Anne down under

prices are ridiculous in Oz. I can understand in places like HK and Japan where's there's a lack of land. But in oz? Come on - I know infrastructure plays a part.
Perth will be the first to go. It may not be any time soon, but when China has an issue and the mining boom ends , Perth could be really affected.

freebo

Nobody knows when, but the writing seems to be on the wall.

Zoran

Rates to rise, property speculation a 'mistake'

http://www.abc.net.au/news/stories/2...29/2858966.htm

coolshadows

major house builders have a monopoly on land, so effectively have created a land shortage. On average they only release around 1% of their portfolio each year to keep prices nice and high.

it's easier to be a highly profitable business if you have a monopoly.

coolshadows

Yeah I'm SURE too - lmao. The banks can rely on the LMI so why would they bother? Their own interest is protected, they're not interested in protecting the customers interest - that's for them to worry about. The bottom line for the banks is PROFIT and thanks to LMI housing is a LOW RISK investment for them (unlike the borrowers).

freebo

http://www.smh.com.au/business/prope...0408-rvcf.html

To anyone in the UK or US this may sound familiar?

Lyx

very familiar

IndieG

But tis different here

fish.01

Sounds similar to the following sort of comments from last year:

- A recession is bound to happen in OZ, Australia is just a year behind the UK and the US.
- Australians are stupid if they think they are different and won't go into recession.
- They are just as badly managed as us they just don't know it. There is no way they can avoid a recession because we didn't so how could they - impossible!! There is no difference between them and us they are just behind us like usual.

freebo

I actually don't think the recession is over, I think the effects where just postponed by massive money printing in the US and elsewhere. Australia has done well not because its so well managed (although I'm sure its better managed than most), but because China has been stockpiling commodities. If China catches a cold (and it could happen), Australia will get one too, IMHO.

fish.01

Sure, whether good or bad the point being it was different from the UK and US.

freebo

Absolutely, but also the US was different from the UK, the contributing factors where different but the end result was the same, easy money created a property bubble which encouraged debt and further speculation. It happened over a different time frame, first the US then the UK. In the US it was NINJA loans and the UK low interest rates and loose monetary policy. Australia had tighter policy but pumped the property market with buyer incentives.

The symptoms of a property bubble are looking eerily similar, over confidence in the market, increased speculation, mortgage borrowing for luxury items fueling high consumer debt, rising interest rates, distressed borrowers, low affordability etc.

Only time will tell if the outcome is the same.

On the subject of the GFC the effects of the US housing bubble have not yet been fully dealt with, the US govt just printed a vast amount of money to save the banks & took all the bad assets in return (mortgages), effectively they robbed the poor and gave the money to the financial elite. Now were supposed to believe that the cure for too much debt was actually a whole lot more debt. Within a year of being saved by public money the banks announce record profits and multi million dollar bonuses...

There are global imbalances which still need to be resolved and I'm not sure anyone can yet declare that they dodged the recession.

Again, all just IMHO

fish.01

Exactly. All unique circumstances that led to different severity of outcomes and different time frames. That's the challenge when looking at the Australian situation. Will it burst or deflate and when will it happen. What do our unique circumstances tell us. There are good signs and bad. Which outweigh each other. All these unique circumstances are worthy of discussion.

MartinLuther

Replace the word bubble with boom and it would sound just like the UK and US

77hil

Have to blame the Australian banks though who clearly have not taken any notice of the collapse that has happened across the rest of the globe. Again the belief that borrowing will never really have to be paid back. All laughably familiar.