Welcome Guest [Log In] [Register]


Reply
  • Pages:
  • 1
Australia can't afford to burst housing bubble as wave of Chinese money looms
Topic Started: 1 Oct 2015, 04:22 PM (2,110 Views)
Mike
Default APF Avatar


http://www.smh.com.au/business/the-economy/australia-cant-afford-to-burst-housing-bubble-as-wave-of-chinese-money-looms-20151001-gjysne.html

Quote:
 
Property rises might be taking a breather after a year of superheated growth, but one investment banker has bad news for most aspiring home owners: Australian house prices will keep getting higher and the government will do nothing to prick the bubble because the country simply can't afford it.

And any hint of instability in China could send a wave of new money into the Australian market, says Saxo Capital Asia macro strategist Kay Van-Petersen.

Houses and apartments in Australia, particularly Sydney and Melbourne, have never been more expensive. The median house price in Sydney hit $1 million in July, said the Domain House Price Report, and investment bank Goldman Sachs estimates the markets in Sydney and Melbourne are almost 20 per cent overvalued.

Morgan Stanley has said the prices have peaked, but Mr Van-Petersen says they will continue to grind upwards and the government is unlikely to do anything about it.

"The government has to try and talk it down and say it's inflated, but at the same time all they can try and do is control the ongoing growth as best they can," Mr Van-Petersen said. "If they wanted to prick it, they could, but Australia simply cannot afford to."

New Zealand and Singapore have enacted strong policies to force adjustments in housing markets and Mr Van-Petersen said Australia could easily deflate the bubble by pulling the stamp duty tax charged to foreign buyers from properties of more than $15 million to, say, $1.5 million.

But the property market is one of the few areas of the economy that is growing adequately as terms of trade plummet and mining companies shed value because commodity prices are falling in light of a slowing China.

"Australia can't afford for property to have a hard landing. If housing prices bust, the banks will get hit hard. And then what is there? It's in everyone's interests right now."

In the IMF's latest report on the Australian economy, it raised the increasingly likely potential of a housing price correction, and called for greater investment in infrastructure to "relieve bottle necks and housing supply constraints".

"Buoyant housing investor lending has recently prompted regulatory action to reinforce sound residential mortgage lending practices," its report said.

In a similar finding to that of the Australian Prudential Regulation Authority, the report said the big banks' strength and profitability would need more support if a severe adverse scenario occurred, such as a housing bubble collapse.

Even if more houses and apartments are made available for purchase, Mr Van-Petersen warned any political or financial issues in China could trigger a huge wave of foreign buyers into the property market.

He said: "There is a lot of talk about Chinese money, but you guys haven't seen anything yet. Any wobble in China, whether it's political or a financial markets issue, will see serious money flooding out here and, so far, Australia's got no idea of what that looks like."

http://mike-globaleconomy.blogspot.com.au/
Profile "REPLY WITH QUOTE" Go to top
 
Lipton
Unregistered

Quote:
 
any hint of instability in China could send a wave of new money into the Australian market, says Saxo Capital Asia
To think that the Government can control the market is ridiculously naive.

Even with record low interest rates and a real estate obsessed population, auction clearance rates are down and prices are already tapering off. Investors are becoming wary- returns are at record lows and there are doubts of continued pace of growth. Unemployment is creeping up, exports down, banks bracing themselves and limiting loans/ placing restrictions on borrowing VOLUNTARILY, etc.

Further cuts will do little to pump up prices into a market that is IN FACT OVERSUPPLIED, and will be MASSIVELY SATURATED by new housing within 18-24 months.

Has everyone forgotten what happened in the 80's, when the Japanese were buying everything?
The sudden divestment of Japanese (predominantly commercial property) crashed much of the building industry for years. The Chinese seem to be more focused on residential - meaning more 'mum and dad' investors will get burnt this time.

The next crash, surely just around the corner, will be much worse. Does anyone think someone with a speculative investment in a property won't sell it if they need cash, or if prices start to come down and they want to cut their losses? Supposedly, the current market purchasers over recent years are made up of approx. 60% speculators, rather than home owners.

The bubble is much bigger than it should be, because Australia effectively side-stepped the worst of the GFC, meaning the real estate market didn't correct back to its historical trends.
"REPLY WITH QUOTE" Go to top
 
Tick Tock
Default APF Avatar


I thought the Chinese government have put new restrictions on Chinese investors buying outside of China???
Profile "REPLY WITH QUOTE" Go to top
 
John Frum
Member Avatar


Mike
1 Oct 2015, 04:22 PM

Hilarious - it's like the classic 80's action b-movie trope, where during the climax the cornered villain manages to grab a hostage (usually the hero's romantic interest or a small child) and then threaten mutually assured destruction unless he's allowed to escape.

"If you pop this bubble we're ALL gonna die!"

Fortunately the hero usually ends up killing the villain and all the good people live happily ever after - in lovely big, well located homes that they managed to snap up at bargain prices after the bubble popped.
"It were not best that we should all think alike; it is difference of opinion that makes horse races." - Mark Twain on why he avoids discussing house prices over at MacroBusiness.
"Buy land, they're not making any more of it." - Georgist Land Tax proponent Mark Twain laughing in his grave at humourless idiots like skamy that continually use this quip to justify housing bubbles.
Profile "REPLY WITH QUOTE" Go to top
 
Loki
Member Avatar


John Frum
1 Oct 2015, 08:24 PM

Hilarious - it's like the classic 80's action b-movie trope, where during the climax the cornered villain manages to grab a hostage (usually the hero's romantic interest or a small child) and then threaten mutually assured destruction unless he's allowed to escape.

"If you pop this bubble we're ALL gonna die!"

Fortunately the hero usually ends up killing the villain and all the good people live happily ever after - in lovely big, well located homes that they managed to snap up at bargain prices after the bubble popped.
And the hero arrives in October (November at the latest).

Somebody pass the popcorn.


“Talk sense to a fool and he calls you foolish.” - Euripides
Profile "REPLY WITH QUOTE" Go to top
 
John F. Kennedy
Default APF Avatar


Pathetic article from the past tense. The Chinese government might do this or that, and it might have this or that effect. Totally vacuous. Typical of fairfax to put a worthless beat up about nothing on their front page.
Profile "REPLY WITH QUOTE" Go to top
 
Ex BP Golly
Member Avatar


The article is at least honest enough to tell us our economy is so fucked up that the only thing we can do is allow cashed up Chinese criminals to price us out of our own homes.

The white trash of Asia huddled in their Banana Republic thus reaches end game at the end of the biggest longest boom in our history.

What a bunch of bogans.
Edited by Ex BP Golly, 2 Oct 2015, 09:01 AM.
WHAT WOULD EDDIE DO? MAAAATE!
Share a cot with Milton?
Profile "REPLY WITH QUOTE" Go to top
 
Jimbo
Member Avatar


Mike
1 Oct 2015, 04:22 PM
But the property market is one of the few areas of the economy that is growing adequately as terms of trade plummet and mining companies shed value because commodity prices are falling in light of a slowing China.
This is all Australia has now? Flogging off its best real estate to foreign buyers?

And this is going to save the economy by some sort of feedback loop mechanism that will make Australia great again?

And we must encourage it to happen because if it doesn't happen, Australia will be worse off?

And you believe this shit?

And you expect others to believe this shit?


Matthew, 30 Jan 2016, 09:21 AM Your simplistic view is so flawed it is not worth debating. The current oversupply will be swallowed in 12 months. By the time dumb shits like you realise this prices will already be :?: rising.
Profile "REPLY WITH QUOTE" Go to top
 
lonewolf
Default APF Avatar

Jimbo
2 Oct 2015, 06:20 AM
This is all Australia has now? Flogging off its best real estate to foreign buyers?

And this is going to save the economy by some sort of feedback loop mechanism that will make Australia great again?

And we must encourage it to happen because if it doesn't happen, Australia will be worse off?

And you believe this shit?

And you expect others to believe this shit?

Pathetic but true..everyone knows its gonna end somewhere, i'm sure even the bulls does, its now how much money you can make from flipping before it burst..I have to be too dumb or too maverick to trade in these dangerous water..
Profile "REPLY WITH QUOTE" Go to top
 
createdby
Default APF Avatar


Jimbo
2 Oct 2015, 06:20 AM
This is all Australia has now? Flogging off its best real estate to foreign buyers?

Long doggie poop bags and scoopers and travel wet wipes.
Profile "REPLY WITH QUOTE" Go to top
 
1 user reading this topic (1 Guest and 0 Anonymous)
ZetaBoards - Free Forum Hosting
Create your own social network with a free forum.
Go to Next Page
« Previous Topic · Australian Property Forum · Next Topic »
Reply
  • Pages:
  • 1



Australian Property Forum is an economics and finance forum dedicated to discussion of Australian and global real estate markets and macroeconomics, including house prices, housing affordability, and the likelihood of a property crash. Is there an Australian housing bubble? Will house prices crash, boom or stagnate? Is the Australian property market a pyramid scheme or Ponzi scheme? Can house prices really rise forever? These are the questions we address on Australian Property Forum, the premier real estate site for property bears, bulls, investors, and speculators. Members may also discuss matters related to finance, modern monetary theory (MMT), debt deflation, cryptocurrencies like Bitcoin Ethereum and Ripple, property investing, landlords, tenants, debt consolidation, reverse home equity loans, the housing shortage, negative gearing, capital gains tax, land tax and macro prudential regulation.

Forum Rules: The main forum may be used to discuss property, politics, economics and finance, precious metals, crypto currency, debt management, generational divides, climate change, sustainability, alternative energy, environmental topics, human rights or social justice issues, and other topics on a case by case basis. Topics unsuitable for the main forum may be discussed in the lounge. You agree you won't use this forum to post material that is illegal, private, defamatory, pornographic, excessively abusive or profane, threatening, or invasive of another forum member's privacy. Don't post NSFW content. Racist or ethnic slurs and homophobic comments aren't tolerated. Accusing forum members of serious crimes is not permitted. Accusations, attacks, abuse or threats, litigious or otherwise, directed against the forum or forum administrators aren't tolerated and will result in immediate suspension of your account for a number of days depending on the severity of the attack. No spamming or advertising in the main forum. Spamming includes repeating the same message over and over again within a short period of time. Don't post ALL CAPS thread titles. The Advertising and Promotion Subforum may be used to promote your Australian property related business or service. Active members of the forum who contribute regularly to main forum discussions may also include a link to their product or service in their signature block. Members are limited to one actively posting account each. A secondary account may be used solely for the purpose of maintaining a blog as long as that account no longer posts in threads. Any member who believes another member has violated these rules may report the offending post using the report button.

Australian Property Forum complies with ASIC Regulatory Guide 162 regarding Internet Discussion Sites. Australian Property Forum is not a provider of financial advice. Australian Property Forum does not in any way endorse the views and opinions of its members, nor does it vouch for for the accuracy or authenticity of their posts. It is not permitted for any Australian Property Forum member to post in the role of a licensed financial advisor or to post as the representative of a financial advisor. It is not permitted for Australian Property Forum members to ask for or offer specific buy, sell or hold recommendations on particular stocks, as a response to a request of this nature may be considered the provision of financial advice.

Views expressed on this forum are not representative of the forum owners. The forum owners are not liable or responsible for comments posted. Information posted does not constitute financial or legal advice. The forum owners accept no liability for information posted, nor for consequences of actions taken on the basis of that information. By visiting or using this forum, members and guests agree to be bound by the Zetaboards Terms of Use.

This site may contain copyright material (i.e. attributed snippets from online news reports), the use of which has not always been specifically authorized by the copyright owner. Such content is posted to advance understanding of environmental, political, human rights, economic, democratic, scientific, and social justice issues. This constitutes 'fair use' of such copyright material as provided for in section 107 of US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed for research and educational purposes only. If you wish to use this material for purposes that go beyond 'fair use', you must obtain permission from the copyright owner. Such material is credited to the true owner or licensee. We will remove from the forum any such material upon the request of the owners of the copyright of said material, as we claim no credit for such material.

For more information go to Limitations on Exclusive Rights: Fair Use

Privacy Policy: Australian Property Forum uses third party advertising companies to serve ads when you visit our site. These third party advertising companies may collect and use information about your visits to Australian Property Forum as well as other web sites in order to provide advertisements about goods and services of interest to you. If you would like more information about this practice and to know your choices about not having this information used by these companies, click here: Google Advertising Privacy FAQ

Australian Property Forum is hosted by Zetaboards. Please refer also to the Zetaboards Privacy Policy