Harry Triguboff: Housing “very dangerous, has deteriorated again”

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Last week Harry Triguboff brushed aside concerns about a potential slump in house prices because of Australia’s mass immigration program, while also demanding policies to stimulate the market:

‘The way Australians have always made money is on property. But prices have come down and mortgage arrears are growing,’ he said.

“Prices won’t crash,” he said, but noted that the market would be weak for at least a year. Strong migration would put a floor under the market…

He said a raft of taxes like foreign buyer taxes, limits on foreigners buying new apartments, vacancy taxes, and at local government level, high infrastructure levies on developers, should be relaxed to stimulate the market.

Today it is not so good, Highrise Harry again, this time via Gotti:

“The situation is very dangerous. The market has deteriorated again,” he says

“If it continues like this, people will lose a lot of their wealth because their houses are losing value. Because the value of the properties is going down, the banks are becoming much harder on their clients.

”The amount the banks lend now is much less than before because the banks are being told to be tougher.

“The secondary lenders cannot help because their interest rates are higher and the purchasers are given even less money by the non-bank lenders and they have to pay more per month.

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Gotti adds that Highrise Harry sees Sydney in “crisis” by mid-2019 and adds that he (Gotti) sees the same for Melbourne slightly after. He says Perth is recovering and Adelaide, Brisbane will be fine.

Of course, Perth is not recovering, it’s accelerating downwards:

And no city is going to be spared but Brisbane and Adelaide will certainly fall less as the nine shocks roll on:

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  • macroprudentials two and three;
  • royal commission tightening;
  • bank rate hikes;
  • oversupply and immigration cuts;
  • election and negative gearing reform;
  • withdrawing Chinese investors.

Triguboff’s mid-2019 crisis looks good for the next “surprise” rate cut, if we get that far. The problem is, we’ll then be perilously close to the next global shock and another shocked leg down for prices.

Unless you’re from RBA fantasy land, from Deputy Chairsatan Debelle today:

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“All of that means that yes, it’s something that we’re paying pretty close attention to. How much of a drag it may constitute.. is just not clear.

Not all of the country lives in Sydney. They’ve come down in Sydney [by about] 6 or 7 per cent from their peak, having gone up, sort of, 50 per cent in a few years.

It’s not entirely clear how much of a boost the rising house prices provided to the economy on the way up, which also means it’s not entirely clear how much of a drag it may provide or may constitute on the way down.

I’m not saying that because I think it’s one way or the other, it’s just that it’s really an uncertainty.”

The only thing uncertain about it is why the RBA hasn’t looked at how other bubbles went bust. Employment is the lagging indicator and by the time it rolls over it’s already too late, especially when you have almost no ammunition left.

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.