On Monday, ABS Housing Finance data revealed another deterioration of the number of first home owners’ participating in the owner-occupier segment of the market.
The decline has renewed calls for a national housing affordability debate.
Last week the Abbott government abolished the National Housing Supply Council (NHSC) citing their “activities are no longer needed.”
Economist Saul Eslake, a member of the NHSC told Fairfax, “I suspect the only way that Australia’s housing affordability problem will be solved, if it ever is, is the way the Americans solved theirs. And that is not something that I would wish for.”
Eslake is on the money. Any Government lead affordability action normally props up the market (i.e. First Home Owners’ Boost). Broken aspects of our tax system such as Negative Gearing would never be abolished or quarantined to new properties only, and the country is slow to act on Macro-prudent controls. The problem has been continuously ignored to the point it is now simply too big for any other potential solution.
ยป First-home crisis triggers call for action – The Sydney Morning Herald, 16th November 2013.
First home buyers deserting the market in droves coupled with a recent investigation that auction clearance rates are under 50% and not over 80% as claimed by the real estate industry and a big spike in foreclosures spells ‘Crash’ to me.
Oh, and I forgot to add Christopher Joye turning into a property bear claiming interest rates are on the way up and therefore property is on the way down.
Those leveraged into property better get into the brace position as this crash will be swift and brutal.
Looks like it’s here! The final push before the crash.
I know 3 people in their 35’s who are trying to flog off 7 properties this season… They said they are trying to transfer the ‘money they made’ into the ASX because property was giving them nothing compared to the ASX.
I also know about 100 people around 20-30 who have savings but wouldn’t touch property because they know only to buy something that you can rent out for greater than the loan repayments and a profit.
Just remember it takes about 18-24 months for a crash to really bottom out minimum. So all those first home buyers will come back around 2015/16
We were told Australia was different!!! What happened? Lol could it be that land is worthless? Especially when it’s so salty and sunburnt you can’t even grow cactus on it haha. But my 300m2 block 1hr from Sydney is worth 400k the bank said was!!
Australia – Always 5-6 years behind the US. Every time. E.v.e.r.y. t.i.m.e…
Ladies and gentlemen.
It’s here.
Good luck!
@ Michael Francis, thank you for your comment, and what you have stated seems to contradict what the media are reporting (especially here in Sydney), that the clearance rates are very high (biased media reporting I suspect).
What I also find contradictory is how the property market is booming (which it is), but at the same time a lot of property investors are experiencing mortgage stress. And with rapidly increasing unemployment/underemployment, how are either first home buyers or investors going to be able to service a hefty 25 year mortgage?
By the time real estate truly crashes the employment numbers as well as aggregate businesses goes down as well,not to mention other type of investments also gets wiped out(not necessarily in that order), cause and effect. So we’re back to a small minority who can afford to pay outright for a house then…. You just can’t win.
After spending more than ten years out of WA and returning, I cannot believe how angry the youth here are.
They have missed out on the boom and with youth unemployment and underemployment growing fast (from an already elevated level) there is going to be one unhappy generation and one great crash.
Makes me wonder whether it was worth coming back to this once great state as the greed here has encapsulated so many that they cannot see they will be the first to fall and from a very lofty height.
Does anyone have a link where I can read the AFR article about the auction clearance rates.
You can tax Australians until they bruise. Raise their energy bills until they scream. Reduce their salaries and work hours yet hold their servitude. Have them sign, and exclaim somekind of victory over, a mortgage that will bind them ’til death do them part.
When (or if?) this property market is beheld by gravity, by their bear skin, Australians will defeat an armed standing army. By then its’ too late. Its’ too late now.
I’m going to get a little off topic here but I have a friend who is convinced the US dollar will collapse within a year or two… This scares me much more than an Aussie housing crash.
And the internet is full of doomsters predicting the same thing and they provide pretty strong arguments. But then again I remember years ago I was convinced peak-oil was going to create mass destruction to our society and that never eventuated.
And now I feel its happening again. However this time I am inclined to think that it isnt going to be as bad as the doomsters are making it out to be.
What do you guys/girls think?
http://www.macrobusiness.com.au/2013/11/dodgy-auctions-figures-put-buyers-at-risk/
Crashboombang
Try this.
@Suley
As far as the US dollar goes, I would say the thing to watch is the yield on the 10yr and 30yr treasury. The whole point of QE was to lower interest rates (mortgages in the US are priced off the 30yr).
However lately the yield on these bonds have been rising, they are now over 1.5% higher than the lows. If rates were to keep rising despite QE, effectively the Fed will have lost control of the bond market and be trapped.
This is problematic because if the Fed were to print even more money, rates would likely go even higher, both as a lose of confidence and also money heading into the stock market and the currency lose even more value.
Conversley if they tightened monetary policy the economy would probably go back into recession although the currency would probably strengthen.
Remember the US govt carries massive debt, so any increase in rates affects the interest payments significantly.
I have notice mortgage repossessions in the local paper and there seams to be new ones every week.
@ suley
There is this whole prepper movement going on. There is as many as 3 million US people prepping from buying gold to haveing guns 1 year supply of food. It is also starting to take off in Australia you be suprised how many there is. I have been prepping for 2 years now. Is there somthing going to happen who knows when or what. In Queensland floods it took 3to 5 days to get water and food to isolated people and it took over a week before the army were diploid.
Really getting sick and tired of seeing the word ‘recovery’ in every msm media article about property.
If government doesn’t do anything, which is likely and unemployment remains steady, you will see Australia turn into 50% landlords and 50% Renters – not a pretty site.
Agents are pulling auctions off the market and not reporting them and the clearance rate is hovering around 30-50% across Australian cities. They are fudging the numbers bad and they are worried. This year saw a lot of houses come on the market but there’s zero demand from people with actual money. It’s all just investors and investors being who they arnt won’t buy a property if it’s yield is above the 8% threshold. Particularly when capital growth isn’t guaranteed anymore…
I’d expect to see at least two years of declines from here on out.
First home buyers are the only original demand generators for housing. Population growth has nothing to do with prices as seen by Ireland Spain Japan Dubai and the US. Now that the only people buying houses are investors they will ‘cut the fat’ and dump any properties not turning a nice profit. Especially if they are negatively geared.
Worst home ownership and investment laws in the world. Stupid Australia can’t learn from others mistakes.
@Mad Max,
I am writing academic papers on real estate bubble. Do you know any reliable websites which provide foreclosure/repossession information?
Thanks
Uni horn
If you have time up your sleeve try an FOI request to the Department of Human Services for the year on year numbers of households applying for Mortgage Relief Assistance.
These forms are to be filled out when a bank formerly begins foreclosure proceedings. They enable emergency access to super funds to stave of foreclosure.
Applying to the banks for foreclosure statistics is a waste of time so best try the backdoor approach.
http://www.humanservices.gov.au/spw/customer/forms/resources/8106-1210en.pdf