Australias Property Bubble Bursting

[Anonymous No.12882583]

She's fucked mate, big time.

https://www.theaustralian.com.au/business/time-to-get-real-property-sellers-told-as-discounting-bites/news-story/fa36727bdf400797dc355ef8741a4e96?

>The gap between buyer and seller expectations is continuing to grow as property vendors around the country are forced to drop prices to get settlements over the line.

>Around 75 per cent of properties sold by private treaty in the last quarter of 2018 were settled for less than the original asking price, Core Logic data shows.

>The heavy discounting is prevalent in almost all capital cities, where the median discount sits at 6.3 per cent: the worst figure since 2009. While regional markets are still weak, they are performing better at, with a 5.2 per cent discount.

>CoreLogic data analyst Cameron Kusher said discounting was likely to continue and that sellers needed to be more realistic when setting prices.

>Sydney experienced substantial discounts over the past 12 months, beating global financial crisis levels. The median vendor discount is currently 7.5 per cent, 2.7 per cent worse than 2017. But, Melbourne has had the steepest jumps in house price discounting, hitting a record all-time record of 7 per cent.

>Brisbane and Adelaide markets have had modest discounting, each currently at 5.3 per cent.

>Perth was the only market to slightly reduce its discounting levels, up 0.1 per cent to 6.4 per cent.

[Anonymous No.12882601]

What's the deal with this guy? Why does he keep posting these threads? What's he getting out of it?

[Anonymous No.12882603]

>>12882601
Coping mechanism that he will never be able to afford a fucking house.

[Anonymous No.12882611]

>>12882601
>>12882603

>Why follow the biggest expense of your life? What's the motive?

Dunno you'll have to work that out yourself champs

https://twitter.com/PhilipSoos/status/1101000467817979905

[Anonymous No.12882621]

>>12882611
Melbourne Q4 vacant land sales results.

42% fall in sales in a single qtr to Q3.
58% fall in sales compared to Q4 2017.

[Anonymous No.12882622]

>>12882601
He's doing everyone a service

[Anonymous No.12882629]

>>12882611
You're not understanding my question. Why do you keep *posting these threads*? They clearly take a lot of time to type up. What benefit is it to you to have these threads on biz?

[Anonymous No.12882632]

>>12882621
Sage, your a faggot
Go get a job

[Anonymous No.12882633]

>>12882629
They get other people talking which provides me the opportunity to learn about issues I might not have considered, which allows me to further inform myself and make the best decisions possible I can in the real estate market.

[Anonymous No.12882640]

>>12882632
Cope

[Anonymous No.12882651]

>>12882633
Not buying it. Trolling for info is done by lazy anons and is always lazy as fuck. In these threads you're making all of the effort by an order of magnitude.

[Anonymous No.12882679]

>>12882640
Kys aussie white dog, id slap you and your family all the way back to the convict era

[Anonymous No.12882693]

>>12882679

[Anonymous No.12882761]

>>12882629
>why do people post threads for substantive discussion about things that interest them and affect their lives
How many X chromosomes do you have?

[Anonymous No.12882790]

>>12882761
You must be new here. Did you stock up on idex shitcoins like all those "discussion" threads told you to?

[Anonymous No.12882798]

>>12882583
Gday property OP I'm interested in these posts.

How long do you think this downward trend should last? I've signed a year lease with plans to buy at the end of it. Obviously I'll re assess when the time comes. TY

T. Melbourne poofter

[Anonymous No.12882825]

>>12882583

[Anonymous No.12882846]

man theres going to be alot of pajeets who racked up huge ass negative mortgages in the last decade hehe, maybe it's time to go back

[Anonymous No.12882876]

>>12882798
I can't say, i'd suggest following the publicly released monthly data in the news to get a handle on where the market is at. There's no shortage of news articles I tell ya

[Anonymous No.12882976]

>>12882798

last time it happened in the early 90s it only lasted 2 years

[Anonymous No.12883017]

>>12882825
kekkles

[Anonymous No.12883244]

Stay in cash, don't buy. Prices will go lower yet for another year or two.

[Anonymous No.12883252]

Its funny how data makes people upset

Look at the gains, what's there to cry over

[Anonymous No.12883315]

Credit momentum continues to lag.

[Anonymous No.12883320]

What happens in 2020 when all these IO loans that originated in 2015 have to rollover but they're in negative equty because we're already unwound to 2015 prices?

The bulk of the rollovers in 2019 are from 2014 and prior but 2020 is mostly going to be people who bought just under the peak. 2021 same again.

[Anonymous No.12883337]

>>12883320
About half of all mortgages originating in 2015 were IO.

[Anonymous No.12883347]

>>12883320
Hence we're still ages from the bottom. Throw in a recession/big economic slowdown being pretty likely in the next 2-3 years, the RBA's pathetically low rates and this time with no China to bail us out and we're in a very very bad place

[Anonymous No.12883373]

>>12883347
https://www.afr.com/news/economy/housing-credit-suffers-worst-month-since-1984-20190228-h1btp0

>Low rate terms on interest-only loans are expiring and it has been estimated that about about 650,000 borrowers with loans totalling around $230 billion could struggle to refinance, according to Morgan Stanley.

>"A key contributor to slowing credit growth is that many investors have switched from interest-only mortgages to principal and interest," Mr Kusher said.

>"Previously, these borrowers weren't paying off the principal on their mortgage, now that they are, coupled with far less investor mortgage demand, they are paying back their principal and fewer new investor mortgage applications are occurring which in turn contributes to the ongoing slowing of investor credit growth."

[Anonymous No.12883391]

>>12883373
https://www.afr.com/real-estate/interestonly-loans-worth-230-billion-trap-650000-warns-morgan-stanley-20190215-h1bbcy

>About 650,000 borrowers with loans totalling around $230 billion are 'trapped' in their interest-only loans and could struggle to refinance, forcing many to sell into already deteriorating property markets, according to investment bank Morgan Stanley.

>Borrowers will need to extend the interest-only period, switch to a principal and interest loan or find a buyer for their property as their low rate terms expire, warns the analysis, which was done in conjunction with AlphaWise, a customised researcher for hedge funds and finance companies.

>"Almost half of interest-only borrowers are 'trapped'," the analysis warns.

>"These households appear high risk on a variety of metrics, and we expect added selling pressure on the housing market when their interest-only periods expire in the next two years."

[Anonymous No.12883439]

This is a year old, I'd love to see the new one given Sydney fell ~10% yoy since then and Melbourne ~7%.

[Anonymous No.12883444]

Good thread thanks for the insight gentleman

[Anonymous No.12883466]

>>12883439

[Anonymous No.12883982]

>You didn't buy Appen shares when I told you to in 2015

[Anonymous No.12883999]

Keep it up OzProperty Anon. Been doing research myself, since I've finished holding my tether for 1 year (for 50% discount on CGT) after selling btc around 12k, and just waiting for shit to go down before dumping it all on property. Your last posts regarding the rollover period with IO loans and how many people will be forced to liquidate was my key macro level heuristics on getting the timing right. Keep it up, been following your posts.

[Anonymous No.12884045]

>>12882601
are your boomer bags are starting to get heavy ?

[Anonymous No.12884100]

https://twitter.com/PhilipSoos/status/1101079595325911041

-1% in 'strong' February for Syd/Melb. If the rest of the year were 'strong' it'd be -12% for the year ontop of the falls already.

[Anonymous No.12884129]

>>12884100
In 'weakest' December Syd fell -1.8% and Melb -1.5%. Feb sure is 'strong'. I can't wait to see how 'strong' the rest of 2019 is.

>At the end of 2018, Sydney values were back to where they were in August 2016, while Melbourne values are back to February 2017 levels. Perth values are back to levels last seen in March 2009 and Darwin dwelling values are at October 2007 levels.

[Anonymous No.12884227]

>>12882601
>>12882629

Fuck you, worthless fucking cocksucker. These are some of the best threads on /biz/. OP is a Godsend giving us the details from Down Under.

[Anonymous No.12884557]

>>12884227
Thanks fren. Someone had to tell them.

Funny fact is the permabulls say property always goes up because of high Australian immigration. Well 90% of migrants move to Syd and Melb and Syd and Melb are where prices are falling the most, so that theories fucking shit.

It's the easiest one liner to trot out, "People need a place to live!" yeah no shit but Sydney and Melbourne have an oversupply of rentals and an oversupply of unsold listed properties, aswell as an oversupply of developments still being built.

People need a place to live, they have it, so stop saying that, you sound like retards

[Anonymous No.12885446]

perth is getting absolutely JUST'ed

[Anonymous No.12885481]

>>12884557
The Chinese blew the bubble and the Chinese are popping it. Locals are just greedy patsys.

[Anonymous No.12885488]

>>12882603
>Never be able to afford a studio apartment

You are a hyperbolic fuck and don't seem to get that the economics of all entrepreneurial ventures are thrown into chaos by rapid inflation of shelter costs. When your labour has to live 3 people to a room and has little money for other shit, /biz/ suffers. Wanting that to be status quo forever is asinine unless you are a rent seeking faggot who got lucky scooping properties before the bubble.

[Anonymous No.12885533]

>>12883373
Wtf is an interest only loan? A loan where you don't pay down the principle? On purpose? Why would anyone ever want to do that? Why not just pile your money and set fire to it? At least it'll keep you warm for a bit.

[Anonymous No.12885574]

>>12885533
Based on the assumption the underlying asset will appreciate more rapidly than the carrying costs of the mortgage. Late stage capitalism before the rug gets pulled out. Ironically this worked for more than a decade in some hot real estate markets.

[Anonymous No.12885608]

>>12885533

Its a fairly common thing in australia (ausfag here)

Basically you are eligible for a 20-30 year mortgage using the house as collateral (30y is common in aus)

The bank says okay, we'll let you go interest only for 1-5 years (5 years max usually) where you only have to pay the interest, but on the last day of the loan you have to:

1. refinance in order to #2
2. pay back the entire principal; or
3. foreclose

In australia bankruptcy is quite different too - you can't just walk a way from a mortgage. banks will sue you into bankruptcy and force you to sell your house, car, all your furniture etc. You can't simply write off debt.

The loans were introduced in the construction industry in the 1980s so for example, if you have 10 houses worth 100k, you can interest only mortgage 2 of them for 5 years to get 200k with ~10k per year in interest.

This is perfect for example if you want to use your 200k to unlock 150k cash to buy some land, build a house on it, then sell it.

problem is it got out of control

I used to be a senior risk analyst at Westpac bank. 50% of the loans originated at westpac bank between 2014 and now are interest only.

That means that beginning in 2019... 50% of westpacs 2014 mortgage customers will need to refinance. The average mortgage is 20 years, so

5 years / 20 = 25%, /2 = 12.5%

12.5% of the mortgage customers of the 2nd largest bank in Australia are now forced to refinance their loans in the next 5 years. But the real killer will be 2023 because then you will get all the fuckwits who bought houses on interest only loans in 2018 only to have them crash by 30% in value

[Anonymous No.12885613]

>>12885533
If you plan to flip it for a profit before the IO period expires (<5 years) then you make more profit by not paying the principle.

As you can see here >>12883439
>>12883466 the flipping strategy was quite profitable for the investors as prices continued to rise. But now prices are falling they're not quite as desirable...

They were very common in the UK until their bubble burst, then they were pretty much eradicated. They were also very common in Ireland until their bubble burst, then they were pretty much eradicated.

[Anonymous No.12885731]

Source: https://www.corelogic.com.au/news/national-auction-market-preview-3-march

These are the peak clearance rates for the year, generally. Only in boom years do clearance rates improve after February. Knowing that you're starting at 50% and that's a lead indicator of falling real prices, you'd be brave to assume anything but further falls nationally.

[Anonymous No.12885739]

>>12885446
>>12885731
>23.8%

absolute state of the state

[Anonymous No.12886465]

>>12882601
Fucking dog cunt!