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The Crunch Is Nearer Now - The Property Imperative Weekly 26 May 2018

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We discuss the latest property and finance news from a distinctively Australian perspective
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Text Comments (93)
Tudval Stone (19 days ago)
So only the top 10% of the market saw a bit of price decline y/y. Next scary video please.
Walk The World (18 days ago)
More to follow...
Ken D Plumber (23 days ago)
Site is becoming quite active. Your cofirming why i decided to prepare 14 months ago. If you don't prepare, your not aware ! Great job !
Walk The World (22 days ago)
Thanks, - yes, we are gaining some traction. Hopefully generating some light, not just heat!
Kate Bird (23 days ago)
Chinese buyers have been out of control buying Australian property since 2010. Developers are knocking down established homes and constantly building HIGHRISE APARTMENTS TO SELL DIRECTLY TO THE CHINESE MARKET, THESE DEVELOPMENTS ARE FIRB PRE APPROVED. Chinese investors are still the most active off-shore players across the real estate market, outlaying $1 in every $4 spent by foreign interests in residential and commercial property. China's property investments while down around 50 per cent over the year, still topped $15 billion in 2016-17, followed by Canada with $7.2 billion and the US with $6.8 billion. "These half years [second half of 2016 and first half of 2017] were like night and day in terms of Chinese investment," said Carrie Law, director of Chinese real estate website Juwai. "In the second half of 2016, Chinese investors were investing in Australian real estate at an almost irrational pace … it was like money falling from heaven for vendors and developers," she said. "In early 2017, capital controls, financing restrictions, and foreign buyer taxes reduced Chinese investment to more reasonable levels." Ms Law said Chinese investment in property now appeared to be running at more sustainable levels. "Chinese buying enquiries for Australian property in March were 5.7 per cent higher than the month before and in April they were 22.3 per cent higher."http://www.abc.net.au/news/2018-05-29/chinese-property-investment-drops-as-tougher-regulations-bite/9811942 . SYDNEY HOME PRICES STARTED TO FALL IN LINE WITH CAPITAL CONTROLS AND FINANCE RESTRICTIONS FROM FOREIGN BUYERS.
Walk The World (22 days ago)
The overseas investment sector is a big factor in some markets, and was one reason for the building boom, now fading. One reason why demand is down now.
Anthony Davis (23 days ago)
These are excellent videos Martin. Keep up the great work!
Walk The World (23 days ago)
Thanks, appreciated.
Tobacc0 (24 days ago)
I've supported analysts in 3 banks and their work isn't worth much. They keep half an eye out on their careers when making any predictions and tread a line between what numbers suggest and what the institution wants to hear. You're much better off using your eyes on the street, frankly.
Walk The World (23 days ago)
I tend to agree..
Emmett (24 days ago)
Would be nice to qualify the decile ranges in the core logic data.
Walk The World (24 days ago)
Good point, hard to do, but I will look at our data, thanks.
Muneeshwar Khanna (25 days ago)
Please do a piece on new credit reporting regime and it's impact on borrowing power as people will not be able to lie about how much credit they already have/owe. Thanks for all the episodes to date!
Walk The World (24 days ago)
Great idea, thanks.
patrick salmon (26 days ago)
Hi Martin, what are your thoughts on the regions just outside of Sydney- Central Coast, Wollongong and Newcastle? Will they see faster property price declines as Sydney is becoming more “affordable”?
Walk The World (25 days ago)
I will cover the regions in a separate post - had several people ask .. thanks.
TheDixiechick12 (26 days ago)
Great work Martin
Walk The World (25 days ago)
Thanks appreciated
rascubulous (26 days ago)
Martin. FYI - Tassie is still going crazy. Place we are in just sold. Last sold for mid-400's, 4 years ago, recently went for just under 600K. Sold in the first weekend. No building inspection. There is a ton of work to be done to the place... electrical, plumbing, roof, gutters, new kitchen and bathrooms needed... I really feel sorry for the people who bought it. Any thoughts on how long before Tassie joins the party? (PS. and thank you for all of your hard work!)
Walk The World (25 days ago)
Thanks - yes watching TAS - incomes are lower there, so the spate of rises seem driven by interstate investors. In fact I know of Sydneysiders selling and buying in Hobart and Adelaide. Suspect these markets will ease as investors lose interest though. Hard for locals to buy... not good.
Devvy Nully (26 days ago)
I wonder when the government will start to panic. The pump from the FHB stimulus has abated, so they will need to do something else soon. Tax deduction for owner occupier interest? Delayed interest payments using a government insurance scheme where the banks get paid now but the government gets paid later? True innovation in Australia happens in the housing credit industry.
Devvy Nully (24 days ago)
I think the populace is realising this is already happening so I don't think the politicians will get away with it for long.
Tobacc0 (24 days ago)
The plan seems to be to just add 200,000 migrants every year.
Walk The World (25 days ago)
I expect further actions - more FTB incentives, perhaps longer loan terms, and more super-related options. None will work.
Lightest Asian (26 days ago)
People will just lose their collateral on a margin loan .. All those investors who put in their family home as equity will see their retirement gone when the market corrects by 40% the amount it is currently overvalued at and they need to sell their investment properties at a loss and need to still service their debts to the banks. Major swindle using finance and credit creation in exchange for the counterpartys real assets ... Nice form of high finance predatory behavior .. A swap of monopoly money for your little green house. I wish i played monopoly and i was the banker and i could create money and issue loans like this then also be guaranteed by the government for my losses.
ian grove (25 days ago)
As is stands now. The government cant touch our Super. But laws and morals tend to change in time of crises. What if the masses demand their super be released ? Any thoughts ?
Walk The World (25 days ago)
Yes government bail-out for the banks is certain...
Lost Soul (26 days ago)
A friend saw something earlier this week that was of interest to me, fuel prices in SE Qld jumped by 10-15c a ltr, one servo was selling fuel for 4c a ltr less then surrounding servo's. On Tuedsay night it had a line of vehicles out it's driveway and up a side road to about 6 or 7.....there is no spare cash around and if IR rise or if employment is reduced....boom. The RBA will have to start thinking about dropping thier rate, the credit crunch will reduce property prices and demand and spending will go negitive, in turn no or negitive growth ie recession. By dropping the rates all those with mortgages and there are heaps, should get some relief and have extra cash to keep things moving along. But unemployment is going to rise and this will break the economy's back.
Dale Cunningham (26 days ago)
Lost Soul if the RBA drops rates in my opinion there will be a flow from our dollar to the US and the aussie will crash, thus making fuel more expensive as we import it..
Walk The World (26 days ago)
Yes our surveys show growing financial pain as costs rise (irrespective on where mortgage rates go). The gap between income growth and cost growth is growing...
songforguy1 (26 days ago)
If the RBA were to reduce rates, little if any will be passed on to the customer. The banks will be busy keeping their heads above water and will be looking at widening their margins as the Aussie dollar drops, so it's possible the banks may even start rising their lending rates as things start collapsing.
Arthur Treibs (26 days ago)
Funny how quickly the table has turned; https://hotcopper.com.au/threads/house-of-cards.4211681/?get_post=true&direction=previous#.WwnfUfZuKWk
songforguy1 (26 days ago)
The first set of detonators have been fired! Now sit back and watch the collapse at near free fall speed!....
songforguy1 (26 days ago)
Walk The World yes to fully play out it may take 2yrs however the initial fall is usually a pretty dramatic one played out in just a few months, remember we have little to fall back on.
Walk The World (26 days ago)
Suspect more a slow train wreck... this will take 1-2 years to play out...
x y (26 days ago)
I feel sorry for that poor girl and that poor blind guarantor who got buried alive by the banksters the cause of all evil that exist
google eyes (26 days ago)
Adelaide would be the ledge on the side of the cliff but it doesn't have much going for it anymore so it wont be a long term footing for the masses that will desperately migrate their investments to this market.
Walk The World (26 days ago)
There was a spate of interstate investors but that appears to be easing now... and small volumes of sales.
Steve Victor (26 days ago)
With Sydney / Melbourne prices being pushed down heavily, does it look like Perth will continue to fall? I honestly can't see Perth magically 'stabilising' if the east starts falling off a cliff.
Walk The World (26 days ago)
Perth has been drifting for several years, but cannot see any reason why it would start rising, especially if other states fall.
Murray Krause (26 days ago)
Always thought 'Core logic' were cheerleaders for the property marketing industry. Your report demonstrates how they were supposed to behave in the 'public' interest. A week is not only a long time in politics.
Walk The World (26 days ago)
They produce a wide range of data, the mainstream media do not report the full story though. I do not blame CL for that!
Gurmender Grewal (26 days ago)
Great work Martin. As you discussed, developers are applying discounts, even for house+land packages. A year ago developers were turning away external sales agents, now they want all the marketing help they can get. Rumour is buyers will have a very difficult time getting large loan approvals after July 1st.
Walk The World (26 days ago)
Thanks, yes more tightening ahead - though the non-banks are picking up the slack in some places (even less well regulated).
Damien (26 days ago)
Predictions of Crash/ Crunch are usually very reliably wrong & there is always a new trick & mass immigration is not slowing the slightest.
N .A (25 days ago)
Notice how they always predict 2 years into the future?
Arthur Treibs (26 days ago)
Don't forget another essential element; EXPECTATIONS OF RISING PRICES!
Walk The World (26 days ago)
Credit is the primary driver of price growth, that is whats different this time.
Shawn Lu (26 days ago)
Went to 3 auctions in Sydney, all passed in. One property in Cabramatta people were offering 900k...vedor bid was 1.25 mill. The market is gone. Banks are turning the screws.
Shawn Lu (26 days ago)
I've watched your videos for the last year. Keep up the work. Very interesting data/discussions you touch on. First time commenting. :)
William Wells (26 days ago)
Walk The World Lenders will loan a maximum of $335k - $365k to us even though we own land outright worth $480k, no debt at all, $50k of savings in the bank, combined income income of $100k, gold and silver valued at $77,000. We are better off than most as it would be our 2nd home being buit and our credit rating is un-marked. So what about those who have little savings or assets and are looking to buy? What can you buy in Sydney for $335k - $365k?
Walk The World (26 days ago)
Yes, getting lots of stories of no sales... vendors are reducing their expectations, but credit is drying up faster still
Billy Roberts (26 days ago)
What about Regional Australia?? Whats the data showing- Towns under 100k population?? What about the share market- How can it be at near record highs also? Bubbles everywhere? Look at Deutsch Bank- 10k lay offs announced.
Walk The World (26 days ago)
OK, will add to the list... thanks.
baywizard (26 days ago)
Walk The World Thanks Martin, would be great if you could do a post on regional areas. I'm thinking of buying a home in Batemans Bay.
Walk The World (26 days ago)
Regional areas are worth a separate post. The stock markets are set for adjustments, but timing is the question.
cpswyl2 (26 days ago)
I remember looking through Perth real estate in 1998-2001 (not really that long ago, when you're not in your 20's anymore). The thought of purchasing a $240,000 property with $200,000 debt made me sweat; and a $320,000 property positively weak at the knees. Beats the hell out of me how home buyers nagivate debts multiples above this. It seems very unnatural to carry such debt. Have people just got used to it/grown up with it (its been going on for so long)? Used to be if you had a couple of hundred dollars in your pocket it was a big deal. Maybe I'm showing my age.At least I'm old enough to have a perspective on the inflation that has just occured.
cpswyl2 (19 days ago)
Broken clocks are never always-wrong.
Tudval Stone (19 days ago)
Yeah well, you were wrong then, so you are likely wrong now. some people are always wrong. You need a perspective on inflation in the future, the past.. we all know it.
Lightest Asian (26 days ago)
Need to drive more uber and make more coffees to pay that down
Walk The World (26 days ago)
Many are enticed by the prospect of future growth, that may now be shot. Then the question is affordability, and that's a challenge.
Encrypted by MicroSoft (26 days ago)
Not age. Just wisdom I reckon
Big Sinner Risk Ninja (26 days ago)
Was out looking at property in Sydney today. Cherrybrook and Epping (10 in total, busy day with two kids in the car!) and there was an obvious reduction in confidence from real estate agents. While 3 months ago they were very cocky, the tone has definitely changed. They are even often disclosing price ranges well below vendors asks (less auctions now) where they would present offers. (Agents stock book definitely growing now too!) Because I cannot see a catalyst for sudden property price appreciation, I expect this trend to continue. 1.3m used to get you quality Baulkham Hills, now it will get you Cherrybrook and in a few months I hope maybe Castle Hill or even Epping. (Apologies for the Sydney centric comment!)
Walk The World (26 days ago)
Thanks - getting similar reports else where too. Some regional centres have more momentum still, but its a small fraction of the total market.
Timm (26 days ago)
Chances of an RBA rate rise before 2019?
Walk The World (26 days ago)
Lower, and rate cuts more likely now.
Charles Owen (27 days ago)
This is ponzi finance collapsing on it's own size. Double whammy coming shortly - global Interest rate shock. Not sure what gov and central banks have as ammo for the 2008 crash that was never fixed.
Walk The World (26 days ago)
'Fraid that's how it works...
malayrojak (26 days ago)
Walk The World So someone else's stuff up, becomes our problem? Sounds pretty convenient.
Walk The World (26 days ago)
Limited shots left in the locker, so different from 2007/8 when we started with a surplus. Many years of mis-management will hit home.
Brett Hunter (27 days ago)
Really appreciate this Chanel. Thanks for all the time your putting in
Walk The World (26 days ago)
Thanks, good to hear.
Playing out before our eyes in real time communication with copious data available. Leads me to reflect upon the last property decline in the late 80's where we had mainstream media only to rely upon for financial propaganda er, information ; no www.somethingorother in those days. Must be galling for those who set about to control the information publicly available but are now thwarted by the alternative media where the information available is limited only by ones imagination. No surprise that few people saw the excesses of the late eighties and the 1991 recession and those who did could not effectively communicate their concerns. What a vastly different picture this time around. Another great video contribution Martin which we thank you again. Cheers OD
Walk The World (26 days ago)
Yes, data is out and running, So people can make their own decisions. The mainstream media are very selective in the data they report.
Stephen Caves (27 days ago)
Yeh on you Mr. Martin!
Walk The World (26 days ago)
Thanks
7555tx 7555tx (27 days ago)
Thanks Martin, this was expected. A credit backed housing bubble.The private debt is higher than the GDP. Is the private debt higher than 20%.of the GDP?
Arthur Treibs (27 days ago)
Absolutely great, Martin! The figures you're quoting are extremely sobering and anybody ignoring your prophesies is playing with fire. A great contribution to financial literacy of our country. Thanks, mate.
Walk The World (26 days ago)
Thanks, appreciated
pamela peel (27 days ago)
Thank you for your reports with great info
Walk The World (26 days ago)
You are more than welcome...

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