Inga Ting, Geoff Thompson and Alex McDonald provide and excellent set of graphics and information on the bursting of Australia’s housing bubble at House of Cards.
Home prices in more than four out of five council areas have reached their peak and are sliding towards an unknown nadir, according to the latest figures from property market analyst CoreLogic.
As the slump moves into its second year with little or no prospect of rebound, the downturn in capital city property markets threatens to drag down the rest of the economy.
And with a mixed outlook for the global economy, doubts are surfacing about where Australia is going to find the fuel to extend its near-record run of 27 years of unbroken economic growth.
Yearly Change in Median Dwelling Value
The graph in the article is interactive with a choice of eight cities. Sydey displayed above.
Major Declines Since 1980
Click on the graph for an even larger image.
Perth and Darwin have been clobbered. Sydney is in the works.
Every Bubble is Different
https://twitter.com/linzcom/status/1072407223303856129
I also like this Tweet in response.
Property prices will fall but not in my area. My area is special because “insert reason here”.
— John Spitzer (@ASX1500) December 11, 2018
I believe this person means 2019 not 2018
https://twitter.com/PhilipSoos/status/1072753367535902720
Party is Over
There is no way Australia avoids a recession. I don’t care what the central bank does.
Mike “Mish” Shedlock
Contracting rate of debt growth is DEFLATIONARY. A combination of lender and borrower believe the debt can’t be repaid, so no fewer loans are made.
Sydney & Melbourne home prices rose 40% over 3 years,
home prices in those same cities have fallen 10% this year…
The sky is not falling.
Maybe so. But 10 % of mortgage holders are already in negative equity territory. Prices only need to fall another 5 – 7% to bring this negative equity figure up to 20%.
Australian household debt is 200% of GDP – the highest in the world. Even a small recession and cutback of construction jobs will have a major impact.
When McMansion land starts to feel a major price reduction watch out. All those COBs particularly those employed in the construction industry who have mortgaged themselves to the hilt, bought the latest expensive 4WD ute and maxxed their credit cards out in Bali
Central banks already shot their wad over the last 10 years propping this house of cards up. Very little can be done this time around.
I think the same goes for the US. Reports of layoffs at architecture and real estate firms are telling. This recovery was always a farce and everyone knew it was based on more debt and not wage gains. 60% of CFOs are planning for a recession in 2019 so the layoffs will come after the holidays. Once the slide begins it will be a cliff dive.
Expect social moods to change sooner than later. This time down I believe we will see the rise of socialism in the United States with widespread public union strikes and the like. It is possible a socialist gets elected in 2020 and makes more promises that cannot be kept as the economy continues its decline.
I think it will take a miracle for Trump to win in 2020. My hope is the democratic nominee is a center candidate and not a socialist., but I agree with you about socialism gaining traction in the US.
If the stuff hits the fan mid 2020’s (it could go on that long) the socialists will get the blame. The next couple of sets of elections may be ones no one wants to win. Clever candidates won’t run, only the deluded and/or stupid.
Do you really think someone would turn down being POTUS because it’s a bad time to be president?
I hope not, but that’s my only real argument.
$22T in national debt, $200T in entitlements, underfunded pensions everywhere (even after a 10 yr bull market)…..a socialist candidate wanting free health care, education, more welfare, etc… colliding with this debt reality will be quite fascinating