Tableland

Agreed. It had to end like this, and this ending has been obvious since about halfway through the story. Indicators - people on minimum wage holidaying in the Med (credit), average workers driving luxury cars (credit), average house costing 6.5 times the average salary (credit). The practice of remortgaging your property to buy depreciating assets should be illegal.

What they're hoping is the fall in oil prices (nymex crude future $123 today) is going to be a downward pressure on inflation and get it under control, allowing them to cut rates and get the morons borrowing ten times their salaries to buy over-valued housing stock.

And they could pull it off, too.

Walkabout

exchange rate today is 2.11395 and rising so we may claw back a bit of the equity we have lost on uk house sale if this continues, I don't think this is don to the strength of the pound but more a case of the first round of negative news coming from oz.
good luck everyone
walkabout

Tableland

True, walkabout. Remember, the Australian Govt. does not guarantee funds like the UK and US ones do.

BATS666

though, unfortunately, demand won't keep it going. As in the UK, where everyone says the housing stock is too low, when you can't afford it you can't afford it. Add to that a sudden lack of credit and it all comes tumbling down. The US led, followed by the UK, Spain & Ireland and Oz won't be the last.
Time was you couldn't remortgage your house to buy anything other than home improvements. That time will come again now so many have had their fingers burnt.

Tableland

The "too much demand" gambit was spun out in the UK for a year or so in a vain attempt to hold back the collapse. It is a lie. Right now they are hoping downward oil will allow them to cut rates and this will solver everything. The problem they have is the massive rate cuts in the US (down to around 2%) have only just started to to work, in a few isolated pockets, nearly a year after the shit hit the fans. And even then prices are only up a tiny percentage compared with the massive 30% off in places like CA.

Considering how much weaker and smaller the UK and Australian economies are, and how much more over-valued their housing stock is, I doubt they can hold off the crash with rate cuts. All they will succeed in doing is pushing inflation up even more by allowing even more money into the system.

Tableland

Like I said, remortgaging to buy depreciating assets like the now ubiquitous BMW should be illegal. People's vanity and greed have caused this.

Petals

Creative accounting gone mad.

They also say the private equity companies are next and I have never understood, buying mortgages from banks with money borrowed etc etc sort of like ostriches last one with the ostrich loses out.

In case you do not know years ago everyone bought ostriches here they were going for $30,000.00 of course it all failed as there were no plants to slaughter them or get their feathers they just looked good in the paddock and so the people who got in first were fine but the people in the end were not.

Beppe

This is something all us would be migrants should be thinking about and can do something about. Why buy into dollars and buy or rent Oz property now and fulfill this projected demand? Particularly when the UK is currently ahead of Oz in the loss stakes.

We've all seen what has happened to the UK housing market when people just stop buying. If your circumstances allow, shelve your migration plans for the next few years and move when times are more in your favour. Of course I understand that for some people it is "now or never". By holding back and waiting for better times, it all becomes a self-fulfilling prophecy as migrant demand falls and eases pressure on house and rental prices.

I know that us brits aren't the only migrants, but every little helps. It's something I'm putting into practice myself.

Tableland

All you have to do is rent in Australia until after the depression, and then buy. And as it happens, I think Brits witholding equity will make a real difference to the Australian housing market and will make it crasher quicker and for longer.

Beppe

If I move to Oz and rent I’m putting upward pressure on rental prices and thereby making investor yields look more attractive. Investor demand is just as lethal to house prices as my own. Better to remove my demand entirely.

If I could sell my house now the best thing would be to wait for Oz to follow suit from the UK in a UK rental. This is what I’d advise those on the “selling” thread to consider if time is not a factor.

Ten months ago I wasn’t sure whether or not Oz would follow the same course as the UK as the Oz media appeared only interested in inflating the bubble and hiding the “bad news”. Now sentiment has started to turn in Oz in exactly the same way as it did here in the UK I’m convinced it’s only a matter of time.

DrWho

Went to see a client yesterday afternoon, a builder with a house he got stuck with in Narrabeen on the Northern Beaches. Fantastic views from on high over the beaches and all the way down to Manly; quite superb. Talking to his wife and it seems they've been a bit unlucky; had it sold and then the purchaser couldn't get funding, then sold again -cash - but the couples relationship fell apart... That was over the last 6 months... Now they can hardly get anyone through the door... As he said the buyers have simply disappeared. He's a worried man at the moment with a few other projects on the go...

thedons

So is the term deposit i currently have with the ANZ not guaranteed!

steveyp

Be careful what you wish for.
A crash in property prices in Australia will do massive damage to the economy here. Come to Perth and look at how many people the retail and building industries employ.
People have been cashing in on their house price increases in recent years to fund their luxuries, once the prices start going down that spending stops.
You may end up with a cheaper house here but you won't find a job.
It was always enevitable it would end this way but I am certainly not cheering it on.

Petals

Even if brits don't come the quota will just be filled from other sources, i e India, China etc. They come a lot as business migrants and professional migrants so do not think it would make much difference here.

Not cheering it on either as I remember the other crashes we have had and I remember the last one when houses were worth less than the capital improved value on their rate notices in some suburbs.

Good property will always be in demand its the ordinary property that will be hurt and ordinary people.

Anyone who is a self employed person in the building industry should know though that it comes and goes and make sure they are in a position not to be financially affected by a downturn, just like the farmers do, or try to do, the drought has made that a bit difficult.

BATS666

Yup, you're quite right. Just the same situation as the UK. Spending/borrowing on the back of house value increases does not a healthy economy make. How it effects the local economy remains to be seen and a lousey jobs market is not my idea of fun. It might make housing more affordable but it won't pay the bills.