Welcome to Australia’s ScoMo-prime housing bust. Here’s the blowoff:
Inspired by the Realty PM, who promised rising house prices forever and, to ensure it, guaranteed the deposits of sub-prime FHBs.
Needless to say, he got them very excited, driving up auction clearances:
Sending house prices back to the moon:
And driving the average new loan size to all-new highs:
It is apt, then, that all the Realty PM has done is suck the unwary into the top of the bubble. It can now be rebranded as the ScoMo-prime mortgage bubble that is going to pop thanks to COVID-19.
Consider. Ahead lies this:
- auctions to shutter until October;
- consumers to bunker intensively until then and probably beyond it;
- collapsing international students, tourists and migrants as other nations apply travel restrictions to Australia over Winter;
- collapsing rents;
- many thousands of dead elderly flooding deceased estates onto the market;
- an unemployment spike for the ages, and
- house prices rolling over in due course.
Followed by:
- smashed banking profits as bad loans and funding costs rise while collateral plus margins fall, resulting in
- credit rationing.
Undoubtedly, Scomo-prime will bail this out, stimulate what and where he can and hose tax-payer’s dough like water on the conflagration.
But how is he going to defeat a virus that simply means people won’t go out for six months this year and perhaps next as well? I don’t have the answer. Neither does the sharemarket, so we are seeing the fastest crash in bank values I have ever seen:
ScoMo-prime is going to bust and its toxic namesake will be swept from power by a tsunami of wiped out mortgagees.
