I have thought Aussie housing prices have been unsustainable for years, no matter how strong other aspects of our economy are (mining, agriculture esp) I have really struggled to see how average housing prices 9 and 10 times averages wages could be maintained.
It was not until last week after noticing auctions in my local area failing to clear and a glut of vacant and for sale buildings that I really did any research into things beyond basic wages/prices figures but I've come to the conclusion the fundamentals in Oz do not allow prices to remain at current levels. Short term a few things are holding prices up including:
Longer term however I am convinced that housing markets here will drop based on other indicators I've dug up. Given we are unlikely to experience unemployment on the same levels of America and our laws do not allow homeowners to simply walk away from their debts in the same way a crash isn't a definite however they have got to normalise sooner or later and prices will come down and banks will no doubt suffer.
Indicators are freely available for anyone who wants to identify and search for them on google. Things that worry me are huge rises in utility costs in the most populous state which put huge pressure on people struggling with mortgage payments. The other things are credit card debts up 70% in the last 5 years and seemingly a trend towards delinquency on bills and personal debts. We also have 3.1% inflation which is going to force a rate rise on Nov2 which may pressure some people into going delinquent on payments and will further reduce already low new home sales.
I am not going to post all the indicators as there is no space for dozens of links to sales stats, government stats, news articles, opinion pieces and analysis and other sources and besides as RussH says you need to do your own due diligence but the main indicators are easily found via google. This article below sums up the magnitude of our bubble relative to the US bubble and also covers just how damn exposed our banks are the mortgage markets.
How to Profit From the Coming Aussie Property Crash (and Banking Crisis)
Has anyone else been looking into the Aussie real estate market? Are your perceptions the same of do you think the otherwise strong economy will keep the market stable? If you see a contraction or crash coming what would you suggest the time frame would be and do you think a rate rise in November will set a correction in motion?
It was not until last week after noticing auctions in my local area failing to clear and a glut of vacant and for sale buildings that I really did any research into things beyond basic wages/prices figures but I've come to the conclusion the fundamentals in Oz do not allow prices to remain at current levels. Short term a few things are holding prices up including:
- Government schemes to bolster first buyers deposits.
- Stamp duty tax breaks in some states.
- Unfounded fears of housing shortage.
- Dumb money (overconfidence).
- An otherwise stable economy.
Longer term however I am convinced that housing markets here will drop based on other indicators I've dug up. Given we are unlikely to experience unemployment on the same levels of America and our laws do not allow homeowners to simply walk away from their debts in the same way a crash isn't a definite however they have got to normalise sooner or later and prices will come down and banks will no doubt suffer.
Indicators are freely available for anyone who wants to identify and search for them on google. Things that worry me are huge rises in utility costs in the most populous state which put huge pressure on people struggling with mortgage payments. The other things are credit card debts up 70% in the last 5 years and seemingly a trend towards delinquency on bills and personal debts. We also have 3.1% inflation which is going to force a rate rise on Nov2 which may pressure some people into going delinquent on payments and will further reduce already low new home sales.
I am not going to post all the indicators as there is no space for dozens of links to sales stats, government stats, news articles, opinion pieces and analysis and other sources and besides as RussH says you need to do your own due diligence but the main indicators are easily found via google. This article below sums up the magnitude of our bubble relative to the US bubble and also covers just how damn exposed our banks are the mortgage markets.
How to Profit From the Coming Aussie Property Crash (and Banking Crisis)
Has anyone else been looking into the Aussie real estate market? Are your perceptions the same of do you think the otherwise strong economy will keep the market stable? If you see a contraction or crash coming what would you suggest the time frame would be and do you think a rate rise in November will set a correction in motion?
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