^^ huge difference in market caps too. If bitcoin's bubble burst nobody cares. But if the property bubble bursts the whole country's screwed!

From the article:

Select to expand quote

As a whole, the Australian economy has grown through a property bubble inflating on top of a mining bubble, built on top of a commodities bubble, driven by a China bubble.

Unfortunately for Australia, that "lucky" free ride is just about to end.

Societe Generale's China economist Wei Yao said recently, "Chinese banks are looking down the barrel of a staggering $1.7 trillion - worth of losses". Hyaman Capital's Kyle Bass calls China a "$34 trillion experiment" which is "exploding", where Chinese bank losses "could exceed 400% of the U.S. banking losses incurred during the subprime crisis".

A hard landing for China is a catastrophic landing for Australia, with horrific consequences to this country's delusions of economic grandeur.

443 houses for sale

Not long now till it's doubled the low supply of 2016 and its almost all existing lived-in properties on the market

^ Don't forget during a housing boom there are more properties for sale than during a housing slump. Agents love booms.

Orsm, good for us then ?

450

Select to expand quote

evlPanda said..
^ Don't forget during a housing boom there are more properties for sale than during a housing slump. Agents love booms.

Except that the number for sale usually spike and peak just before a crash.

Select to expand quote

Adriano said..

evlPanda said..
^ Don't forget during a housing boom there are more properties for sale than during a housing slump. Agents love booms.

Except that the number for sale usually spike and peak just before a crash.

"Peak" is an ex-post definition so is true only by definition. If it didn't drop immediately afterwards then it wasn't a peak. Not useful for prediction.

Select to expand quote

Adriano said..

evlPanda said..
^ Don't forget during a housing boom there are more properties for sale than during a housing slump. Agents love booms.

Except that the number for sale usually spike and peak just before a crash.

I tend to agree.

I remember seeing the result of a holiday village down the south coast. When times were good, people were selling, and people were buying. The number of houses on the market weren't that great.

Then, something happened, whether it was the GFC or not I can't remember, but suddenly it looked like half the town was on sale, as people were still trying to sell, but no one was buying so the houses sat on the market.

Sales have halved in most areas near me, comparing with the same time last year and the year before

So what are you guys who are egging on a crash hoping for, and how do you plan to benefit from it? Would you buy if houses dropped 10% or are you wanting a collapse with prices halving in value before jumping in? Or are you just wanting a crash so you can laugh at the people who lost out because of it?

No one likes to see people in financial stress, but you have to admit, property prices in Sydney and Melbourne are extraordinarily inflated.

If that means that some will lose while others will win financially in the event of a sharp correction, that's the way the cookie crumbles.

No one is egging anything on. As if talking about it on a water sports forum is egging.

Select to expand quote

Haircut said..
Sales have halved in most areas near me, comparing with the same time last year and the year before

Sales may have halved, but what is the rate of listings/sales over the same period?

As far as i see too much is spent on a house anywhere in Australia and causes low level personal growth, that being because the system used is always borrowing capacity and when developments occur they "gear the release price upon completion for maximum to the area" leaving no-one with savings for 10 to 20 years, worse , a quick lesson in finance says that the economy is never a sure thing and as occurred in the drought and recession in the 90's early 2000's and they cannot sell or had to drop prices mildly and sell very slowly. They're too greedy and the system obliges people to have no other choice except use "loan borrowing capacity" of stable wage to ever buy a home !
That happens to be one of the criticisms i have in this "article" windsolarhybridaustralia.x10.mx/PPL-light-aircraft.pdf about the absurd mechanisms of lifestyle in use by this country because it is all done by loans !

Select to expand quote

Adriano said..
No one likes to see people in financial stress, but you have to admit, property prices in Sydney and Melbourne are extraordinarily inflated.

If that means that some will lose while others will win financially in the event of a sharp correction, that's the way the cookie crumbles.

No one is egging anything on. As if talking about it on a water sports forum is egging.

I am not sure about inflated... but certainly unsustainable. And maybe egging is the wrong word, but some certainly seem excited by the prospect. I was just curious whether the excitement was because they could then afford to buy property or because they would see a bunch of people lose money/equity. I'm all for trying to pick the market when buying selling for max financial benefit. I am just not convinced that a large drop in property values is going to benefit many people that are struggling to get into the market at the moment due to other effects on the economy and the way banks lend money. I think a stagnation in price growth to let inflation and wages catch-up would be best for most. I am a bit sick of people who did not take an investment opportunity getting hateful towards those that successfully did when they chose not to.

Select to expand quote

nicephotog said..
As far as i see too much is spent on a house anywhere in Australia and causes low level personal growth, that being because the system used is always borrowing capacity and when developments occur they "gear the release price upon completion for maximum to the area" leaving no-one with savings for 10 to 20 years, worse , a quick lesson in finance says that the economy is never a sure thing and as occurred in the drought and recession in the 90's early 2000's and they cannot sell or had to drop prices mildly and sell very slowly. They're too greedy and the system obliges people to have no other choice except use "loan borrowing capacity" of stable wage to ever buy a home !
That happens to be one of the criticisms i have in this "article" windsolarhybridaustralia.x10.mx/PPL-light-aircraft.pdf about the absurd mechanisms of lifestyle in use by this country because it is all done by loans !

Your post is difficult to read but I think I understand the point...

If Australia wasn't so obsessed with housing maybe we could use our GDP and borrowing capacity to fund actual production/creation of things and new innovation.

Instead, we'll all stuck selling services to each other and borrowing too much to live (or invest in) over-priced properties.

Select to expand quote

vosadrian said..

Adriano said..
No one likes to see people in financial stress, but you have to admit, property prices in Sydney and Melbourne are extraordinarily inflated.

If that means that some will lose while others will win financially in the event of a sharp correction, that's the way the cookie crumbles.

No one is egging anything on. As if talking about it on a water sports forum is egging.

I am not sure about inflated... but certainly unsustainable. And maybe egging is the wrong word, but some certainly seem excited by the prospect. I was just curious whether the excitement was because they could then afford to buy property or because they would see a bunch of people lose money/equity. I'm all for trying to pick the market when buying selling for max financial benefit. I am just not convinced that a large drop in property values is going to benefit many people that are struggling to get into the market at the moment due to other effects on the economy and the way banks lend money. I think a stagnation in price growth to let inflation and wages catch-up would be best for most. I am a bit sick of people who did not take an investment opportunity getting hateful towards those that successfully did when they chose not to.

I reckon your missing the point there which is the greater the bubble the larger the fall and the more damage it will do to all and sundry not just the ones punting in Sydney and Melbourne. Its now so big it will take The country with it when it goes. The longer and deeper will be the recession that goes with it basically.

So yeah the guys that are calling a bubble want it to burst but not really for selfish and immediate gain but rather because we don't want to live in a trashed economy for the next decade or so. Get it?

Select to expand quote

vosadrian said..

Adriano said..
No one likes to see people in financial stress, but you have to admit, property prices in Sydney and Melbourne are extraordinarily inflated.

If that means that some will lose while others will win financially in the event of a sharp correction, that's the way the cookie crumbles.

No one is egging anything on. As if talking about it on a water sports forum is egging.

I am not sure about inflated... but certainly unsustainable. And maybe egging is the wrong word, but some certainly seem excited by the prospect. I was just curious whether the excitement was because they could then afford to buy property or because they would see a bunch of people lose money/equity. I'm all for trying to pick the market when buying selling for max financial benefit. I am just not convinced that a large drop in property values is going to benefit many people that are struggling to get into the market at the moment due to other effects on the economy and the way banks lend money. I think a stagnation in price growth to let inflation and wages catch-up would be best for most. I am a bit sick of people who did not take an investment opportunity getting hateful towards those that successfully did when they chose not to.

I'm all for property ownership being affordable for all, including the young.

Currently in Sydney and Melbourne, unless you settle for a cardboard shxtbox in a crappy satellite suburb you're not going to own a house until your parents or grandparents die or you are one of the 5% with high income.

So if the only way to make this possible for all is a crash, then yes it would in the medium term be a good thing, even though the short term pain for some will be terrible.

In summary, if you are still one of these people who think prices will always rise and there will never be a crash or downturn, take a long deep breath, put down the rose coloured glasses and start to re-evaluate your exposure.

Select to expand quote

bene313 said..

nicephotog said..
As far as i see too much is spent on a house anywhere in Australia and causes low level personal growth, that being because the system used is always borrowing capacity and when developments occur they "gear the release price upon completion for maximum to the area" leaving no-one with savings for 10 to 20 years, worse , a quick lesson in finance says that the economy is never a sure thing and as occurred in the drought and recession in the 90's early 2000's and they cannot sell or had to drop prices mildly and sell very slowly. They're too greedy and the system obliges people to have no other choice except use "loan borrowing capacity" of stable wage to ever buy a home !
That happens to be one of the criticisms i have in this "article" windsolarhybridaustralia.x10.mx/PPL-light-aircraft.pdf about the absurd mechanisms of lifestyle in use by this country because it is all done by loans !

Your post is difficult to read but I think I understand the point...

If Australia wasn't so obsessed with housing maybe we could use our GDP and borrowing capacity to fund actual production/creation of things and new innovation.

Instead, we'll all stuck selling services to each other and borrowing too much to live (or invest in) over-priced properties.

IN A NUTSHELL !!!!!!!!!!!!

(vosadrian) ..."I am not sure about inflated... but certainly unsustainable. "....

IN A NUTSHELL !!!!!!!!!!!! Stuffing the levy tax dollars down their shirts.......

The story here goes as a bum i was wandering the streets about 10 years back when they announced they would be putting tax up on all property sales and i had to go to Strathfield for a purpose and stay overnight there, i looked in a real-estate agent window that night as i always do and looked at the prices and there was a sign alerting people to buy by a particular date or the price will go up because of (new tax) property sales tax on a particular date.
The next (late) morning i looked again and houses and flats that were 500K were now 700K (to cut a long story short), SO when that tax was effected the price covered the tax the sellers had to pay which was something like a 200K markup the very next day !!!!!!!!!!!!!
The sellers did not lose a cent to the new tax by not selling !

Select to expand quote

Adriano said..

Haircut said..
Sales have halved in most areas near me, comparing with the same time last year and the year before

Sales may have halved, but what is the rate of listings/sales over the same period?

as of this year they're now way up, basically doubled - re the numbers i've been posting.

i don't think many people realise how well the gold coast market did in 2015 and 2016. it's not like sydney but an investor could have made 100k after taxes/fees in just over 2 years with a $550k, 4 bed, 2 bath, 800sqm + block, no renos and in some cases non tenanted. - in parkwood / helensvale / coombabah and parts of coomera.

it looks like it might be over now , or at least the beginning of the end

If it is the beginning, we won't really see it coming. It will organically fall apart as the panic sets in and the banks start calling in the debts.

Select to expand quote

bene313 said....If Australia wasn't so obsessed with housing maybe we could use our GDP and borrowing capacity to fund actual production/creation of things and new innovation.
Instead, we'll all stuck selling services to each other and borrowing too much to live (or invest in) over-priced properties.

nicephotog said..
As far as i see too much is spent on a house anywhere in Australia and causes low level personal growth, that being because the system used is always borrowing capacity and when developments occur they "gear the release price upon completion for maximum to the area" leaving no-one with savings for 10 to 20 years, worse , a quick lesson in finance says that the economy is never a sure thing and as occurred in the drought and recession in the 90's early 2000's and they cannot sell or had to drop prices mildly and sell very slowly. They're too greedy and the system obliges people to have no other choice except use "loan borrowing capacity" of stable wage to ever buy a home !
That happens to be one of the criticisms i have in this "article" windsolarhybridaustralia.x10.mx/PPL-light-aircraft.pdf about the absurd mechanisms of lifestyle in use by this country because it is all done by loans !

This is a very good point. Currently, the majority of value in property is tied up in land costs.

If we didn't have an obsession with getting ahead of the Jones's by playing the property market, the land cost wouldn't nearly so over inflated and we could spend more on what really matters in property, good design and good buildings.

The trouble is, lenders are set up to place value on the land as the security and estate agents peddle lies and half-truths about the quality of buildings to make a sale. If more value was placed on good design, lenders could then place a premium on the security inherent in the improvements rather than just the land.

Select to expand quote

Adriano said..

vosadrian said..

Adriano said..
No one likes to see people in financial stress, but you have to admit, property prices in Sydney and Melbourne are extraordinarily inflated.

If that means that some will lose while others will win financially in the event of a sharp correction, that's the way the cookie crumbles.

No one is egging anything on. As if talking about it on a water sports forum is egging.

I am not sure about inflated... but certainly unsustainable. And maybe egging is the wrong word, but some certainly seem excited by the prospect. I was just curious whether the excitement was because they could then afford to buy property or because they would see a bunch of people lose money/equity. I'm all for trying to pick the market when buying selling for max financial benefit. I am just not convinced that a large drop in property values is going to benefit many people that are struggling to get into the market at the moment due to other effects on the economy and the way banks lend money. I think a stagnation in price growth to let inflation and wages catch-up would be best for most. I am a bit sick of people who did not take an investment opportunity getting hateful towards those that successfully did when they chose not to.

I'm all for property ownership being affordable for all, including the young.

Currently in Sydney and Melbourne, unless you settle for a cardboard shxtbox in a crappy satellite suburb you're not going to own a house until your parents or grandparents die or you are one of the 5% with high income.

So if the only way to make this possible for all is a crash, then yes it would in the medium term be a good thing, even though the short term pain for some will be terrible.

In summary, if you are still one of these people who think prices will always rise and there will never be a crash or downturn, take a long deep breath, put down the rose coloured glasses and start to re-evaluate your exposure.

No rose coloured glasses here. I sold a property early this year in expectation of a time that is less appealing to own an investment property. I think I timed it about right.

I frequent a few forums that discuss property prices, and there are always a vocal majority of people grabbing every bit of evidence that could point to a crash and getting excited about it. Most just want to see the people who have benefited cop some pain. They do not intend to buy. They don't really care about the people who want to buy. Just seems like typical Aussie tall poppy syndrome mostly.

I do think that the crash some people hope for would be terrible for everyone in the Aussue economy, and mostly the people who have done well in property investment would fair better than most. Of course those who have maxed investment loans to buy lots of properties will lose out, but the seasoned property investors have probably already cashed out and will have no issue with a property crash.

A property crash will happen if either credit runs out or interest rates rise. A crash could also happen if there has been over investment in the property market too, too many new properties available.

Is there any likelyhood of credit being restricted or interest rates rising?

An over supply could possibly reduce prices but that would be overall a good thing. Lots of new apartments are being built all over Sydney. However there doesn't appear to be many empty apartments in these new buildings. There seems to be more people in Sydney all the time. So I'm not sure if there is an over supply of new dwellings on the market.

Traffic on Sydney roads is getting worse with more cars on the roads. We drove around Sydney last Sunday and were stuck in a number of traffic jams during the day.

Anyone aware of the recent changes for purchase of real estate in NSW for non-residents? They have to pay an 8% surcharge on purchase and a further 12.5% tax when they sell the property. So, that's a 20.5% hit for foreign investors. The Chinese have disappeared from all the recent auctions near me, when previously it was near impossible to outbid them unless the house was number 4 or 44.

Select to expand quote

Harrow said..
Anyone aware of the recent changes for purchase of real estate in NSW for non-residents? They have to pay an 8% surcharge on purchase and a further 12.5% tax when they sell the property. So, that's a 20.5% hit for foreign investors. The Chinese have disappeared from all the recent auctions near me, when previously it was near impossible to outbid them unless the house was number 4 or 44.

Do you think that they are cause and effect or has something else happened in China that makes it more difficult to get money out of the country?

If its just a NSW thing, I wonder if there are more Chinese buying property outside of NSW?

I think a lot of the Chinese buying these properties were storing their wealth up in these properties, so the 8% may not be enough of a disincentive by itself, and the 12.5% only something they will see when they finally sell.

Select to expand quote

Harrow said..
Anyone aware of the recent changes for purchase of real estate in NSW for non-residents? They have to pay an 8% surcharge on purchase and a further 12.5% tax when they sell the property. So, that's a 20.5% hit for foreign investors. The Chinese have disappeared from all the recent auctions near me, when previously it was near impossible to outbid them unless the house was number 4 or 44.

So true about numbers..three Chinese buyers were about to kill each other over the run down old house on half of quarter block with number 8 on my street. Went for 1,12 mil...few weeks later the good renovated house on a quarter block with number 4 was passed in at 1.4 mil..there was a crowd of the local buyers, but no Chinese

^^^

^ I would love to find house price statistics and group by street number. There'd be some outliers, like #1 and #2 being on corners, but I'd be most curious to see #8's average price. Throw in #4 and #13 for good measure.

Anyone know where to begin?

^^Since Sydney urban sprawl is coming to end, I 've got an idea: just buy any property you can afford with number 8 and HODL !

Select to expand quote

FormulaNova said..
I think a lot of the Chinese buying these properties were storing their wealth up in these properties, so the 8% may not be enough of a disincentive by itself, and the 12.5% only something they will see when they finally sell.

Apparently the new rule is retrospective for contracts previously exchanged but not yet settled, and in many instances Chinese investors are simply walking away letting their 10% deposit go. (According to my local real estate agent.)