Australian house prices not sustainable, says Moody's
GLOBAL ratings agency Moody's has warned it has serious misgivings about Australia's housing market amid fears the property bubble will burst if Europe's debt crisis is not contained. In a new report, Moody's says it has Australia's mortgage insurance industry on "negative" watch and current prices for Australian houses are "not sustainable" despite recent falls. The ratings agency warns it remains concerned about the medium-term outlook for the housing sector, as the eurozone crisis represents a "material" threat and Australia may face a re-run of the property crash in the US and Europe in recent years. Another agency, Fitch, said in a report yesterday that the proportion of home loan customers running late with repayments had improved in recent months despite growing weakness in the housing market. But Moody's says there are "meaningful uncertainties" for Australian housing and mortgage delinquency rates are likely to increase over the next decade. "Capital city house prices have more than quadrupled and household debt has tripled since 1990. Simple metrics indicate that the current price levels are not sustainable," Moody's lead analyst Ilya Serov said. "The sensitivity of the mortgage insurers' portfolios to a serious economic downturn has yet to be tested at current house prices and levels of indebtedness." Mortgage insurers such as Genworth and QBE cover banks for losses on home loans - generally those where borrowers own less than 20 per cent of their properties. ANZ is less negative on the medium-term outlook but in research published yesterday, the bank's analysts said they expected house prices to drop further in 2012. They expect Victoria to be hardest hit as the state's economy slows.
Latest Real Estate Institute of Victoria figures show Melbourne's median house price, at $551,000, is already down $50,000 from its peak a year ago. Moody's said that despite its concerns, Australian mortgage insurers were well capitalised and the outlook was unlikely to affect the short-term ratings of banks. The warning comes as official figures show housing starts in Australia tumbled 9.4 per cent in the year to September - the fourth fall in five quarters. CommSec economist Savanth Sebastian said the housing sector was going "nowhere" as potential buyers sat on their hands. Most economists are tipping the Reserve Bank will lower rates to 4 per cent in February to further insulate the Australian economy from the global downturn. "(A) resurgence in housing activity will be needed to support broader economic growth over the coming year," Mr Sebastian said.
O.k so that article was from 4 years ago and yes prices have kept rising in Sydney and Melbourne is now overtaking Sydney of late but, The Eurozone like the U.S is still quite sick and is still recovering from GFC 1.
And i'm pretty sure (from other sources) Italy's 200 odd banks are presently in pretty bad shape and I read their starting to limit withdrawels at ATM's to stop Bank Runs and thers even been some secret 'bailouts' to keep some going.
O.k so that article was from 4 years ago and yes prices have kept rising in Sydney and Melbourne is now overtaking Sydney of late but, The Eurozone like the U.S is still quite sick and is still recovering from GFC 1.
And i'm pretty sure (from other sources) Italy's 200 odd banks are presently in pretty bad shape and I read their starting to limit withdrawels at ATM's to stop Bank Runs and thers even been some secret 'bailouts' to keep some going.
So it's not all over yet!
Yes, and I've read some stuff on the internet over the years too; With probably something like 95% of it being absolute f***ing crap.
Anyway never fear as we can go back further in time to see what will unfold in the future.
Australia's real crunch in housing yet to come
Quote:
In Australia a core economic problem is "affordability" — we're finding it very hard to accept the rate of home ownership should be anything other than the historic average of 70 per cent.
In Australia, by contrast, the severe phase of the housing squeeze might only be beginning. But that's not because too many people have over-extended. Though mortgage defaults are on the rise, they are still less than 1 per cent.
No, the real reason we have yet to see the crunch in housing is because prices have not really lifted yet. The inflation numbers for the last quarter were higher than expected — the worst number in the quarterly report was for rent.
Rental costs recorded the biggest quarterly increase since 1989! Yep, 18 years ago when houses were a lot less than the median price today (in Melbourne) of $420,000.
It's hard to know what expert to believe these days.
Australian clearance rates continue to point to strong growth in house prices
Quote:
While clearance rates have fallen from the levels seen earlier this year, recent analysis from UBS found that a rate of around 70% has typically coincided with an annual increase in Australian house prices of around 10% per annum in average weighted-terms.
Indeed, as seen in the table below, that’s the exact increase reported in CoreLogic’s Capital City Home Value Change Index over the past year.
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