The Great Aussie Housing Bubble - Reality or Fantasy?

[satanoperca]

Aussies are not different to Americans.

Supersize me, f---k quality and design. Give me big, I need a five bedroom house with four bedrooms for me and me wife + 5 TV's and 3 Cars.

I will always take a well designed home/apartment that suits me needs and is considered small, than a supersized house with inferior design and building standards.

I don't live in my home, rather the suburb it is in, parks and facilities are more important than size of said home.

Seems the same logic applies to food and interesting that a German company has been able to show our local supermarkets that you can provide good quality for a fair price, who would have thought.

 

[CanOz]

Aussies are not different to Americans.

Supersize me, f---k quality and design. Give me big, I need a five bedroom house with four bedrooms for me and me wife + 5 TV's and 3 Cars.

I will always take a well designed home/apartment that suits me needs and is considered small, than a supersized house with inferior design and building standards.

I don't live in my home, rather the suburb it is in, parks and facilities are more important than size of said home.

Seems the same logic applies to food and interesting that a German company has been able to show our local supermarkets that you can provide good quality for a fair price, who would have thought.

Maybe its just QLD but when i lived in Victoria and SA, in the late 90's up to 2005, the building quality was pretty good. Since we've been looking at houses here in QLD, i've been surprised at the poorer quality in some of the newer homes...I guess its a symptom of a boom too, knock 'em out at any level of quality, just build them fast!

 

[mullokintyre]

Maybe its just QLD but when i lived in Victoria and SA, in the late 90's up to 2005, the building quality was pretty good. Since we've been looking at houses here in QLD, i've been surprised at the poorer quality in some of the newer homes...I guess its a symptom of a boom too, knock 'em out at any level of quality, just build them fast!

It seems problems in Queensland just keep popping up.
Another mid tier builder , BA Murphy has had its Q;d licence suspended by the QBCC. It follows the recent demise of privium construction.
While researching , I came across the following from 2017.
The Chinese part could well apply even today.
Business Insider

• More than 30 construction companies in Queensland have collapsed this year.
• A new report into the risk of further failures puts another 444 building businesses at “high to severe” risk of failure in the next 12 months.
• An apartment glut and loss of Chinese investors are believed to be factors.

A Brisbane-based construction company linked to a massive Chinese building business is on the brink of collapse in another sign that Queensland’s building industry is struggling.
Rimfire Constructions had its building licence cancelled by the Queensland Building and Construction Commission (QBCC) in July and is currently seeking a court-approved scheme of arrangement to pay its creditors after months of cashflow problems.

It could be the next in a string of high profile Queensland construction industry collapses this year, amid fears that an apartment glut combined with a slowdown in Chinese investment will hit the state’s property market hard.

It also happened in 2020
FromTodays Headlines
Subcontractors were short-changed millions of dollars following the collapse of several major Queensland construction companies.

The state’s building sector sailed into uncertainty at the start of the year with building approvals at year-long lows.

Here are some of the state’s most costly and publicised collapses of 2020.

MJM Projects Pty Ltd – trading as Vystal Construction and Development​

Collapsed January 29
Sub-contractors and workers were owed a staggering $4.1 million following the shock collapse of a major Queensland construction business.

At the time of its collapse the company owed 182 secured and unsecured creditors $3.99 million, a financial report authored by liquidator Steven Staatz revealed.

A further eight priority creditors, workers and the Australian Taxation Office, were owed $137,378 – taking the total to $4.1m.

Laidlaw Group Construction Pty Ltd​

Collapsed May 28

Two unsecured creditors were owed $57,328 when Laidlaw Group Construction was put under the control of SM Solvency liquidator Brendan Nixon in May.
.

The Australian Taxation Office and TW Accounting and Business Solutions were owed $56,928 and $400 respectively.

Thomson Family Builders trading as Lifestyle Renovations QLD​

Collapsed June 4

Control of Thomson Family Builders was handed to Revive Financial liquidator Jarvis Archer as debts to 23 creditors reached almost $100,000.

The company, which was registered in June 2019 and undertook small to medium renovation and construction services, fell over owing unsecured creditors $89,128.

Two priority creditors, an employee and the Australian Taxation Office, were owed a further $8123.

Adtech Building Group Pty Ltd​

Collapsed June 5

Southport’s Adtech Building Group Pty Ltd was put under external administration on June 5 owing $187,117 to 16 creditors.

The company had $74,647 in assets according to liquidator Michael Caspaney.

The Australian Taxation Office and ANZ Bank were the largest creditors, owed a combined $96,78.

Toowoomba joinery company Project 717 is listed as an unsecured creditor, owed $69,986.

RGD Group Pty Ltd​

Collapsed June 12

Major Sunshine Coast builder RGD Group left a huge wake of unsecured creditors claiming about $31m in debts following its collapse earlier this year.

RGD Group and RGD Constructions, two Sunshine Coast-based companies directed by Ron Grabbe, were placed into voluntary administration in May before liquidators were formally appointed on June 12.

A report to creditors found between $13.5m and $14.5m had been lost by RGD Constructions due to a range of issues on the Virtuoso project, a premium, riverfront apartment development by Stockwell in Brisbane’s West End.

FTI Consulting liquidators also found “comprehensive losses” of about $10m and $9.3m had been recorded by RGD Constructions in the 2019 and 2020 financial years.

The Deputy Commissioner of Taxation claimed debts of more than $138,000 against RGD Constructions and more than $388,000 against RGD Group.

Other notable claims against RGD Group included more than $513,000 owed to Bimcrest Pty Ltd, more than $287,000 owed to Peter Saunders and more than $112,000 to Regency Fabrication.

Mewett Constructions Pty Ltd​

Collapsed June 15

The liquidation of Mewett Constructions was the second company collapse for director Adam Mewett within weeks following the downfall of Adtech Building Group.

Control of Mewett Constructions was handed to liquidator of Michael Caspaney with debts totalling $74,010 to five creditors.

Pioneer Credit Solutions is the largest creditor, owed $68,459 and the Australian Taxation Office is $1050 out of pocket.

Total Lifestyle Builders Pty Ltd trading as Lifestyle Kit Homes​

Collapsed June 18

Brisbane’s premier home extension and renovation business went into liquidation in mid-June with the list of creditors topping $1m.

Total Lifestyle Builders Pty Ltd – trading as Lifestyle Kit Homes appointed Jarvis Archer of Revive Financial as liquidator to wind up its affairs.

According to a report on the company’s activities and property provided by Total Lifestyle Builders’s sold director Allan Ernest Stroud it owed $1,049,950 to unsecured creditors.

“Of this total, $610,000 is owed to the director who has advised he provided personal funds to the company,” Mr Archer said in June.

The balance of $439,950 is owed to unrelated creditors including the ATO, various suppliers, subcontractors and other trade creditors. of the company.

Bulkbuild Pty Ltd​

Collapsed June 19

Mansfield-based Bulkbuild Pty Ltd went into voluntary administration in June and later Hall Chadwick’s Ginette Muller and Marcus Watters were appointed liquidators.

Bulkbuild collapsed owing about $5.5m to creditors.

The liquidators have filed an application with the Supreme Court for sole director Digen Hur’s interest in a two-storey mansion in Carindale – valued at $1m.

At the time Bulkbuild went into voluntary administration in May it was working on the Ferro Property Group’s West End apartment project, London Residences.

Hobson Constructions​

Liquidated June 22

The retirement of Hobson Constructions director Roderick Hobson prompted him to put the dormant company into liquidation.

The company was liquidated with one creditor owed $712,925.

However the creditor is a related company, Patrick Property Trust.

Liquidator Robert Humphreys said no recovery was expected following the collapse of Hobson Constructions.

MG Constructions QLD​

Collapsed July 2

A staggering 52 creditors were left out of pocket when long-time Brisbane building company MG Constructions QLD – which supplied, reinforced and pumped concrete – was put into liquidation in July after 15 years in business.

Nine priority creditors, employees, were owed $165,077 in superannuation and leave.

A further 43 secured and unsecured creditors were chasing $665,121.

However, Robson Cotter liquidator Abdul Chambal noted the company had significant assets including cash in the bank – meaning creditors were likely to receive between 51c and 100c in the dollar.

Beagle Boys Construction​

Collapsed: August 31

Townsville’s Beagle Boys Construction was put in the hands of liquidator Robert Humphreys as its financial situation worsened.

Four creditors owed $236,455 were listed at the time of its collapse.

Director Aaron Hardy was overwhelmingly the largest creditor, owed $198,259.

The Australian Taxation Office ($23,080), Mackay Concrete Pumping Service ($10,941) and WorkCover Queensland ($4175) were the remaining creditors.

Urban Construct and associated entities​

Liquidated September 7

The development firm that once boasted a $3.5bn pipeline of apartment projects in southeast Queensland is winding up a number of its companies.

Urban Construct Qld and associated companies were wound up voluntarily by its shareholders with a liquidator put in charge of the company’s affairs.

The company did not owe any money to its creditors.

Urban Construct managing directors Todd Brown and James Rice relocated from Adelaide a decade ago and by 2014 said they had over that time built up a pipeline of developments of 3500 apartments and 1500 town houses worth $3.5bn.

Must be a difficult place to build up there.
Mick

 

[qldfrog]

It seems problems in Queensland just keep popping up.
Another mid tier builder , BA Murphy has had its Q;d licence suspended by the QBCC. It follows the recent demise of privium construction.
While researching , I came across the following from 2017.
The Chinese part could well apply even today.
Business Insider

It also happened in 2020
FromTodays Headlines
Subcontractors were short-changed millions of dollars following the collapse of several major Queensland construction companies.

The state’s building sector sailed into uncertainty at the start of the year with building approvals at year-long lows.

Here are some of the state’s most costly and publicised collapses of 2020.

Must be a difficult place to build up there.
Mick

Just phoenix companies.just avoiding major drama with a pool builder
Company get all these contract and down payments then stop paying contractors, suppliers and ato dues.alk moneys to owners or sucked another way.collapse then reborn the next day and restart under new name.
Rince and repeat.maybe easier to do in qld?

 

[mullokintyre]

It seems problems in Queensland just keep popping up.
Another mid tier builder , BA Murphy has had its Q;d licence suspended by the QBCC. It follows the recent demise of privium construction.
While researching , I came across the following from 2017.
The Chinese part could well apply even today.
Business Insider

It also happened in 2020
FromTodays Headlines
Subcontractors were short-changed millions of dollars following the collapse of several major Queensland construction companies.

The state’s building sector sailed into uncertainty at the start of the year with building approvals at year-long lows.

Here are some of the state’s most costly and publicised collapses of 2020.

Must be a difficult place to build up there.
Mick

One of the owners of hte melbourne cuop winner, paul Kanskey, has finally run out of luck.
Lanskey constructions QLd has a list of creditors that total $11.2 million, including the ATO.
From The evil murdoch empire

A report lodged by liquidators FTI Consulting with the Australian Securities and Investments Commission (ASIC) Tuesday reveals Lanskey Constructions Qld Pty Ltd’s 282 unsecured creditors including the Australian Taxation Office, suppliers and subcontractors are owed $11.2m. FTI declined comment on the report.

Ben Campbell and John Park, of FTI Consulting, were appointed by directors to wind up the company last month but said the liquidation did not impact other entities in the Lanskey Construction Group.
Lanskey, founded in 1986 by Paul Lanskey and Ross Williams, is involved in large commercial projects across Australasia with offices in Brisbane, Sydney, Melbourne, Perth and Auckland.

Lanskey Construction Qld held a category 5 licence from the Queensland Building and Construction Commission (QBCC) with allowable annual turnover of $120m.

That licence was suspended by the QBCC last month for failure to meet Minimum Financial Requirements.
Lanskey had worked on supermarket, retail and restaurant developments for some of the nation’s biggest brands including Woolworths, Coles, Starbucks, A-Mart and Myer.

As well as his construction business Mr Lanskey is a horse breeder and part owner of 2019’s Melbourne Cup winner Vow and Declare. Comment has been sought from Mr Lanskey.

The article hints that there may be a few more joining Mr Lankys group.

The liquidation of Lanskey Constructions Qld comes as one of Australia’s largest home builders and a major sponsor of the renovation television show The Block, the Simonds Group, is considering a capital injection as it faces a prolonged and challenging construction environment.

The Melbourne-based company, that started in 1949 and was ranked in seventh place in the Housing Industry Association largest home builders list this year, faces an uncertain future.

In September, Simonds said it would slash 9 per cent of its workforce after suffering a net loss of $9.7m in the 12 months to June 30 due to rising costs. It has been seeking to realign its cost base and strengthen core operations.

Interestingly, the Block Austions which took place were a bit of a dud result, and may indicate the problems that are about to surface in the housing market.

Three of the houses were passed in at auction, one sold in post-auction negotiations, and two remain on the market today. Of the three houses that did sell — all to serial buyer Danny Wallis, nonetheless — one broke The Block's record in terms of prize money. Sadly, another house incurred one of the smallest profits seen since the 2014 season.

A cynic might suggest that Danny Wallis's main job is to pay over the odds for the houses to ensure the success of the show, and keep the money rolling in for the main players.
Mick

 

[divs4ever]

Just phoenix companies.just avoiding major drama with a pool builder
Company get all these contract and down payments then stop paying contractors, suppliers and ato dues.alk moneys to owners or sucked another way.collapse then reborn the next day and restart under new name.
Rince and repeat.maybe easier to do in qld?

not so sure it is easier in QLD , but it does convince the more mathematically skilled tradies to seek another career ( or retire when they have a comfortable nest egg )

and of course second rate subbies only compound the problems ( because all the better ones have left the industry )

 

[mullokintyre]

Westpac CEO , peter King, has warned that the highly inebdted nature of housing has started the inevitable increase in housing loan defaults and house repos.
From The Australian

Westpac chief executive Peter King has warned the bank is concerned about its high debt to income loans, revealing it had taken possession of about 200 homes after borrowers defaulted on payments.
Mr King, who runs one of Australia’s biggest banks, said the number of homes in possession was near the levels at Westpac during the Global Financial Crisis but noted this was still a muted number and signalled the willingness of borrowers to keep paying their mortgages.

Mr King also noted the lending market for homes was “the most competitive market that I’ve seen in my career”.

He said Westpac was not looking to compete with rivals who might be writing loans below the cost of capital.

“We’re playing in the market but we’re not growing above the market,” he said.

“From a credit perspective it’s a good time to write business you’ve got big buffers, property prices have come down.”

This not only impacts the housing market, as a bunch of homes from repos will hold or depress the house prices, but it has implications for the Big Banks.
If they have been 'too competitive" in the market place , either by shaving interest rate margins, or worse, offering loans to people who perhaps should not be getting them, it will come back to bite them.
Mick

 

[wayneL]

Westpac CEO , peter King, has warned that the highly inebdted nature of housing has started the inevitable increase in housing loan defaults and house repos.
From The Australian

This not only impacts the housing market, as a bunch of homes from repos will hold or depress the house prices, but it has implications for the Big Banks.
If they have been 'too competitive" in the market place , either by shaving interest rate margins, or worse, offering loans to people who perhaps should not be getting them, it will come back to bite them.
Mick

Rinse.
Repeat.

 

[mullokintyre]

The above chart shows the median house price to nominal GDP per capita ratio over the last 120 years.
The little red circle in the chart above happens to coincide with the introduction of the capital gains tax discount and Howard's doubling of the first home owner grant.
correlation and causation are two different things, but it is "interesting".
Mick

 

[sptrawler]

View attachment 166091
The above chart shows the median house price to nominal GDP per capita ratio over the last 120 years.
The little red circle in the chart above happens to coincide with the introduction of the capital gains tax discount and Howard's doubling of the first home owner grant.
correlation and causation are two different things, but it is "interesting".
Mick

From memory they also started using both parties wages when working out what people could borrow, previously it was only on the main breadwinner in the household.
Just one stuff up after another.

 

[qldfrog]

From memory they also started using both parties wages when working out what people could borrow, previously it was only on the main breadwinner in the household.
Just one stuff up after another.

So you think looking at both incomes is a stuff up?

 

[sptrawler]

So you think looking at both incomes is a stuff up?

Well it did keep a lid on what families could borrow and therefore prices.

 

[divs4ever]

Well it did keep a lid on what families could borrow and therefore prices.

yes , i saw it all unfold before my eyes

now we have regular 'first-home buyers ' incentives etc. etc

the bubble will keep going until the fools has no borrowing capacity left unless they start offering 100 year mortgages

high prices , lower quality buildings ,i have no idea why some call it 'a house of cards '

V For Vendetta Dominoes Scene (complete)

V For Vendetta Dominoes Scene (complete) made by me. Music: 1812 Overture.

invidious.slipfox.xyz

 

[qldfrog]

Well it did keep a lid on what families could borrow and therefore prices.

I personally think you keep banging on the wrong tree: CGT,that, negative gearing etc etc anything
We are only 30ish millions on one of the biggest country on earth, the crazy real estate prices are just a symptom of ultra regulation and high taxation/fees.
Be it licences plumbers or electrician for AC, installing lights is supposedly needing a trade verification.
Then all the enviro BS no more septic but a full size individual severance plant for properties not on sewer..extra 30k ..etc etc and then council and states gorging on fees limiting land release etc etc etc.
We have California house price 30km from Toowoomba.that is the real issue, not bubbles in Sydney beaches or Melbourne.
If people want to pay 3m for a 3bedrooms unit by the beach..let it be, the issue is that all even shittiest accommodation cost a fortune, there is no more any economically sensible way even with CGT, neg gearing etc etc to build new for rental profit, and we have added more than half a million new people via migration in not even a year..
All the rest is just food for green and far left activists...
Let's stick to bare facts and numbers

 

[sptrawler]

I can only go off what I have noticed over my life in W.A, the big climb in house prices here was in the late 1980's, when credit freed up, prices rise to what the market will bear, if people keep buying prices keep rising.
The other thing that started happening over here, people started buying on land potential, prior to then people focused on the house, not the land.
At the moment it has just become a guaranteed money spinner, so everyone is paying stupid money, because they are sure someone else will pay them more for it and they get a tax break on their interest holding costs.

 

[tech/a]

As has been the case for the last 50 years (I've been involved).
Property, continues to be referred to as a continuing price bubble.

It's not------- it is simply a reflection of supply and demand.
Those who saw this and were/are in a position to benefit from it did so and are doing so
and they will continue to do so. Rebalancing their mix to suit supply and demand in the years they are involved in and are targetting.

There is NO BETTER time than NOW.
In 10 years you will look back and understand this statement
Just as I look back to my purchases through the 90s 2000s 2010 and 2020s
AND in just about every case you could hear me groaning about how ridiculous
the prices I paid were!
AND I missed many by a few $1000 which had I REALLY understood the highlighted
above would have made 100s of 1000s $$.

 

[divs4ever]

As has been the case for the last 50 years (I've been involved).
Property, continues to be referred to as a continuing price bubble.

It's not------- it is simply a reflection of supply and demand.
Those who saw this and were/are in a position to benefit from it did so and are doing so
and they will continue to do so. Rebalancing their mix to suit supply and demand in the years they are involved in and are targetting.

There is NO BETTER time than NOW.
In 10 years you will look back and understand this statement
Just as I look back to my purchases through the 90s 2000s 2010 and 2020s
AND in just about every case you could hear me groaning about how ridiculous
the prices I paid were!
AND I missed many by a few $1000 which had I REALLY understood the highlighted
above would have made 100s of 1000s $$.

i remember my dear old dad being told about a ( biggish ) house block by a rellie for 50 Pounds since it was close by we ( dad , rellie and i ) walked over the block , and dad retorted who in their right mind would buy a piece of freshwater swamp ( well it was fairly wet ..but )

went past that same block several decades later they call the area Coolum Beach and that block was about 50 metres from the beach , might be worth a few bucks extra .. now

BTW don't forget to factor in inflation into those house/land prices my first ( official ) pay-packet ( after tax ) was $25 for the week in 1972 , ( i wonder what a first year apprentice gets now )

 

[tech/a]

i remember my dear old dad being told about a ( biggish ) house block by a rellie for 50 Pounds since it was close by we ( dad , rellie and i ) walked over the block , and dad retorted who in their right mind would buy a piece of freshwater swamp ( well it was fairly wet ..but )

went past that same block several decades later they call the area Coolum Beach and that block was about 50 metres from the beach , might be worth a few bucks extra .. now

BTW don't forget to factor in inflation into those house/land prices my first ( official ) pay-packet ( after tax ) was $25 for the week in 1972 , ( i wonder what a first year apprentice gets now )

We are similar Age Divs4ever

You know I learned more from my father from what he didn't do than from what he did do!

Similar story When 16 Dad had a chance to purchase a large 5-bedroom home 15K from Adelaide
Price $30K Dad called the agent and said he would sign a contract for $29,000--Great we are moving!
The agent arrived with a contract for $30K and Dad sent him packing.

30 years later I saw it for sale at $695K -----
Today it would be twice that!
I can imagine Dad's face if you told him one day that THAT property would be valued at $1 million.

Would look just like the faces of those reading this thread when I suggest that in 20 years their $1 million
property is likely to be valued at $2 million.
Not that it means anything if it's your ONLY property PPR.

 

[wayneL]

I'm blown away at just the cost of building. My folks built a 39.5sq house in the mid eighties for just over $50k.

I shudder to think of what it might be now, AT LEAST $800k according to Domain.com.au

 

[farmerge]

I'm blown away at just the cost of building. My folks built a 39.5sq house in the mid eighties for just over $50k.

I shudder to think of what it might be now, AT LEAST $800k according to Domain.com.au

And probably a lot more.
A nephew and his wife are building a joint in Vic Park, builder wanted another 70k because of trades shortages and building materials costs rising.
So much for a "fixed price contract"
If he didn't cough up then everything would grind to a holt.