Financial commentator and co-host of Channel 7’s Sunrise, David Koch, is considered one of the more influential people in the finance industry, appealing to much of the Mum & Dad segment.
Today, Kochie featured a story on Australia’s falling property market – yes, that’s right, falling.
In an interview with Louis Christopher, a property analyst from SQM research, Kochie explains that it is the worst period for house prices in 12 years, that house prices are falling in almost all regions around the country, the number of listings is up 70% and auction clearance rates are falling rapidly. He asks the question if home owners are being given the property price truth?
Kochie has a problem, he sees all these houses that have been up for sale for a year in his area, but then reads the weekend papers about all this good news that properties are being sold. He says “It just doesn’t match up.”
Mr Christopher explains that many of the news papers make most of their revenue from real estate advertising and will promote property in a positive way, before joking with Kochie about the fact that “property never falls”.
He tells the Australian, “I find it amazing and quite ironic that so much expense and effort has been put into cleaning up the financial planning industry, but most of the problems are actually occurring on the real estate side,”
“We need to see a similar clean-up of the real estate industry, where agents need official qualifications and reporting bodies need to be independently audited if they are going to be used in the public sphere.”
He is referring to the fact that investment advisor’s require Australian Financial Services licences and financial products require Product Disclosure Statements for investments that could be as small as $1,000, let there is no such requirement for property investments which is most people’s biggest asset and could range between the hundreds of thousands, even millions of typically leveraged dollars. Real Estate professionals can, and do say just about anything they want.
Louis told Sunrise he expects falls in house prices of between 5-10 percent this year, and in some regions between 15 to maybe 20 percent as a result of having too much household debt and by enticing first home buyers to bring forward their purchases resulting in little first home buyer activity in the market today. He will join Kochie on Sunrise again tomorrow to talk about the worst effected regions of the “property price plunge”.
» Kochie’s tips for a falling property market – Sunrise, 23rd May 2011.
» Auction rates ‘misleading’ – The Australian, 23rd May 2011.
So the mainstream media catches on before they caught out as being liers, and serving other interests. Mar Bouris of Wizard Home Loans had a big hissy fit in light of this bad news, and his now blaming everyone else (like the media) for it, instead of property being a bubble.
The one thing I disagreed with from Louis Christopher is towards the end that Australia wont experience a massive fall like the US because fundmentally Australia is different. Bullshit. The banks are carrying 50% plus of their business on house mortgages. The banks have over 2 – 3 trillions dollars of overseas investors money that the govt has guaranteed till Oct 11. It is fundmentally different because if those overseas investors get spooked and raise their rates to the banks what do you think the banks will do. Also what if they want their money back the banks wont have it then the govt will have PRINT some money. The RBA may not have the luxury of dropping rates as the banks wont be able to pass that on if the overseas investors get spooked. Australia is fundmentally F#$KED and different if things start to really go south. It sure looks like it has started.
Crikey ! Kochie suggesting on mainstream media that the property market is falling. Even I am surprised by that, and just how quickly the tone (ie negative ) of all media commentators when refering to the AUS house market, has changed in a matter of 1-2 months. But then, why should I be ? As many of us know, the property market has been propped up, tinkered with, fuelled and promoted relentlessly by the spruikers. It was never going to last, and I feel this downswing is definately not over yet…
LBS, I think perhaps that Louis doesn’t want to come over as alarmist. After all a week or two ago he was saying that prices would fall 5-10% over the next two years. Now he’s saying that in Perth and Brisbane at least, that there will be falls of almost 10% by the end of the year.
Maybe though, he does feel that with commodities boom, the amount the RBA can cut the rate and the fact that people can’t just walk away from loans like they can in some US states will protect our prices. Like you, I think it’s quite possible – and probable – that we’ll end up with a perfect storm for prices here in Australia. China wobbles and busts the commodities boom. RBA cuts (or not) but another global credit crunch means that our banks with their large portion of overseas funding will struggle to keep rates in line with RBA cuts. There’ll be no jingle mail here but if the projections get bad enough the banks will start to move swiftly, calling in loans and forcing folks into bankruptcy. This is much worse than jingle mail.
Wait for it – – – – – Yoda say general public brainwashed by mass media. More chance of Kevin Rudd becoming next UN Secretary General than the masses understanding this story let alone taking positive action. It needed a free giveaway to attract the masses attention, or a reference to a footy game or cooking idea.
This story will do nothing to change peoples perceptions of house prices always rising. “They don’t Fall !” They flatten?
Overseas investors dumping Australian banks and our currency falling are indicators the party of credit growth is over.
Kochie did a year or so ago, comment on the grant bringing forward demand and his opinion was to first home buyers to wait………., so he is not too late the biggest debt collapse party this country has seen.
Read this article and tell after you read it that you are getting very worried about things. This is bad Australia is no ahead of the US in debt per person.
From the article….. This is what scared the sh$% out of me.
“To compare Australia’s position on the debt leader board to the U.S., each Australian adult is currently in debt to the value of around US$56,000, compared to the debt of American adults of US$44,000. Australians’ mortgage, credit card debt and personal loans total over AU$1.2 trillion, which is an increase of 71 per cent from just five years ago.
However, it is not simply the fact that Australia is leading the world in personal debt that deserves attention, but also the amount of debt. Thanks to recent stimulus packages and first homeowner boosts, Australia’s personal debt has risen to 100.04 per cent of the annual GDP; this is the first time debt has exceeded 100 per cent, and Australians are now living beyond their means, often dangerously so”
http://australia.creditcards.com/credit-card-news/australia-world-credit-card-debt.php
What do you expect for a country of land lords (on credit of course).
Lol @ Free Willy. Very true.
NineMSN have just come out with this news article:
Mortgage arrears at record highs.
http://finance.ninemsn.com.au/article.aspx?id=8253729
They seem to be blaming natural disasters and Christmas presents for the rise!
How about Exorbitant house and land prices thanks to an abundance of easy credit, government manipulation, and rampant speculation?!
Oh reality, where art thou reality?
Sadly every time I run into some one I haven’t seen for a long time, they say oh how wonderful my partner and I are just about to buy our first house or we are looking to buy a bigger place.
One close mate understands what I am saying about property prices collapsing, yet his whole family keep telling him he needs to buy a bigger house so that he can effectively make money from his home while he sleeps.
Sadly many of the masses just don’t get it and no matter how much you tell people, they just can’t grasp it. Sadly these sheeple will blame the eventual property fall on governments or the Chinese, just so that the can defer the blame onto someone else, rather than accepting responsibility for their ill informed decisions.
@Adrian I know exactly what your talking about when I speak to people about the housing prices they used to say it never goes down. Now they are saying it might drop a little but will just be mostly flat for a year or so. The “property prices always goes up” is so ingrained into there mentality if you start talking about 30 or 40 % drops they look at you as if your a crazy nut job.
@LBS,
Australia’s credit card problems started in 2005. I don’t have numbers on this, the info came from a Commonwealth Bank (Conmanswealth Bank) employee who managed his little department that called people up to hassle them for a payment. It was in 2005 when he told me, “should se how many people are late, getting busted, and defaulting on their cards”.
That was the same year the Salvation Army, Mission Australia, the Wesley Mission, and a few others started reporting that they had a large increase in emergency bill payment assistance, and food assistance to (I’m gonna say it)… WORKING FAMILIES. Remember back then too when interest rates rose 0.25% how many peple were thrown into the bread line everytime that happened.
I think the past surface before it could have been corrected. Also I’ll add I’m not placing blame in this post whether its’ the fault of the inprudent, the creditors or both. Just pointing out a bad situation for many people.
What happened to the ACA story on the property market boom and gloom that was meant to be on last night? It was promoted all week as an analysis of which suburbs etc are going down in value. It vanished into thin air last night and there was a puff piece on some gold coast brick pimps using soft porn to sell units….I smell a rat!
RE industry would have leaned on someone to pull the story.
O OH here comes the emergency bubble repair kit! This time its from the BANKS!!
http://smh.domain.com.au/real-estate-news/banks-battling-for-big-borrowers-20110530-1fbec.html
70-100 basis point interest rate ‘benefit’ + LVR reductions…
Loan book in jeopardy; can’t sustain current growth targets; panic! panic!
Our banks won’t be happy until every man/woman and child is up to their neck in debt!