balkanghost

Morgan Stanley analyst bearish on housing market. LOCAL property investors have become "Ponzi borrowers" in a market 40 per cent overvalued, according to a Morgan Stanley strategist.

In a bearish note to clients this morning, Morgan Stanley strategist chief strategist Gerard Minack warned Australia's housing "bubble" could be pricked should banks tighten credit or "loss-making" middle-class landlords start to sell.

He argues owner-occupiers are in too much debt and investors are riskily relying on capital gains to repay their loans and interest repayments.

Compounding the problem is "ill-advised policy", such as the government's first home-buyers grant, which has combined to make Australian houses "40 per cent above fair value", Mr Minack says.

"Buying an asset that's over-priced never ends well," he said. "The real return on residential property over the next decade is likely to be negative, in my view."


No surprise, the supposed increase or spruiking of house prices has been based upon "population growth" spike due to labour demand till 2008, returning Australians, international students and backpackers (statistics and related info lags a lot...). But this has slowed dramatically with new student enrolments for 2011 "falling off a cliff", permanent residency blocked for many due to "immigration debate" so they are either not coming in the first place or are returning home, thus investors assuming they can rent out their properties should be very wary..... owner occupiers should be fine in medium term.

Sally Simpson

Was on the news this evening that rentals are going for great deals, including free rental, in Cairns, as market so poor.
Interesting times!

Alfresco

Can't wait for it to burst soon.

Amazulu

MartinLuther

Must be serious if they've brought out the Ponzi!

Looks like a rebound in the doomster market.

cbeeb

i lived in ireland and luckily sold house before it all went pearshaped there are many aspects of housing market here that mirrors ireland just before crash. only an opinion

Hotton

Rubbish property in Australia will only go one way thats up ,never down no bubble will burst hear ,we are the lucky country . My 2 bed fibro shack on sydneys northern beaches i payed ONE MILLION DOLLARS for will be worth 2 Million in 5 years time The estate agent who sold it to me told me so and he can see into the future , can he

hollykimalan

I try to explain we had a $570,000 house in the UK and we sold it for the equivalent of $370,000. That would never happen here they say!
I love the Australian optimism- genuinely I do.
HIS

MartinLuther

Apparently the media is always talking up the market.

I've been told by many reliable people on here that you never see an article in the newspaper suggesting that houses may be over priced. Or that there may be a fall in the market.

gumtree

Quote
''Australian Tax Office data confirm that residential investment is a poor investment: total rent has not covered total costs since FY2000 (the date the bubble started to inflate). In short, this is an investment that depends on capital gain for its payback."

Petals

Will it won't it who knows, they change their minds from one week to the next.

Personally I have been waiting since they brought the home owners grant in and it still has not happened.

Not to say it will not, it happened when we had the depression we had to have in the early nineties.

People have run from gambling on shares to gambling on property and highly geared is highly geared no rainy day stuff.

Look at DFO about to fold, greed is not always the way.

verystormy

We have spent weekend trailing around the show home villages as we want to build at some point and its been p@ss funny. I explain to the pushy sales guy that we wont be buying yet as i think the markets over rated and will come down. He then inevitably tells me how that impossible. That Australian property only goes one way. So i ask him how buyers who earn $45k average salary afford the cheapest properties that are $500k? At which point he stubles around. Then i ask how sales are going and guess what? Oh yes he say nobody is buying.

BristolBeary

You have to be pretty foolish to think a property will be worth less in 10 years? For me it's a no brainer I was spending $26k a year in rent!

Sure if your trying to make a fast buck out of property short term now - you probably are a donut.

mpgrewal

It won't. Millions are waiting for house prices to fall, they will start buying at the slightest glimpse of 'rates fall' which will again hike the prices due to demand.

I reckon, in next 2 years all the houses in Melbourne will be 500K+ including the ones which are 50km away from the city center. And everything within 20km will be 1 million+. Current home owners are winners

Red_V_Roger

In areas like a main city, immigrants will continue to come and people will have kids faster than new housing is built. Supply and demand means that the prices mean they wont drop.

For sure that speculative house buying in holiday areas as second property is full of risks.