Friday, November 04, 2005

'Property Bubble Bursts' In Australia

The fallout from a housing bubble can be seen in this Australian report. "The property bubble has burst for many high-fliers, as lenders begin to repossess more homes. Arrears are heading towards their highest level in eight years as household debt levels soar. 'I deadset have not seen a mortgagee sale for two or three years, now there are six to seven each week,' said Jamie Burke, who has 20 years experience in the real estate industry."

"'It is not necessarily high-end properties but high-end people who end up with resposessions. The people you would think who have dinner every night at flash restaurants and drive big expensive cars are the people who seem to have overcommitted. All the smarties who have got four cars and a boat under lease and a big house worth $3 million, all mortgaged, are getting caught as their cash-flow dries up.'"

"Mr Burke recently sold a beachfront property, owned by Gold Coast motivational speaker Rob Dale, under the hammer at a mortgagee auction for $5.5 million, $800,000 less than he paid for it a year ago."

"'There is more receiver work coming, definitely more activity now than there has been for some time. This is just the start though I think,' Marcus Weld said. 'The residential developers who didn't have the cashflow to support it that are getting squeezed at bit at the moment.'"

"Credit ratings agency Standard & Poor's said the number of borrowers falling behind in their interest payments had reached its highest level since a spike in 2001, and is closing in on levels not seen since 1997. S&P surveillance analyst Sarah Raisbeck reports the recent data includes low-doc loans that typically had higher rates of default than standard loans."

"Adelaide Bank recently reported a doubling in the amount of mortgage balances that were more than 90 days overdue. Financial Counsellors of Queensland president Gregory Mowle said many families were now at breaking point. 'People are being pushed to the edge of the cliff. Previously the banks would be happy to keep giving people credit or do consolidation loans but they are reining in credit now and people can't keep on borrowing,' he said. 'The word on the street is people are at breaking point. People coming in for bankruptcy advice is significantly on the increase.'"

"According to ANZ, Sydney house prices are overvalued by 23 per cent, Melbourne house prices are overvalued by 14 per cent and Brisbane house prices are overvalued by 29 per cent."

3 Comments:

At 8:02 AM, Blogger crisp&cole said...

I WAS IN AUSTRALIA IN DEC 2004. EVERYDAY IN THE NEWSPAPERS WAS ARTICLES ABOUT WHEN AND HOW BAD THE BUBBLE WOULD BURST. A YEAR LATER IT IS HAPPENING. JUST LIKE THE U.S., THE BURSTING OF THE BUBBLE WILL HAPPEN VERY QUICKLY WHEN THE CREDIT DRIES UP.

 
At 7:32 PM, Blogger Pointlines said...

Things will be like that here shortly.

Will see it in Spring 06.

 
At 9:00 PM, Blogger Chip said...

OC Vic -- Could be, but I think sooner.

At least, far fewer of us think "later."

 

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