Australian Politics Forum - AUSTRALIA IS IN ONE OF THE WORST HOUSING BUBBLES

vikaryan

Senior Member

Offline

Australian Politics

Posts: 453
Gender: male

AUSTRALIA IS IN ONE OF THE WORST HOUSING BUBBLES
Mar 28^th, 2015 at 5:01pm

Australia is in one of the worst housing bubbles we have ever seen

Property News‎

March 27, 2015

Australia's latest property doomsday author, Lindsay David, has returned from a decade in the US with some frightening theories.

By all accounts, Australia is experiencing what is one of the greatest credit-fuelled real estate bubbles in modern times. On the back of a collapsing mining sector, we can thank the RBA, APRA, ASIC and the political elite in Canberra for creating a flawed household wealth-creation strategy that shares all the hallmarks of a predictable economic disaster.

In plain English, since the mid-1990s, Australia's strategy is for home buyers and investors to borrow heavily from lenders and flip houses to the next buyer who has taken out even more debt to speculate.

Today, all this country has to show for it is a $1.9 trillion mountain of household debt
that will make the US credit-fuelled housing bubble of the last decade look like a walk in the park when our housing bubble bursts.

The unfortunate victims of today's "wealth-creation" strategy are young home buyers and middle-income earners who are either completely priced out of the market or leveraged through the roof.

While our society lacks a meaningful and open debate on the toxic and rising levels of household debt, new home buyers in Sydney and Melbourne are entering the market and taking upon the most illogical sums of debt, courtesy of our over-leveraged banking system.

Based on median multiples, new home buyers in Sydney will spend the better part of 6.54 years savings (using 30 per cent of their income) for a 20 per cent deposit to buy a median-priced home.

When it comes to servicing the first 12 months of a 25-year/80 per cent LVR mortgage, it will cost roughly 65 per cent to 70 per cent of household income to service that debt at current record-low mortgage rates. Melbourne is not too far behind.

So what have our leading economists, regulators, public executives and politicians done to stop this debt-induced folly? Nothing. In fact, they have bent over backwards to inflate prices via stimulants such as housing grants and allowing retirees to tap into their life savings.

These powerful stimulants have been implemented, not to improve home ownership rates, but to boost prices for the benefit of existing owners, bankers' profits and government balance sheets.

If new home buyers cannot access (or are not willing to take on) a greater sum of debt compared to previous buyers, Australia's wealth-creation strategy will collapse just like it did in Ireland. Rest assured, our society is definitely caught up in the same irrational exuberance they experienced.

From 1996 to 2014, housing prices and mortgage debt significantly outpaced economic fundamentals like inflation, rents, incomes and GDP. Yet, our central bankers are more concerned about whether we will pay less tomorrow for a can of soda than new home buyers in Sydney borrowing $50,000 more than last year to buy a home. Where is the logic in that?

If the RBA factored in the expansion of debt required for a new home buyer to enter the market, inflation would officially skyrocket through the roof. Regardless, our political and economic elites are now stuck between a rock and a hard place.

Unfortunately, that is the price a country pays when it builds an unsustainable property bubble while avoiding a debate on the most important topic when it comes to housing: debt.

With Australia having the world's most indebted household sector
, the seemingly unending price rises in Fool's Paradise will eventually slam to a halt. As I argue in my new book Print: The Central Bankers Bubble, having the largest housing bubble and mining boom in Australia's economic history going down simultaneously will cause a severe economic and social catastrophe.

http://news.domain.com.au/domain/real-estate-news/australia-is-in-one-of-the-worst-housing-bubbles-we-have-ever-seen-20150327-1m8vao.html

Back to top

« Last Edit: Mar 28^th, 2015 at 5:07pm by vikaryan »

Housing_Bubble_Australia_-_Houston_vs_Sydney.jpg (220 KB | 145 )

We fight a holy war against the fat and the corrupt and the sinful and the unbelieving!

IP Logged

vikaryan

Senior Member

Offline

Australian Politics

Posts: 453
Gender: male

Re: AUSTRALIA IS IN ONE OF THE WORST HOUSING BUBBLES
Reply #1 - Mar 28^th, 2015 at 5:17pm

vikaryan wrote on Mar 28^th, 2015 at 5:01pm:

Australia is in one of the worst housing bubbles we have ever seen

Property News‎

March 27, 2015

Australia's latest property doomsday author, Lindsay David, has returned from a decade in the US with some frightening theories.

By all accounts, Australia is experiencing what is one of the greatest credit-fuelled real estate bubbles in modern times. On the back of a collapsing mining sector, we can thank the RBA, APRA, ASIC and the political elite in Canberra for creating a flawed household wealth-creation strategy that shares all the hallmarks of a predictable economic disaster.

In plain English, since the mid-1990s, Australia's strategy is for home buyers and investors to borrow heavily from lenders and flip houses to the next buyer who has taken out even more debt to speculate.

Today, all this country has to show for it is a $1.9 trillion mountain of household debt
that will make the US credit-fuelled housing bubble of the last decade look like a walk in the park when our housing bubble bursts.

The unfortunate victims of today's "wealth-creation" strategy are young home buyers and middle-income earners who are either completely priced out of the market or leveraged through the roof.

http://news.domain.com.au/domain/real-estate-news/australia-is-in-one-of-the-worst-housing-bubbles-we-have-ever-seen-20150327-1m8vao.html

The RBA captains the Titanic through icy seas….blindfolded

26th March, 2015

And they failed to spot an iceberg.

Lindsay David – Author ‘Print: The Central Bankers Bubble’

The Reserve Bank of Australia has clearly guided Australia into territory where the Australian housing market has lost all mathematical logic.

My research company ‘LF Economics’ today released a brief seven page analysis on housing and mortgage affordability for new home buyers. And the data was truly overwhelming (see chart below as an illustration).

Even if mortgage rates were to fall to 3%, mortgage affordability for the median household is incredibly challenging in the first year. Particularly for residents of Sydney and Melbourne. Unfortunately that is the price a country pays when it is not willing to debate the most important topic when it comes to housing… DEBT! Unfortunately whatever new policy the RBA attempts through interest rate policy is is too little, too late.

http://blog.australiaboomtobust.com/2015/03/the-rba-captains-the-titanic-through-icy-seas-blindfolded/

Back to top

00011-1024x621.jpg (79 KB | 129 )

We fight a holy war against the fat and the corrupt and the sinful and the unbelieving!

IP Logged

Ex Dame Pansi Gold Member Offline Australian Politics Posts: 24168	Re: AUSTRALIA IS IN ONE OF THE WORST HOUSING BUBBLES Reply #2 - Mar 29^th, 2015 at 7:30am What are we thinking? No one in their right mind could justify that house on the right costing $890,000 and they say there's no bubble, yeah right!
Back to top	"When the power of love overcomes the love of power, the world will know peace." Hendrix andrei said: Great isn't it? Seeing boatloads of what is nothing more than human garbage turn up..... IP Logged

John Smith

Gold Member

Offline

Australian Politics

Posts: 72209
Gender: male

Re: AUSTRALIA IS IN ONE OF THE WORST HOUSING BUBBLES
Reply #3 - Mar 29^th, 2015 at 9:11am

Ex Dame Pansi wrote on Mar 29^th, 2015 at 7:30am:

What are we thinking? No one in their right mind could justify that house on the right costing $890,000 and they say there's no bubble, yeah right!

that's right ... no one in their right mind would. ... most would say that house is worth $50g, the rest is the cost of the land.

Back to top

Our esteemed leader:
I hope that bitch who was running their brothels for them gets raped with a cactus.

IP Logged

Bobby. Gold Member Offline Australian Politics Posts: 95261 Melbourne Gender:	Re: AUSTRALIA IS IN ONE OF THE WORST HOUSING BUBBLES Reply #4 - Mar 29^th, 2015 at 1:18pm Wait till Nail finds about this new thread.
Back to top	IP Logged

John Smith Gold Member Offline Australian Politics Posts: 72209 Gender:	Re: AUSTRALIA IS IN ONE OF THE WORST HOUSING BUBBLES Reply #5 - Mar 29^th, 2015 at 1:39pm Bobby. wrote on Mar 29^th, 2015 at 1:18pm: Wait till Nail finds about this new thread. he'll blow his load as soon as you tell him about it
Back to top	Our esteemed leader: I hope that bitch who was running their brothels for them gets raped with a cactus. IP Logged

Sir lastnail

Gold Member

Offline

Australian Politics

Posts: 29705
Gender: male

Re: AUSTRALIA IS IN ONE OF THE WORST HOUSING BUBBLES
Reply #6 - Mar 29^th, 2015 at 1:55pm

John Smith wrote on Mar 29^th, 2015 at 9:11am:

Ex Dame Pansi wrote on Mar 29^th, 2015 at 7:30am:

What are we thinking? No one in their right mind could justify that house on the right costing $890,000 and they say there's no bubble, yeah right!

that's right ... no one in their right mind would. ... most would say that house is worth $50g, the rest is the cost of the land.

So smith - the cracks are starting to appear. Even the RBA is starting to back peddle from the mess it has inflicted onto the economy. Won't be long now !!

"Ireland Australia blew it by ceasing to believe that you sustained prosperity by making things and selling them and starting to believe that there was a new magic kind of prosperity which was made out of selling bits of Ireland Australia to each other"

Back to top

In August 2021, Newcastle Coroner Karen Dilks recorded that Lisa Shaw had died “due to complications of an AstraZeneca COVID vaccination”.

IP Logged

Bobby. Gold Member Offline Australian Politics Posts: 95261 Melbourne Gender:	Re: AUSTRALIA IS IN ONE OF THE WORST HOUSING BUBBLES Reply #7 - Mar 29^th, 2015 at 2:08pm John Smith wrote on Mar 29^th, 2015 at 1:39pm: Bobby. wrote on Mar 29^th, 2015 at 1:18pm: Wait till Nail finds about this new thread. he'll blow his load as soon as you tell him about it No - Nail has supplied a cogent argument.
Back to top	IP Logged

Wolseley

Gold Member

Offline

Australian Politics

Posts: 1453
Sydney
Gender: male

Re: AUSTRALIA IS IN ONE OF THE WORST HOUSING BUBBLES
Reply #8 - Mar 29^th, 2015 at 11:08pm

Quote:

Houston is one of the best places to live in the US. Houston is a rich city. It is rapidly growing. It has 6 million people. Houston has a normal, healthy property market.

You forgot to add that economists have predicted that Houston will be hit by a recession this year.

http://www.bizjournals.com/houston/morning_call/2015/02/economists-forecast-a-re...

Back to top

IP Logged

Amadd

Gold Member

Offline

Mo

Posts: 6217

Re: AUSTRALIA IS IN ONE OF THE WORST HOUSING BUBBLES
Reply #9 - Mar 31^st, 2015 at 12:20am

The RBA has stuffed up monumentally. Who was it that voted them in? Oh that's right...nobody.

I'm glad I don't have debt and I'm supposing the banks will still get their catch, but it might be time to take some profits and shift some into gold for awhile.
The apathetic aussies will probably accept 10 to a house and working 12hrs per day for nix, so I expect the major banks to survive.

Back to top

IP Logged

Sir lastnail

Gold Member

Offline

Australian Politics

Posts: 29705
Gender: male

Re: AUSTRALIA IS IN ONE OF THE WORST HOUSING BUBBLES
Reply #10 - Mar 31^st, 2015 at 9:38am

Amadd wrote on Mar 31^st, 2015 at 12:20am:

The RBA has stuffed up monumentally. Who was it that voted them in? Oh that's right...nobody.

I'm glad I don't have debt and I'm supposing the banks will still get their catch, but it might be time to take some profits and shift some into gold for awhile.
The apathetic aussies will probably accept 10 to a house and working 12hrs per day for nix, so I expect the major banks to survive.

Your dreaming aren't you. They'd have to work 144 hours a day to even start to payoff the 2 trillion of household debt.

Back to top

In August 2021, Newcastle Coroner Karen Dilks recorded that Lisa Shaw had died “due to complications of an AstraZeneca COVID vaccination”.

IP Logged

John Smith

Gold Member

Offline

Australian Politics

Posts: 72209
Gender: male

Re: AUSTRALIA IS IN ONE OF THE WORST HOUSING BUBBLES
Reply #11 - Mar 31^st, 2015 at 2:12pm

Bobby. wrote on Mar 29^th, 2015 at 2:08pm:

John Smith wrote on Mar 29^th, 2015 at 1:39pm:

Bobby. wrote on Mar 29^th, 2015 at 1:18pm:

Wait till Nail finds about this new thread.

he'll blow his load as soon as you tell him about it

No - Nail has supplied a cogent argument.

how do you know he didn't blow his load?

he hasn't supplied any cogent argument ... I don't see the RBA backpeddling, do you? Cheesy

Back to top

Our esteemed leader:
I hope that bitch who was running their brothels for them gets raped with a cactus.

IP Logged

Sir lastnail

Gold Member

Offline

Australian Politics

Posts: 29705
Gender: male

Re: AUSTRALIA IS IN ONE OF THE WORST HOUSING BUBBLES
Reply #12 - Apr 8^th, 2015 at 6:11pm

Like I have always said that property does not create wealth but only consumes it !!

"And importantly - will a cut to the cash rate fuel booming real estate prices in Sydney - that some economists think might be developing into a dangerous bubble."

http://www.abc.net.au/am/content/2015/s4211532.htm

Quote:

The full story...
Economists split on whether RBA should cut rates

Business editor Peter Ryan reported this story on Tuesday, April 7, 2015 08:30:00

MICHAEL BRISSENDEN: Well economists are split on whether the Reserve Bank (RBA) will cut interest rates today.

With the latest betting I'm joined by our business editor Peter Ryan.

Peter, will we see rates fall to a new historic low when the RBA makes its decision public this afternoon do you think?

PETER RYAN: Well Michael, money markets are factoring in a 78 per cent chance that rates will be cut to two per cent when the decision hits this afternoon.

And that's being reflected in the Australian dollar now lower at US75.9 cents. But the RBA of course wants the dollar to go even lower.

Market economists though are split on whether the RBA will cut today or wait until the next consumer inflation reading in a few weeks time.

But headline inflation is already running well below the two to three per cent target band, so the debate is whether the RBA should cut today or wait til next month.

And importantly - will a cut to the cash rate fuel booming real estate prices in Sydney - that some economists think might be developing into a dangerous bubble.

MICHAEL BRISSENDEN: And as we heard from Chris Richardson, that fall in iron ore price is slicing into Joe Hockey's budget almost every day.

How do you expect that will weigh on the RBA board's decision?

PETER RYAN: Well the iron ore price fell to a new low at the weekend of US$46.70 a tonne. That's compared to $135 at the start of 2014 and $185 a tonne in 2011.

And Deutsche Bank is predicting the price could fall as low as US$40 a tonne.

And Deloitte Access Economics as we've heard says that's three billion in lost revenue since December's midyear budget update. And the hit to the Federal Budget since Tony Abbott became Prime Minister could end up being as much as $25 billion.

MICHAEL BRISSENDEN: A lot of us glaze over listening to implications for the budget. But what does a falling iron ore price mean for everyone?

PETER RYAN: Well ultimately the big question is whether the falling iron price will hurt living standards. And that's because a weaker iron ore price means less tax and royalty revenue for state and federal governments.

Which means they'll have less money to spend on social services we all use; like health, education and roads.

And the falling terms of trade will push the Australian dollar lower as we're already seeing and that means imports that have been less expensive during the resources boom - cars, TV's, clothing, books - will start costing a lot more.

MICHAEL BRISSENDEN: And Peter, if there's a rate cut today, it will almost inevitably be welcomed as good news by the Government. But that's not necessarily the case is it?

PETER RYAN: Well no Prime Minister or Treasurer has seen a rate cut he or she didn't like.

But the reality is that the economy is softening, the transition from the resources boom appears to be stalled, and the jobless rate importantly is expected to get as high as 6.75 per cent.

So while a rate cut is good news for borrowers, it's not so good if you don't have a job.

And of course it's bad news for self-funded retirees who rely on the interest they earn from bank deposits. Because a rate cut means their nest egg is getting increasingly smaller.

MICHAEL BRISSENDEN: Business editor Peter Ryan there.

Back to top

In August 2021, Newcastle Coroner Karen Dilks recorded that Lisa Shaw had died “due to complications of an AstraZeneca COVID vaccination”.

IP Logged

Bobby.

Gold Member

Offline

Australian Politics

Posts: 95261
Melbourne
Gender: male

Re: AUSTRALIA IS IN ONE OF THE WORST HOUSING BUBBLES
Reply #13 - Apr 8^th, 2015 at 7:09pm

John Smith wrote on Mar 31^st, 2015 at 2:12pm:

Bobby. wrote on Mar 29^th, 2015 at 2:08pm:

John Smith wrote on Mar 29^th, 2015 at 1:39pm:

Bobby. wrote on Mar 29^th, 2015 at 1:18pm:

Wait till Nail finds about this new thread.