As we talked about way back in May, at end of every bubble there comes an admission that the “undersupply” of housing was in fact a debt driven myth that only really existed because there was an oversupply of speculators. As the market collapses these people disappear and all of a sudden there are too many dwellings on the market and not enough buyers.
We received an amusing e-mail today from a reader telling us about a brisbane based apartment complex. The e-mail begins.
Don’t miss your opportunity to secure a prime piece of Brisbane real estate at drastically reduced prices!
But we aren’t suprised. We talked about this sort of thing recently, and as noted in a the latest local government association of queensland report (An Econometric Analysis of the Determinants of SEQ Housing Prices)
It can be seen … that the number of dwellings in SEQ has increased faster than that of population for each census period. This has resulted in the number of dwellings per 100 population increasing from 38.1 in 1991 to 41.1 in 2006.
And if you look at the trends in vacancy rates for Brisbane rentals you will notice there has been a growing problem for quite some time.
We know that property bulls like to try and convince the niave public that Australia is different from the rest of the countries that have suffered a property asset shock. But the reality is that Australia is no different at all. Debt driven speculation that has no real ROI has the same outcome in any language. That is why countries really require a different type of speculation.
As we have talked about previously the real job of a central bank is to create an economic environment that delivers sustainable productive growth. So with that in mind, we can give the RBA a D minus. This is just going to get more ugly.. Lets just hope it doesn’t completely destroy the country.
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