what housing bubble? things must be very different where you live in ozactually I see you are in Vic which may explain that
what housing bubble? things must be very different where you live in ozactually I see you are in Vic which may explain that
actually I see you are in Vic which may explain that
There's no bubble in Vic!
ok, I had the idea that it had risen during the GFC and defied all odds and hadn't really dropped yet. For us mere mortals out in the likes of qld and WA a lot of our stock has already dropped a good 20-50% so its hard to know if the doomsday prophets are including already savaged stock in their forecasts. For a property that was $2m a few years back to go to $400k seems like a stretch. anybody would pick up a beachfront property for that price becuase it would only be 3 x income. 1.5 times if 2 people were working. thats if they have a job. seems jobs are the key. UE is on the way up but I cant see this going nuts in the short timefram Dent is talkign about
The availability of credit seems to be the key contributor from what I have seen. If credit markets freeze and Australian banks can't borrow internationally to keep the bubble propped up, a crash would be sudden and severe.
I was at a seminar at the weekend where Rick Otton was talking about the opportunities available during the savings and loan crisis in the US. Because there were no banks lending money during the crisis, you could only buy with cash. He was saying that prices literally dropped by 95%. You could buy a nice 3 bed house for $600, just 20 odd years ago.
The same has happened in Florida this time around with 80-90% price drops as banks are holding onto cash, instead of lending it.
The whole housing bubble in Australia has been formed on loose credit, as it was in US, UK etc. When the tap is turned off, housing markets must deflate.
the US also have a construction mantra of "build it and they will come", massive oversupply is a key factor for such large drops.
bubble has long since burst. WA and Qld now have the strongest economies on the verge of a serious break out with high population growth and a burst property market. seems obvious it's primed for growth.
their 'think big' approach is admirable IMO. aussies are so dam conservative
Whereas in Australia it's 'I won't build it until I have pre-sold all of my units'
ha ha spot on Aaron...and hang on.... is the postcode right? and do you have 30% equity contribution? no no - that security is not prime, we will only accept cash or residential land. Ooooh your sales price looks to be about 5% above the dogbox that sold down the road last January - may have to trim that back. Do you have any other equity you can put up as security because the bank feels this is just too risky?
You mean lazy, uninnovative whingers?
Um - no. Surprisingly lending in Australia was still relatively sound and strictly controlled. Borrowers have to prove they could repay comfortably.
Yes we did have 95% lend, yes we did briefly have No Doc loans ... but these weren't available to all and sundry, and there were a heck of a lot of hoops to jump thru to qualify.
Especially in the USA, with their NINJA loans there was no requirement of prove of ability to pay. Add in non-recourse and the recepie for disaster was always there for those with the ability to forward see.
Now we have the 'responsible lending' laws so it is harder for things to get out of control in terms of residential lending. Lo doc/No doc loans have always been a very small part of the market for self-employed borrowers who can't prove income - a PAYG worker can't get a lo doc loan in almost all cases anyway.
so if the US has crashed and UK and Aus hasn't, then why? what was going to happen has happened.
I too am looking for soem of this loose credit here in Aus - where can I get some?
Sorry the D&Gs took it all already. Come back next time.
.....except the criteria for said regulations lies solely with those lending the money.
if the banks deems 25% serviceability and 105% lend as "responsible", then they will lend on that criteria.
prices in perth have not seen growth since 2007 and have come down in nearly all suburbs, in the meantime wages have increased, how is that a bubble?
i would bet on growth in the next 24 months over decline if i had to choose
Chris Joye was calling for more interest rate rises only recently while simualtaneously arguing that residential property had good growth prospects. Now he's arguing that property will also be a relative winner if lower interest rates are brought on by an economic downturn. You'd almost think that he had a vested interest in pushing property investment regardless of the fundamentals.
makes sense tho because IRs are jsut the brake and accelerator.
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