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 Post subject: Re: Ominous signs in Australia
PostPosted: Thu Jul 19, 2018 12:42 am 
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https://amp.smh.com.au/business/the-economy/the-epicentre-of-the-downturn-sydney-housing-slump-to-last-until-at-least-2020-say-economists-20180719-p4zsa9.html

The 'epicentre of the downturn': Sydney housing slump to last until at least 2020, say economists
Quote:
The key takeaway from economists: the "fear of missing out" is now over. And while predictions are for a relatively soft landing, it's time for the market to adjust to a new normal.


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 Post subject: Re: Ominous signs in Australia
PostPosted: Mon Sep 17, 2018 4:35 am 
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https://www.afr.com/real-estate/residen ... 915-h15fq6

Quote:
Sydney house prices have fallen 7.1 per cent over the past 12 months with Melbourne down 2.7 per cent


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 Post subject: Re: Ominous signs in Australia
PostPosted: Tue Sep 18, 2018 7:57 pm 
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Bricks and slaughter: Part one - Exposing Australia's housing crisis | 60 Minutes Australia



Quote:
It’s no secret that Australia is experiencing a downturn in the property market. But for Aussies who own their own home or have a mortgage, there’s worse news. Many believe calling it a downturn is foolishly optimistic – the slump we are in is more like falling off a cliff.


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 Post subject: Re: Ominous signs in Australia
PostPosted: Tue Sep 18, 2018 10:43 pm 
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snaps wrote:
Bricks and slaughter: Part one - Exposing Australia's housing crisis | 60 Minutes Australia

Went onto the second part two, comments disabled. It's going to be a bloodbath.

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Those who don't study history are doomed to repeat it. Those who do study history are doomed to watch everyone else repeating it.


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 Post subject: Re: Ominous signs in Australia
PostPosted: Tue Sep 18, 2018 11:25 pm 
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https://www.professionalplanner.com.au/ ... or-a-rout/

That is well worth a read

Quote:
question is whether the rapid accumulation of household debt – to record levels – will produce not only weaker economic growth (through a decline in construction activity, home sales, renovation demand and, consequently, consumer spending and sentiment) but also a more painful experience, such as a recession.



Quote:
over the last five years, the banks have written $650 billion in interest-only mortgages. That represents about 40 per cent of the total book of mortgages written. The value of interest-only loans maturing next year will be $133 billion. That figure will peak in 2020 at about $159 billion, with another $135 billion maturing in 2021 and $117 billion doing so in 2022. If 40 per cent of the total book is interest-only and the APRA-imposed cap is 30 per cent of all new loans written (assuming no system growth), that means about 10 per cent or $136 billion will migrate from interest-only to P&I between now and 2022.

ASIC states that the average size of an interest-only mortgage is $347,000, which means there are about 392,000 interest-only mortgagors migrating to P&I between 2019 and 2022. Keep in mind it is the marginal buyer and seller that will determine the price of everyone’s property. It is the behaviour of buyers and sellers next weekend that determines property prices for all of us.



Quote:
AGL Energy financial year 2017-18 result showing bad and doubtful debts jumped more than 20 per cent, to $94 million – equal to fully 13 per cent of the CBA’s bad and doubtful debt charge.



Quote:
Australia-wide, home-loan growth is going backwards at the rate of about 8.4 per cent as at June this year


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tidal wave of interest-only mortgages that would switch to principal and interest (P&I), and which would be accompanied by a rise in repayments of as much as 40 per cent. Clearly, this will have a dampening effect on discretionary spending.


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we haven’t even touched on the impact of a 65 per cent slump in applications to the Foreign Investor Review Board (FIRB) by foreign entities for investment in housing


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Moody’s data shows that the 90 days past due delinquency rate for mortgages that have converted to P&I from IO is 0.94 per cent, double that of IO loans that have not yet converted and 0.24 percentage points higher than all securitised mortgages.”


Quote:
owner-occupier loans for alterations and additions slumped about 20 per cent, year-on-year


again, worth a read


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 Post subject: Re: Ominous signs in Australia
PostPosted: Wed Sep 19, 2018 9:40 am 
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Excellent article


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 Post subject: Re: Ominous signs in Australia
PostPosted: Thu Sep 20, 2018 12:18 am 
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Quarterly Figures

Image

http://www.abs.gov.au/ausstats/abs@.nsf ... num=&view=

Quote:
Annually, residential property prices fell in Darwin (-6.1%), Sydney (-3.9%) and Perth (-0.9%), and rose in Hobart (+15.5%), Canberra (+3.0%), Melbourne (+2.3%), Adelaide (+2.1%) and Brisbane (+1.7%).

http://www.abs.gov.au/ausstats/abs@.nsf/mf/6416.0


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 Post subject: Re: Ominous signs in Australia
PostPosted: Thu Sep 20, 2018 4:34 am 
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Quote:
Overall, Australia's population grew by 380,700 people to reach 24.9 million in the year ending March 2018.

Net overseas migration added 236,800 people to the population, and accounted for 62 per cent of Australia's total population growth.


http://www.abs.gov.au/ausstats/abs@.nsf ... Mar%202018

Highly highly relevant as there are some reports of vacancy rates dropping and rents rising which would put a floor under price drops. The government very deliberately put the foot down on the accelerator of migration over the past few years.

It is labeled as skilled migration but thats only a tiny amount relative to the new 'temporary' visas that have been issued. Those 'temporary' visas are a route for large numbers of low skilled third world migrants who will cram in to Sydney and Melbourne (and they are as its far better than the slums they come from). The catch is a very real race to low standards of living.

Quote:
This faster-than-expected surge in population has been an important element in propping up the Australian economy and has supported the ‘27 years of continuous economic growth’ narrative. Indeed, it is possibly the only element, given that population increase contributed around two-thirds of total economic growth in Australia since the GFC.

The challenge is that, while Australia’s income continues to increase on the back of population growth, last year we saw a small decline in real income per capita. That is, while population growth is propping up our headline economic growth figures, the real standard of living has stagnated and fallen slightly (0.2%).


https://www.pwc.com.au/press-room/2018/ ... oming.html


The government doubled down on property quite a while ago. Remember they also guaranteed the banks in 2008 (which had the unintended consequence of relieving the banks of negative impacts of irresponsible lending) thereby throwing fuel on the fire.

Nevertheless at growth of 380,000 a year and an average household size of 2.6 it equates to a demand of 152,000 properties a year. The rate is currently over 200,000 being built a year


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 Post subject: Re: Ominous signs in Australia
PostPosted: Thu Sep 20, 2018 9:34 am 
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Spoke to a banker in Sydney. "Soft landing on the way, Sydney back 5-10%, with another 5-10% to come, Perth already bottomed out, Brisbane and Adelaide never had a boom."

Safe to say that panic hasn't set in just yet... :x

We all partied. XD BD


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 Post subject: Re: Ominous signs in Australia
PostPosted: Thu Sep 20, 2018 3:39 pm 
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https://www.afr.com/real-estate/one-in- ... 920-h15mt1

https://rogermontgomery.com/how-well-do ... more-28335

Second link would leave you speechless or you might laugh out loud alot. It's subscription but free to, do it if you are Aussie based


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 Post subject: Re: Ominous signs in Australia
PostPosted: Thu Sep 20, 2018 11:59 pm 
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https://www.afr.com/real-estate/one-in- ... 920-h15mt1

Recent mortgage survey done by UBS ("How well do you know your mortgage" - more info in the link in the post above on the roger montgomery website)
Quote:
One in five interest-only borrowers could run into mortgage repayment arrears


Quote:
of the interest-only loans issued to owner-occupiers, rather than investors, a third of borrowers signed up for the mortgage to benefit from negative gearing, a concession only available to investors



Quote:
one in three still didn't know how much their repayments will increase when their interest-only loan period expires.

"We believe interest-only product knowledge remains poor and the more we delve into the data the more concerning the responses," UBS said.

UBS takes a view that a credit crunch in the next two years is likely as will a persistent fall in house prices, particularly in the next year


Hard to see anything other than a massive bail out


this is from a year ago:
Quote:
only 25 per cent of respondents claimed to have taken out an interest-only loan, well below the official statistics of 35 per cent.

The only plausible explanation, they said was that "around one-third of interest-only customers do not know or understand that they have taken out an interest-only mortgage".

https://www.afr.com/business/banking-an ... 004-gyu2qh


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 Post subject: Re: Ominous signs in Australia
PostPosted: Fri Sep 21, 2018 1:49 am 
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https://www.news.com.au/finance/busines ... 446e03ca3b


Quote:
AN ELDERLY West Australian couple who were “doorknocked” by a salesman spruiking a real estate investment thousands of kilometres away were victims of a “fraud” committed by Westpac, consumer advocates claim.

An internal mortgage application “tracker” showing how bank staff inflated the couple’s monthly income to get a $464,000 loan over the line was tweeted out by LF Economics founder Lindsay David on Tuesday.

The couple, whose confidential settlement with Westpac prevents them speaking to media, were declined for the loan on January 19, 2012. The document shows that on February 10, a bank staff member adjusted their total monthly income from $4561.67 to $5797 after the husband received a one off bonus.

The loan was approved, and within 18 months they were struggling to make the repayments due to the property remaining untenanted for long periods.

“This is how the banks do fraud,” Mr David said. “(The tracker) is a basic timestamp style, it shows who touched what, and all of the employees on that list I believe are still working at Westpac.”

He likened Westpac to a “chop shop”. “You know how they get all the stolen cars, cut them up into pieces and put them back together?” he said. “That’s why you have so many borrowers getting loans they can’t afford.”


Quote:
UBS analyst Jonathan Mott has estimated as much as $500 billion of Australia’s $1.7 trillion mortgage book could be made up of so-called “liar loans” — loans that relied on false information, whether from the borrower, broker or banker.


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 Post subject: Re: Ominous signs in Australia
PostPosted: Fri Sep 21, 2018 2:20 am 
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https://www.macrobusiness.com.au/2018/0 ... -adelaide/

Quote:
The South Australian Liberal Government is preparing the ground for a cheap labour flood by axing labour hire laws targeting migrant worker exploitation.


Quote:
A decision to scrap laws put in place to punish companies that exploit workers has been labelled as an "attack" on the state's most vulnerable workers by the South Australian Opposition. The scheme, which came into effect earlier this year, includes stricter penalties for wrongdoers and a requirement for all labour hire companies to be licensed. The amendments successfully passed SA Parliament in November 2017



Quote:
South Australia’s labour underemployment and underutilisation rates (some of the highest in the land)


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 Post subject: Re: Ominous signs in Australia
PostPosted: Mon Sep 24, 2018 8:43 am 
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The media is catching on
https://www.news.com.au/finance/economy ... 4d30a3ecd8
Quote:
According to late Irish finance minister Brian Lenihan, that was the message he received on his phone from European Central Bank chief Jean-Claude Trichet on September 27, 2008, at the height of the financial crisis.

Three days later, Ireland’s government announced a controversial blanket guarantee of the banks. Over the next two years, the country’s banking and property sectors collapsed, costing taxpayers €64 billion ($100 billion).

“Our banks were very dependent on obtaining funding from other countries, and once that began to dry up we knew that would create very serious problems for the Irish banking system,” Mr Lenihan said in a 2010 TV interview before his death.

“Mr Trichet rang me and hadn’t been able to get through to me. I was at a racecourse in County Kilkenny at a (party) event. So I caught up on Mr Trichet’s message the following day, which was that, ‘You must save your banks at all costs’.”

While Mr Trichet would later deny such a call ever took place, insisting he did not “blackmail” Ireland into a series of financial measures culminating in the November 2010 bank bailout, experts have drawn comparisons to Australia’s situation a decade later.

In a provocatively titled video, “Will one phone call drop home prices by 80 per cent?”, Digital Finance Analytics founder Martin North, economist John Adams and PhD student Sean Quinn, who was in Ireland at the time, discussed what would happen here in a similar scenario.



Quote:
About $260 billion of Australia’s $486 billion 90-day debt comes from Wall Street, with most of that funding held by the Big Four. Australia’s total household debt to GDP is now one of the highest in the world, at 120 per cent.

With taxpayers footing the bill, house prices in Ireland fell by 40 per cent. Without the bank bailout, Mr North believes they would have fallen by double that. In Australia’s case, that would plunge Australia into a depression to rival that of 1892.

“You’ve got to say, let’s understand what created the problem in the first place, which is the debt bomb,” Mr North said.

“If we are simply just kicking the can down the road, we’ve actually not solved anything, we’ve just moved the problem out a bit but we haven’t actually fundamentally thought about how to reset the economy.

“It seems to me at some point, there has to be an ‘alt-control-delete’ on the way the economy works. Tough though it would be, if I were getting that phone call I’d say I think that short, sharp, deep recession is probably the least worst option.”


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 Post subject: Re: Ominous signs in Australia
PostPosted: Mon Sep 24, 2018 11:46 am 
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Quote:
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.


https://www.afr.com/personal-finance/we ... 924-h15s1a

:shock:


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