Thread: Is Australian real estate collapsing?

Australia Real Estate WORST DROP Since 1990! Prices Down 8.2% In Sydney!


Real estate in Australia has once again fallen further down. This is a definitely trend that has not let up. All throughout 2018 we have seen prices in Sydney in particular come down to a level which has started to worry market analysts who in fact expect this rout to worsen throughout 2019. For homeowners who are barely above water with their massive mortgages, what does this mean for them?


Australia Real Estate WORST DROP Since 1990! Prices Down 8.2% In Sydney! ? Investment Watch

It was a bubble that was bound to burst. 8.2% down is a correction and as it should be.
Same will happen in Auckland.

Well, I hope Dickie will be ok

Not collapsing yet but as said above, correcting in most locations to unwind some of the insanity of the last several years. Read an article yesterday speculating that some locations will go down a total of 15-20% so maybe only halfway there now. Am thinking the social and financial cost of such an adjustment doesn't yet seem to have kicked in. Many purchasers in recent years must surely be below loanable sums (valuation to loan amount ratio) required by the banks and in some cases, all equity must be gone.

Originally Posted by BoganInParasite

in some cases, all equity must be gone.

The shit will really hit the fan when these debtors just stop repayments on a large scale and let the financers evict them.
There will be such a large backlog that they'll probably get free rent for a year or more before eviction.

Watching this quite intently because general rule of thumb is that the NZ market follows on 6-12mths from Aust (Sydney in particular).

Originally Posted by BoganInParasite

in some cases, all equity must be gone.

I'm not so sure of that. After learning their lessons from Fanny Mae and Freddie Mac, banks in Aus and NZ required 20% deposits PLUS income that will cover the repayments.
If a young couple bought a house last year on 20% deposit, and if prices dropped 20%, they still have a house that they can afford to live in and pay the mortgage. It's wrong to abandon the house because it has no equity. By the time their loan term is up, equity will have been restored.

Around 30 years ago, when interest rates in NZ were circa 20% (yes!!! twenty and at one point up to 23!!), the deposit demanded by banks was 5%. I bought a house with zero deposit because I convinced the finance company that the equity was in the fact that I was proposing to buy an empty section and a house "for sale for removal" to place on the section; the whole was greater than the sum of it's parts. A "handyman's dream" house, so to speak. Even after paying out my ex after our divorce, I have been mortgage-free for a while, have sold that house and upgraded, still debt-free.
My point...even if equity is lost or hidden, by hanging on (assuming intrest rates don't get beyond what you can afford), and one day you will own and be debt-free.

Originally Posted by AntRobertson

NZ market follows on 6-12mths from Aust (Sydney in particular).

Yes, but Auckland in particular. South Otago will be oblivious
The Auckland situation will be exacerbated by ACC allowing expansion into green belts and the government's First Home policy (or whatever it's called). There will be a sudden glut and subsequent devaluation of Auckland properties.
Rubbing my hands...will be time to mortgage what I've got to buy-up an extra property, and, as mentioned above, hold on for the longer term, but I think Sydney will be the place to buy...if I can manage to mortgage in NZ to purchase in Aus.
Much better than bitcoin.

Termites on the piers the bugger picture

The greatest upheaval in the global banking regime, the bankster frauds of 2008, precipitated the collapse in interest rates and ushered in a prolonged cycle of cheap credit, low inflation and massive QE among central banks ensuring that low inflation continued. The QE tap has now been turned off, the cost of borrowing has increased accordingly, inflation is increasing and rates will rise. Coupled with the Trump wars and this mounting debt exposure, the asset bubble of property is now pricked. A further significant contraction in the Chinese market will certainly fuck the antipodeans more than most and their over-heated property markets are looking ever more exposed. The UK is experiencing similar frailty and the Brexit chaos is merely compounding the effects but it is significant that both the British residential and commercial property markets are entering a downward cycle together as it becomes more apparent that their worth has been grossly over-valued. A bear market in equities and a war in the Gulf pushing oil to 100$ a barrel would certainly make the cocktail of volatility that much more explosive. Exciting times ahead.

Originally Posted by Maanaam

After learning their lessons from Fanny Mae and Freddie Mac

Isn't the only thing that they learned from the GFC is that if they are "too big to fail" then the government will bail them out, and the execs will still receive huge bonuses ?

Originally Posted by TizMe

Isn't the only thing that they learned from the GFC is that if they are "too big to fail" then the government will bail them out, and the execs will still receive huge bonuses ?

I can't speak for OZ as I don't know, but NZ has legislated checks and balances. For instance, in Auckland, where house prices are absurd, 20% deposit is required. Not the banks' choice, it's a legal matter. Banks also have to ensure the mortgage applicant has income to cover repayments at current interest rates and I think it's that repayments are no more than 50% of net household income. Financial gurus reccommend that no more than 30% of household income is used to pay a mortgage, but the 50% is doable at a pinch hence the law allowing up to 50%.

In Oz, a recent Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry has revealed that the major banks, insurance and financial companies are a bunch of crooks.

https://financialservices.royalcommi...im-report.aspx

^ no surprises there.

that's our terry fucked then,

Originally Posted by TizMe

Banking, Superannuation and Financial Services Industry

not forgetting insurance scum

hopefully a few at the top will have to fight to stay out of jail

and they were trapped into the royal commission by some skillful play and a fcukup on their side

PM Malcolm Turnbull capitulated on his previous dismissals of the need for a banking royal commission after sustained pressure from within his own Government and an admission by Australia's big four banks that an inquiry was necessary to restore public faith in the financial system.

Forget purgatory, Australia's financial sector is currently rooted in the fourth circle of hell — the spot reserved for those being punished for greed and indifference to the plight of others.

Australia's big banks, superannuation funds, wealth managers and insurers are now facing massive and enforced changes to their culture, management and conduct, largely thanks to their own testimony.

The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry has forensically picked apart the appalling behaviour that has become entrenched; examining sales-driven commissions and remuneration, poor risk management, tardy customer remediation, as well as the role of regulators and the law in the disintegrating trust the community has for the sector.

It has been a humiliating time for the banks.

https://www.xxx.xxx.xx/news/2018-09-...eline/10310800

I don't see the problem.
Never have.
What is the issue with housing being more affordable?