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AUS: Houses prices
  • Australian sales of newly built homes slumped to the lowest level on record in August, a private report showed, underscoring the central bank’s decision to resume lowering interest rates.

    Sales decreased 5.3 percent to 5,383 from July, when they dropped 5.6 percent, the Canberra-based Housing Industry Association said, citing a survey of the nation’s largest builders. Detached house sales fell 5.8 percent, while apartments slipped 2.5 percent, it showed.

    The number of seasonally adjusted new detached house sales in August fell by 7 percent in New South Wales, 8.6 percent in Victoria, 2.9 percent in Queensland, 2.6 percent in South Australia and 9.4 percent in Western Australia.

    Via: http://www.bloomberg.com/news/2012-10-03/australia-new-home-sales-fell-to-record-low-in-august-hia-says.html

  • 14 Replies sorted by
  • Well, I was planning on getting a bigger house next year. Problem is housing prices have risen 5% from last year again here in the Washington DC area. Argh....

  • In Northern Ireland there has been a severe house price crash since the summer of 2007 with nearly 60% being knocked off the equity in the last 5 years. I bought my own house in July 2004 for £71,000. By summer 2007 it was worth over £210,000 now it's barely worth seventy grand! I pity anyone who bought at the peak of the market as they will never see their investment returned.

  • 4% said No :-) All else said, yes, in fact. As answers had been specially formulated to prevent proper understanding. Housing shortage is exactly that you see in housing bubble.

  • The average Australian wage in 1977 was just over $10,000. Today the average Australian wage is $69,000 with the mining boom no doubt inflating the current figure. So at best there has been a 7 fold increase in wages while real estate prices have increased more than 20 fold. Something's gotta give and the prediction is it will be fairly soon.

    This is similar to the USA housing situation. Still a big disparity between wages and home prices, and yet, home prices are starting to rise again. Partly that might be due to investors and speculators buying up distressed properties.

  • Foreign ownership of Australian houses was the straw that broke the camel's back.

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  • Most interesting is that all goverments and banks perfectly know how big is the damage caused by inflated home prices. As this temporary solution to debt bubble problem was one of key reasons for destruction of local firms making any real stuff.

  • My mum's house and land $14,000 built by mum and dad in 1969, now valued at $650,000 .. 8km from city centre.

    Rentals where I live are 1/2 of the minimum wage (about $32K) for a 1 bedroom flat.

    The rental hike with the interest rises about 8 years ago doubled rental rates in 18 months. And although interested rates are now well below half what they rose too .. of course the rentals haven't dropped, and I doubt they will.

  • We also have an amazing thing here called 'Negative Gearing', where you can borrow to buy an investment property and claim all the interest from your loan as a tax deduction. Basically the government is funding everyone to purchase multiple properties, we are the only country in the world to have such crazy scheme. I hope we have a major correction soon, however I fear the government will just keep handing out more and more incentives to prolong the inevitable.

  • I'm waiting for a housing price 'correction'

    Real correction will mean same as in Spain :-) Buying house will be exactly your last though.

    Right now Australia and NZ are partially protected because they are owned by UK.

  • @truestory You pretty much summed it up.

    Steve Keen is on the ball... http://www.debtdeflation.com/blogs/2011/02/10/a-motley-crew-interview-on-australian-house-prices/

    I'm waiting for a housing price 'correction' before I jump on some north facing land to build a passive solar house.

    My aunt purchased a house 10kms from Melbourne in 1977 for $36,000. It sold last month for $850,000 (land value only ) and that was in an already cooling market. If it had sold 12 months earlier it would have fetched around $1,000,000.

    It sold for 24x it's original purchase price.

    The average Australian wage in 1977 was just over $10,000. Today the average Australian wage is $69,000 with the mining boom no doubt inflating the current figure.

    So at best there has been a 7 fold increase in wages while real estate prices have increased more than 20 fold. Something's gotta give and the prediction is it will be fairly soon.

    Incidentally a neighbor fly's around 6000km's round trip every few weeks to go to work. Can you guess what she does? She drives one of those massive iron ore dump trucks in the Kimberly.

  • The problem in here in Australia is simple, everyone rode the gravy train for 10 years (1998-2008) house and land prices rose from 150% to over 300% in some cases. The Banks convinced everyone to borrow more money against the inflated values and everyone in Australia felt like they were all millionaires

    It is not problem, as you think. It one of known solutions in hard task of keeping debt bubble alive. To increase debt load on people best bet is to start fast inflation of house prices, so they can both use existing homes as foundation to get more and more loans each year and also buy new houses to get new loans using them also. People who now have touble buying a house are also part of solution as they now pay more and more of house final price to banks, as loans become longer.

  • The problem in here in Australia is simple, everyone rode the gravy train for 10 years (1998-2008) house and land prices rose from 150% to over 300% in some cases. The Banks convinced everyone to borrow more money against the inflated values and everyone in Australia felt like they were all millionaires, except for those who could not afford to buy in, they struggled to pay increasing rent prices. We also have a once in a 100 year mining boom which has created tens of thousands of jobs with obscene wages being paid. You can earn $75,000usd here just washing dishes or cleaning toilets on a mine site. Most mine workers are earning $100,000usd plus for 2 weeks on 1 week off.

    The problem here is that everyone including all the politicians have enormous wealth tied up in real estate so they keep trying to keep the market high by offering first home buyers large cash incentives to buy or build a new home. This is slowly coming to an end in the current climate but we are yet to see a real drop in Australian house prices. Most major independent economists agree that house prices in Australia are 50-60% over priced.

    Australia has primarily been untouched from the GFC as we had minimal government debt, so our government was able to spend billions of dollars on stimulus packages without any major stress to the economy. However the private debt to GDP ratio in Australia is approx 150% in 2008 up from 17% in 1975. Like most OECD countries we all used the power of Leveraging and easy capital to accelerate our wealth, unfortunately now in Australia we are seeing a sustained period of de leveraging as people stop retail spending and pay down debts. The high Australian dollar is also a curse (great for buying shit from B&H though) as our exporters are getting pounded and cannot compete. I think if China starts to falter for any sustained period the house of cards will start to topple here as Australia has put all its eggs in the mining basket at the expense of all other industries.. That's my 2 cents worth anyway... cheers

  • @Cde

    Same had been the case in Spain. Canada is also similar to Australia with big bubble on house prices waiting to bust .

  • Real estate prices in Australia are ridiculous. A drop has been a long time coming.