Australian housing bubble thread

Discussion in 'Economics' started by m22au, May 21, 2010.

  1. sydney auction clearence rate low 60s% ,dn from 80s, over the w/end
    housing finance up.5 compared to .7 last month
    seems to me that that the last round of property spiking up during apr/may looks like it sucked a raft of new probaly first home owners(i hope not)into the highs
    i can see a 800k house becoming a 500k house over the next 5yrs...why not(pls dont say lack of supply)
    remember gfc houses in north shore/eastern suburbs dropped by a third now at that stage it just seemed confined to investment bankers et al the margin loan set but i think the next 5yrs will put the average sydney debt loaded household under alot of pressure
    look at the rba credit numbers they are very bad, housing finance is/was the only thing propping it up...personal and esp business are flat to negative and in particular m3 is now running at 2.9%
    these are numbers of a at best stagnant economy and yet we are touted as the strongest in the world?
    #11     Jun 1, 2010
  2. Wordwide capital streams have concentrated into Australia as a result of the resource boom so naturally they're experiencing a rising tide. Claiming that the Australian property market is a "bubble" is ridiculous speculation however. The property market in Australia has gone through a price correction but has held up well in the face of rising interest rates.
    #12     Jun 1, 2010
  3. m22au


    #13     Jun 1, 2010
  4. Daal


    Yes the resource boom can fool some as housing is supposed to do better when the economy is doing great. But the valuations are pretty high, at similar levels to other bubbly housing markets, including housing prices to income, and the key about income is that it already takes into account the resource boom
    #14     Jun 1, 2010
  5. This is starting to become like the US market thread of a few years back. I recall that, on stating a few simple observable facts to one on the outside, I was told that, not being American I should stay out of the argument.

    Funny how biased people get when its housing.

    There was almost no correction here. Prices were held up by:
    - the old distortions continuing
    - a doubling of the first home buyers grant (which instantly added more than the grant to the price of houses in that bracket)
    - cash handouts to all to prop up the retail sector
    - the china will save us all story.

    Like all bubbles, I will be wrong about the exact timing. I will also be wrong about the cause (what will be the confidence tipping point in Aus this time?) But in the end it will pop.

    My guess is that it pops within the next few months. My friends in real estate over here are not quite the optimists they were last year (and when is a salesman anything but a booster?)
    #15     Jun 1, 2010
  6. Pinozi


    US hedge funds dump Australian bank shares

    AUSTRALIA'S biggest banks have become the victims of aggressive international hedge funds, which are shorting the banks' stocks after growing concern about the strength of the domestic property market.

    The top four banks have suffered a sustained selldown since April, as the US funds slash their exposure to the local financial services sector.

    Westpac has experienced the most savage declines, with its share price down 19.4 per cent since early April, ahead of NAB's 15.5 per cent decline, CBA's 13.97 per cent fall and ANZ's 12.82 per cent depreciation.

    The sell-off of the banks, combined with the negative sentiment towards the Australian mining industry because of the government's super-profits tax, has pushed the S&P/ASX200 down at least 8 per cent in the past month.

    A New York hedge fund manager, who did not want to be named, said sentiment towards the Australian banks had soured because of doubts that the strength in the national property market would be sustained.

    "There's a lot of scepticism in the US regarding the Australian property market," the hedge fund manager said.

    "A lot of people have doubts about whether the strength of the market is going to be maintained.

    "I think it's the case funds are shorting the banks. If you're of the view that property is going to come off, then shorting the stocks is a very clean way to express that view. It's an attractive trade."

    Australian property prices have remained resilient, as capital city property prices rose 4.4 per cent in the first quarter of the year. However, new figures published by RP Data-Rismark this week show a weak 0.3 per cent increase in April. Economists were also surprised this week when new building commitments plunged by 14.8 per cent in April, outstripping the market's consensus for a 5 per cent decline.

    The big four banks in Australia confirmed there had been an increase in the level of international trading in their stocks but downplayed the property connections.

    The fall of the Australian dollar was thought to have prompted some of the overseas selling.

    The banks' share prices have been under pressure since the recent reporting season in late April, when the chief executives warned of slowing earnings growth in the next 12 months.

    The cash earnings of the majors rose, but there was pressure in individual businesses at each of the banks.

    Westpac's Gail Kelly surprised the market when she said earnings growth would be difficult to maintain in the second half of the financial year.

    Westpac is thought to have been targeted most heavily by hedge funds because of its large residential mortgage book, which has grown rapidly over the past two years.

    CBA is understood to be least exposed to hedge fund investors compared with its three major rivals, primarily because of its large retail investor base.

    However, several US long-only funds are thought to have sold out of the bank recently.
    #16     Jun 5, 2010
  7. m22au


    Home prices drop for first time in 17 months

    National city home prices fell for the first time in 17 months in June, as rising interest rates sent auction clearance rates lower.

    Median national home prices fell by 0.8 per cent in June, in raw terms, from a 0.6 per cent increase in May, according to RP Data-Rismark figures. It was the largest monthly fall in home prices since April 2008, shaving the median national dwelling price by $3000 for the month to $465,000.

    More detail in the link above
    #17     Jul 30, 2010
  8. finance numbers out today showed an uptick in housing to 8% so thats pretty consistent personal/bus credit is still flat to all the money is being sucked into housing as long as umemployment stays strong it will keep it all together if not then...ya stuffed
    #18     Jul 30, 2010
  9. A hard rains gonna fall in Oz ...

    I remain way long Jun 11 and Sept 11 Aussie 90 day bill futures ...
    #19     Jul 30, 2010
  10. hum... i have done proper research, numbers statistics, etc and here it is.
    Research done using historical house sale data and compared prices in Sydney Inner West which is the constant hot area due to old town feel and achieved fantastic returns, etc... as this is potential area of interest to me. Only sales of the same unimproved properties included (to best of my knowledge). Top and bottom results discharged.
    Sure, I was surprised. I am getting average return across the sales i could identify for last 10 years around 4.5% per annum after latest surge.

    Which is equivalent to renting due to low renting yields. So person renting 10 years house would end up with more or less same money as person buying in 2000 and sell in 2010. Found couple of prices back to 91 and compared to sale 10/09 and appreciation was 2.5% per annum. Looks like nienties more moderate although '91 recession. So, really = inflation more or less. All in balance looks like.

    Lower returns for appartments.

    Where are these XXX% returns claimed by AU house index ?

    Is it possible that price increases are only due to renovations, maybe cherrypicking which sales go in index and building more expensive & luxurious places later on to get illusion going ?

    If my research is correct then affordability is virtually the same as it was more or less during last 20 years.

    And bubble may pop due to over-renovation and abuse of lines of credit thinking how rich you are and not due to REAL increase in house prices.

    Any ideas what am I missing here ?
    #20     Sep 22, 2010