Australian Politics Forum - Australias Real Estate Bubble

Redmond Neck

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Australias Real Estate Bubble
Feb 15^th, 2014 at 8:02am

This guys prophecy of impending doom in the real estate market has got me wondering what actually happens to existing mortgages if suddenly house prices crash by say 30%.

Will the banks be able to suddenly demand large increases in mortgage repayments as i think happened in America resulting in lots of forclosures?

This is very likely I think as I think most new home buyers are borrowing far too much relative to their ability to repay!

Nightmare vision of impending property crash

American economist and demographer Harry S Dent jnr says there is a bubble in Australian house prices and we should brace ourselves for a spectacular collapse starting this year.

Dent is in Australia to speak at seminars and to promote his book, “The Demographic Cliff”. He says that house prices are unsustainable and will fall by at least 27 per cent in Sydney and Melbourne over the next several years.

Your real estate is so high it has to come down.

Dent told Money in a video interview that the trigger for the collapse of Australia's house price bubble will be the bursting of the Chinese house bubble.

How high can property go?

Dent says Sydney and Melbourne property markets are being held up by foreign buyers and that cannot last forever.

“China has a bubble [in house prices] that makes Australia's look like nothing,” he says.

“I think China's bubble is going to burst and I cannot see any way that Australian property prices can keep going up," he says.

If his forecasts do not come true it will be because governments “wave the magic wand and kick the can down the road again”.

The Reserve Bank of Australia and most Australian economists say there is no bubble in Australian house prices. But Dent is sticking to his guns.

“Nobody in real estate development or government can afford to say that 'we have got a bubble',” he says. “They will always say it is not a bubble”.

But what of our special factors - we are a very large country with a unique economy and most of the population concentrated in a few conurbations - don't they count against the general rules for bubbles and their ending. Dent says he has studied every bubble in history and every time a bubble comes whether it is in tulip bulbs, gold, stocks or housing they are always described by those on the inside as being different, and unlikely to burst.

“I am saying that China has the biggest [bubble] and that is going to trigger [the bursting of] your bubble. Your real estate is so high it has to come down in the next few years."

Read more: http://www.theage.com.au/money/investing/nightmare-vision-of-impending--property...

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cods Gold Member Offline Australian Politics Posts: 88048	Re: Australias Real Estate Bubble Reply #1 - Feb 15^th, 2014 at 9:05am well China has just doubled its population... they are now allowed to have two children....so can you see the future sinking down for CHina??.. Im blowed if I can..
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John Smith Gold Member Offline Australian Politics Posts: 74446 Gender:	Re: Australias Real Estate Bubble Reply #2 - Feb 15^th, 2014 at 9:44am cods wrote on Feb 15^th, 2014 at 9:05am: well China has just doubled its population... China's population is actually on the decrease, but lets not let facts get in the way of a good story
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Swagman

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Re: Australias Real Estate Bubble
Reply #3 - Feb 15^th, 2014 at 9:56am

Redmond Neck wrote on Feb 15^th, 2014 at 8:02am:

This guys prophecy of impending doom in the real estate market has got me wondering what actually happens to existing mortgages if suddenly house prices crash by say 30%.

In most cases Lenders Mortgage insurance pays for any shortfall between the mortgagee sale price & the amount of the home loan.

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Sir lastnail

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Re: Australias Real Estate Bubble
Reply #4 - Feb 15^th, 2014 at 11:03am

Redmond Neck wrote on Feb 15^th, 2014 at 8:02am:

This guys prophecy of impending doom in the real estate market has got me wondering what actually happens to existing mortgages if suddenly house prices crash by say 30%.

Will the banks be able to suddenly demand large increases in mortgage repayments as i think happened in America resulting in lots of forclosures?

This is very likely I think as I think most new home buyers are borrowing far too much relative to their ability to repay!

Remember the sinking of the Titanic ? After it struck the ice berg it took ages for it to sink but as it took on more water the rate at which it sank grew until it took on so much water that it sank in a matter of minutes !! There was no stopping it !!

Now replace the titanic with the property sector and water with debt and you get some idea of what happens in a crash. What the iceberg will be is anyone's guess but I'm already putting my money on the rise of unemployment as the trigger whereas Harry Bent said that it will be the collapse of chinas real estate market. Fun times ahead Sad

Looks like Steve Keen was right way back in 2007 except that governments kept hatching up hare brain schemes to kick the can down the road again Sad

What will be the next hare brained idea ?

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In August 2021, Newcastle Coroner Karen Dilks recorded that Lisa Shaw had died “due to complications of an AstraZeneca COVID vaccination”.

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ian Gold Member Offline OzPolitic Posts: 9451	Re: Australias Real Estate Bubble Reply #5 - Feb 15^th, 2014 at 11:20am in the worst recession this country has ever had prices didnt crash.
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John Smith Gold Member Offline Australian Politics Posts: 74446 Gender:	Re: Australias Real Estate Bubble Reply #6 - Feb 15^th, 2014 at 11:21am Sir lastnail wrote on Feb 15^th, 2014 at 11:03am: Remember the sinking of the Titanic you want to compare the property market to the titanic? desperate nail, desperate
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teddybear

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Re: Australias Real Estate Bubble
Reply #7 - Feb 15^th, 2014 at 11:41am

John Smith wrote on Feb 15^th, 2014 at 11:21am:

Sir lastnail wrote on Feb 15^th, 2014 at 11:03am:

Remember the sinking of the Titanic

you want to compare the property market to the titanic? Grin

desperate nail, desperate

Some of comments on here seem to show a total lack of understanding..,Or maybe they are renters and never brought a house. Angry

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Sir lastnail

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Re: Australias Real Estate Bubble
Reply #8 - Feb 15^th, 2014 at 12:33pm

teddybear wrote on Feb 15^th, 2014 at 11:41am:

John Smith wrote on Feb 15^th, 2014 at 11:21am:

Sir lastnail wrote on Feb 15^th, 2014 at 11:03am:

Remember the sinking of the Titanic

you want to compare the property market to the titanic? Grin

desperate nail, desperate

Some of comments on here seem to show a total lack of understanding..,Or maybe they are renters and never brought a house. Angry

Here we go again. The old "this time it's different" line is wheeled out once again. Like the dude said.

Quote:

But what of our special factors - we are a very large country with a unique economy and most of the population concentrated in a few conurbations - don't they count against the general rules for bubbles and their ending. Dent says he has studied every bubble in history and every time a bubble comes whether it is in tulip bulbs, gold, stocks or housing they are always described by those on the inside as being different, and unlikely to burst.

“I am saying that China has the biggest [bubble] and that is going to trigger [the bursting of] your bubble. Your real estate is so high it has to come down in the next few years."

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In August 2021, Newcastle Coroner Karen Dilks recorded that Lisa Shaw had died “due to complications of an AstraZeneca COVID vaccination”.

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Grappler Truth Teller Feller

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Re: Australias Real Estate Bubble
Reply #9 - Feb 15^th, 2014 at 12:51pm

Redmond Neck wrote on Feb 15^th, 2014 at 8:02am:

[b][color=#0000ff]This guys prophecy of impending doom in the real estate market has got me wondering what actually happens to existing mortgages if suddenly house prices crash by say 30%.

Will the banks be able to suddenly demand large increases in mortgage repayments as i think happened in America resulting in lots of forclosures?

Well they are the total idiots I believe them to be if they do - since neither they nor anyone else will be able to recoup the capital expenditure put out for those houses at the beginning, and many bankruptcies will occur which will leave the country desolate.

(On KRUD News tonight - our finance reporter Johnny Cashta Singhe reports on the collapse of the market.. live from Point Piper....)

"What am I bid for this Mortgagee auction waterfront in Point Piper? come on, bidders - the reserve is low at $19.3 million - I'll take a bid of $1m! One millyun anyone".....

No takers.. no money in the market... the doors are closed for investment property hoarders now - can't sustain them when they operated on the principle that if they ever got into trouble they could sell off a property to bail out..... now all their properties combined won't bail them out...

The future looks grim for the Australian property market with the collapse of China's economy in a welter of social imbalances caused by Chinese Industrial Man having ripped the bowels out of the economy and causing the bankruptcy of the farmers and producers through low farm produce prices, imported cheap Third World Australian canned fruit, and rising costs of living due to massive pay rises for industrial workers.

With the Second Red Guards Cultural Revolt roaming the streets by day and night, and the government firmly back in the hands of populist Trotskyite Communists intent on hunting down capitalist fascist running dogs of the past, and Indian billionaires burnt on pyres to compensate for the impoverishment of their own people under the new Radical India Party, we anticipate the market will continue to decline with prices for luxury villas on the waterfront falling to as low as $50k.

Meanwhile on a brighter note, President Grappler's Reform Australia Party has made a public announcement that a culling of bank managers, politicians, CEOs and public servants above a certain level will be undertaken, as they are sent out to the rice fields from Day Zero to see what a real job is all about, tilling rice by hand under a long-term unemployed previously overseer or single mother."

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“Facts are stubborn things; and whatever may be our wishes, our inclinations, or the dictates of our passion, they cannot alter the state of facts and evidence.”
― John Adams

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John Smith

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Re: Australias Real Estate Bubble
Reply #10 - Feb 15^th, 2014 at 1:12pm

Sir lastnail wrote on Feb 15^th, 2014 at 12:33pm:

Here we go again. The old "this time it's different" line is wheeled out once again. Like the dude said.

who said anything about different? Australia never had a property bubble burst and for good reason ... nothing has changed, it's not different ,and that is exactly why we won't have any imaginary bubble bursting

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Our esteemed leader:
I hope that bitch who was running their brothels for them gets raped with a cactus.

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Sir lastnail

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Re: Australias Real Estate Bubble
Reply #11 - Feb 15^th, 2014 at 1:20pm

John Smith wrote on Feb 15^th, 2014 at 1:12pm:

Sir lastnail wrote on Feb 15^th, 2014 at 12:33pm:

Here we go again. The old "this time it's different" line is wheeled out once again. Like the dude said.

who said anything about different? Australia never had a property bubble burst and for good reason ... nothing has changed, it's not different ,and that is exactly why we won't have any imaginary bubble bursting

and there is no property bubble because the banks say so Cheesy

LOL

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In August 2021, Newcastle Coroner Karen Dilks recorded that Lisa Shaw had died “due to complications of an AstraZeneca COVID vaccination”.

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teddybear

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Re: Australias Real Estate Bubble
Reply #12 - Feb 15^th, 2014 at 1:26pm

Sir lastnail wrote on Feb 15^th, 2014 at 1:20pm:

John Smith wrote on Feb 15^th, 2014 at 1:12pm:

Sir lastnail wrote on Feb 15^th, 2014 at 12:33pm:

Here we go again. The old "this time it's different" line is wheeled out once again. Like the dude said.

who said anything about different? Australia never had a property bubble burst and for good reason ... nothing has changed, it's not different ,and that is exactly why we won't have any imaginary bubble bursting

and there is no property bubble because the banks say so Cheesy

LOL

Or because some wanker on some stupid forum say's so

Wink

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Aussie

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Re: Australias Real Estate Bubble
Reply #13 - Feb 15^th, 2014 at 1:43pm

Quote:

Will the banks be able to suddenly demand large increases in mortgage repayments as i think happened in America resulting in lots of forclosures?

If there is a serious diminution of value in the property secured (that is, the one over which the Bank holds the mortgage) below that of the amount of the loan (and even in other circumstances) notwithstanding that you are up to date with your payments, the Bank has the right to call in all of the debt for immediate payment.

(Well, that's how it used to be 'in the day,' but I don't reckon much has changed.)

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Sir lastnail

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Re: Australias Real Estate Bubble
Reply #14 - Feb 15^th, 2014 at 1:50pm

teddybear wrote on Feb 15^th, 2014 at 1:26pm:

Sir lastnail wrote on Feb 15^th, 2014 at 1:20pm:

John Smith wrote on Feb 15^th, 2014 at 1:12pm:

Sir lastnail wrote on Feb 15^th, 2014 at 12:33pm:

Here we go again. The old "this time it's different" line is wheeled out once again. Like the dude said.

who said anything about different? Australia never had a property bubble burst and for good reason ... nothing has changed, it's not different ,and that is exactly why we won't have any imaginary bubble bursting

and there is no property bubble because the banks say so Cheesy

LOL

Or because some wanker on some stupid forum say's so

Wink

and there can never be a property bubble in Australia. That only ever happens in other countries Cheesy

LOL

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In August 2021, Newcastle Coroner Karen Dilks recorded that Lisa Shaw had died “due to complications of an AstraZeneca COVID vaccination”.

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