Here's one sign Australia's housing market is due for a 2008 moment... Auction market puts up another solid showing...
Australia's housing market "insane"
(Bloomberg) -- Insane. That's how Jonathan Tepper, chief executive officer at research firm Variant Perception, described Australia's housing sector in a word, painting the picture of a market that's strikingly similar to that of the U.S. prior to the financial crisis.
A 60 Minutes segment that aired on Sunday titled "Home Groans" chronicled some of the eye-popping events in the nation's real estate market, with amateurs owning (and underwater on) multiple homes with no tenants, interest-only loans growing in prominence, price-to-income ratios at elevated levels, and home auctions attended by the community and captured for the small screen.
Much of the clip centers on the coal town of Moranbah, which the narrator deems to be a canary in the coal mine for the nation's housing market as a whole, and the financial and emotional plight of those who got caught up in the boom. According to an owner, one property in the Queensland town has declined by roughly 80 percent.
Perhaps the juiciest tidbit, however, is a claim that John Hempton, a hedge fund manager at Bronte Capital and long-time Australian property bear, and Tepper—who's called housing busts in the U.S., Spain, and Ireland—put on Twitter: Tepper later added that this offer came from a "major brand lender."
While most discussions of frothy housing markets focus on the low cost of credit (and central banks' role in that), the ability to access credit is arguably more important. A borrower may be willing to take on a dangerous amount of leverage in order to be part of a seemingly can't-miss opportunity, but in the end, the bank still has the final say on whether to provide the funds.
Australia hasn't had a recession since the early 1990s, but it's tough to see the nation avoiding one in the event that Tepper's prophesied 30 to 50 percent crash in home values comes to pass. Of course, investors have also been warning of an Australian housing bubble for almost as long.
Auction market puts up another solid showing
Australia’s auction market has continued its solid start to 2016, with preliminary figures from CoreLogic RP Data showing another respectable result for the national clearance rate.
Last week’s national clearance rate currently sits at 72.3%, compared to the previous week’s result of 71.8%, while the corresponding week one year ago returned a clearance rate of 77.3% from more than 2,200 auctions
Sydney is again home to the nation’s highest clearance rate, with its preliminary result coming in at 77.2% from 724 tracked auctions.
The result is only slightly lower than the previous week’s result of 78.1%, which was the city’s highest clearance rate since August 2015.
Last week, the City and Inner South were Sydney’s best performing sub-regions, returning a preliminary clearance rate of 88.2%, while Baulkham Hills and Hawkesbury was the worst performer with a preliminary rate of 50%.
While Melbourne topped Sydney in terms of auction volumes, with 1,057 auctions, its clearance rate is somewhat lower.
Currently, Melbourne’s preliminary clearance rate sits at 73%, just below the 74.4% the city recorded during the previous week.
In what was a relatively busy week for Brisbane last week, with 169 auctions held, the Queensland capital currently holds a preliminary clearance rate of 54.5%.
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(Bloomberg) -- Insane. That's how Jonathan Tepper, chief executive officer at research firm Variant Perception, described Australia's housing sector in a word, painting the picture of a market that's strikingly similar to that of the U.S. prior to the financial crisis.
A 60 Minutes segment that aired on Sunday titled "Home Groans" chronicled some of the eye-popping events in the nation's real estate market, with amateurs owning (and underwater on) multiple homes with no tenants, interest-only loans growing in prominence, price-to-income ratios at elevated levels, and home auctions attended by the community and captured for the small screen.
Much of the clip centers on the coal town of Moranbah, which the narrator deems to be a canary in the coal mine for the nation's housing market as a whole, and the financial and emotional plight of those who got caught up in the boom. According to an owner, one property in the Queensland town has declined by roughly 80 percent.
Perhaps the juiciest tidbit, however, is a claim that John Hempton, a hedge fund manager at Bronte Capital and long-time Australian property bear, and Tepper—who's called housing busts in the U.S., Spain, and Ireland—put on Twitter: Tepper later added that this offer came from a "major brand lender."
While most discussions of frothy housing markets focus on the low cost of credit (and central banks' role in that), the ability to access credit is arguably more important. A borrower may be willing to take on a dangerous amount of leverage in order to be part of a seemingly can't-miss opportunity, but in the end, the bank still has the final say on whether to provide the funds.
Australia hasn't had a recession since the early 1990s, but it's tough to see the nation avoiding one in the event that Tepper's prophesied 30 to 50 percent crash in home values comes to pass. Of course, investors have also been warning of an Australian housing bubble for almost as long.
Auction market puts up another solid showing
Australia’s auction market has continued its solid start to 2016, with preliminary figures from CoreLogic RP Data showing another respectable result for the national clearance rate.
Last week’s national clearance rate currently sits at 72.3%, compared to the previous week’s result of 71.8%, while the corresponding week one year ago returned a clearance rate of 77.3% from more than 2,200 auctions
Sydney is again home to the nation’s highest clearance rate, with its preliminary result coming in at 77.2% from 724 tracked auctions.
The result is only slightly lower than the previous week’s result of 78.1%, which was the city’s highest clearance rate since August 2015.
Last week, the City and Inner South were Sydney’s best performing sub-regions, returning a preliminary clearance rate of 88.2%, while Baulkham Hills and Hawkesbury was the worst performer with a preliminary rate of 50%.
While Melbourne topped Sydney in terms of auction volumes, with 1,057 auctions, its clearance rate is somewhat lower.
Currently, Melbourne’s preliminary clearance rate sits at 73%, just below the 74.4% the city recorded during the previous week.
In what was a relatively busy week for Brisbane last week, with 169 auctions held, the Queensland capital currently holds a preliminary clearance rate of 54.5%.
You may have missed:
Putting together a follow-up marketing system that works
Why people fail in their financial goals
