mortgages. This makes household loan repayments more sensitive to movements in interest rates….” But that’s not considered to be an issue.
  • And: “Risk of financial stress from the large numbers of mortgages with interest-only phases that are due to transition to principal-plus-interest repayment is also not considered substantial.”

Nevertheless, here’s what authorities should do, after they get through with their denials (emphasis added):

“The authorities should prepare contingency plans for a severe collapse in the housing market. These should include the possibility of a crisis situation in one or more financial institutions.” The contingency plans should include “a loss-absorbing regime (including bail-in provisions) in the case of financial-institution insolvency.

Despite the big four banks passing the stress tests, “the possibility of financial-institution crisis should not be discounted entirely.”

So when this “financial-institution crisis” happens, who should pay? The OECD explains:

Insured account holders will be fine: “For account holders there is a deposit insurance scheme, the Financial Claims Scheme, which provides protection up to a limit of A$250,000 per account holder at each bank.”

But bank shares – that A$341 billion in current market cap – senior debt, and uninsured deposits may be bailed in:

“As regards the institutions, a crisis would put recently passed crisis-resolution legislation under test. Unlike in the United States or European Union, the legislation does not include explicit bail-in provisions on senior debt or deposits owed by financial institutions. This gives flexibility to adjust resolution plans to the specific characteristics of the crisis.”

“On the other hand, the absence of explicit bail-in provisions could slow down the speed of resolution and risk encouraging financial institutions to gamble for resuscitation. APRA has indicated that it will start a consultation on its loss-absorbing capacity framework in late 2018;”

“Loss-absorbing and recapitalization capacity should consist of a financial entity’s equity (shareholders) as well as debt instruments (certain bondholders and uninsured depositors) on which losses can credibly be imposed in a resolution.

Even if the banks don’t topple…

The report warns that “substantial impact of a hard landing in house prices on the wider economy may occur through other channels”: “If house prices collapse, consumer spending could suffer, via negative impact on wealth, including from exposure to bank shares, which would encourage deleveraging. Together with reduced housing-related expenditures, this would put pressure on the whole economy.”

“A large drop off in house prices could cut household consumption, prompt collapse in the construction sector, increase mortgage defaults, and freeze bank lending to business.”

In its own OECD bold, it says: “Financial supervisors and bank regulators should be prepared in the event of a hard landing in the housing market.”

And the RBA should hike its policy rates to remove the stimulus under the housing market: “In the absence of negative shocks, policy rates should start to rise soon. Monetary conditions remain very accommodative, with the risk of imbalances accumulating further if the low-interest rate environment persists. In the absence of a downturn, a gradual tightening should start as inflation edges up and wage growth gains momentum.”

So “a start to policy-rate normalization is now firmly on the horizon.” And “Though there are risks” to this “gradual tightening” envisioned by the OECD, “it could potentially bring welcome unwinding of the tensions and imbalances that have accumulated from the low-interest environment, notably housing-related issues.”

Which should have been done years ago before “the tensions and 

Link to comment
Share on other sites

It's a bit sad that for many years previously the anglo economies were prospering under conventional economic policies. The last decade they seem to have gone wholly 3rd world mode. Just keep borrowing and we'll all be rich.

Link to comment
Share on other sites

On 13/12/2018 at 09:43, A_P said:

Bit of an older video (earlier in the year) but I saw this last night. Was posted on the ToS. Absolutely bonkers the sums of money that were borrowed

 

Absolutely incredible viewing.One of her ehouss at peak$900k,now $180k.....................

Link to comment
Share on other sites

Here’s a graph plotting the falls so far in Syd, Mel and Perth. The falls in Perth have been getting worse this year despite being 4 years of pain already!

 

Could prove to be the best value buying once the dust settles.

 

 

Capture-218.png

Link to comment
Share on other sites

22 hours ago, Sugarlips said:

Here’s a graph plotting the falls so far in Syd, Mel and Perth. The falls in Perth have been getting worse this year despite being 4 years of pain already!

 

Could prove to be the best value buying once the dust settles.

 

 

Capture-218.png

Says a lot that the falls appear steeper in Sydney and Melbourne than perth.

Link to comment
Share on other sites

On 24/12/2018 at 04:13, Band said:

I was discussing this with my wife today - we both know NZ and Oz well.  Hundreds of blocks have gone up in the cities in the past ten years.  If 1% of them have structural problems due to shitty Chinese steel, it will be a disaster.  It has echoes of the leaky home scandal in New Zea;and that ruined many families lives:

 

https://en.wikipedia.org/wiki/Leaky_homes_crisis

Link to comment
Share on other sites

7 minutes ago, wherebee said:

I was discussing this with my wife today - we both know NZ and Oz well.  Hundreds of blocks have gone up in the cities in the past ten years.  If 1% of them have structural problems due to shitty Chinese steel, it will be a disaster.  It has echoes of the leaky home scandal in New Zea;and that ruined many families lives:

 

https://en.wikipedia.org/wiki/Leaky_homes_crisis

Karma.

Link to comment
Share on other sites

14 minutes ago, Band said:

Karma.

eh?  most of those affected by the leaky homes scandal were that rare thing - an innocent party fucked over by the government.  How is that Karma?

Link to comment
Share on other sites

23 minutes ago, Band said:

Sorry im talking about investors buying flats in oz.

oh - yeah, could not agree more. 

 

Although I had hoped that the massive oversupply of apartments in almost all Oz cities would mean, post crash, nice cheap housing for the next generation of Australians so that they could start life with security of tenure.  If towerblocks are collapsing by 2025, that ain't going to happen....

Link to comment
Share on other sites

20 minutes ago, wherebee said:

oh - yeah, could not agree more. 

Although I had hoped that the massive oversupply of apartments in almost all Oz cities would mean, post crash, nice cheap housing for the next generation of Australians so that they could start life with security of tenure.  If towerblocks are collapsing by 2025, that ain't going to happen....

It isnt a supply of housing issue, its a cheap loose credit issue ... besides in my mind the picture of the perfect Australian lifestyle is where there is open space and a nice big house with a garden ... not on the 32nd floor of a tower block ... which is no place to raise a kid no matter how expensive it is.

Link to comment
Share on other sites

43 minutes ago, Band said:

It isnt a supply of housing issue, its a cheap loose credit issue ... besides in my mind the picture of the perfect Australian lifestyle is where there is open space and a nice big house with a garden ... not on the 32nd floor of a tower block ... which is no place to raise a kid no matter how expensive it is.

Agreed, but once the credit crash happens, and cheap credit is gone, mass apartments mean that when young, living and working in a city, they won't have to hand over 700 bucks a week to some scumbag landlord, as hopefully he's gone bankrupt and they can buy the apartment cheapo.

Link to comment
Share on other sites

13 hours ago, Band said:

It isnt a supply of housing issue, its a cheap loose credit issue ... besides in my mind the picture of the perfect Australian lifestyle is where there is open space and a nice big house with a garden ... not on the 32nd floor of a tower block ... which is no place to raise a kid no matter how expensive it is.

Partially.

Its also about total exposure to housing via debt.

If the average Ox house is trading at ~ 9 LTE thats pretty bad. Each 10% fall will see the owner losing a years income.

However .... as the earlier pointed out, oz expsoure to housing is way beyond OO - the new Oz dram being a home owner and owning aa couple to rent out. Youd have to be the moronic imbred offsroping of dumb crim stock to bring in soemthing like negative gearing, allowing more leverage in housing ...

Ive not seen the numbers but I guess thers' a fair chunk of Ozs who 'own' >3 houses.

Each 10% fall in the housing market will see their equity wiped out at 3x the rate - so a 10% = 4 years income lost.

Oz is banks and personal wealth are fucked.

 

 

Link to comment
Share on other sites

13 hours ago, wherebee said:

Agreed, but once the credit crash happens, and cheap credit is gone, mass apartments mean that when young, living and working in a city, they won't have to hand over 700 bucks a week to some scumbag landlord, as hopefully he's gone bankrupt and they can buy the apartment cheapo.

A very dim light bulb went on in my mums head.

I was explaining MMR lendign limits to her. It sunndely dawned on her that is a bank chad to swith from lending 8x incoem to 4x max then the price of houses will halve.

I pointed out that she had only half got it -loans now have to repayment, meaning that that the price halves again.

UK has gone from lending ~7LTE at IO to max 3 repayment. Thats pretty much a quarter.

 

 

Link to comment
Share on other sites

sancho panza
On 26/12/2018 at 07:06, spygirl said:

Partially.

Its also about total exposure to housing via debt.

If the average Ox house is trading at ~ 9 LTE thats pretty bad. Each 10% fall will see the owner losing a years income.

However .... as the earlier pointed out, oz expsoure to housing is way beyond OO - the new Oz dram being a home owner and owning aa couple to rent out. Youd have to be the moronic imbred offsroping of dumb crim stock to bring in soemthing like negative gearing, allowing more leverage in housing ...

Ive not seen the numbers but I guess thers' a fair chunk of Ozs who 'own' >3 houses.

Each 10% fall in the housing market will see their equity wiped out at 3x the rate - so a 10% = 4 years income lost.

Oz is banks and personal wealth are fucked.

 

 

Aside from digging up minerals,their industry died with the strong ozzie dollar.Betwixt rock and a place caled hard

Link to comment
Share on other sites

sancho panza

https://wolfstreet.com/2019/01/02/housing-bust-in-sydney-melbourne-gains-momentum/

The Housing Bust in Sydney & Melbourne, Oh My!

by Wolf Richter • Jan 2, 2019 • 31 Comments

But it wasn’t the central bank that pricked the bubble; its interest rate is at a record low!

The relentlessness of the housing busts in the regions of Sydney and Melbourne – they account for about 55% of Australia’s housing stock by value – is quite something. At some point, it seems, the price declines would slow down at least for a little while, or even perform a quick bounce, before falling again. But no. The downward momentum is picking up.

For Sydney, according to CoreLogic’s Daily Home Value Index, prices dropped 1.8% in December from November, in just one month! The index is now down 11.1% from its peak in July last year:

Australia-home-prices-Sydney-2018-12-31.

In the calendar year 2018 in Sydney, the prices of all types of dwellings fell 8.9%, with prices of single-family houses down 10.0%, and prices of condos (“units”) down 6.3%. These declines pushed the index back to its level of August 2016.

Prices of more expensive homes are falling faster: Prices in the upper quartile of the market fell 10.0%; prices in the lower quartile of the market fell 6.8%.

In Melbourne, the second largest market in Australia, the housing bust lags Sydney’s bust by about four months. According to the CoreLogic Daily Home Value Index, since the peak in November 2017, prices of all types of dwellings fell 7.2%, which pushed prices back to February 2017 levels:

Australia-home-prices-Melbourne-2018-12-

In the calendar year 2018, Melbourne’s prices of all types of dwellings fell 7.0%, with single-family houses down 9.2% — having plunged nearly 2% in just the month of December — and “unit” prices down 2.3%.

High-priced homes are on the chopping block: Prices in the most expensive quartile of the market dropped 11.2%; prices in the bottom quartile inched up 0.5%.

In the other capital cities in the year 2018: The housing bust pushed prices back to 2007 levels in Darwin and to 2009 levels in Perth, while prices gained in the remainder:

  • Brisbane, Queensland: +0.2%
  • Adelaide, South Australia: +1.3%
  • Perth, Western Australia: -4.7%; which pushed prices back to levels last seen in March 2009. After peaking in 2014, prices were then felled by the mining bust.
  • Darwin, Northern Territory: -1.5%; this pushed prices back to levels last seen in October 2007, after having peaked in 2014.
  • Canberra, Australian Capital Territory: +3.3%
  • Hobart, Tasmania: +8.7%; but that pace is down from double-digit year-over-year gains earlier in 2018.

CoreLogic’s national home price index is down 5.2% from its October 2017 peak. Head of research Tim Lawless said in the report that this is a broad weakening in market that goes “well beyond the correction in Sydney and Melbourne.”

The increasingly steep price declines in Sydney and Melbourne can be blamed on the confluence of factors:

Prices are too darn high: After years of steamy price gains, unaffordability for many potential buyers who’d actually live in the homes they’d buy reached crisis levels.

The construction boom is dousing the market with record new supply.

Exposure of the banks’ mortgage shenanigans, first in the media and eventually by the Royal Commission investigation, is putting a damper on said shenanigans, thus crimping mortgage lending.

Generally tighter credit availability, according to CoreLogic’s report:

Interest-only lending has tracked well below the recently discarded 30% limit, credit growth for investment purposes is virtually flat-lining and owner occupier credit growth slowed sharply over the second half of the year. Lenders are generally seeking out larger deposits from borrowers and have become much more forensic in detailing borrower expense profiles and servicing capacity.

“Lenders are understandably risk averse against a backdrop of falling dwelling values, high household debt, rising supply and heightened regulatory focus following the banking royal commission,” said CoreLogic’s Lawless.

Consumer sentiment has soured on real estate, not surprisingly, given the well-publicized drop in prices, after the years of you-cannot-lose-money-in-real-estate hype. CoreLogic cites the Westpac/Melbourne Institute Consumer Sentiment survey which showed that measures of housing sentiment were “pessimistic.”

Chinese investors got cold feet, after seeing prices drop. CoreLogic explained that “the substantial reduction in foreign buyer activity” and “a reduction in overseas migration” were among the factors “dragging market conditions down even further over the year.” And this in a housing market that has become desperately dependent on both – as many locals can no longer afford to buy at these prices.

Interestingly, all this is occurring as mortgage interest rates remain near historic lows, and as the policy rate (cash rate) of the Reserve Bank of Australia remains at its all-time low of 1.5%, where it has been since the last rate cut in August 2016. In other words, it’s not the central bank that has pricked this bubble.

In Seattle, house prices dropped 4.4% in four months, the biggest four-month drop since Housing Bust 1, according to the Case-Shiller Home Price Index. Prices also deflated in the San Francisco Bay Area, San Diego, Denver, and Portland. ReadThe Most Splendid Housing Bubbles in America Decline  
 

Link to comment
Share on other sites

Archived

This topic is now archived and is closed to further replies.

  • Recently Browsing   0 members

    • No registered users viewing this page.

×
×
  • Create New...