Ominous signs in Australia

[Blindjustice]

https://static.ffx.io/images/$zoom_1.271%2C$multiply_1%2C$ratio_1.776846%2C$width_1059%2C$x_0%2C$y_3/t_crop_custom/w_1024/t_sharpen%2Cq_auto%2Cf_auto/6b428604ea52a83966ee185353cfe40f7be5e2a1

brisbanetimes.com.au/nation … 4z8s3.html

[yoganmahew]

Westpac Group, the nation’s second largest lender, is giving risky property investors less than a month to find another lender amid growing concerns about the impact of rising rates, falling values and oversupply.

The bank is sending a single-page letter to investors warning it can “no longer support our commercial relationship with you”, adding it will work with the borrower to help them find a new lender.

Victor Kumar, a director of Right Property Group, a buyers’ agency, who has seen the letter sent to property investors, said: “This is of concern because they have used the banking system to get these loans.”

The brief letter informs borrows Westpac is a responsible lender, claims it can no longer support the relationship and volunteers to help them find another lender, he said.

afr.com/personal-finance/we … 924-h15s1a

Uh-oh - it’s too late to leave the party, well, it is when you are so drunk you can’t walk.

[Blindjustice]

The housing downturn is likely to worsen if the banking royal commission unleashes a fresh round regulation on the banking sector, SQM Research’s Louis Christopher says.

“It’s hard to see Sydney and Melbourne recovering, at least not for the next year,” he said.

"The real risk is further regulation, which is acute now. What further regulation means is higher costs for banks to meet compliance and more restrictions on lending.

“The cost base of banks will go up and they could pass it on to borrowers.”

afr.com/real-estate/auction … 925-h15tq0

apparently regulation is ‘acute’ -

The Melbourne auction scene is dismal with the general number of bidders now down to “one or none”, buyer’s agent Morrell and Koren’s Emma Bloom says.

“A lot of auctions have been failing,” Ms Bloom said. “What agents are now doing to protect the value of the home is to use an expressions-of-interest private treaty selling method.”

Ms Bloom said they did this so they could pitch potential buyers against others sometimes “phantom buyers” in a less transparent sale process to an auction.

The only exception this past weekend was the sale of the five-bedroom family home at 8 Avenel Road in Kooyong at just over $3 million. It had a “surprising” four bidders, Ms Bloom said.

“I nearly fainted, it wasn’t even that good,” she said.

Ms Bloom said there was plenty of room to negotiate on properties of less than $5 million in Melbourne.

Vermin

afr.com/real-estate/melbour … 812-h13v0u

more often than not, none of them took any steps to verify the applicant’s outgoings.
Verifying outgoings was considered “too hard”.
“But what was meant by verifying outgoings being ‘too hard’ was that the benefit to the bank of doing this work was not worth the bank’s cost of doing it,” Mr Hayne said in his interim report yesterday.

amp.9news.com.au/article/b99fbe … e8e02e0f23

Australian Bureau of Statistics figures show Australia’s July building approvals figures are down -5.6 per cent in seasonally adjusted figures, with apartments the worst hit, down -6.2 per cent.
Mr Oliver said the worst is yet to come for Australia’s tradies, in a view supported by BIS Economics’s Angie Zigomanis.
“The fact that approvals are going down again points to a downswing at the end of the year going into next year,” Mr Oliver said.
Mr Zigomanis went further, predicting the decline would continue “at least another 12 months or possibly two years.”
Building approvals are important as they point to what comes next in the construction cycle.
In recent years building approvals have steadily risen as the east coast housing boom went into full swing. Levels grew to almost 30 per cent higher than the long term average, and the national residential crane count — 528 cranes — is significantly greater than the USA (300) and Canada (123) combined.
That’s despite Australia’s entire population being only 6 per cent of the combined populations of the United States and Canada.

https://cdn.newsapi.com.au/image/v1/d273ce41285590f14d6df63400393af5

construction accounted for 1.19 million, or almost 9.5 per cent, of all jobs in Australia. That’s not to mention the additional 228,000 who work in rental, hiring and real estate. That makes construction the third largest employment sector behind retail and healthcare.

A lot of people have gone into construction over the last decade, as the good times keep getting better.

Some of these people have never experienced a decline. But the drop in building approvals will soon mean there’s less work for nearly 10 per cent of our entire work force.

And in what could be seen as a sign of the times, job ads for construction and real estate/property are all down from last year, almost in line with the concurrent falls in building approvals.

This reflects a growing trend that’s been seen in Seek ads since June earlier this year.

https://cdn.newsapi.com.au/image/v1/6308716f48c56eb0dc212d2e3d2e1b7c

news.com.au/finance/economy … 1223ae1743

[Blindjustice]

While the overall average is much less, some individual postcode areas have dropped by around 15 - 27 or so %

House prices in Hawksburn and Toorak (3142) have fallen 18 per cent over the past year to June 30, 2018 and the prices of units in the two suburbs have fallen by 15 per cent.

Postcode 3182 St Kilda, St Kilda West -27.3%

smh.com.au/money/investing/ … 506od.html

Sydney:

Postcode 2007 – Broadway, Ultimo –18.8%

smh.com.au/money/investing/ … 506b5.html

Check out the cool tool on realestate.com.au
Lets look at St Kilda on it…
realestate.com.au/neighbour … 2-vic?cid=

Scroll down to the “Median property price” heading, look at the trend for the last few months - since June prices have been below 1 million and as of September 2018 the median is $865,000.
Change the chart from monthly to annual - the latest number is December 2017 - I reckon the chart must need a full year to auto expand another year which is why on the monthly we get the month just gone etc. Anyway the Median price as of December 2017 was $1,367,500

Eye watering with plenty of more room to drop. In 2013 house prices were $590,000 - which is where it dropped to (from highs of $727,750) after the last temporary drop in prices with were ramped back up by various things that just wont help this time.

[Blindjustice]

9news.com.au/national/2018/ … -sold-land

Repo fun begins

[Epicurus]

Where’s me Nama Sport!

[dolanbaker]

https://www.9news.com.au/national/2018/10/08/19/14/property-dispute-melbourne-family-camp-on-sold-land

Repo fun begins

Site repo’d in 2014, new owner started work on it a couple of weeks ago and displaced owner then decided to “occupy” the land!
Why didn’t make a stand four years ago?

[NegativeEquity]

https://www.9news.com.au/national/2018/10/08/19/14/property-dispute-melbourne-family-camp-on-sold-land

Repo fun begins

Site repo’d in 2014, new owner started work on it a couple of weeks ago and displaced owner then decided to “occupy” the land!
Why didn’t make a stand four years ago?

Ben Gilroy prob going on holidays to Oz in the near future.

[Blindjustice]

More than 1 million households in mortgage stress

macrobusiness.com.au/2018/1 … ouseholds/

and…people are starting to wonder about deposit safety

[Blindjustice]

abc.net.au/news/2018-10-16/e … s/10378570

The National Debt Helpline — a federal government-run financial counselling service — said it’s on track to receive a record number of cases through its call centres this year — many from older Australians who can’t meet their mortgage or rent payments.

“The phones just never stop now,” financial counsellor Greg said.

"They’re just going day after day, after day.

“You put the phone down, you pick the phone up again.”

Greg has been with the call centre for 14 years.

He said it’s never been so busy, now with record numbers of older Australians calling in, unable to pay rent, or make good on their mortgage repayments.

[DSE3Br]

AMP predicting a 20% peak to trough decline in Sydney/Melbourne. Back to 2015 levels they reckon. To sustain a bounce at those levels you would need what? Maybe if rental yields get to levels where they exceed the cost of capital? I think that would require a big discount even if interest rates drop. Even then, value investors would be looking for a decent risk premium before taking the plunge. Lenders are likely to get a whole lot more selective in who they lend to.
afr.com/real-estate/amp-cap … 018-h16sdp

[propertyspire]

There are two things that can happen to an asset price bubble. It can burst dramatically, or deflate slowly.

Which brings us to the Australian housing market.

Prices in Sydney and Melbourne continue to decline at a modest rate. The CoreLogic index has Sydney prices down 6.1% for the last 12 months, and Melbourne down 3.4%.

This barely dents the huge increases in previous years and is consistent with “deflate slowly” scenario.

What could cause a pop?

Interest-only loans could do it
As I have said here before, one of the worries is interest-only loans.

theconversation.com/vital-signs … how-105137

[Blindjustice]

Chinese nationals are buying Australian vineyards and wineries at unprecedented levels, with up to 10 per cent of South Australia’s iconic Barossa Valley now in Chinese hands.

abc.net.au/news/2018-10-27/ … y/10429078

Communist party wine

as of June 2017, its records stated 13.6 per cent of all agricultural land was foreign held

Australia already selling off the silverware

[Blindjustice]

abc.net.au/news/2018-10-26/ … u/10435148

One Belt, One Road: Victoria signs MOU to join China’s controversial global trade initiative

Senior national security figures have often warned of serious “strategic” consequences if Australia formally signs up, although various investment projects on Australian soil seem to have had some form of involvement.

[the_dude]

https://www.abc.net.au/news/2018-10-26/victoria-and-china-belt-and-road-signing-mou/10435148

One Belt, One Road: Victoria signs MOU to join China’s controversial global trade initiative

Senior national security figures have often warned of serious “strategic” consequences if Australia formally signs up, although various investment projects on Australian soil seem to have had some form of involvement.

Has any country other than China ever ended up on the winning side of one of these deals ?

[propertyspire]

Westpac Group, the nation’s second largest lender, is giving risky property investors less than a month to find another lender amid growing concerns about the impact of rising rates, falling values and oversupply.

The bank is sending a single-page letter to investors warning it can “no longer support our commercial relationship with you”, adding it will work with the borrower to help them find a new lender.

Victor Kumar, a director of Right Property Group, a buyers’ agency, who has seen the letter sent to property investors, said: “This is of concern because they have used the banking system to get these loans.”

The brief letter informs borrows Westpac is a responsible lender, claims it can no longer support the relationship and volunteers to help them find another lender, he said.

afr.com/personal-finance/we … 924-h15s1a

Uh-oh - it’s too late to leave the party, well, it is when you are so drunk you can’t walk.

I dont get it
Are they on about future lending?
Can I assume they have packaged all there existing (billions/trillions) loans to third parties i.e. you and me and pension funds?

[Blindjustice]

news.com.au/finance/busines … dd171fc571

ANZ has blamed “strong headwinds” in the housing market and the fallout from the banking royal commission for a 5 per cent drop in full-year cash profit to $6.487 billion.

[Blindjustice]

Sydney’s annual price change has been revised down heavily, from -6.3% to -7.4%

macrobusiness.com.au/2018/1 … downwards/

[Blindjustice]

podcast
abcmedia.akamaized.net/radio/lo … gomery.mp3

Have a listen in to Roger Montgomery on the on ABC yesterday here. Fast forward to Sally at 24 minutes who is a realtor managing some large settling apartment blocks in South Bank, Melbourne. Her story of Chinese buyers left high and dry should give everyone pause for what’s coming down the pipe in terms of defaulting developers and forced stock sales:

macrobusiness.com.au/2018/1 … partments/

another interesting sign
forums.whirlpool.net.au/forum-r … ?t=2762040

[catbear]

podcast
abcmedia.akamaized.net/radio/lo … gomery.mp3

Really interesting perspective about retirement develops at the 40 minute mark, I hadn’t thought about the inability in a falling market to raise the downpayment that developers would need to begin.

I reckon the Irish Fair Deal scheme could be adapted further to bridge that gap. It would actually allow people stay out of nursing homes longer if they can transition to a semi independent living developments.