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sancho panza

The dud Kangaroo bounce thread

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3 hours ago, maffo said:

 

Australia’s boom is based mainly on China industrialising its economy. What they don’t seem to understand is that historically  this process is only going to happen once. They could have taken the windfall an invested it sensibly but with the assistance of the banks and Oz’s crooked political elite they blew it on a property ponzi.

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https://www.news.com.au/finance/economy/australian-economy/let-the-bloodbath-begin-house-prices-in-sydney-and-melbourne-could-halve-in-worst-crash-since-1890s/news-story/5918ea13042d5f819cb13c77629f060a#.y0wyv

LF Economics founder Lindsay David, who has been warning of the looming property crash for the past five years, said in a report today the recent house price falls were just the beginning.

CoreLogic data for January showed Sydney and Melbourne prices were now 12.3 per cent and 8.7 per cent down from their respective peaks in July and November 2017, with Melbourne falling at “the fastest rate ever seen”.

“We think there’s a chance property prices could fall by half in Sydney and Melbourne over the long run,” Mr David said. “I wouldn’t be surprised by falls of at least 40 per cent. When all hell breaks loose you’ve only got so many buyers out there.”

His base case of 20 per cent falls in calendar 2019 is significantly more bearish than other experts. AMP Capital is tipping total peak-to-trough falls of 25 per cent in Sydney and Melbourne, while UBS is tipping 25 per cent with a “rising risk of 30 per cent”.

 

 

Edited by sancho panza

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Do any of our members here know any people on the ground in Sydney? How's the sentiment/pressure with everyday folk? The MSM seem to be pumping out a lot of a property doom material of late and now even starting to focus on China, which I'm somewhat surprised at

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On 26/02/2019 at 10:19, A_P said:

Do any of our members here know any people on the ground in Sydney? How's the sentiment/pressure with everyday folk? The MSM seem to be pumping out a lot of a property doom material of late and now even starting to focus on China, which I'm somewhat surprised at

@Sugarlips @wherebee are pretty well informed,not sure they live there though.

Edited by sancho panza

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On 26/02/2019 at 17:19, A_P said:

Do any of our members here know any people on the ground in Sydney? How's the sentiment/pressure with everyday folk? The MSM seem to be pumping out a lot of a property doom material of late and now even starting to focus on China, which I'm somewhat surprised at

I have a lot of family and friends in Sydney. Near full employment and Cheap credit are keeping the plates spinning at present, the looming federal election promises tax bribes and the RBA still have a couple of rare cuts up their sleeves so day to day for most people it’s business as usual. 

Sentiment is neutral to positive currently amongst the established majority ie those with family homes and superannuation both of which have done very well over the last decade (the wealth effect).

most are oblivious to the party ending, after 27 years of no recession, no one under 40 knows what’s coming (other than those that moved there from Ireland etc).

 

so that’s today. Tomorrow is a whole nother ball game. Suggest you spend some time watching the vlogs at digital financial analytics website and depending how keen you are, the data over at macroeconomics.com.au is also excellent. 

Why do you ask?

 

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I do watch them occasionally. I ask because it's easy to surround yourself in bear news and only get a very small piece of the pie. 

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1 minute ago, A_P said:

I do watch them occasionally. I ask because it's easy to surround yourself in bear news and only get a very small piece of the pie. 

If you’re thinking of moving there for work, go for it wages are good, jobs are still plentiful in most sectors, despite the crushloading of infrastructure in recent years the lifestyle is pretty good (so long as you choose where to live carefully) but it’s not cheap to rent, toll roads are expensive but there are benefits with cost of living vs England (cheaper petrol, no council tax if you rent, no tv licence fee etc).

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https://wolfstreet.com/2019/02/28/home-prices-sydney-melbourne-australia-spiral-down-bust-spreads-imf-to-regulators-reinforce-financial-crisis-management/

Home Prices in Sydney & Melbourne Spiral Down, Bust Spreads. IMF to Regulators: “Reinforce Financial Crisis Management”

by Wolf Richter • Feb 28, 2019 • 17 Comments • Email to a friend

Bitter irony: Government told first-time buyers 5 months before bust began to “get into the Sydney housing market”; once in, “you’re pretty well set for life.”

“Nothing goes to heck in a straight line” because there is always a bounce, sooner or later – that’s my story and I’m sticking to it, but it does get tested from time to time, including in Australia’s housing bust.

Across the metro area of Sydney, prices of all types of homes combined, according to CoreLogic’s Home Value Index, fell 1.0% in February from January, 10.4% from a year ago, and nearly 13% from its peak in July 2017. Just over the past four months, the index has dropped 5.5%:

Australia-home-prices-Sydney-2019-02-28.

The volume of closed sales recorded in Sydney in February plunged 20.6% from the already weak sales in February last year, according to CoreLogic’s report.

Condos, generally the lower end of the market, is where first-time buyers are thought to have a chance, and they were considered the saving grace in this market. But prices continue to drop, and the industry’s hope that first time buyers would bail out this market is now fading.

  • House prices dropped 1.1% in February and 11.5% year-over-year.
  • Condo prices dropped 0.8% in February and 8.8% year-over-year.

In the Melbourne metro, the second largest market in Australia, prices of all types of homes fell 1% for the month and 9.1% year-over-year, according to the CoreLogic Home Value Index. The index is now down nearly 10% from the peak in November 2017. Over just the past four months, the index for Melbourne dropped 5.0%:

Australia-home-prices-Melbourne-2019-02-

House prices in Melbourne dropped 1.2% for the month and 11.5% year-over-year. Condo prices dropped 0.6% for the months and 3.7% year-over year. CoreLogic estimates that closed sales in Melbourne plunged 22.1% in February from the already weak sales a year ago.

Of the bottom 10 sub-regions of Australia’s capital cities seven were in the Sydney metro and three were in Melbourne (chart via CoreLogic):

Australia-home-prices-bottom-10-sub-regi

There is a bitter irony to all this. In February 2017, just months before the market in Sydney peaked, Anthony Roberts, New South Wales Minister for Planning and Housing, was promoting the launch of a 690-unit apartment development at Olympic Park, a suburb of Sydney, heaping praise on the developer for having reserved 60 units for first-time buyers.

Roberts was hyping new incentives for first-time buyers, including a reduction of the down-payment to 5%, to lure them into the Sydney housing market:

“This is about fairness, and this is about enabling people to get into the Sydney housing market. Once you are in the Sydney housing market, you’re pretty well set then for the rest of your life.”

It induced me to write an article with this headline, obviously: Housing Bubble in Sydney Soars to New High, Politicians Promote Scheme to Bitter End, with this image of the Sydney Morning Herald’s eternally glorious headline:

Australia-Sydney-property-set-for-life.p

The metros of Sydney and Melbourne, due to their enormous size and high prices, dominate the national home values, but weakness is now spreading to other capital cities, with only Hobart and Canberra still showing year-over-year gains (in parenthesis, CoreLogic’s measure of “median value”):

  • Sydney: -10.4% (A$789K)
  • Melbourne: -9.1% (A$629K)
  • Brisbane: -0.5% (A$491K)
  • Adelaide: -1.0% ($433K)
  • Perth: -6.9% (A$439K)
  • Hobart +7.2% (A$457K)
  • Darwin: -5.3% (A$398K)
  • Canberra +3.4% (A$594K)

On a national basis, the CoreLogic Home Value Index dropped 6.3% year-over-year and 6.8% from its peak in October 2017. It’s now back where it had been in September 2016. CoreLogic’s report points out that, despite the decline, the index remains 18% higher than it had been five years ago, “highlighting that most home owners remain in a strong equity position.” Only recent buyers are underwater.

That’s a calming thought, even for the Reserve Bank of Australia, according to the minutes for its Monetary Policy Meeting on February 5, 2019, when it decided to maintain its policy rate at the record low level of 1.5%:

From a longer-run perspective, members assessed that, following such large increases in housing prices, the effect of the recent price falls on overall economic activity was expected to be relatively small.

From a financial stability perspective, tighter lending standards, an improving labor market and low interest rates were all likely to support households’ capacity to service their debt.

Few households were in negative equity positions despite the falls in housing prices, implying that banks’ losses would be limited even if household financial stress were to become more widespread.

The IMF was less sanguine in its assessment of Australia. It found that “the financial sector faces continued vulnerabilities from high household debt, still-stretched real estate valuations, and banks’ ongoing dependence on funding from global markets.”

The assessment “recommended further steps to bolster financial supervision as well as to reinforce financial crisis management,” which might be a good idea.

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There is still a huge number of apartments to hit the market in Syd/Mel over the nexr 2 years. Having said that the auction clearance rate has shot higher again today from circa 40% over the last few months to 65% today. Likely seasonal, also the total volume of sales is well down but it could be the tentative signs that a floor is being found in the established detatched housing segment.

Perth cant catch a break though 6.8% unemployment rate is the joint highest in 41 years and their property market is down 1.5% in Feb, 3.5% over the last quarter and 17.8% since the last peak in 2014. I expect some govt interference in that market soon before everyone hands the keys back. Mortgage delinquencies are 2.8% and climbing in Perth double the national average.

 

Sources Abc news, macrobusiness.com.au

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https://www.abc.net.au/news/2019-03-06/gdp-q4-2018/10874592

 

officially in a ‘per capita’ Recession

first time I’ve seen the R word used by the ABC since the depths of the gfc...

jpmorgan put a note out today predicting 2 RBA cuts 1 in July 1 in August ie as soon as the federal election is out of the way and the abolition of negative gearing is in place

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Posted (edited)
9 hours ago, Sugarlips said:

https://www.abc.net.au/news/2019-03-06/gdp-q4-2018/10874592

 

officially in a ‘per capita’ Recession

first time I’ve seen the R word used by the ABC since the depths of the gfc...

jpmorgan put a note out today predicting 2 RBA cuts 1 in July 1 in August ie as soon as the federal election is out of the way and the abolition of negative gearing is in place

What if Oz starts seeing capital flight? I guess itll be more fast drip.

What has Oz got? Unwanted coal. Population selling houses to each other.

Oz is going to lead the charge of countries raising rates to attract cash.

Edited by spygirl 🏆

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https://thenewdaily.com.au/money/property/2019/03/14/australian-houses-fall-weaker-than-gfc/

Australia’s housing market is on track to experience a slump bigger than both the global financial crisis and the 1980s recession.

National dwelling (houses and units) values slumped by 6.8 per cent since their peak in October 2017, driven mainly by sharp falls in Sydney (-13.2 per cent) and Melbourne (-9.6 per cent), according to new analysis by property data company CoreLogic.

If prices continue to fall at current rates, within one month this downturn will be the largest since 1982/83 when Australia – along with most of the developed world – was in the grip of a crippling recession.

Graph showing the housing market downturns The Australian housing market is on track to experience its biggest slump in decades. Source: CoreLogic

Some downturns are big, and some are small,” said Geoff White, head of real estate at CoreLogic.

“Usually, it’s driven by economic conditions, but in this case it’s more about credit.

We’ve come off a brilliant period where we’ve seen strong growth – but the key is when things go up quite radically, they can go down quite radically. In many cases the growth over the last five years has been unstable and we’re seeing a reaction to that now.”

A key trigger for the downturn is that lending standards have tightened and banks are more cautious to provide credit to prospective home buyers, particularly investors.

During the GFC, banks were still prepared to approve loans, as the federal government’s bank guarantee – where the government underwrote the banks to boost confidence – kept credit flowing, while the first homebuyer grant stoked demand.

The tightening of lending standards – especially to property investors – coupled with increased stamp duty for foreign investors, have combined to cause the sharp market decline.

While the current downturn is dramatic, house prices over the longer term still show a positive trend – over the last 20 years the median house price has seen a 275 per cent increase, according to CoreLogic data.

“We’ve had a GFC, we’ve had recessions and yet we’ve still seen the market rise,” Mr White said. “It will always dip and dive, and it depends on the severity.

“This time the economy, across Australia in most major centres, has been performing well. Unemployment is low, inflation is low, interest rates aren’t high. There are great periods of growth and there will be falls.”

Confidence is key

But one commentator argues that economic conditions this time around should make homeowners feel more confident than they may have been during the GFC and the ’80s recession.

Not only is the economy strong enough to weather the storm, but Deloitte partner Nicki Hutley told The New Daily their analysis shows that wages are going up “albeit slowly” and people are still spending.

“When people say it’s the biggest downturn, it was preceded by the biggest upturn.

“In Sydney, for instance, we had houses going up 75 per cent, so for the bulk of people who brought in last five years they’re still ahead of the game,” she said.

Ms Hutley stresses that the drop-off in investor lending is nowhere near the extent of what happened around the GFC and that “things are going in our favour”.

“The biggest risk to Australia is not internal but external – China is the biggest risk at the moment, but even there the government is acting to bolster the economy through fiscal stimulus.

“I’m far less worried about internal [circumstances]. We’ve got good employment rates, there’s income growth, it’s slow but it’s growing and that helps consumption. Thing are going in our favour.”

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7 hours ago, sancho panza said:

https://thenewdaily.com.au/money/property/2019/03/14/australian-houses-fall-weaker-than-gfc/

Australia’s housing market is on track to experience a slump bigger than both the global financial crisis and the 1980s recession.

National dwelling (houses and units) values slumped by 6.8 per cent since their peak in October 2017, driven mainly by sharp falls in Sydney (-13.2 per cent) and Melbourne (-9.6 per cent), according to new analysis by property data company CoreLogic.

If prices continue to fall at current rates, within one month this downturn will be the largest since 1982/83 when Australia – along with most of the developed world – was in the grip of a crippling recession.

Graph showing the housing market downturns The Australian housing market is on track to experience its biggest slump in decades. Source: CoreLogic

Some downturns are big, and some are small,” said Geoff White, head of real estate at CoreLogic.

“Usually, it’s driven by economic conditions, but in this case it’s more about credit.

We’ve come off a brilliant period where we’ve seen strong growth – but the key is when things go up quite radically, they can go down quite radically. In many cases the growth over the last five years has been unstable and we’re seeing a reaction to that now.”

A key trigger for the downturn is that lending standards have tightened and banks are more cautious to provide credit to prospective home buyers, particularly investors.

During the GFC, banks were still prepared to approve loans, as the federal government’s bank guarantee – where the government underwrote the banks to boost confidence – kept credit flowing, while the first homebuyer grant stoked demand.

The tightening of lending standards – especially to property investors – coupled with increased stamp duty for foreign investors, have combined to cause the sharp market decline.

While the current downturn is dramatic, house prices over the longer term still show a positive trend – over the last 20 years the median house price has seen a 275 per cent increase, according to CoreLogic data.

“We’ve had a GFC, we’ve had recessions and yet we’ve still seen the market rise,” Mr White said. “It will always dip and dive, and it depends on the severity.

“This time the economy, across Australia in most major centres, has been performing well. Unemployment is low, inflation is low, interest rates aren’t high. There are great periods of growth and there will be falls.”

Confidence is key

But one commentator argues that economic conditions this time around should make homeowners feel more confident than they may have been during the GFC and the ’80s recession.

Not only is the economy strong enough to weather the storm, but Deloitte partner Nicki Hutley told The New Daily their analysis shows that wages are going up “albeit slowly” and people are still spending.

“When people say it’s the biggest downturn, it was preceded by the biggest upturn.

“In Sydney, for instance, we had houses going up 75 per cent, so for the bulk of people who brought in last five years they’re still ahead of the game,” she said.

Ms Hutley stresses that the drop-off in investor lending is nowhere near the extent of what happened around the GFC and that “things are going in our favour”.

“The biggest risk to Australia is not internal but external – China is the biggest risk at the moment, but even there the government is acting to bolster the economy through fiscal stimulus.

“I’m far less worried about internal [circumstances]. We’ve got good employment rates, there’s income growth, it’s slow but it’s growing and that helps consumption. Thing are going in our favour.”

Perhaps Ms Hutley would like to be Australias next premier?...she has all the qualities of a successful politician I.e self denial when faced with reality!

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https://www.abc.net.au/news/2019-03-19/house-prices-abs-december-quarter-2018/10915740

Australian property values fell $133.1 billion in the December quarter, with capital city home prices down an average of 2.4 per cent across the nation.

Key points:

  • Australian capital city home prices fell an average of 5.1pc over the past year
  • Sydney (-7.8pc) and Melbourne (-6.4pc) led the annual residential property price falls
  • BIS Oxford Economics says the current price falls in Sydney and Melbourne are about twice as fast as historical averages

 

Figures from the Bureau of Statistics show Sydney and Melbourne continued to lead the falls, with a 3.7 per cent and 2.4 per cent fall respectively.

 

In real terms, Sydney house prices have declined 16 per cent since the last peak in June 2017, which is about three-quarters of the average 21 per cent real decline in prices during previous downturns.

However, in this downturn the price declines have occurred about twice as quickly as average.

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https://www.news.com.au/finance/economy/australian-economy/house-prices-fall-faster-than-during-global-financial-crisis/news-story/1717ddae11fca3b4063f166c491d7f87

Australian property prices are falling at a faster rate than during the global financial crisis (GFC) with new figures showing the decline is widening outside the Sydney and Melbourne markets.

The Australia Bureau of Statistics released figures today showing house prices in capital cities fell 2.4 per cent in the December quarter to record a total drop of 5.1 per cent in 2018.

This compares with the annual fall of 4.6 per cent in 2009 during the GFC.

Sydney prices lost 3.7 per cent to the three months to December for the sixth consecutive quarter loss and were down 7.8 per cent for the year.

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13 hours ago, sancho panza said:

https://www.news.com.au/finance/economy/australian-economy/house-prices-fall-faster-than-during-global-financial-crisis/news-story/1717ddae11fca3b4063f166c491d7f87

Australian property prices are falling at a faster rate than during the global financial crisis (GFC) with new figures showing the decline is widening outside the Sydney and Melbourne markets.

The Australia Bureau of Statistics released figures today showing house prices in capital cities fell 2.4 per cent in the December quarter to record a total drop of 5.1 per cent in 2018.

This compares with the annual fall of 4.6 per cent in 2009 during the GFC.

Sydney prices lost 3.7 per cent to the three months to December for the sixth consecutive quarter loss and were down 7.8 per cent for the year.

Why make the connection between the GFC (2008) and Oz house prices?

The Oz economy has the same correlation between Europe/US as Outer Mongolia.

The almost 30 year (1992 -> 2017ish) boom in Oz has been down to the massive growth and internal consumption of raw materials by China.

Dumb ockers are looking West when they need to be looking East (or sort up North and Eat a bit, geographically).

 

 

 

 

 

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