Australian (ASX) Stock Market Forum

And therein lies the problem for central bankers....too many people with too much leverage paid for with debt!

More than just a pop?

ROFLMAO .... you know when you have gone to the servo and you look at your tyres and notice the front left is looking a bit flat but you did not notice that it had gone down? It has already happened and you did not know about it :eek:

Pretty soon we will be "living in palaces eating Spam” - Thanks Professor Steve Keen for the quote.

Now that we are not credit risk averse anymore then I pity the Gen -Z's in the future who will inherit the toxic debt as it becomes increasingly difficult to roll over ;)
 
90% of housing financial commitments are for existing.

Whether or not that is sensible depends on the location. Eg Sydney (high population growth) there's a definite need for new builds but that isn't really the case in, say, north-west Tasmania where the population is stagnant at best.
 
Whether or not that is sensible depends on the location. Eg Sydney (high population growth) there's a definite need for new builds but that isn't really the case in, say, north-west Tasmania where the population is stagnant at best.

Well what can we do to entice the good folk of Sydney to translocate north-west Tasmania ?

RBA has gloomy news for everyone who owns a home:-

This paper examines whether it costs more to own a home or to rent. We argue this is a useful criterion for assessing housing overvaluation. We use a new Australian dataset, which includes prices and rents for matched properties, letting us value housing in levels. We find that if real house prices grow at their historical average pace, then owning a home is about as expensive as renting. If prices grow more slowly, as some forecasters predict, the framework used in this paper suggests that the average home buyer would be financially better off renting. We decompose house prices into contributions from rents, interest rates and expected capital gains, which may help policymakers in the detection of housing bubbles. Recent data do not show signs of a bubble.

http://www.rba.gov.au/publications/rdp/2014/2014-06.html

But, but, but ... they said there was no bubble.

​The Reserve Bank has warned of even higher home prices, saying stocks of unsold land suitable for development in Sydney and parts of other cities are getting "unusually low".

Builders have also lifted their margins, as record low interest rates encouraged more investors and owner occupiers to borrow to buy property.

http://www.smh.com.au/business/the-...even-higher-house-prices-20150615-gholmq.html
 
If prices grow more slowly, as some forecasters predict, the framework used in this paper suggests that the average home buyer would be financially better off renting.

The problem here is that they've based this statement on continued house price growth.
What if wages don't continue to grow as quickly as they have been?
What if households can't borrow anymore?
What if rates can't drop any lower?

I would argue we're nearing the limits of the last two, and the first is slowing down hugely.

Also, this is from June 2014. House prices have grown in Sydney/Melbourne since then (other markets not so much)

I would say statements from the Head of Treasury, Head of APRA, Head of ASIC and Head of the RBA would trump the findings of a 1-year old paper.
 
Those are some pretty significant falls. I am not too familiar about Perth and its surrounding suburbs, but I can't imagine that a >10% fall in South Perth (i.e. next to the CBD) is a good sign.

W.A is always sensitive to the mining sector, the double whamy is public sector downsizing.

I think the wave we have been riding in the West,is dumping big time.
Consolidation phase is approaching, as population growth slows, or turns negative and housing supply is still strong.

Probably due to the time lag between signing up and the project completion. Apparently there is a 50% increase in housing supply on the market, compared to 12 months ago.

Long term buying opportunities, may present in the near future, however holding cost, versus rental security is moving into scary territory.IMO
 
If WA property returned to intrinsic value, It be worth moving back there.
 
If WA property returned to intrinsic value, It be worth moving back there.

I'm sure it will, unlike Vic & NSW, Western Australia has minimal service industry and tourism jobs.

Surviving in W.A is difficult, without a network of friends. Many investment property owners will find it a very cold winter.IMO
 
The falls in WA are interesting and encouraging development. Now there are calls that property will crash in Victoria (I believe from Phillip Sous who seems to be bearish on housing overall).

What would happen if we had price falls in both WA in Vic? Surely those who invested in these markets but live in other states would be losing money and therefore be restricted in which properties they can further purchase in their home states. Further, if those markets get to a low enough price then maybe residents of more expensive states (i.e NSW) will begin migrating to them. Couple this with the recent measures to reduce mortgage credit and things aren't looking good for Australian property
 
The falls in WA are interesting and encouraging development. Now there are calls that property will crash in Victoria (I believe from Phillip Sous who seems to be bearish on housing overall).

What would happen if we had price falls in both WA in Vic? Surely those who invested in these markets but live in other states would be losing money and therefore be restricted in which properties they can further purchase in their home states. Further, if those markets get to a low enough price then maybe residents of more expensive states (i.e NSW) will begin migrating to them. Couple this with the recent measures to reduce mortgage credit and things aren't looking good for Australian property

I tend to think W.A isn't reflective of the other states, it is quite unique, being remote extremely large and a very small population.

W.A will tank big time, due to the resources cycle, the Eastern States aren't as exposed.
 
I tend to think W.A isn't reflective of the other states, it is quite unique, being remote extremely large and a very small population.

W.A will tank big time, due to the resources cycle, the Eastern States aren't as exposed.

Right, but W.A isn't its own independent nation.

Do none of the Eastern citizens own property in WA?
Do the IP owners in WA own property in the Eastern states?
Can residents from the Eastern states cross borders and take their money West?

I just don't think you can have a crash in one part of the country and loss of capital without having some sort of effect on another part.
 
Right, but W.A isn't its own independent nation.

Do none of the Eastern citizens own property in WA?
Do the IP owners in WA own property in the Eastern states?
Can residents from the Eastern states cross borders and take their money West?

I just don't think you can have a crash in one part of the country and loss of capital without having some sort of effect on another part.

Well the dynamics are completely different, Sydney has minimal resources or minerals, but has a population close to 5 million. Therefore most of their wealth is generated through servicing the population, which is condensed into an area about 100klm by 100klm.

W.A is very reliant on pockets of mining activity, this has to support a population of 2 million people spread over an area of 3,000klms by 2,000 klms.

It is a completely different dynamics, NSW and Vic will continue to grow, due mainly to critical mass of population.

W.A doesn't have that, therefore their fortunes are more aligned to how well their local economy is performing, much like our country towns.:2twocents
 
I noticed that in the recent years the TV Reality Shows about Real Estate are poping out like mushrooms after the rain.
House Wreck Rescue, 60 minute makeover, House Rules, The Block, Whole House Reveal-you name it. Add few Brittish ones that are also repressing the growing Thirst of everything that relates to the House, Home, or Real Estate. I do not have the graph showing the number of reality shows ploted on the house prices, but this increase of REATV shows is one more good indicator capturing an extremity of sentiment towards Real Estate.

There were little or none Reality TV Shows on or after 2009, showing that market "hated" Real Estate at some point and interest to buy it cheaper was low, not to mention escalating it on TV with exitment. That's a classic example how waves of optimism and pessimism creates conditions that points to reversal in social mood trends.

Smell of a Tulips in Real Estate... Sydney posted record surplus because of the bubble.
Hard to see this to continue much longer.
 
I know a few who have moved to WA in recent years and they all moved for the same underlying reason. Jobs. Either they couldn't get a job at all in their previous location and saw WA's then booming economy as the answer, or they could get themselves a substantially better job by moving.

To the extent that WA is no longer a booming economy then that reason to move there disappears and thus cuts future demand for housing. To the extent that recent arrivals become unemployed, or end up in a lower level (either pay or position) role than they could get in the eastern states then they have no real reason to stay in WA at all. They've got family and friends elsewhere after all, and are only in WA in the first place for the money.

Go back a couple of years and "I'll just move to WA" was pretty much the standard response for anyone faced with the prospect of becoming unemployed and not able to secure employment in their current location. That idea doesn't really work anymore it seems and that removes the reason to move to WA.

Go back a generation or two and Perth and Adelaide were about the same size in terms of population. Since then, Perth has grown far more rapidly on the back of WA's mining-based economy whilst Adelaide has almost stagnated as the city's manufacturing industries have declined or disappeared completely. Without the mining based growth, it's highly doubtful this would have been the case. Needless to say, if mining falls hard enough then that's the end of the WA growth story. :2twocents
 
I know a few who have moved to WA in recent years and they all moved for the same underlying reason. Jobs. Either they couldn't get a job at all in their previous location and saw WA's then booming economy as the answer, or they could get themselves a substantially better job by moving.

To the extent that WA is no longer a booming economy then that reason to move there disappears and thus cuts future demand for housing. To the extent that recent arrivals become unemployed, or end up in a lower level (either pay or position) role than they could get in the eastern states then they have no real reason to stay in WA at all. They've got family and friends elsewhere after all, and are only in WA in the first place for the money.

Go back a couple of years and "I'll just move to WA" was pretty much the standard response for anyone faced with the prospect of becoming unemployed and not able to secure employment in their current location. That idea doesn't really work anymore it seems and that removes the reason to move to WA.

Go back a generation or two and Perth and Adelaide were about the same size in terms of population. Since then, Perth has grown far more rapidly on the back of WA's mining-based economy whilst Adelaide has almost stagnated as the city's manufacturing industries have declined or disappeared completely. Without the mining based growth, it's highly doubtful this would have been the case. Needless to say, if mining falls hard enough then that's the end of the WA growth story. :2twocents

You're pretty well spot on smurph.

The only thing between W.A surviving, or ending up like S.A and Tasmania, is Barnie.IMO

http://www.abc.net.au/news/2015-06-23/wa-government-and-woodside-reach-browse-gas-deal/6567708

The only politician that is showing any vision.IMO
 
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