1. Coming into the crisis with much higher interest rates than either the US or EU. Much more room to cut and stimulate. 2. Being the principle beneficiary of the largest State stimulus package in history (China) 3. Sentiment didn't sour for long ( but long enough to see some pretty decent price falls in 08/09.
4. We didn't have a big overbuilding problem, like places such as US and Ireland 5. We had far tighter regulatory controls on banks, which in turn had far greater controls on lending criteria 6. Our property market had not increased by nearly as much as places that had crashes
That's just what I thought of in a minute. There are no doubt others as well.
Black Panther will be happy. Investors continue their dominance in NSW:
In Melbourne, there are also signs of transmutation:
Those graphs are looking like exponential growth. A good proportion of this activity must investors offloading apartments to other investors. I think I saw a figure awhile back showing that 80% of Sydney apartments are investor owned. So who is the smart investor, the one selling or the one buying? Time will tell.
4. We didn't have a big overbuilding problem, like places such as US and Ireland 5. We had far tighter regulatory controls on banks, which in turn had far greater controls on lending criteria 6. Our property market had not increased by nearly as much as places that had crashes
That's just what I thought of in a minute. There are no doubt others as well.
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4. We didn't have a big overbuilding problem, like places such as US and Ireland
Prices fell in Dublin city by 50%. There was no overbuilding in Dublin city.
Besides, the real supply glut came when the bubble was already well and truly inflated.
The real villain was cheap credit plus irrational exuberance.
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We had far tighter regulatory controls on banks, which in turn had far greater controls on lending criteria
Probably true. What really sunk the banks in the end in Ireland was loans to property developers. I don't see a whole lot of difference between the two countries in how they lend to mortgagees.
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Our property market had not increased by nearly as much as places that had crashes
But more than can be reasonably be expected by the "structural shift".
The structural shift, naturally, explains much of the price gains but what the chief bulls don't like talking about is the rise of the investor. The structural shift doesn't explain why it all of sudden became fashionable for every man and his dog to buy investment properties: a widely held belief that property prices would keep rising and deliver lavish capital gains does.
Like I said, in Perth, right now, thousands of units are coming on line into a rental market that is already becoming oversupplied. Many of these investors have a business plan that depends on having regular rental income. If its not forthcoming what do you think is going to happen next?
Property acquisition as a topic was almost a national obsession. You couldn't even call it speculation as the buyers all presumed the price of property could only go up. That’s why we use the word obsession. Ordinary people were buying properties for their young children who had not even left school assuming they would not be able to afford property of their own when they left college- Klaus Regling on Ireland. Sound familiar?
The evidence of nearly 40 cycles in house prices for 17 OECD economies since 1970 shows that real house prices typically give up about 70 per cent of their rise in the subsequent fall, and that these falls occur slowly. Morgan Kelly:On the Likely Extent of Falls in Irish House Prices, 2007
It'd be rarer than that, a 0.001% chance would mean it happens 50 times a year (5 million mortgaged homes in Oz). If it happened that much we'd have heard about it. If it happened once we'd have heard about it! I've never heard of it happening, probably cos a bank would have no reason to do it. What would be the point of calling in a loan if the repayments are being met. It's one of those silly bear myths that just won't die!
0.001% of mortgages would probably be high for now when very few loans are underwater and most of the shaky lenders have already been shaken out. Might not seem so high in the event of a 20+% downturn in property prices when a high proportion of loans are with non-bank lenders though.
I could only see it happening with a lender that is bankrupt for a residential mortgage.
The truth will set you free. But first, it will piss you off. --Gloria Steinem AREPS™
As Bob Carr used to say, immigration adds more to demand than it contributes to supply. Here in Victoria, we simply export large percentages of new buildings to foreign investors. I don't agree with it, but why could this not continue?
The established dwelling market can crash while the new dwelling market continues to boom. If demand from overseas investors continues, but local incomes (and hence demand) declines, the housing market will split into two markets, domestic and export. If overseas investors continue to buy new dwellings, what happens will depend on whether they rent them out or not. If they do, rents will decline, which will lead to the established dwelling market crashing further as domestic investors head for the exits.
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Yes, Norway has oil. So it's OK to drill holes in the ground, but not to dig holes in the ground? Would you be happier if Australia was drilling, instead of digging?
Norway has a similar problem, i.e. dependence on a single export, but they have managed that a lot better than we have. By the way, we also once had oil, which we pumped out and sold internationally and blew that also. Norway has a small population and large reserves of oil, but they are still planning for the day it runs out.
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Here in Victoria, we have a new industry: micro-apartment construction and exports. We have no minimum design specifications so apartments can be constructed as small and cheaply as the developer desires and then exported to foreign investors. They may only be suitable for student accommodation, but it's an industry nonetheless, isn't it?
No, apartment construction is assembly, not industry. "Building products" was an industry in Australia, but it the three main players have either offshored or closed down most of their domestic operations.
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There will come a tipping point, a time when debt-to-GDP must peak, but that might be years away. You guys can't keep calling the top time and time again. You've got to be more precise. That's one the reasons I've decided to hold Frummy to October 2015.
We are close now, this is the end game. I think October 2015 is probably a good call, but it might be as late as Jan 2016 or as early as Mar 2015.
------------------------------ " ... which is that all-too-familiar dynamic in Irish life where people tell lies, cover them up and create all sorts of collateral damage, sometimes spread out over decades, and never take responsibility." - Alan Glynn
While I think we are headed for a genuine economic downturn in the next year or so, I think housing may be protected by high immigration, as Doc Watson suggested.
The established dwelling market can crash while the new dwelling market continues to boom. If demand from overseas investors continues, but local incomes (and hence demand) declines, the housing market will split into two markets, domestic and export. If overseas investors continue to buy new dwellings, what happens will depend on whether they rent them out or not. If they do, rents will decline, which will lead to the established dwelling market crashing further as domestic investors head for the exits.
Norway has a similar problem, i.e. dependence on a single export, but they have managed that a lot better than we have. By the way, we also once had oil, which we pumped out and sold internationally and blew that also. Norway has a small population and large reserves of oil, but they are still planning for the day it runs out.
No, apartment construction is assembly, not industry. "Building products" was an industry in Australia, but it the three main players have either offshored or closed down most of their domestic operations.
We are close now, this is the end game. I think October 2015 is probably a good call, but it might be as late as Jan 2016 or as early as Mar 2015.
We are close, but I don't think we are that close.
As Dr. Watson correctly pointed out, there's still money in the till to create future stimulus if need be.
Good point on the split market though. I suspect it will continue until the new buyers see value on the other side of the city and decide they would like to rent the locals their previous homes back to them. They are already looking at H&L packages, which was recently discussed on a thread posted by BP.
The lack of regulation on dwelling size for student apartments is a disaster in the making IMO
We do have a 'land shortage' in prime locations, but it isn't so short that we are forced to fill the city with bed sitters just yet
0.001% of mortgages would probably be high for now when very few loans are underwater and most of the shaky lenders have already been shaken out. Might not seem so high in the event of a 20+% downturn in property prices when a high proportion of loans are with non-bank lenders though.
I could only see it happening with a lender that is bankrupt for a residential mortgage.
Its oso unlike stringbean and shadow to argue such a fine point too. They must have been having a slow day.
Whenever you have an argument with someone, there comes a moment where you must ask yourself, whatever your political persuasion, 'am I the Nazi?'
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