The australian housing bubble

[Anne B]

If the property bubble burst would the exchange rate turn around or would the rental market boom?

 

I have two dilema's. Where will people live if they loose their home, will they all go back to their parents places? Or will they look to rent as a cheaper option?

Afterall there is already a housing shortage hence the high price and demand.

 

 

If the property bubble burst I don’t think there would necessarily be a problem with not enough rental properties. In the UK when prices started dropping, or rather when there was the expectation of them dropping, people stopped buying. Why buy today when prices tomorrow will be lower? So everything came to a standstill and the volume of house sales fell enormously. However not everyone can just sit tight and not move – life goes on and there are always people who have to move/sell property, for many reasons, such as death, divorce, new job in a new area, emigrating, desperately needing a bigger house etc. They try to sell their house at the price they want but nobody wants to buy, so they can either sell at a lower price than they wanted or else rent out their current property and either buy or rent a new one. So the supply of houses available for rent actually increases. In my local UK newspaper it had always been say 12 pages of houses for sale and 2 pages of houses for rent. About 18 months ago this jumped to 6 pages for sale 8 pages for rent.

 

There is article on this subject on news.com.au which is quite interesting, especially the readers comments at the bottom. The Australia economist who says the housing bubble will never burst here says

 

“Australia’s unique situation of strong population growth, a housing shortage, low unemployment and historically low interest rates would keep house prices high.”

 

Well that is exactly the same argument that was used in the UK before the bottom fell out of the housing market there. The UK also has a shortage of housing and high levels of immigration, so it’s not all about supply and demand. The GFC totally shook people’s confidence and expectations, and then everything went pear-shaped. The one thing that may well prevent the housing bubble from bursting in Australia is the fact that Australians never seem to lose their confidence in the future, regardless of what is going on around them. There is a strong belief that what happens in the rest of the world won’t happen here.

 

House price implosion claims ridiculous, says local economist | News.com.au

 

 

 

As for Australia not being into credit so much, just today we got a letter ‘to the householder’ trying to get us to sign up to a credit card. It seems some haven’t learnt the lessons of the credit crunch.

[ozzieclare2be]

personally and frankly people need to see australia as a country and economy in its own right, and not keep comparing it to europe, we have sustainable resources, we dont rely on the us to keep our markets afloat. The current interst rate rise is a way of slowing down the market appropriatley (though i think the banks in their wisdom could have been fairer!)

 

I think often people try to scare monger, it doesnt work like that in australia, people adopt long term investments, they dont seek instant gratification or "stuff"" thats not the aussie way!! In reality eveything is relative, even the exchange rate your 1 pound means nothing here till its exchanged , you could be waiting to get the rate you think you deserve for a long time, in the mean time your paying rent and the rate is dropping, interest rates rising, whose winning? Yes you can wait, try to predict the market but unless your a forex dealer it could take good while to see excahnge rates of 2.40!

[Guest guest4504]

So the " Aussie way " is to overstretch finances with increasing rates and rising houshold debt... hmm, ok. lets just see who is right between the two cases. I know where im leaning on. Also Australia may not rely on US or UK for its economy, but dont forget the certain country with 1.4 billion people..... oh yes, China ! Not looking good for that region at the moment.

[Guest guest4504]

One of the main reasons the bubble is as bad as it is is that you Pom's come over here, and buy up anything and everything worth a damn. Too bad the young people of adelaide dont have flats in london to sell to fund their purchases.

 

Immigrants using favourable exchange rates and paying cash for any property that isnt a ****hole is causing the bulk of this. Dont kid yourself otherwise.

 

Wouldnt you have done the same if you had the opportunity ? Especially as alot of Ozzies claim the land to be. Sounds like jealousy. Dont blame the Pomme, blame your own gov for not imposing property restrictions in the first place.

[ozzieclare2be]

So the " Aussie way " is to overstretch finances with increasing rates and rising houshold debt... hmm, ok. lets just see who is right between the two cases. I know where im leaning on. Also Australia may not rely on US or UK for its economy, but dont forget the certain country with 1.4 billion people..... oh yes, China ! Not looking good for that region at the moment.

 

 

no thats the british way lol, dont forget aus survived the world financial crisis, well so far so good. Too many people in the uk have the mentatility of wanting it now, the aussies i know are doing well thankyou. Many invest in property because the effects of negative gearing and capital gains tax cuts, meaning not only does it invariably not cost much to buy a second house to rent out but also you get tax breaks on it, my partner does this with his investment property, it doesnt cost him a bean.

 

Not a case of right or wrong mate, its a case of wait and see and pointless trying to prempt something as the same theory was banded about 2 years ago when i got here, didnt happen then , dont know if it will happen in future so think its pointless to scare monger. As for chinas economy what is that theory based on? Yep if china sinks it will probly take countries like australia and canada with it, but it will also have a huge

knock-on effect on uk and us too , think we could all benefit from a crystal ball lol!

 

Btw seeing as your about to move here i suggest you look at australia as a seperate country and not a big version of the uk lol, otherwise you will be called a whinging pom lol

[Guest guest4504]

Quite alot of ' LOL' there. Was not scare mongering, just my opinion like you have yours. As to me moving there I will accept what it is I dont and wont ' Winge' about the place. I do see Australia as its own but its not immune.ok.

[ozzieclare2be]

Quite alot of ' LOL' there. Was not scare mongering, just my opinion like you have yours. As to me moving there I will accept what it is I dont and wont ' Winge' about the place. I do see Australia as its own but its not immune.ok.

 

yes you are entitled to your opinion and i added the lols as its meant to be a lighthearted debate , but thankyou so so much for poitning them out to me because you have nothing else constructive to offer next time i shall try not to laugh so much

[Guest guest4504]

Fair enough, there was no anamosity intended I just have my own opinion and I dont think i am right and others are wrong. Just wondered on the lol being meant in a wrong way about my view, supose i was wrong on that one.

[Guest Guest5035]

to be honest i don't give a poo, i'm not selling or buying, its all swings and roundabouts, whatever happens, happens.

 

stevo

 

 

 

 

 

 

ps.......... you'd have thought this thread was started by a economist, not a floor layer:huh:

pps.........my prediction is petrol will go up next thursday

[taffordbark]

That should read 'an economist' . grammar please!

[Guest soggy]

So the " Aussie way " is to overstretch finances with increasing rates and rising houshold debt... hmm, ok. lets just see who is right between the two cases. I know where im leaning on. Also Australia may not rely on US or UK for its economy, but dont forget the certain country with 1.4 billion people..... oh yes, China ! Not looking good for that region at the moment.

 

Not sure where you get your information about China from, it took a few knocks the last couple of years but, like Australia has done much better than most, and 8% growth in GDP is expected this year, I keep a very close eye on China as we have property, busness interests and lot of family there, it's doing fine.

 

Simon:D

[Guest Guest5035]

Given that I have been through all of this before,,i think ther is no question of a crash not happening.

The figures are just not adding up as they were not in the UK in December 2006,,,yes that long ago!!!!!!!!!!

I had my own business in the Uk and just got a funny feeling about things ,,never been so right in my life,,think there is a lot of complacency in Australia that the mining sector will always pull the economy out of trouble,,mr Rudd and mr swann kissed that goodbye on Sunday,,and the over-enthusiastic real-estate idustry are making peoples realistic expectations of achievable property prices exhasperating.....watch this space!

 

 

you were saying..............

 

stevo

[Guest Guest5035]

Given that I have been through all of this before,,i think ther is no question of a crash not happening.

The figures are just not adding up as they were not in the UK in December 2006,,,yes that long ago!!!!!!!!!!

I had my own business in the Uk and just got a funny feeling about things ,,never been so right in my life,,think there is a lot of complacency in Australia that the mining sector will always pull the economy out of trouble,,mr Rudd and mr swann kissed that goodbye on Sunday,,and the over-enthusiastic real-estate idustry are making peoples realistic expectations of achievable property prices exhasperating.....watch this space!

 

That should read 'an economist' . grammar please!

 

you were saying.................

 

stevo

[taffordbark]

lol let you have that one,,,my bad!

[Guest Guest75]

:biglaugh::biglaugh: @ this thread.

 

Nice to see folk behaving !

[taffordbark]

Yeah ..know where you coming from Tyke,,started off as a bit of info,turned into chinese whispers,, love a bit of banter,,the only thing I realy miss from England (hate the phrase UK).............And ............I do not take it too seriously! At the end of the day ,,whatever will be will be,we always have 3 square meals a day,sleep 8 hours and have a beer at the weekend ,so who cares.realy!

[taffordbark]

oooops,,,wheres my dollar value going?