No more levers to pull

In Barrow Hill box
Creative Commons License photo credit: Elsie esq.

Australian property prices are so over-valued their return to the long term trend will make the painful bubble burst in the USA look like a child’s picnic.

Government, major banks and property speculators used every tool in reach to keep alive this Ponzi scheme – Hyman Minsky’s term for borrowers reliant on capital gains to repay principal and interest. recently updated their Real Price Index graph – a statistical series that mimics the US Case-Shiller index. The sheer scale of land price inflation fills me with awe. The modest blue line is the US property crash that derailed their economy.

And land prices are in retreat, with every statistical survey showing price falls nation-wide. Further, there are no economic levers left to pull to prevent land prices reverting to the long term trend.

• We have an army of loss-making middle-income landlords, driven by our stupid tax system, who must sell – or be destroyed – if prices retreat even a little.

• The number of properties on the market across Melbourne and unsold for over 60 days has blown out to 90,600. This giant lump of ‘Stale Stock’ is now beyond digestion. Postcode 3029 (Hoppers Crossing, Tarneit and Truganina) has 2 years 4 months supply; postcode 3030 (Point Cook, Werribee and Derrimut) has 2 years 5 months supply – assuming no new construction and no existing owner sells in that time.

• Nationally in September, only 16.4% of housing finance went to first home buyers, up from 15.4% in August, the lowest proportion since the ABS Housing Finance statistical series began. FHB’s have turned away or been excluded from home ownership to travel, study, saving or investment.

• There will be no relief on interest rates. The current level of rates “is about where we want them to be,” RBA Assistant Governor Guy Debelle said Monday. “If they weren’t, we would do something about it.”

• A First Home Owners Scheme from the federal government would fail and bring a torrent of abuse upon them. FHB’s now know these schemes merely inflate land prices – good for vendors but not for buyers. The minority Gillard government has nil capacity for other creative financial reforms that might offset the fall in prices.

House prices decoupled from the fundamental economic anchor – what a house could rent for – in the mid 1980’s. That is the true support level, and there is only air between here and there.

Don’t Buy Now!


  1. aushousingcrash23-11-2011

    Aggregate Land Value to Gross State Product charts updated. As at June 2011 VICTORIA was still leading the RACE (to the bottom) The massive upwards revision of land values by the ABS for 2010, meant the VIC land bubble SMASHED the well reported NSW Housing/Land Bubble of 2003/04

  2. Steve Adams27-11-2011

    A major problem today is that the real estate media and the blogosphere are dominated by the 1 percent.

    The 1 percent control everything, and they control the news that they drip fed to the masses, to the 99 percent.

    It was revealed recently that the Australian real estate industry actually pays shills and spruikers to ‘talk up’ property on forums and blogs (yes even blogs like this one) to plant positive spin, to post as if they are one of the 99 percent when in fact they are the 1% pretending to be a normal blogger.

    Watch this for evidence, it includes a video that Bernard Salt probably wishes was never recorded:

    Are your eyes open yet people? Don’t believe what you read, anywhere. The problem is the 99 percent don’t read blogs like this. They don’t find out the truth. So pass this on, pass the message on to everyone. Tell your friends what’s happening. Make them read this article. Make then watch the Bernard Salt video (he’s a public figure, they might have heard of him, they might listen to his scheme and revolt against it).

    Above all, remember, the 99 percent are fed lies by the 1 percent and this is a huge obstacle we must overcome.

    But in time, the truth must come out. It always does.

    We are the 99 percent.

  3. Sally27-11-2011

    “15.4% in August, the lowest proportion since the ABS Housing Finance statistical series began.”

    That is simply false.

  4. Gavin R. Putland27-11-2011

    If it’s good enough for the 1 percent to pose as the 99 percent, it’s good enough for the 99 percent to pose as the 1 percent for just long enough to sink the boot in: .

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