Ominous signs in Australia


#1

Third interest rate hike…
news.com.au/business/money/s … 10,00.html
Offers from developers…
dailytelegraph.com.au/news/h … 5804948858


#2

#3

Melbourne is going feckin mad

It’s all very 2006 isnt it.


#4

Correct me if I’m wrong but the developers in my second link won’t get finance if they can’t sell off plans? I’d be mighty p1ssed if my $600,000 shoe box in the Westies just dropped 10% when it’s already a guaranteed cashflow loss on completion. My girlfriend’s friend just put down a deposit on and off plans apartment mileage from Brisbane CBD to get a “foot on the ladder”. Scary stuff.


#5

Ah, straight line economic forcasting gets another mental-I’m an utter gobshite spokesman.


#6

Next up - demographics.


#7

Signal of a commodities top?


#8

As long as China keeps growing, Oz will keep booming.


#9

Everyone’s a little sheepish about calling Oz I notice.

I say bubble but the China point is valid.


#10

How do I short oz property?


#11

Same way as you short property anywhere else. Short those holding the mortgages, selling houses, arranging credit etc.


#12

Melbourne is a difficult call . Lots of sub prime lending , Tabloid media scaring people with talk of ’ getting on the ladder ’ mainstream media at it as well with talk of the average house costing 1 million in 10 years time .
Economy is doing well and rents are going up . All banks fine with no bailouts .

Interest rates are on the rise , almost by the month . There was an economist on TV saying he could not understand how prices wee going up along with interest rates . He advised people not to buy but to rent and save instead as and I quote ’ House prices always come back to affordability at some stage ’

I would say a small bubble which will burst when the first time buyers grant runs out and interest rates hikes kick in .
We can’t all be as dramatic as Ireland .


#13

How about Japan or California or Dubai or Spain or Bulgaria or Florida?


#14

Nope , none of the above . Average house prices in Melbourne are not that much over heated . Could always move up a couple of gears but unlikely given interest rate rises .


#15

https://www.myrp.com.au/upload/propertystats/melbourne_house_prices_graph.jpg

myrp.com.au/melbourne_house_prices.do


#16

Sorry, everybody knows, but articles like this make me think differently:
news.com.au/business/money/s … 51,00.html

Soft landing?:

Bumps in the road? Nah:

I know it is a shill piece, but it matches exactly the predictions that shill pieces were making about Ireland in 2006.

The question is what is going to happen in the Australian economy. I see two scenarios:

  1. World economy recovers, China keep buying commodities, but demographic pressures ease as people can find jobs at home.
  2. The world economy doesn’t recover, China reduces commodity buying…

There are few countries in the world undergoing inflation, Australia is one of them. At some point the cycle will turn and that debt will have to be accounted for. A median house price of 442k is ridiculous, when median income levels in Melbourne are about 20k per individual. Even with average male and femal incomes, that only comes up to 60k, so you are looking at 10x median couple income or 7.5x average couple income for the median house.


#17

I said there was a small bubble and that they were overheated . My point is there is a bubble but not a big one . Another factor is that emigration into Australia that is putting demand on housing stock .


#18

Would that be demographics?


#19

Average earnings for someone in full time employment is $60 - $65k. abs.gov.au/AUSSTATS/abs@.nsf/mf/6302.0
That is Australia wide so I would expect Melbourne would be a bit higher, the same way that people in Dublin typically earn more than people in Limerick, Cork & Galway.

The median comes out at 6.8 times average earnings, pretty consistent with recent years Demographia housing affordability surveys.

Comparing prices alone is not apples for apples. The average home size in Victoria is the largest in the world. theage.com.au/national/welco … -jywb.html

Your average new home in Melbourne at $442k is a 245sqm five bedroom detatched house on it’s own block, not a 66sqm two bedroom shoebox with no parking space. Mind you it’s also 40-60km from the city, but there are good freeways and a sometimes-functional rail system.


#20

Well, that’s why I gave the median. The median tells you what half the population makes less than. If you are talking about median price, which is what 441k is, then you talk about median wage. If you can find the average price, let me know!

Melbourne may be desirable from an anglo-centric point of view, but it is neither the capital nor the first city of the country… perhaps it is relatable to Cork?

The median of the average?

Granted. But the average non-house size is smaller. It would still be large by Irish standards, but then the kennel I built for the dog is large by Irish standards. While this may be evidence that builders aren’t gouging buyers, it doesn’t say anything about bubbles. McMansions drop in price just like shoeboxes do.

Besides, what I was trying to do was to compare the median price to the median wage and an average price to average wage is equally a useful metric.

The other consideration is whether there are properties available for the lower paid - do you have to indenture yourself to buy ‘anything’, never mind what you might actually want/need.