Sir lastnail wrote on Aug 2
nd, 2010 at 1:49am:
http://www.businessspectator.com.au/bs.nsf/Article/Housing-nears-the-precipice-p... Quote:Housing nears the precipice
Steve Keen
Published 6:49 AM, 10 Jun 2010 Last update 9:55 AM, 10 Jun 2010
Last month I argued that "The next two months’ data on home lending should be enough to confirm which way things are going" (The home lending dive will continue, May 18) – and the first of those two instalments, the ABS lending data released yesterday, does nothing to change my view that we are well past the turning point in the deflation of the great Australian housing bubble.
Previously I highlighted the fact that the only group increasing their borrowing for housing was investors – owner occupiers have been backing away from borrowing since mid-2009. As Adam Carr noted yesterday, on an annual basis the number of new loans is down 25 per cent since June 2009, while at the same time the number of loans made to investors has risen 26 per cent.
There are plenty of ways to slice up this data, but the telling figure is the rate at which owner-occupier buyers are leaving the market (see chart below). In both number and value terms the people who actually want to live in houses are increasingly sceptical of taking on massive debt to buy a home. In trend terms, the number of loans for all borrowers excluding refinancing of existing home-loans has fallen in nine of the last 10 months. In value terms, it's eight of the last 10 months. (Also nine and eight out of the last ten months respectively in seasonally adjusted terms.)
http://www.businessspectator.com.au/bs.nsf/0bd6ea4d7e0e401eca257300000473fc/286a... Quote:Investors, as described last month, continue to increase their borrowing – which is masking some of the departure of owner occupiers in the aggregate figures. This line from the ABS release says it all: "In trend terms, the total value of dwelling finance commitments excluding alterations and additions decreased 0.8 per cent. Owner occupied housing commitments fell 2.4 per cent, while investment housing commitments increased 2.0 per cent."
So the Great White Hope for the housing market is the White Shoe Brigade of housing investors. But here yet another reality check is required: even with the growth in investor lending of the last decade, the national debt stock, worth about $1.1 trillion in total, comprises $770 billion to owner occupiers and $330 billion to investors – so a lot more investors would have to jump into the market to counterbalance the owner occupiers who are bailing out.
What these figures represent is the enduring belief amongst investors that "prices will always go up" for properties, even as potential home-buyers send the clear message "not if we have to borrow that much to buy them!"
Expect this lending data to take some time to bite in terms of capital city auction clearance rates and prices – but bite they will. Next month's data should give some indication of how soon this will happen.
I haven't really followed much of what Keen has said, but there are a couple of obeservations which WILL influence future Existing & New Housing -
1) Over the next 20 years, around 5 Million Australian Baby Boomers, will retire, wanting to downsize out of their McMansions and many will pass on, permanently.
2) That means that the assured, automatic growth in Demand for Housing that has now been in place for some 60 years will cease, unless immigration remains at current high levels.
3) However, it is highly unlikely that immigration will remain at current levels, considering the effects of Declining Energy sources, other Essential Resources & the negative effects that Climate Change will have on Food & Water.
4) It is therefore likely that immigration will decline, over the next 20 years, as will the demand for Housing, both Existing & New, particularly as Baby Boomers start dying on mass.
The net effect of all of this, is that Housing Demand Growth will start to lessen, before finally housing available exceeds demand and then Prices start to decline.
And, these are some of the reasons for the current gap in land availability, as planners can see what is comming just over the horizon.