The Sydney property bust: “This time it’s different”

Nice video here from Martin North and friends examining the coal face of the Sydney property market.

Nothing in there that I don’t agree with.

Comments

    • There was a similar dip in 2015. Two years later prices were 20% up. Who knows what will happen this time, but being bearish on property has been a trade that has made many poor, whereas those who have bought are millionaires.

      • reusachtigeMEMBER

        Exactly! And now is probably one of the best times to buy in many many years as there’s some great bargains out there while things are relaxing. Some are off 5 or so percent!

      • It’s thinking like this that makes me hopeful that when there is really a wolf, the villagers will ignore the boy crying to their own demise. This mainstream thinking of “past performance is the only indicator of future performance” is a necessary ingredient to infuse complacency in the masses. How else do you sleep walk off a cliff?!
        RBA’s patient zero.. they will look back on this rate decision in years and lament how they should have cut. But again, they’ve listened to the boy crying wolf too many times and they reckon this time they’ll ignore the cries.. Bad move, the wolf seems to have arrived.

      • THe 2015 correction was over in about four months and back to back to pre fall levels after about eight months. We’re at about nine months of falls so far and still falling this time. Current falls also twice as deep as the lowest point last time.

      • How has being bearish on property made anyone poor? Shares (esp overseas) have had better gains than the average Australian property over the last ten years, and that’s even counting the Sept 2008 GFC meltdown. SP500 is up 100% from this day ten years ago and that’s without the risks of being long an illiquid asset with high debt.

        If you can’t see the differences between 2015 (where we had scope for heavy rate cuts and lending standards were loose, plus Chinese stimulus went nuts) and now (no cuts, tightened lending standards, no clear stimumus) then you deserve to be long your illiquid leveraged asset class as we head into a crash. Enjoy.

  1. The prediction seems to be 5%~10% down over the next 2 years in the $2m+ market. …Because of toll road construction…!

    What a growling bear!

    • reusachtigeMEMBER

      Yeah, like, LOLOLOLOL! And how much has it gone up? It’s not a friggin bust it’s a relax. This blog and it’s always wrong crashniks! Like, always wrong always!

      • Reusa, this market relies almost totally on availability of debt. As you’ve heard, “valuers are getting twitchy”. It means the market will strangle itself with a negative loop syndrome in lending.

      • reusachtigeMEMBER

        ^ LOLOLOLOLOLOL, you sound like that totally discredited Steve Keen freak. It all has to do with supply and we have a shortage in available properties to invest in and we need to house our imported human capital somewhere!

      • Bloody hell! MB cranks out a plea for zero nominal interest rates meaning RAT negative about 10% just depending on your inflation measure.

        Plug zero rate into your NPV calc! The RBA designed this bubble and were (are?) proud of their achievement. It was in their minutes. Are they really going to change course? Can they without absolutely crashing the economy. Will they raise rates into runaway inflation? No they won’t – they’ll look through it.

        I think we need to be very careful in thinking that the only way is way way down in nominal dollars.

      • BubbleyMEMBER

        ” It all has to do with supply and we have a shortage in available properties to invest in and we need to house our imported human capital somewhere!”

        Dammit Reusa, I hate it when you’re right. So damn smug.

    • Robert Hanssen

      Yeah – the infrastructure bit was crap – he is talking his own book there.

      • Why in Haberfield some properties have had their values smashed as a result of all that construction which gutted the suburb in half? I wouldn’t want to buy a house right next to a new expressway.

      • It’s not so hard to believe is it? There’s usually losers from infrastructure development (i.e. who bears the costs both monetary or not).
        Hospitals, public transport, social infrastructure = Good for locals, not as good for private enterprise
        Toll roads, industry infrastructure, freight lines, airports, etc = Bad for locals, good for private enterprise + large landholders

  2. This time is different. But not in a good way. This is the same kind of scenario that led to Trump in the US.
    Scary times when the system is rigged. I wonder how Australia and Australians will respond to a housing crash?

    • Terror Australis

      Blame the muslims, queers, feminists, darkies and unpatriotic “leftists”.
      Then burn the Reichstag.

      • No surprise they are the most relaxed places in Australia! Nice warm weather and all that. Now the southeastern states will learn to relax too…

    • ErmingtonPlumbingMEMBER

      Lots of finger pointing and propaganda full of misinformation.
      Keating’s “recession we had to have” lead to Howard and Costello.
      Would a Coalition owned Recession lead to a ig swing to the left? I suspect it will.
      But a big barrier for many (to return to the left) IMHO, is the “leadership” of the Lefts preference to keep the Ledt/Right dichotomy primarily centered around Identity politics issues.
      This allows MPs and Apparatchiks to “not rock the economic boat”, keep the coporate rent seekers happy (they make powerful enemies) and ensure the same cushy career path is open to them, that coalition MPs enjoy.

      Nothing will really change, unless it comes from the grass roots of the political parties,….ALL SYSTEMS AND INSTUTIONS BECOME CORRUPTED,…when you let people weild power, they will abuse it,…always.
      Real democracy is the solution,…not the representative dictatorship we have, where rule is rotated between 2 factions of the same pro Plutocracy political structure.
      A 2 party system can only deliver positive outcomes for comon people when a REAL economic Left/Right parliamentary dichotomy exists,….it doesn’t today!

      Change can only be forced apon out political system from
      within Political parties that have very large rank and file numbers, that demand control over their leaderships decision/policy making process.
      Any “new party” will have its leadership just as corrupted, with out this kind of active oversight.

      The next step towards a Revolution is to join a party, bear witnesses and call out courrupt and self serving behaviour every time you see it.
      https://youtu.be/mLAeNmRwY3I

      If your not prepared to do anything,…why should anyone give 2 stuffs about anything your whining about. It’s not just our leadership that is at fault,…its our apathy also.

      If my preference doesn’t suit ya, pick another, but join one of em and turn up,…regularly.

      https://www.alp.org.au/joinlabor

      • Jumping jack flash

        left, right, up or down, side to side, and round and round…

        It’s all the same these days because the government actually has no idea, and no control over anything any more. They simply don’t want to, and don’t need to.
        Long gone are the days of politicians who actually need to be experts at their portfolios, or be educated past an arts degree.
        If even that, these days.

        They made the decision to sell it all off years ago so instead of actually doing any work, they could sit back and quaff red in the cafeteria, bonk their staffers, and pay themselves a ton of money for literally doing nothing.
        It also meant that the top jobs were suddenly really easy and anyone who was an expert at talking could do them.

        So now the pollies basically have their decisions made for them. And that’s how they like it.

        And, most importantly: All the different political “directions” exist in the same environment of private companies, and use the same groups of private companies for running the country and making decisions.

        Therefore, unsurprisingly, regardless of which political “direction” is in power, the decisions and outcomes are the same!

        This particular point is becoming incredibly obvious since we have flip-flopped around the political directions, but ended up travelling in the same direction each time.

        The time to prune out the rot was a decade ago, but things will need to get a lot worse before the average person sees there is actually any problem.

      • “when a REAL economic Left/Right parliamentary dichotomy exists,….it doesn’t today!”
        It never has existed, and never will under Westminster democracy. That is the whole point, and why it was created in the first place.

      • BubbleyMEMBER

        Well kiss my furry little butt, I disagree with your statement with all the moral integrity that Trump does not posses.

      • I’m smart enough to understand that if MSM and George Soros hate him, he is probably good for me regardless.

  3. SoMPLSBoyMEMBER

    Speculators are a healthy component of equity based markets and help temper the vicissitudes that are present. For many years, assisted by public and private interventions, the bulls in property have enjoyed great gains and normal investors have been treated to speculator type advances. When the ‘interventions’ are reduced or removed, it’s very likely the other side of the trade table will feature just as prominently.

  4. The only justification for Sydney and Melbourne property prices is the expectation of more large gains. That expectation is diminishing rapidly. We either have already or soon will hit stall speed in the absence of a fast return to business as usual.

    • Funny how all the Chinamen have dissapeared up their own clackers when prices started heading the other way. Even funnier how you never see them at auctions in WA, NT, Nth QLD or any mining town…… They call them “MOMENTUM” players and the only momontum now is the force of gravity!

      • And we were dumb enough to let them buy… now we’ll pay for it, while they take their gains and leave off to another market..

      • @Gav not so sure they’re leaving. They bought to give their kids and elderly residency in a country with social security and park their money away from the CCP.. Seen about 2 dozen of these in my particular area since 2011 or so. The house is left empty 95% of the year.

  5. RussellMEMBER

    Wow, the bank of mum and dad group – could be a bit higher than the 2 million mark for their first homes. Insane… you can just see articles written about this obscene bubble in years to follow. Since when is 2 million a starting point for a basic home in Sydney? Pop!