Another future fundie warns on Aussie housing bubble

By Leith van Onselen

Following JCP Investment Partners’ – one of three equity managers that invests for the Future Fund – warning this week that Australia’s housing bubble is as disastrous as Ireland’s and the US’, former Future Fund managing director, Mark Burgess, has issued a similar warning about Australia’s unparalleled appetite for investment property. From The AFR:

“We have this strange thing that you don’t see anywhere else in the world with property investment. Two million people had investment properties in 2013 and I’m sure it’s much higher today, 40,000 had six or more.”

“Supposing we had some disaster and people will try to sell one of their investment properties. If it’s a real disaster they will stick the other five on the market and see which one sells. Many of the others will do the same thing and we will have our moment of correction.”

Clearly Mr Burgess also needs some radical reprogramming via MB’s Spruikbot Telephunken U-47:

Stocks are selling fast, so grab one while you can.

[email protected]

Comments

  1. TORONTO HOUSING PANIC … (VIDEO) LEAD DEVELOPER GIVES IT TO THEM …

    Toronto Homeowners Are Suddenly in a Rush to Sell … Bloomberg
    h/t GF

    https://www.bloomberg.com/news/articles/2017-05-24/toronto-bidding-wars-turn-to-homebuyers-remorse-as-market-slows

    Toronto’s hot housing market has entered a new phase: jittery.

    After a double whammy of government intervention and the near-collapse of Home Capital Group Inc., sellers are rushing to list their homes to avoid missing out on the recent price gains. The new dynamic has buyers rethinking purchases and sellers asking why they aren’t attracting the bidding wars their neighbors saw just a few weeks ago in Canada’s largest city. … VIEW & READ more via hyperlink above …

    Garth Turners Greater Fool Blog … ‘MAYDAY ?’
    … h/t PH …

    http://www.greaterfool.ca/2017/05/01/mayday-2/

    Over six thousand people decided to sell their GTA properties in the last seven days. Of those 6,050 new listings roughly 1,500 were condos, which might suggest a whole mess of locals have decided to cash in their detached lottery ticket before this gig is up.

    No wonder. The angst and heebeejeebees this pathetic blog has been wallowing in for the last few weeks has finally made into what’s left of the MSM. Like this story in today’s Toronto Star:

    It is like a tap has been switched off. That’s how realtor Louise Sabino describes the housing market in the wake of the Liberal government’s provincial plan aimed at cooling Toronto’s scorching property prices.

    “I think it’s shocking that it did make the impact so fast,” the Royal LePage Signature Realty agent said.

    That’s the funny thing about bubbles. Everybody’s horny to get their hands on rising assets – until they’re not. It always happens fast, whatever the asset and no matter the trigger. Greed is a powerful emotion, but it wilts before the dominance of fear. If enough people fear houses will stop rising (prices don’t even need to decline), they’ll cease making the Herculean sacrifice required to buy one. And down she goes. … read more via hyperlink above …

    About Garth Turner … Greater Fool Blog

    http://www.greaterfool.ca/about-garth-turner/

    Google News Search ‘Home Capital Canada’

    https://www.google.co.nz/?gws_rd=ssl#q=home+capital+canada&tbm=nws&spf=731

    • When the Irish bubble burst 07 / 08 the average unweighted median multiples for its metros went from 4.7 to 2.8 … putting all its Banks to the wall.

      Australian metros overall average unweighted median multiples are currently about 5.5 … New Zealand 5.9.

      The 2015 figures for the Irish Banks bailout costs were in the order of 70 billion euro. It is still very much ‘mortgage mayhem’ as the Irish debtors laws are so draconian.

      Subsequent research by the Central Bank of Ireland found high multiple lending (Loan to Income ratios) was far more problematic than high Loan to Value ratio lending … which in turn led to a general cap on mortgage lending of about 3.5 times annual household incomes. The Bank of England had earlier capped at 4.5 times.

      Refer to the schedule of Annual Demographia International Housing Affordability Surveys (13 to date) accessible via my archival website http://www.PerformanceUrbanPlanning.org … to assess the bubble values of specific markets.

      These items are useful too …

      Prof Bill Black & others discuss the Irish financial system performance … Youtube

      https://www.youtube.com/watch?v=t7zd5dRILBw

      … and …

      This country still needs to get its houses in order ten years after the financial crisis began … Lucinda Creighton … The Irish Sun

      https://www.thesun.ie/news/1006506/this-country-still-needs-to-get-its-houses-in-order-ten-years-after-the-financial-crisis-began/

      Lucinda Creighton – Wikipedia

      https://en.wikipedia.org/wiki/Lucinda_Creighton

      • All Hell Breaks Loose In Toronto’s House Price Bubble | Zero Hedge

        http://www.zerohedge.com/news/2017-05-26/all-hell-breaks-loose-torontos-house-price-bubble

        “It’s fear.”

        During the first two weeks in May, according to preliminary data from Toronto Real Estate Board, home listings surged 47% from the same period last year even as sales plunged 16%. The average selling price dropped 3.3% from April – and this, after a 33% year-over-year spike in home prices in March and a 25% surge in April. Something is happening to Toronto’s blistering house price bubble. … read more via hyperlink above …

      • Economy hit by spending strike, cyclone … Australian Financial Review (behind paywall)

        http://www.afr.com/news/economy/economy-judders-on-bank-crackdown-cyclone-debbie-20170526-gwdmra

        Australia’s economy looks to have experienced its weakest start to a year since 2011 – narrowly skirting a contraction – as a growing consumer spending strike and a cyclone-driven slowdown in exports weighs on activity just as the government bets its budget strategy on a rebound.

        While the country is not at risk just yet of a technical recession – or two quarters of consecutive declines in gross domestic product – the economy looks set to continue in 2017 its whip-saw pattern of the past year.

        Combined with weak spending and a fall in shipments of iron ore and coal, as well as lower commodity prices, the first quarter is likely to have been weighed down by a sudden collapse in construction work – a sign that a regulatory squeeze on apartment lending may be starting to bite.

        Weak retail spending, which this week saw the seventh retailer go under in recent months, sharply rising car loan delinquencies and falling new car sales all point toward a population clamping down on discretionary spending.
        ANZ Bank economists said next month’s national accounts may show the economy grew just 0.1 per cent from the December quarter – raising the spectre of the second negative quarter in nine months after GDP shrank by 0.5 per cent in the September quarter before rebounding by 1.1 per cent in late 2016.

        Annual growth may have shuddered to just 1.5 per cent in the opening months of the year from 2.4 per cent last year.

        While they are in the minority, some analysts are starting to warn that the economy may have gone backwards, not just in the March quarter, but may be doing so in the current period.

        The warnings presage a long nervous wait in coming months for the Turnbull government, which announced in the budget this month that it had built its return to surplus forecast on a belief that GDP growth would accelerate to 3 per cent in just over a year.

        Treasury officials declined to remark on the government’s key budget growth forecasts, with Treasury secretary John Fraser due to face a Senate estimates hearing next week in Canberra.

        Official signs in coming weeks may not only challenge that key growth assumption but help fuel growing unease among households, which are struggling under weak wages growth, rising taxes, and higher mortgage rates as regulators lean on banks to cool the housing market.

        “There’s a risk of a technical recession,” as the hit to exports from Cyclone Debbie spills over into the second quarter, National Australia Bank economist Tapas Trickland told AFR Weekend. … read more via hyperlink above …

  2. I’ll be waiting this time before I flag this to friends and family, all it took was two rate cuts by the RBA to get this thing going again, and still uncertain with Chinese money

      • So 70% of Westpac mortgages can only be repaid if refinanced (and presumably this would mostly need to be on IO at the same or a lower rate than the original loan, and rely on the underlying asset not having declined in value). They’re a ticking time bomb. Why aren’t depositors queuing outside? Due to the aggregate ADI limit on the government guarantee, Westpac depositors are likely to get back cents on the dollar (unless further measures are then taken – e.g. a financial levy).

      • @Andrew – Do you have any info on this aggregate limit on the deposit guarantee? Everyone is aware of the 250K guarantee and takes that as meaning their deposits are safe, yet almost no-one knows that an aggregate limit is also in force..

      • McPaddyMEMBER

        the full data is at the top of p.2 of the paper you’ll find if you google jcp investments and go to their latest research paper

      • Per JCP, Westpac’s loan book is 50% IO, CBA 40%, ANZ 37% and NAB 32%. Average across all bank books is a bit over 40%. It’s not good. But it’s not 70% Mr Burns.

    • Wonder if that’s why they are offloading a bit more of BT – needs some extra capital?

  3. I have not mentioned the ‘B” word to my friends and family for several years now. During that period most forgot the logic of my arguments that there were limits to this absurdity, and became comfortable about their view of the world again.

    But from now and until long after the collapse my silence (to family friends etc) will be deafening ! That will be my gloating strategy.

    • Same here – with friends and family. But with bustards and bitches at work.. I will be in their faces day in day out – once it goes off.

    • GeordieMEMBER

      “He who fights with monsters should look to it that he himself does not become a monster. And if you gaze long into an abyss, the abyss also gazes into you.”

      • So you wave at the abyss and say “Hi!” only to realise the abyss is staring at someone behind you.

      • Oh god, that happened to me just last week. The worst part was The Abyss looked embarrassed for me. Like, didn’t even have the decency to pretend it hadn’t noticed.

      • blacktwin997MEMBER

        Even worse is when you encounter an Abyss with a lazy eye. Well, lesson learned i guess.

  4. We have this strange thing that you don’t see anywhere else in the world with property investment. Two million people had investment properties in 2013 and I’m sure it’s much higher today, 40,000 had six or more.”

    That is state supported behavior emanating from all levels of govts, ATO, banks, regulators, media. It’s a social ideology.

    • TailorTrashMEMBER

      ….and we know all that …..but the one thing we don’t know ( or our governments ,state and federal don’t want is to know ) is how many of those properties are foreign owned ( legally and illegally ) ?

  5. Weeeoooo weeeoooooo……..it’s only ever been a bubble , ……………………if it BURSTS.

  6. ErmingtonPlumbing

    This story has me all Scared and Excited at the same time!,….could all those MB prophecies, finnaly becoming true?
    Is this the beginning of the rapture?
    Please Mummy,…tell me what to do!

    • The Traveling Wilbur

      No, really, this time I’m sure it’s gonna happen. I mean the absurdity of it all is aptly demonstrated in the article above. 2m people plus can only hold up a bubble for so long. They don’t have never ending debt ceilings they can increase. And there’s no possibility of support flowing in from overseas buyers now. Or the government. And price growth has finally moderated to only 1-2% every 6 months. In some capitals. It’s only a matter of time before those auction clearance rates come off their peaks. And of course all that immigration tightening​ the government is doing will really shake things up too.

      Won’t be long now.

      • The public seem to be noticing that public transport and other services like roads and schools are packed to the rafters but they have still not put 2 and 2 together.

        The problem is not

        * poor planning
        * not enough cranes 500+ on the east coast
        * local councils
        * BANANAS

        It is just too many people arriving too quickly to absorb with the problem made worse by govt RBA and APRA allowing speculators – foreign and domestic – to turn residential housing into a casino.

    • Seems pretty simple Ermo. Keep driving around in the trusty old Hilux, charging $150 for the callout plus $80 per hour thereafter and if something eventually takes your fancy at 60% off what it was two years prior, give it some consideration. Otherwise you’re rich anyway!

      • blacktwin997MEMBER

        With that sort of broken display, Chinese investors will pay a premium to snap this clock up ahead of their countrymen!

    • Charge double for any work in eastern subs, northern beaches and other ‘hotspots’. Introduce travel time and a eftpos levy.

      • ErmingtonPlumbing

        I’ve got a little bit of fit off left, on a 4th story, (no lift) 1950s built apoartment Reno at Bellevue Hill, where there is no parking for 2 blocks, complaining neighbours and a ball breaker of an owner who’s purchased some of the most difficult to fit and expensive European PC items you can buy.

        I’ve told Johnny, the Irish builder, this is the last Eastern Suburbs job I’ll be doing.
        So much work close to home now, my days heading that way are over. 2 and a half years after returning from Cloudbreak and I’m finally ” living the dream” of local work, after slowly building my referral base.
        If I can tweak the advertising right,…I might be able to reject all jobs in Suburbs that don’t adjoin Ermo!

        Hope I get there before the bust.
        🙁

  7. Top Shop and Careers Australia gone into administration. More pain ahead but our market will hit new highs today.

    • Also all the Coates workers taking a haircut! Great start for scotties wage growth fantasy

    • Neither entity is listed on the market though?

      Regardless, both companies did not consider strongly enough the nature of Australian business, which is to find a way to attach yourself to property upside and somehow be involved in the business of selling off Australian assets to overseas interests. Anything else is a complete waste of fucking time, even attaching yourself to the government’s wallet won’t save anyone.

    • The market has a tendency to sleep through its alarm clock then wake up a bit later and in a mad panic.

    • billygoatMEMBER

      WTF Careers Australia?
      See:
      contradiction
      kɒntrəˈdɪkʃ(ə)n/
      noun
      a combination of statements, ideas, or features which are opposed to one another.

    • He has a point.

      At least those non-bank lenders are raising the money they want to bet on housing.

      Which is a lot better than our rent seeking bloated ADIs that use the extraordinary privileges of bank status to pump Banker credit aka Pseudo Fiat into residential housing asset bubbles.

      But as a few bank apologists like to tell us – it’s not the model to blame just a few bad apples.

    • I’m bearish….but don’t hold your breath….

      My gut feel is that it will seem something like, “It’s on…..it’s not….it’s on…it’s not…..maybe it’s still not…yeah, I was too hasty again….then crumple, then bang…..I don’t personally think we can slow melt this one – that option was 2007-2012, and their was too much scope for more cheap credit and visas….it’s different this time! 😉

      • lukehowardMEMBER

        Indeed. I don’t disagree with the MB thesis, but I suspect it’s always going to be further down the track than one might imagine.

      • Likewise. I believe there will be a correction but nothing like the doom and gloom that we hear about and to be fair, MB pushed their correction predictions to late 2017-early 2018 from memory to coincide with the recession the see coming.

  8. Posting here (duplicate)
    Cost of funding for tier-2/Mutuals has spiked within the last month. Standard variable will increase in a month or so.

    July 1st: organise BBQ’s to remember/commemorate the day. Lots of small little things are suddenly popping up everything will come out into the open from July 1st
    1. Standard variable spike
    2. ZILCH refinance for anyone greater than 1 IP and > 60% LVR
    3. APRA mandated serviceability changes to take into consideration total-debt not just new-debt
    4. APRA will introduce “new capital requirements” for ADI’s
    5. “Interest only” loans for IP will be go the way of Mark Latham’s political career.
    6. 10-12.5% withheld from sale until property can be correctly identified (affects foreign-owners, this will bring a lot more stock onto rental market)
    7. FED hikes (not sure about this, but is a possibility)
    8. Many infestors will get squeezed out or will have tax-debt when they file tax returns
    9. AirBnb + negative gearing may not be workable (ATO source)
    10. I read somewhere that there are 2 – 3 million property investors. Only 1% have to blink and put only 1 property on the martek, we will suddenly have 20,000 properties on the market trying to run for the exit! Let that sink in.

    Most mum-dad infestors on the ground aren’t very smart, unfortunately, they will never get to know “what hit them”!

    • C.M.BurnsMEMBER

      cheers Virus, your insights are always great to read and valuable.

      from your posts, I assume that you work in the banking industry but not for mega-bank, is that correct ?

    • Thanks. What’s this about>

      6. 10-12.5% withheld from sale until property can be correctly identified (affects foreign-owners, this will bring a lot more stock onto rental market)

    • As much I would want to believe this I might not agree with the overall conclusion until I see the changes clearly, definitely not to the extent that it will crash this ponzi scheme rightaway.

      1. Standard variable spike – Economy and inflation slow and RBA cuts again, you can get 3.65% interest now on a 2m loan if you have enough salary(and not appts), let it reach 6% before people will start thinking.
      2. ZILCH refinance for anyone greater than 1 IP and > 60% LVR head over heels finance for FHBs including perks, they have to shift and replace while capping the price growth. There are just too many people renting or not living on their own atleast in Sydney
      3. APRA mandated serviceability changes to take into consideration total-debt not just new-debt Good thing but what is the limit?
      4. APRA will introduce “new capital requirements” for ADI’s its planning for Big-5 not for all
      5. “Interest only” loans for IP will be go the way of Mark Latham’s political career. For investors and that too more than one, FHBs can walking and sign this up right now. Again focus is shifting to FHBs
      6. 10-12.5% withheld from sale until property can be correctly identified (affects foreign-owners, this will bring a lot more stock onto rental market) Good but foreigners are already out from established market and less in apartment, this will push it further. Apartment bust is the single biggest danger since locals don’t want to live in those & that too Melb/Bris
      7. FED hikes (not sure about this, but is a possibility)
      8. Many infestors will get squeezed out or will have tax-debt when they file tax returns if they have jobs they are offsetting it against tax though the CGT chase will go down. So jobs are key not their tax returns or debt – peple unfortunately have heaps and are not scared(don’t know why)
      9. AirBnb + negative gearing may not be workable (ATO source) I am not sure how ATO can do this when leaving it empty or renting it on AirBnB there is no difference. NG is rorted big time on several areas including bogus claims on depreciation of curtains.
      10. I read somewhere that there are 2 – 3 million property investors. Only 1% have to blink and put only 1 property on the martek, we will suddenly have 20,000 properties on the market trying to run for the exit! Let that sink in. Agree on the thought but people will not put that on sale until they loose jobs and can no way support paying interest on them. Hope it happens though mostly again will affect apartments, we dont have enough houses where people want to live so they will grab it at 25% off – if it happens.

      • Thanks Amit, mostly agree.

        I don’t know how someone with a IP can hold onto the IP when they deseperately need ‘refinance trick’ to stay afloat. In Sydney, if prices come off 25%, is there capacity in FHB to secure 700+K bank loan? Considering 25% comes off the median price, at which point there will be carnage on the street. Majority of FHBs who have capacity are already indebted, remaining are ppl who either cannot afford (500-700K range) or do not want to buy.

        You are absolutely right, jobs are the key. But give this scenario a thought, when you are squeezed out and cannot put food on the table does having a job matter? Something has to give, either suicide or bankruptcy. If jobs go, dont expect a “floor” for prices but without losing jobs enough damage can/might/will occur!

        When i say standard variable spike, I was not talking about RBA. Banks/financial sector detached from RBA rates long time ago, no one noticed it thats all. Any rate-cuts from RBA will transform into rate-increase for the consumer. If RBA cuts -25 BPS, customer will see +3BPS, if RBA increases by +25 BPS, customer will see +28BPS. IMHO.

        Regarding IO loans for FHB, agree but I don’t what capacity FHBs have at this point in time.

        Regarding AirBnB + Negative gearing I am unable to comment further.

        When properties hit RE.com.au enmasse it might start from most unfavourable areas… so favourable/desirable areas are the last to get on RE.com.au. The problem is, banks will start balancing their books to keep their head above water, by the time desirable areas have heavy discounting banks would have imposed stricter lending, locking out marginal FHBs who want to live in the desirable areas. When “inflating” they always have a “positive feedback” when “deflating” they usually have a “negative feedback”…

      • BTW, my bullet points and conclusions are not prophecy 🙂
        Some of them are facts, some my opinion.

        If I am wrong, I will apply for a role of a economist. If I am right, I will apply for a role as a buy-side trader at an investment bank 🙂

      • >> 2. ZILCH refinance for anyone greater than 1 IP and > 60% LVR head over heels finance for FHBs including perks, they have to shift and replace while capping the price growth. There are just too many people renting or not living on their own atleast in Sydney
        3. APRA mandated serviceability changes to take into consideration total-debt not just new-debt Good thing but what is the limit?

        Banks have to calculate something called as ‘surplus umi’ for every loan app. Previously, Big-4 have approved loans to customers whose ‘surplus umi’ was as low as “$9” or “$10”. APRA turned a blind eye and left the ADI’s to “take care”. Word on the street is APRA is collecting this ‘surplus umi’ data and wants to cap it at $200 or $500 (I cannot remember the figure). That puts a massive dent to borrowing capacity.

      • Good points there Virus and believe you are sitting near where the lending books are discussed. I am sure from here market will be soft it will even fall but more so around specific areas/circles. A $1m house in Oran Park has to go down in that, though a house in Gordon will go soft but still picked up by someone. Same for new appts, that Green Square corridor which is in news a 2 bedder there is almost a mil that needs to go down. But none of that until jobs growth goes negative and RBA/Govt will be in action.

        Majority of FHBs who have capacity are already indebted
        You sure? I am a FHB with zero debt though don’t want to rent anymore and pay for a infestor to pocket my earnings. My breakfast is mostly raisin toast with butter and a cup of tea from the work pantry!

        Regarding IO loans for FHB, agree but I don’t what capacity FHBs have at this point in time.
        It will be same as rent so either rent or take a IO and live in the same home but your own that. Job is key, without that FHBs can’t pay rent or a mortgage. And Australia is still dynamic with a big ponzi scheme at the center, if the govt had intent it can transition jobs from housing which in fact is same as the reset we speak about here. All I say I don’t see it as Ireland/Spain more a Britain around GFC.

        With the attitude of banks you have to just think, will banks do this re balancing of books with a 25% crash which is tanking economy on their own, no they wont. They will be in a crisis meeting in closed rooms with a free credit line from RBA to refinance as many owner occupier loans while letting investors with more than 1 property burn – And also taking over smaller lenders at risk. Around the interest rates from RBA yes banks will keep more of it with them but still a cut which keeps a lid on interest rates at current rates which is a good outcome.

        Property investors that too those who are leveraged with multiple properties are $ucked for sure, but that’s 40K properties as you stated(10K individuals bankrupted). 40K homes at 50% price while rest drop by 10% I will accept it any day with a dent to banks but the psyche of property investment will be dented forever. That’s a good result in my view make people think there is more hard work needed before you earn that money. Also we are adding much more than 40K families a year to Syd/Melb shut the supply and move all construction workers to build infra – though wont happen quickly which is where the much needed pain is.

        In all this aussie will fall which will be a not bad in the medium term.

        Next election in any case will be fought over immigration and housing affordability, so expect everyone to be innovative with labor extending interest deductions to owners with caps, that will make FHBs jump it will be cheaper to buy than rent.

        BTW your analysis is spot on just take emotion out and you will be a trader at a IB with your book to run!

        Ignore the typos, time to get paid.

      • Amit,
        All valid points and I agree.

        You and I, although FHBs are “standing aside from the market” have enough capacity but no-go. That is a huge difference and fortunately, we are in the minority. I, for one will surely jump in if Labor brings in “PPOR mortgage on pre-tax income” rule.

        You are absolutely right, the “elected democracy” will try their level best to keep the balloon inflated. Unfortunately, that is biggest unknown in “predicting the outcome”!

      • Cheers mate, BTW I am close to taking a tough call and bite it soon. I know fall will start after that though I think I am much better equipped to cope up with it and pay my mortgage then heaps others. If it means those loaded investors get burnt and are homeless paying those debt then even better.

    • “10. I read somewhere that there are 2 – 3 million property investors. Only 1% have to blink and put only 1 property on the martek, we will suddenly have 20,000 properties on the market trying to run for the exit! Let that sink in.”

      Our landlord apparently owns multiple investment properties and recently tried to sell ours, but couldn’t get the asking price. I think he has missed the top in Melbourne! Probably thought he was being clever.. I’d be basking in my smug, self-righteousness right now if my partner hadn’t turned around and said she wants to buy instead of continuing to rent! Thankfully we’re waiting until next year. I can’t be lucky enough to buy after the crash, so we’re probably another 18 months before Melbourne implodes… Once I buy, that will be the top..

  9. Everyone is overlooking the fact that there are over 1 billion chinese and as many Indians who have effectively unrestricted access to our real estate. Even if only 0.01% act on it, the bubble will continue indefinitely. We can never build enough homes to meet the open door policy our govt offers. So dont hold your breath.

    • McPaddyMEMBER

      Agree. That is an option. It’s now a contest between the greed of those who are on the train (2/3 of Australia’s population) and [desperation of the rest + the ethical backbone of the first cohort]. Too close to call really…. I guess we could end up with greed winning, only to be superseded by a minsky moment of unfathomable proportions too.

    • You are right to a certain extent. But the problem is, moving forward foreign-buyes/fresh immigrants need to be cash-buyers otherwise the plan does not stack up in anyone’s books. If they are cash-buyers, interesting to see how many will have the buffer to take 30-50% haircut( or 100% as per OJ’s anecdote) getting their funds out of China/India. There is a misguided belief here that getting money out of India is lot more easier than China. It is not, India has had capital controls for a long time (incoming is dead easy and encouraged, outgoing is freaking difficult). Right now, it is even more tight.

      • Yeah I think it’s piddly something like 40k INR per annum per person. Though I think there might be ways to get it out yet. But it’s nowhere near what is required to buy property at these inflated prices in AU dollars.

    • 1 billion poor Chinese. Their income are truly pathetic. Their 99% percentile households income is the same as our 66% percentile household income. It works out to be 4.6 million vs 2.6 million household respectively. So it’s only these 4.6 million households your are remotely interested in, the rest of the Chinese population you could just safely discard. That’s why this line of reasoning is so poor, because you could even caste an even wider net and say there are 7 billion people in the world, and if 0.01% acted on it Australia will have a perpetual property shortage.

      • And then if these numbers Kevin is saying are right, there are alot more supply in the US and UK that are going to be better placed to succeed, our economy is so dependent on housing sector, why would the chinese risk their money in australia with a crashing economy when there are other stable anglosphere economies.

    • The latest Census will still state that Australia is a country with majority from whitie land, if it’s just Chinese left in the game you think Australian’s will let it happen, already it’s bad enough with ~25% of the market, good luck with that reasoning

      • @Mark,
        Does anybody believe the results of a Census? I put myself down as a “Cable Layer”. There is a lot of BS in the results.

    • Maybe. Prices are just getting so hideous it might even turn them off. Houses in shitty bogan suburbs are approaching 2m for something decent. Anything in classier suburbs well you’d wanna be damned rich to drop 5m for what is essentially just reasonably upper class. It’s not that good a life by a long shot.

    • Check this shit out. Email from a Real Estate agent today.

      Exciting Rebuild Opportunity in Prime Merewether Position
      For Sale – $1,250,000

      The Address is : 74 Merewether Street
      Merewether NSW 2291

      So I did a quick Google Search.
      https://www.realestate.com.au/property/74-merewether-st-merewether-nsw-2291

      Sold in February 2017 for $1,030,000.

      Already trying to jump ship? After settlement?

      Seriously $1M for a house in Newcastle? I know the area is nice but it’s not $1M nice.. fools..

  10. PrinceOfPersia

    Where is that idiot with cowboy picture?! The tosser must have some stupid things to say, as usual! Where are you “The Dill Man”?! LOL.

    • You seem to be new. Stick around for a few days and you will realise our dear Reusa is the wisest man (and the biggest MEMBER) around here.

    • Prince of Persia you only wish to be invited to the best swingers parties on the planet. You could put your car keys in the fruit bowl and on the way out whoever’s keys you pick up you go home with for some extra kinky time with lots of white powder. But as a Persian you might not be allowed to attend and associate in such activities. Shame for you. 😀

  11. So all we need is some massive crisis where people can’t afford to pay their mortgage bill.. something we have never had before, and then we’ll see prices drop

    The loon pond is here (90% of you that have commented today)

    • Here. here. most of this lot are deluded fools. They are constantly waiting for their lottery ticket numbers to come in, in reduced house prices. Yet they are hoping to correctly time the bottom in the market, so they can enjoy the capital gain in the future for an asset they despise. Yet in the 4 years they’ve been moaning about it on this blog, they could have DOUBLED their money in Sydney. Sad doesn’t even cut it. Rent in your shitty suburbs and smile when you eat that shit sandwich, it’s the loser’s lunch you ordered.

      • Some of us happen to think sub-standard houses for 1.5M are just not fair value… Or we just want a home, not a capital gain.

      • Do us a favour Dylan. Don’t sell your properties. Hold them forever like the winner you are.