Australia: House Prices Fall Most in Five Years
Submitted by
CalculatedRisk on Fri, 06/06/2008 - 6:56pm (61 comments)
in
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Did they start keeping records 5 years ago?
Lo and behold. HAAAAAAaaaaaaaaaaaaa
Looks like we're finally getting all the housing markets in sync worldwide -- GOING DOWN!
It looks like it is time for another Bird and Fortune skit.
OK, let's take a look at ye olde SS Decoupler :
UK - recession ahead
Canada - heading down
Australia - slightly behind the UK
Spain - shipwreck ahead
Ireland - kaboom soon
Japan - back to the usual soon
$65 tril world GDP
$13 US
Above totals to just under $10 tril.
US goes down, takes another US down with it, and then 1/3 global economy flat to sinking. Meanwhile, the other countries that ARENT sinking, have 10-15% inflation and are out of control.
This should be fun.
Two thirds of non-financial debt is junk bond status? That's gonna leave a mark!!!
Chris
"This should be fun."
Yup and a bunch of clueless politicians and Central Bankers standing in line to make it that much worse.
I recently viewed the Senate hearings on the oil market and was impressed with the testimony of Michael Greenberger, a law professor from the University of Maryland.
After a simple search, I found this audio interview. You "experts" on the forum will likely find it too basic but it is a good listen for those who are beginning to familiarize themselves with the causes of the current economic crisis.
Also includes explanations of the Bear Stearns fiasco.
Presented in a very clear and easy to understand way.
If any of you want to explain the mess we are in to someone who doesn't know. This mmaybe an excellent link to send to them. (40 min)
NPR Media Player
Isn't it interesting that the name of the Economics correspondent on your video is Stephen King? He really does have some scary stories to tell.
The woman, however, is like how Tanta would look like in my imagination.
@Dumbass - the guy's name is Stephen Long, not Stephen King. He is scary, though.
My idea of what Tanta looks like is nothing like that woman. Perhaps because Tanta means "auntie" in Yiddish.
DUE TO RECENT BUDGET CUTS,
AND THE RISING COST OF ELECTRICITY,
THE LIGHT AT THE END OF THE TUNNEL HAS BEEN TURNED OFF.
WE APOLOGIZE FOR THE INCONVENIENCE.
This is OT but the current headline on the bubblevision website is "Stock Selloff Offers Good Chance to Seek Bargains".
Isn't that precious?
LOL!!! Good one, FFDIC!
US goes down, takes another US down with it, and then 1/3 global economy flat to sinking. Meanwhile, the other countries that ARENT sinking, have 10-15% inflation and are out of control.
This should be fun.
Especially if you are not prepared.
Geoff,
UK is on their own, but if you think Eire and Spain are going to bring EUzone down you're sorely mistaken. A lot of other plausible scenarios would have to take place but those dominoes haven't even wobbled yet.
Flipping around the idiot box with the kids tonight, came across a local station showing a Lawrence Welk rerun.
Whodathunk?
And as a saw all of the bubbles floating around, it occurred that Welk used to a Fed Chairman.
Alec:
Yeah, but you're not including the southern tier of Eurozone...Portugal, Italy and Greece.
Sorry, it's kind of like saying that only FL and NV have a problem, the rest of the US is gonna get by. But toss in OH, MI and CA...
Alec:
Yeah, but you're not including the southern tier of Eurozone...Portugal, Italy and Greece.
Sorry, it's kind of like saying that only FL and NV have a problem, the rest of the US is gonna get by. But toss in OH, MI and CA...
Geez, Haloscan's stuttering again.
Alec, add Italy as well to that list. France can blow with the wind and is at the mercy of others.
Key to watch in Eurozone are DE and FR, (with a side-glance at the UK); only Germany is stable at this point, but since former Bundesbank officials still control the ECB bureaucracy, Trichet is following, not leading, the EU central bank goals.
The remainder of the Eurozone, FR included, will just have to hang on for the ride.
HomeDad43:
Welk is on every weekend on the Philadelphia PBS station.
Australia?
Nice try CR.
Lemme know when the price of beer and hookers start falling.
Then we can talk recession.
Lemme know when the price of beer and hookers start falling.
Then we can talk recession.
BTW, the beers can be Tsingtao and the hookers can be male for all I care.
The point is when the price of debauchery starts falling, then I'll be impressed.
Living conditions are secondary to legitimate human needs.
It's Eastern/Central Europe (along with Russia's growth) that is driving the EU forward, Spain (ex the costa del shithole) France ad Italy are on the edge; they need to get their act together in order to go forward meaningfully.
This is breadth AND depth for a secular trend.
I always find the old comments and articles on this site interesting.
Higher interest rates encourage foreign buying and will supposedly slow our purchases. - huy, 6/16/06
I think there are no inflation risk and that the FED should already have the helicopters in the sky pouring cash in people's pocket while at the same time putting an end to the derivative craze. Every second lost in the fight on the oncoming debt deflation crisis means some more damage ahead. And heavy one. - df 6/16/06
The central banks do not have the best track record since going to unbacked currency. At the peak of the business cycle every 15yrs or so there is a powerful burst of inflation. - Steven 6/16/06
While housing may by a threat, I don't see why this is, by itself, of concern to the Fed. The Fed should NOT be concerned with asset prices (housing prices shouldn't matter on the way up, and they shouldn't matter on the way down) but rather the Fed should concentrate on inflation.
Sure, a slowdown in housing may drag down the real economy and the financial sector. But what should the Fed do? Lower interest rates to prop up unsustainable housing prices? NO. Should the Fed encourage more loose mortgage lending standards? No. In fact, this housing bubble was caused by exotic mortgages and easy credit, which may threaten financial institutions. The Fed will want to clean up this mess, not help reinflate a housing bubble. - peterbob, 6/16/06
The fed needs to control the growth of the money supply better... peg the increase in money supply to growth of the economy and not worry so much about individual prices.
If they do that then there will be price stability more or less. If housing or some other asset price inflates then there will be a corresponding 'deflation' in some other class. Net zero pretty much.
However I have been told that its almost as hard to know the real money supply as it is to know the real inflation rate. The measures are pretty inaccurate. Plus 'economic growth' measures like GDP have their own issues & inaccuracies. So while in theory it might be better to peg money supply to economic growth, in practice it might not work any better. - dryfly, 6/16/06
The banks like WaMu who fund option ARMs do sell them. But they keep the top 5% to 20% (the riskiest part) and sell the safer 80% or so on the secondary market. WaMu, Downey, World Savings, Countrywide, etc. are all big funders of Option ARMs.
Personally I don't consider the Option ARMs that risky, because the minimum payment is a fall-back if times get tough, but there is a limit.
The two-year fixed product is the suicide loan. Main funders are Greenpoint, First Franklin, New Century, Long Beach, and a host of other no-name mortgage bankers that have made a killing the last few years. I'd guess that they sell a portion of each loan too. - Carlsbad Jim, 7/25/06
It's like the S&L bailout. If Reagan had chosen to teach investors a lesson and actually enforce the insurance limits a certain group of investors would have had the risk/reward lesson driven home. Instead Reagan chose free lunch for the wealthy and stuck the middle class with the bill.
In the case of the housing bubble I don't exactly see how they pull that off. Speculators are going to get smacked. People who don't understand the difference between a mortgage and a lien are going to learn the hard way why you don't borrow 125% of the value of your house. People who come right out of college and figure it is their birthright to own a McMansion even it it means a interest only ARM will be given a schooling (in my jaundiced view much needed schooling) in market fundamentals. But a lot of people are cruising along with a low rate fixed mortgage and aren't foolish enough to treat their house as a piggy bank. Strangely enough even today some people have plans to pay off their mortgage prior to retirement and in doing so make up the difference between working pay and retirement pay. - Bruce Webb, 7/24/06
More than enough people have rather tenuous financing. That's the nature of the beast in areas with good "professional" incomes. If you don't stretch, you can't buy a house. If you buy, you are stretched (in the aggregate). The difference between good and bad luck is largely the larger economic trend. Those who bought let's say 10 or 20 years ago where probably similarly stretched then as buyers today (aside from negam and IO loans), and have "only" made out well because of a favorable "economy", i.e. accomodating aggregate debt creation that put money in their pockets to pay off mortgages and then some. In a sense a big "societal refi". - cm, 7/24/06
Uh, does Bernanke have a idea what will happen to this disposable income when the housing layoffs start and a commodity crash ensues killing the home ATM? Usually unemployment doesn't begin to rise untill recession, but this one seems to be starting already eh CR?
Personally, gas going down doesn't help me much. My car only takes 35 dollars to fill, so it goes back down to 25. Whoop yee,10 more dollars, may as well spend it on a floor show!!! - Johnson, 8/31/06
Heh, found a post on oil... perusing comments on this one should be fun.
This from Roger Wiegand, editor of the financial newsletter Trader Tracks:
The Federal Reserve, United States Treasury, and the central bankers of the world cannot reconstruct our Humpty-Dumpty of monetary reason and order. Its too late. Humpty is smashed and no one can pick-up the pieces. Next comes the Mother of all write-downs. Those reported lost billions will turn into trillions then, become uncountable. This is a stunning replica; a combination of all historical manias rolled into one times ten. The 1930s was play school compared to coming events. We shall soon witness the largest fiscal wreckage in history.
Whats the bottom line? First, we get stagflation (todays experience), then hyperinflation induced by dollar printing-dilution; next a global system meltdown crash, followed by a depression and then World War III.
Okay. Thanks for brightening my day, Roger.
Wiegand also claims that: gasoline distributors...purchase nearly 40% of Americas gasoline from foreigners fully refined.
Can this be true??? Good lord. Does it come from Canada and Mexico?
ac, here is a coupon for you
Warning: PDF
http://chickenranchbrothel.com/Graphics/ChickenBucksCertificate/CurrentOnWebsite2008/CRBucksNormal08PDF.pdf
YSLP- If you find any trace of "hoocoodanode" back then, let us know. Those old comments make Dryfly look pretty good, heh?
OT: Ratings Raised a Red Flag
Moody's Analyst Aired Concerns on CDOs to No Avail
Ratings Raised a Red Flag - WSJ.com
In late 2006 and early 2007, the Moody's Corp. unit continued to rate new collateralized debt obligations even as the analyst, Eric Kolchinsky, aired his concerns to his colleagues and boss, people familiar with the matter said. It wasn't until October 2007, with mortgage defaults soaring, that the Moody's unit downgraded hundreds of CDOs, resulting in billions of dollars i
I just sold a sydney apartment for exactly asking price, and I see new for sale signs go to "sold" within weeks. Mind you, I'm just looking at the better suburbs. Areas out west are hurting badly with the last few years of US-imported sub-prime lending laying waste to families. Whether it is misplaced optimism or not, most people in australia are aware that the country is making a fortune off commodities and even a huge 30% slump in that demand would still leave exports there at historical highs in dollar terms. This money flow covers a lot of sins.
I'm a big cynic yet can see housing going up at the very top end, sideways in the upper-middle and down hugely only for lowest quality burbs. The same phenomena of increasing wealth gap between top and bottom is operating here as it is in the US. (new york city median housing prices are still making new highs).
FT on WTC7 ?!?
Someone is regretting the $4.25 bln payout.
Hardtime...
President Bush is considering new measures to help stimulate the battered economy, the White House said Friday as unemployment and oil prices soared and Wall Street sank. White House counselor Ed Gillespie said Bush's advisers are constantly looking at options for new economic proposals.
"There's a short window for the president here when it comes to new policy. We understand that," Gillespie said. "So I guess what I'm saying is, don't rule it out."
Business finance news - currency market news - online UK currency markets - financial news - Interactive Investor
$200 oil coming fast, Short Bucky!
Over the other side of the Tasman Sea from Australia the Governor of the New Zealand Reserve Bank donned his Casper the Ghost costume and shouted BOO! at the housing market.
New Zealanders(Kiwis) are addicted to housing as a store of value for historical reasons. His ratcheting up of interest rate has failed to cure the addiction so must be hoping that falling house prices and negative equity will be the cure.
In a gloomy report on the economy, the bank predicted house prices would fall 13 per cent over the next three years.
Once inflation was taken into account, the real drop would be more like 22 per cent.
NPR had a story on people in California (I think LA), abandoning their houses as unaffordable, and living in trailers. These people work, but cannot afford shelter. Apparently there is a particular area that is useful for this and the reporter was interviewing the denizens.
As a sidebar, he interviewed a heroin dealer. The dealer said sales and profits were 'way down. People didn't have any money for their drugs. The reporter says why don't you move to a better location?
The dealer says he's used to it there and his people need to be able to find him. Apparently the trailer livers aren't customers, and they don't like thim there, but what can you do.
I conclude things are really bad if
heroin addicts can't find money for a fix. Does that mean men don't have money for heroin addicted prostitutes?
Greenspan says it wasn't his fault that there is a world-wide housing bubble. The US is 25% of the world economy. When Greenspan pumped money into the US economy, it was a blunt instrument. He couldn't controll where it goes. It caused world-wide asset inflation. Now we are paying the price. I think Greenspan is to blame.
the speculator real estate first at theinvestingspeculator.com
Remember that S&P dude who said oil be $91 +/-50 by the ned of this year?
It's not the end of the year but 141 is quite close.
REBear:
I was trying to google the comment from a few weeks back where someone said something like:
"oil at $115, I'm going all short, right now"
I remember thinking, Jeez, this guy is ballsy... at the time I think I posted a reply of something like "wow, I'd wait until at least $125-130 before even considering shorting"...
anyway, I've thought about that guy/gal a lot lately... ouch.
Sometimes, I think people need to get a sense of scale about the eurozone.
The Irish Republic is smaller than a city of ca. 4 million people. And much like Spain, was one of the poorer countries in Western Europe, until recently.
Certainly there was a housing boom based on the same dodgy assumptions as in places like the U.S. But there was also a housing boom because neither Ireland nor Spain had much in the way of modern housing - and that housing will still be useful into the future, unlike much of America's exurban McMansions. Of course, the write-offs of some of the Spanish boom will be similar to those seen in similar situations in Florida - you know, resort and/or retirement spurred development because all the people living in colder northern climes will be moving down any time real soon.
What will possibly challenge the euro is divergent needs in divergent economies. But then, the same thing happened in the U.S. - the policies that benefited some areas seem to have broken the back of others - keep in mind, at one time, the Rust Belt was the arsenal of democracy, and not a written off region of people not able to catch the wave of service industries based on information technology backed by world class financial engineering.
Justin,
Median prices in NYC are going up, but transaction volume has slowed tremendously. This is the process.
It eventually hits the high end properties(in Phoenix median sales were dropping 7% a month) just the same as the po folk, while condos are there for the slaughter.
My two female friends who live in Hobart, Tasmania are much more concerned about George Bush than their local housing prices. One of them just sold and bought another home and is in the process of re-wiring/upgrades now. I tend to agree mate.
speculator
Nope, The US government, a 2 trillion dollar war paid for with borrowed money in the worlds reserve currency and a global fractional reserve banking system are. Greenspan had a minor role.
YtL,
Try googling O-Joe. You're sure to find it there.
My Citi Mastercard was denied for a $40 purchase today... because I'm 4 days past due on a $45 bill. ($45 is not my minimum; $45 is the amount on my card total. Yeah, I'm one of those "deadbeats" that the banks hate - always keeping my credit card paid off.)
Fuck these people... after 21 years with them, and a good credit record, they're pulling this shit? Let them die.
mal
They hate me even worse then you, I always show a credit on my bill every month and at the end of the year they have to send me a check and I send it back. I'm a cash and carry kind of guy anyway, No cash no carry. I hate plastic.
I only have one credit card. Probably stupid, but definitely simple.
Oh well. Time to give someone else my business. I wonder if there is an industrywide deadbeat blacklist...
Mal
Just overpay the bill by a couple of cents and don't use it anymore, then when they send you a check at the end of the year send them one for a couple of cents. For less then a dollar a year it's good entertainment.
With the economy like this I don't understand why people are talking about anything else.
Okay, I lean to the right, but I'm more of a traditional conservative than a neo-con... (although I'm dense, it took me awhile before I really understood the difference). Anyway, the few political sites that I read give little ink to the housing issue... and yesterday one of them blamed the rise of teenage unemployment on the rise in minimum wage the democrats passed!
It's sad that people think their team is going to solve the problems... (instead of the reality that their team just likes getting elected).
I think if I was a major sports league in America, I'd be a bit worried... but more worried if I was one of the minor leagues. How are all these sports teams going to travel across the country anymore? Must be getting awfully expensive, especially baseball!
ac wrote:
"Lemme know when the price of beer and hookers start falling.
Then we can talk recession."
How about this: "Brothels buckle as Aussies tighten belts"
Brothels buckle as Aussies tighten belts
There may be statistics about falling house prices in Australia, but as someone who lives there I can assure you that the general public still believes that double-digit price appreciation is the natural order of things.
I just got my first credit card in 22 years. It has a $500 limit.
I called to activate it and the nice lady at Bank of America land wanted to be sure I knew I could get a cash advance any time I needed it! The interst rate for that would be 21.24% annually but calculated daily on day 1, in addition to a 1% ($10 minimum) transaction fee.....if you're still with me, this is the point:
If I call them at the 800 call center INSTEAD of doing the cash advance on line at the website the interest rate goes down to 17.94% (?!)
I had her repeat that as I assumed I had it backwards. But no, they will make it cheaper if I call the live person rather than use the internets.
I feel much more comfortable now that these people run the world.
CR just posted a new topic
Does this make me... last?
Oh right a comment. How about
"We are all dodgey now."
Mal wrote: My Citi Mastercard was denied for a $40 purchase today...
Mal, the reason for this stuff is that you are paying for people like an acquaintance of mine who just stuck the credit card companies (43 cards) for one-quarter of a million dollars. He planned the whole thing and even brags about it to several of us in the coffee club when we meet every morning. Gave his house to his son three years ago so as to have no assets you can grab. He works in a cash business and makes a fortune, buys expensive hand made clothes, along with cars and hookers for CASH. A good liberal democrat too. He is not the only one doing this. We are getting stuck because of people like this.
The median home price really jumped out at me. The Australian dollar is almost at parity with the USD. Are homes in Australia really that expensive?
Also, if Germany is the best economy in the EU right now, then we're in trouble. Didn't we read a few months ago how the entire state-owned banking system was about to collapse because it invested in our garbage securities? The government had to come to the rescue, haven't heard much since.
Rupert,
A couple of piddling landesbanks had to be rescued by their larger bretheren, that's it. It's been much more of an issue in non eurozone banks like UBS, Barclays.
I was trying to google the comment from a few weeks back where someone said something like:
"oil at $115, I'm going all short, right now"
I remember thinking, Jeez, this guy is ballsy... at the time I think I posted a reply of something like "wow, I'd wait until at least $125-130 before even considering shorting"...
anyway, I've thought about that guy/gal a lot lately... ouch.
Yearning to Learn
that was me...
i'm very short term oriented...
and I did nail that trade..
here it was...
Called_Bluff writes:
short Oil , right here , right now
june 08 118.40
Called_Bluff | 04.22.08 - 12:17 pm |
made mid 5 figs , covering at 111
and yes, i'm surprised were at 139.
I sure hope we get a Tanta LongPost this weekend!
The median home price really jumped out at me. The Australian dollar is almost at parity with the USD. Are homes in Australia really that expensive?
Rupert | 06.07.08 - 11:32 am
Yes
sorry to my mates across the tassie (Tasman sea) in Aussie. You are a bunch of whingers, biggest mineral boom in our time, locked in tax cuts, NZ sends 600 of its best and brightest to your shores ever week all edumacated for free and yet you diggers buggered up the best economic circumstances in a generation. Fair suck of the sav, and know you have a kiwi coaching your national rugby team.
FFDIC, I am not to sure if you should admit knowing people from tassie, they are kind of like hill billies.