Given the great number of homeowners amongst our readers, we here at the goldwater.com realize this isn’t the greatest of news, but as we’ve stated earlier (see our related coverage), Australia is in for ‘quite a pickle’ when it comes to real estate prices and we prefer to give fair warning.
By now, the Australian mainstream media has also picked up on the issue as today both ‘ABC Australia’ and ‘News Australia’ are covering the upcoming drop in real estate prices.
<blockquote class="twitter-tweet" data-lang="en"><p lang="en" dir="ltr">Property is Australia’s biggest industry <a href="https://t.co/USWHUgaCaB">pic.twitter.com/USWHUgaCaB</a></p>— La Trobe Financial (@LaTrobeFin) <a href="https://twitter.com/LaTrobeFin/status/1006205411396018176?ref_src=twsrc%5Etfw">June 11, 2018</a></blockquote>
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Experts by now agree that the credit crunch, a sort of delayed kicking in of greater mortgage payments if you will, combined with already falling prices of Australian real estate and lower interest from abroad, will leave for devastating results unless… the government could act in time.
Related coverage: https://thegoldwater.com/news/27524-Australia-Why-Real-Estate-Prices-Are-Ready-To-Drop
The Australian Reserve Banks analysts all agree that some 200,000 home loans are about to roll over to principal-and-interest payments, which means that the average borrower will see a rise of mortgage repayments by about $7000 a year.
UNSW economist Professor Richard Holden warns: “The kind of nightmare scenario is where a lot of people need to sell all at once and that’s where you see a kind of fire-sale mentality … and it could lead to significant financial instability.”
<blockquote class="twitter-tweet" data-lang="en"><p lang="en" dir="ltr">It looks like Australia's property downturn is starting to have an impact on household spending (via <a href="https://twitter.com/BIAUS?ref_src=twsrc%5Etfw">@BIAUS</a>) <a href="https://t.co/l8a8ZgXdxx">https://t.co/l8a8ZgXdxx</a> <a href="https://t.co/l1n67bgqgN">pic.twitter.com/l1n67bgqgN</a></p>— Business Insider AUS (@BIAUS) <a href="https://twitter.com/BIAUS/status/1009216246594732032?ref_src=twsrc%5Etfw">June 19, 2018</a></blockquote>
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Luckily for Australia, the upcoming scenario seems to be a copy of what happened in Ireland in 2007-2008, and thus there are some lessons to be learned.
Related coverage: https://thegoldwater.com/news/27173-Future-Freakonomics-Europe-s-Inevitable-Real-Estate-Crash
The official statistics showed that because of the real estate hype of previous years interest-only loans made up almost 40 percent of the country’s outstanding credit by 2015 already, which is a huge risk.
Property analyst Mr. Pete Wargent said: “This is unusual and the tax system in Australia drove it.”
“In the UK, it would be less than half of that and in other parts of the world, it is not as popular. It’s smart investing from a tax efficiency point of view but the issue is that so many people are doing it.”
Source:
http://www.abc.net.au/news/2018-06-19/house-price-falls-from-if-to-how-much/9886604
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