A crash in property prices? Don't bet on it
- Thread starter Propertunity
- Start date
Near the peak of the American housing bubble home ownership rates reached over 69% (an increase from the lows of around 64% in early 1990s). They still currently sit at roughly 66%, only a few % below Australia which is still around 69%. Given such similar home ownership rates... seems priorities in this space are somewhat similar.
You said "Aussies would do anything to keep it from going into default", Americans are the ones who are known for working 2-3 jobs, with some who hold degrees even resorting to the likes of McDonalds and similar low status and paying roles just to keep their homes... will be interesting to see if Australians show the same level of dedication to hold onto their homes if we saw a similar decline in prices (maybe we won't get the chance for this scenario to be tested).
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and how ironic that by intervening they generally cause the opposite, the role of govt is to enable a structure whereby individuals can interact in the market and essentially get out of the way..
stimulus converts capitalism from a porift and LOSS system to only a profit system, if the desired outcome is higher unemployment and higher inflation further down the road then Keynesian is the way to go..
As a typical Aussie, there really is no greater failure than to lose your home. Marriage failure, lose your job, is all accepted now but to lose you house is taboo.
Ironically that is why we don't have the entrepreneurship spirit here because a house is what you risk to start a business in many cases.
I think we are underestimating how powerful this is.
Case in point: In 1990 when the recession hit hard and there was no jobs and unemployment at 10% and rates were as high as 18%, defaults were still no where near what has happened in the USA.
We are presently have no recession, a jobs oversupply, unemployment around 5%ish and real rates at 7%.
A long way to go.
You cannot get a home loan on welfare in this Country. In the USA you could.
Peter 14.7
Opps. my insert:
I think we are underestimating how powerful this is.
Was in reference to underestimating how much people will fight and scrimp to save their house. Not bushiness. Sorry.
On your info, I did not know this. Thanks.
Another example of why comparing the USA with AUS is like comparing apples with a goat. Both are food and that's about it.
And whilst we are at differences in values Country to Country did you know this?
When in France last year , I was stunned to see how cheap housing was.
We stayed in a very new penthouse apartment with 3 bed, 2 bath, large living, two large balcony, LUG, separate eat in kitchen and enhance hallway in Épernay, the centre of the Champagne Region and only 1hr by VFT to Paris which was worth only $300k AUS. Came with stunning views and the dead centre of town.
Imagine $300k for a penthouse in Mona Vale, Sydney!
Anyhow, being inquisitive I found out why. In France the law is you can only expend 30% of your income on debt. And unlike here, and recently defeated when asked for, EVERY LOAN is registered by the Gov. so you cannot over extend. Here the bank cannot find all your debt when you apply for a loan unless you tell them.
So in France everyone has only XXX $ so you get lower prices but the other result is the average unit in Paris is very ,very small (like 50m2). No car space. No lift. Old and needing work.
A massive change like this will change our prices but it aint gunna happen
Peter 14.7
And it is not easy for the banks to "take" back a home. A friend's marriage broke up - she moved out of the home and advised the bank she no longer lived there as she was the one making the mortgage payments - her ex didn't make a single repayment in the 12 months it took for the bank to repo the house and sell.
Fortunately the sale price covered the mortgage - but there was nothing left over.
But the interesting point was that it took the bank such a long to go thru all the steps to repo the house "after" payments had stopped being made.
It's not like they can say "you missed two payments, hand it back tomorrow thanks".
the lesson here is dont be foolish and get married
Again - you are trying to compare apples to goats ... what is that 66% of home ownership made up of? There is a big difference between owning a home in a trailer park even compared to owning something out the back of Bankstown.
As for working 2-3 jobs - that is because there is no welfare after 6 months unemployment regardless of how many degrees you have. It means you have to take whatever job you can get your damn hands on, and if you have no job then you have no medical coverage - so if you get sick (even with basics like appendix or severe flu etc) you are screwed.
Quite funny the comments posted by the renters on SMH. Alan from Parhan seems to get quite worked up and is determined that we'll see 40% aka keen drop in values. I cant imagine he has a job as he spends all his time replying with rebuttals about the end of the world. Surely he's better off working and saving for a deposit like the rest of us did.
Others are convinced they're "cashed up" and ready to "pounce" once the **** falls out of the market. They'll then sail down to Middle Park/Double Bay and buy one of those fancy 5br houses overlooking the water for a "fair" value (sound familiar), about 500k I guess. Isn't that fair value crap a keen theory? Not to clued up on market forces, obviously.
Hilarious read.
Others are convinced they're "cashed up" and ready to "pounce" once the **** falls out of the market. They'll then sail down to Middle Park/Double Bay and buy one of those fancy 5br houses overlooking the water for a "fair" value (sound familiar), about 500k I guess. Isn't that fair value crap a keen theory? Not to clued up on market forces, obviously. Hilarious read.
Yeah something like this is barely even worth $500,000: http://www.realestate.com.au/property-house-vic-albert+park-107260374
I mean, who wants to live next to the sea anyway?
I mean, who wants to live next to the sea anyway?
me me me!!
unless the govt wants to own those assets as part of their nationalised FMC and FNM to save the underlying private CDO value against those assets with taxpayers money.....
Unlike you, I don't have any other online identities. I've always been content to post as Shadow. I currently post as Shadow on Somersoft and on the Australian Property Forum. I previously posted as Shadow on GH PC, Credit Crunch, Bubble pedia, Simple&Sustainable and TalkFinance until all those bear forums banned me for not being a daft bear like them.
My ability to stick with one identity is a marked difference to the multitude of silly old bears who have been consistently wrong about the housing market for the past 5 years, and who constantly change their identities or run off and hide on closed forums when their predictions turn out to be completely wrong over and over again.
Keen's original 2008 prediction was 40% over the next 'few' years. When that one failed (along with his ZIRP, severe recession and double digit unemployment predictions) he changed it to 15-20 years. For some strange reason though, he kept the promised crash magnitude at 40% (even though prices had risen another 20-30% by the time he was forced to revise his expected timeframe).
40% seems to be the magic number for these high profile doomsayers. It doesn't really matter when the prediction is made or what house prices have risen to... the promised fall is always a nice round 40%. And the 40% figure is based on... nothing really, I guess it just sounds nice and scary and makes for good headlines and publicity to help them sell more books and make money from the gullibility of their deluded fans who lap it all up because they're being told what they want to hear - i.e. that they don't need to work hard or save for a home like the rest of us... they can just sit back, spend their money on the 'lifestyle' they deserve, wait for the promised 40% crash, and then snap up the low-priced houses they're entitled to when us nasty over-leveraged tax-rorting parasitic speculators are brought back down to earth and forced to off-load our ill-gotten gains at a huge discount.
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RP Data rejects 'housing bubble' claims
RP Data rejects 'housing bubble' claims
From: http://www.theadviser.com.au/breaking-news/6112-rp-data-rejects-housing-bubble-claims
I know there are always articles published on mortgage arrears but interesting to note that:
RP Data rejects 'housing bubble' claims
From: http://www.theadviser.com.au/breaking-news/6112-rp-data-rejects-housing-bubble-claims
I know there are always articles published on mortgage arrears but interesting to note that:
We're also apparently saving a huge amount. Well sadly not me specifically, but Australians in general are stashing a lot of money in the bank. Can't remember the numbers but I read earlier this week that the increased amount being saved monthly is massive.
Exactly. I posted the same thingt in another thread recently. My point was that with such a high level of savings it's only a matter of time until that money starts spilling out into other things again. Most people don't just save forever (at least, not in this country).
Is the amount in "savings accounts" enough to cancel CC debt yet? I would be surprised if it did. The average Aussie is the most highly indebted in the world, I think I read recently, so will need to do a lot of saving before it starts burning a hole in his/her pocket.
