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The Ultimate Visualization Of Australia's Housing Bubble

Tyler Durden's picture


Will Steve Keen be proven 'early' and correct? We suspect so; and the following infographic from provides some more compelling evidence of the growth of the Aussie housing bubble and its geographical diversity (and should you consider a trade on the back of this - Australian bank CDS are trading near 12-month tights).


State of the Australian Property Market



...and for those thinking of a trade... Aussie Bank CDS (average)...


Chart: Bloomberg


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Tue, 08/28/2012 - 17:38 | 2744690 JeremyWS
JeremyWS's picture

No, no problem here, Haven't you heard? the world is fixed!

Tue, 08/28/2012 - 17:46 | 2744706 Dan The Man
Dan The Man's picture

sounds bullish


Tue, 08/28/2012 - 17:51 | 2744716 Michael
Michael's picture

After snubbing Ron Paul at the Republican Clusterfuck National Convention by not reading Ron Paul's votes at the podium, I am definitely directly voting for Barack Obama in November.

Good luck on your next 4 years President Obama, you'll need it.

Tue, 08/28/2012 - 17:53 | 2744722 Xibalba
Xibalba's picture

"We're not going to let our campaign be dictated by fact-checkers," said Neil Newhouse, a Romney pollster.

Tue, 08/28/2012 - 17:54 | 2744730 Michael
Michael's picture

CNN covering the RP snubbing clusterfuck. No mention from FIX news.

Tue, 08/28/2012 - 17:56 | 2744733 Xibalba
Xibalba's picture

Iowa delegates gave Paul 22 votes and Romney 6.  The announcement from the podium, "Romney gets 6 votes from Iowa!"  

Tue, 08/28/2012 - 18:10 | 2744758 Michael
Michael's picture

CNN did talk extensively about the clusterfuck, so that should make for some good Youtube videos.

Tue, 08/28/2012 - 18:18 | 2744771 Dr. Engali
Dr. Engali's picture

You sound like an Obama supporter pretending to be a Paul supporter. If you really want a protest vote then write in Ron Paul's name. That will send them a message loud and clear. Obama will win anyway so your vote for Obama will have meant nothing and it will just be registered as an Obama vote.

Tue, 08/28/2012 - 18:29 | 2744817 Michael
Michael's picture

My only motivation at this point is only REVENGE!

Tue, 08/28/2012 - 18:34 | 2744839 Dr. Engali
Dr. Engali's picture

Ridiculous motivation, especially since Obama will win anyway. You accomplish nothing except for feeling Shitty about yourself after casting your vote for Obummer. Ron Paul is a man of principle... a principled supporter would never consider voting for either one of the two official choices.

Tue, 08/28/2012 - 20:45 | 2745220 TwoShortPlanks
TwoShortPlanks's picture

At least you two have a choice...who the fuck can I vote for in Oz? It's a political jail cell I tell-ya! Hell, even our Olymipc athletes are a tragic mess...and our fucking home grown television is wrist-slittingly embarrassing, see: ttp:// The greatest frustration of all is that our Gen-Y really do act like these moronic fuck-bags.

Fuck-it, I'm moving to Chiang Mai too!

Tue, 08/28/2012 - 21:29 | 2745343 Dr. Engali
Dr. Engali's picture

We have the same stupid shit here. That's why I got rid of cable. Nothing but idiocy and propoganda on the damn thing.

Tue, 08/28/2012 - 21:58 | 2745420 Al Gorerhythm
Al Gorerhythm's picture

If you go to Thailand you'll miss out on getting richer as your house price goes up. What the fuck is the matter with you?

Tue, 08/28/2012 - 22:13 | 2745475 Dr. Engali
Dr. Engali's picture

Have you read the main post ?;->

Wed, 08/29/2012 - 00:11 | 2745673 Al Gorerhythm
Al Gorerhythm's picture

Article, schmarticle. That's not what the govt. figures state. If we all had a bit more faith in the government's expertise in fixing the economy, we'd all be better off. It's not like they're to blame for people over-spending on houses. If buyers push the prices up, the government can't be held to blame for dumb decisions, right?

Wed, 08/29/2012 - 01:23 | 2745735 TwoShortPlanks
TwoShortPlanks's picture

I hope you're forgetting to post <sarc/off> at the end of your comments...coz, damn!

Tue, 08/28/2012 - 21:46 | 2745391 Freddie
Freddie's picture

Santorum had Romney beaten in Iowa, MI, OH, WS and the RINO GOP "counted" the votes.  Detroit won MI for Romney.  It really sucks but the muslim in the Choom wagon is even worse.

Anyone who watches any TV is a tool and supports the Matrix.

Tue, 08/28/2012 - 22:27 | 2745514 gnomon
gnomon's picture

Why does that not surprise me.  All of you Obummer retreads who "nobly" followed Ron Paul to the cliff edge were destined to slink back "home" for some very special S&M by the master.  Your master awaits.  Kiss his ass and while you are doing that kiss your own goodbye.


Tue, 08/28/2012 - 20:19 | 2745146 Zoran
Zoran's picture

Australia is pretty much doomed. The mining boom is dead, house prices are falling, unemployment will soon skyrocket and the entire economy is on the edge of collapse. Read this for a sober assessment of the severity of the situation.....

When the capital leaves - all we will have is a hangover and debt

Make no mistake. Australia has a massive debt bubble and property bubble.

The collapse will be momentous.

Tue, 08/28/2012 - 20:29 | 2745169 OpenThePodBayDoorHAL
OpenThePodBayDoorHAL's picture

Australia (pop. 22 million) bank market cap now = All European banks market caps combined (pop. 350 million).

Sounds like a nice pair trade: short/long

Tue, 08/28/2012 - 21:06 | 2745283 intric8
intric8's picture

And the scary thing about australia is - they are an island, in numerous senses of that word

Tue, 08/28/2012 - 17:41 | 2744691 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Somewhere Steve Keen is waiting for deflation......

....hopefully it is on a beach and he has a cold drink in his hand.

Tue, 08/28/2012 - 17:43 | 2744696 Xibalba
Xibalba's picture

The southern hemisphere will be the last place the radiation hits after the Great Flash. 

Tue, 08/28/2012 - 21:53 | 2745411 Freddie
Freddie's picture

Well Oz and NZ are the places people with money are going to get away from the rest of the world. 

Tue, 08/28/2012 - 17:53 | 2744697 Dr Benway
Dr Benway's picture

A third of the Australian share market is made up of banks up to the hilt in mortgages.


Current house prices are predicated on future growth, which makes a steady deflation of the bubble impossible - if there is no prospect of rising price, there must be a sharp decline.


There are plenty more catalysts that act as fuel on the fire, such as negative gearing. Just a perfect shitstorm.

Tue, 08/28/2012 - 18:54 | 2744913 Jay Gould Esq.
Jay Gould Esq.'s picture

Any and all entities even remotely associated with the housing bubble in New Holland must be shorted -- if I may borrow a term from Mr. Durden -- "with both hands."

Sage money is buying in New Zealand, not the People's Republic Down Under.

Tue, 08/28/2012 - 19:42 | 2745047 TwoShortPlanks
TwoShortPlanks's picture




WARNING! Most Australian Super Funds are heavy Equities and light Fixed Assets.

A global slowdown represents a Triple Whammy to the Aussie middle class (Economy{jobs}, Housing{assets} and Superannuation{pension})

Gold Reserves of only 50 Tons

Fat assed red headed skank at the helm

THE Perfect Storm!!!


Tue, 08/28/2012 - 21:05 | 2745277 saulysw
saulysw's picture

Australia has a lot of in-ground gold.

And then there is this...

Ours is bigger than yours!! lol.

Tue, 08/28/2012 - 21:58 | 2745419 TwoShortPlanks
TwoShortPlanks's picture

And the Perth Mint is advertising on prime time TV to buy Gold from the public for what reason?

The writing is on the wall, they got caught-out with Silver early last year, and they're gearing up for Gold right now.

We may have Au in the dirt, but production costs are rising in the double digits per year, mining shares are woeful, and if a Gold boom hits there's no way the miners can gear up that fast.

Tue, 08/28/2012 - 22:01 | 2745431 Al Gorerhythm
Al Gorerhythm's picture

She pulls policies out of her ass, I'm told. Do her policies make her ass look big?

Tue, 08/28/2012 - 23:28 | 2745606 TwoShortPlanks
TwoShortPlanks's picture

Let's just say the fucking tard should move to Brazil.

Stupidity Examle: 3 months ago she said our mining industry was, "our economy's strong right arm"...Wow!

Wed, 08/29/2012 - 02:39 | 2745783 bluemaster
bluemaster's picture

I like fat assed red headed gilrs is that normal ?


Tue, 08/28/2012 - 20:35 | 2745183 Red Herring
Red Herring's picture

Can you point to some further reading re: "Sage money buying in NZ"? No sarcasm here, been contemplating just that for the last 6 months, but don't know enough about this, and haven't found a good place to look.  Thanks in advance.

Tue, 08/28/2012 - 22:07 | 2745453 OpenThePodBayDoorHAL
OpenThePodBayDoorHAL's picture

LOL, New Zealand is an even worse unpopped bubble, no real economy besides butter and sheep, Maori land rights law putting every land title in question. Ask most NZealanders, who are all leaving for Australia and elsewhere

Nice place to visit but I wouldn't want to invest there

Tue, 08/28/2012 - 19:13 | 2744975 bilejones
bilejones's picture

Wasn't some 40% of S&P500 profit from financial institutions in 2006?


Look how well that turned out.

Tue, 08/28/2012 - 17:49 | 2744698 Dr Benway
Dr Benway's picture

To be perfectly honest, that is a pretty poor infographic though, as the Australian housing bubble can be illustrated much more simply, cogently and effectively.

Tue, 08/28/2012 - 17:43 | 2744699 LawsofPhysics
LawsofPhysics's picture

Wages fucking matter, imagine that.

Tue, 08/28/2012 - 17:48 | 2744711 Dan The Man
Dan The Man's picture

get out !

Tue, 08/28/2012 - 17:45 | 2744704 Doubleguns
Doubleguns's picture

When China sneezes a typhon will hit Australia.  China has a bad cold right now. Pitty Australia.

Tue, 08/28/2012 - 17:47 | 2744707 css1971
css1971's picture


Tue, 08/28/2012 - 17:52 | 2744720 q99x2
q99x2's picture

Looks like Al Gore isn't going to be getting as much income from his carbon taxes this year.

Tue, 08/28/2012 - 22:03 | 2745439 Al Gorerhythm
Al Gorerhythm's picture

I got a rebate. The government is my saviour.

Tue, 08/28/2012 - 17:53 | 2744724 PSEUDOLOGOI

Yipeee!!!!! let's all go down under...

until, oh no, GASP, someone shows that these # are cooked...

that would never happen, right?

Tue, 08/28/2012 - 17:54 | 2744729 roadsnbridges
roadsnbridges's picture

Just short the whole world, and be done with it.

Tue, 08/28/2012 - 17:56 | 2744732 tweake
tweake's picture


Tue, 08/28/2012 - 17:59 | 2744740 Paracelsus
Paracelsus's picture

You left out one little detail. Ten % unoccupied houses?Squatting is legal in Oz.It is unlawful to leave a building empty for long periods when there is a shortage of housing.Provided the squatters take care of and maintain the property the landlord cannot lock them out while they are staying on.Also,the squatters can act as a live-in security guard,preventing the building being used as a crack-house.Some of the laws derived from the UK are sensible. The point is that the landlord should lower his rents,but won't,so the property sits empty,and he accepts a loss for tax purposes.... Uni students have squatted for years.There's books written on the subject.

Oz does so much trade with Chinese that when the music stops there will be some major deleveraging.The great thing about Oz is they kept their interests rates high,no ZIRP and none of those Ninja loans. 

Tue, 08/28/2012 - 18:08 | 2744755 falak pema
falak pema's picture

Bubbles are so infectious; you'd think it was a disease if it weren't so Wall Street fashionista.

You can make a killing on a bubble pop!

Like robbing blind the poor, like taking candy from a sub prime baby! 

Tue, 08/28/2012 - 18:09 | 2744756 Surrealist
Surrealist's picture

Re Average Weekly Income

Is the % of income on mortgage payments where it states 26% in 2001 and 34% in 2011 a typo where it should be a comparison that states 26% in 2006 and 34% in 2011?

Trying to leave this comment on the site but it won't allow it for some reason.

Tue, 08/28/2012 - 18:10 | 2744759 dottjt
dottjt's picture

haha. As an Australian, I find it hilarious how everyone says that the only way for the housing market, is up. They have this delirious logic that things can only go up, because that's how it's always been for the best part of a decade. The problem is that we've had it too good for too long, and we haven't experienced any of the financial termoil like in over the states or Europe. We feel invulnerable, almost. Jobs are exactly the same and the econonmy is still moving as expected. Wait till the storm hits and China goes down. Our mining industry is basically the only thing holding us together. An instant GG. 

Tue, 08/28/2012 - 18:19 | 2744774 SmittyinLA
SmittyinLA's picture

As an australian, can you buy for less than what it costs to build?   How much are the building "fees & taxes"?

Tue, 08/28/2012 - 18:24 | 2744795 dottjt
dottjt's picture

I'm not too sure on the specifics, but I've heard that building your own home is much, much cheaper. Just hearsay, so I could be wrong. 

Tue, 08/28/2012 - 20:22 | 2745150 Peter Pan
Peter Pan's picture

Australia not only suffers from very high eral estate prices but it also suffers from very high wages which are not supported by industry but simply by the fact that it has for decades relied on its natural resource exports.

The charmed life may soon be over if China slows down considerably.

Wed, 08/29/2012 - 02:34 | 2745778 SuperCycleBear
SuperCycleBear's picture

No it is much cheaper to build than it is to buy, but the land has not been zoned for residential construction where people need to live. COnsequently the low end in Aust market is still quite firm. Properties over median house price are progressively more difficult to sell.

Tue, 08/28/2012 - 18:24 | 2744794 kridkrid
kridkrid's picture

Figure out how to make Money off of what you know to be true.

Tue, 08/28/2012 - 18:52 | 2744906 freak of nature
freak of nature's picture

At the same time it makes me wonder. A lot of the W.A. boom comes from gold mining, so when things go south and money moves into gold what then? Purely out of curiosity I wonder what will happen. In any case real estate costs are a joke every time I go back.

Tue, 08/28/2012 - 18:12 | 2744761 Whoa Dammit
Whoa Dammit's picture

 No one in Australia noticed what became of the U.S. housing market because this time its different.

Tue, 08/28/2012 - 18:14 | 2744764 lolmao500
lolmao500's picture

And how do we buy CDS again? ETFs?

And the same BS thing is said about Canada's real estate market... IT CAN ONLY GO UP!!!

Tue, 08/28/2012 - 18:14 | 2744766 Praetor
Praetor's picture

Ah, I love waking up to hear the Aussie home market is sinking, it smells like victory.

With China slowing down, we'll have less Chinese money buying homes in Melbourne and Sydney that will put further pressure on prices.

However as I mentioned in a previous post, I believe the Labor government will again interfere and go beyond a simple $800 handout and 'guarantee' the nominal house prices to save all the negative gearers and the retirees who are dependant on housing to maintain their lifestyles.

This 'guarantee' process will smash the AUD down further, however those with certainb metals will be protected.

Will Keen be correct? Possibly, but the governrment in their "wisdom" will do everything to prevent it.

Tue, 08/28/2012 - 19:36 | 2745050 Dr Benway
Dr Benway's picture

You simply do not get it.

Half the value of property is due to priced in capital growth. For all those owning "investment properties", flat prices won't cut it but will lead them to sell, they need price growth just to end up even.

The idea that nominal house prices can remain steady is ludicrous IMO.

Wed, 08/29/2012 - 06:03 | 2745874 Praetor
Praetor's picture

Doc B, I agree but follow me on some crazy Gov logic. They want to keep the plebs happy and keep house prices constant or trickle slowly higher to stay in power, so what are the possible 'solutions'?

1) Do a Bernanke special, force the RBA to flood the market with excess AUD and due to inflation watch asset prices rise. AUD will drop relative to other countries, but home owners will see their house price near consistent. Risk is inflation is too high and we eat into peoples spendable cash or drive others into bankruptcy. Back to square one.

2) Change neg gearing laws for more favourable tax treatment.

3) Force interst rates down further.

4)  ???

For savvy investors like yourself you will see through the magic tricks, but do you think Mum & Dad investors negative gearing one or two houses will?

As our American friends have seen, the rules change to suit  the gov, not you or I.

Tue, 08/28/2012 - 18:16 | 2744770 SmittyinLA
SmittyinLA's picture

Looks like the Aus govt is waging an immigration war against its own citizens too, with all that "open space" and hundreds of miles of lumber forests AUS should have 60% home ownership, the only thing standing the way is govt. 

Tue, 08/28/2012 - 18:30 | 2744824 Praetor
Praetor's picture

@ Smitty, I can only speak as a Melbournian, but this endless housing growth has now seen new estates being built into the prime food growing areas, thus I rather see the 'grow up' approach then the 'grow-out' approach we have been currently doing with residential housing as our population has exploded within the last 10 years.

Tue, 08/28/2012 - 18:37 | 2744857 Spontaneous Violence
Spontaneous Violence's picture

My favourite argument for property is, has and always will be "real estate prices always go up" ... value and prices aside that always makes me laugh.

Tue, 08/28/2012 - 19:30 | 2745027 hannah
hannah's picture

what they didnt mention is that most of the mortgage loans are based in euros(euopean banks) so the aussies have to pay back their loans in a foreign currency. with the aussie so strong it was great but what happens when china shits the bed and the aussie dollar falls...?

Tue, 08/28/2012 - 21:00 | 2745259 saulysw
saulysw's picture

"most of the mortgage loans are based in euros"


Source? I call "bollocks" on this comment unless proven. I know of NOBODY who has an Australian loan in Euros, never even heard of it.

Are you confusing Australia with Austria? Seriously, what?

Tue, 08/28/2012 - 21:36 | 2745352 hannah
hannah's picture

come on dont be stupid....individual mortgage owners dont have a loan from a european bank. the aussie banks borrow their money to loan out from the european banks. do your own fucking research....i am not your mother.


*if you want to go deeper down the rabbit hole....check out the money the us fed has given to the aussie banks to prop them up. all this shit talk about how australia 'missed' the recession is pure bullshit. they crashed hard before the qe commidity boom sent prices sky high...then they made some money back BUT the stupid fucks have borrowed themselves into another hole...all in foreign money.

Tue, 08/28/2012 - 23:22 | 2745595 saulysw
saulysw's picture

I am very pleased you are not my mother. She is a lot clearer in her communication, which is something you could learn.

Wed, 08/29/2012 - 02:28 | 2745772 SuperCycleBear
SuperCycleBear's picture

I have worked in bank treasuries, corporate treasuries and the central bank in Australia, offshore borrowing accounts for around 40% of bank liabilities and once an issue is done, the proceeds are swapped out of foreign currency (usually issued at a margin above LIBOR) and into AUD (which the banks want referenced against BBSW).

Bottom line, the FX risk is not borne by the Aus borrower.

Also AUD is one of the few currencies that has not needed to central bank to conduct QE (this has not escaped the attention of central banks keen to diversify their reserves - they are keen to buy AUD). If you are waiting for higher rates and a lower dollar in Oz, you wiull be waiting a long time.  

There is little doubt that if the US do conduct more QE (as close to a certainty as there can be) AUD will be a huge beneficiary.


Tue, 08/28/2012 - 19:52 | 2745085 chump666
chump666's picture

Australia is done. 

Tue, 08/28/2012 - 20:05 | 2745116 PulledPorkBBQ
PulledPorkBBQ's picture

Doesn't/Didn't Australia have a version of the infamous 'Option ARM' loan to entice new debt-slaves?

Tue, 08/28/2012 - 20:22 | 2745152 Zoran
Zoran's picture

It certainly does. In fact Australia's sub-prime problem has been brewing under the surface for a long time, and is on the verge of turning into a flood as massive volumes of loans are fast going bad, and repossessions soar, see link.....

Subprime Mortgage Lending in Australia - The Facts!

Australian property is a huge ponzi scheme sitting the the precipice of an abyss.

Tue, 08/28/2012 - 21:12 | 2745264 TwoShortPlanks
TwoShortPlanks's picture

Zoran is correct, we had Low-Doc and No-Doc Loans here too. I have done both, using bull shit figures to leverage up to $1.9M (in a 9.25% market rate LOL) and sell at/near peak. Now I have no debt at all in preparation.

The issue is that as the global economy has slowed down (and that's what the past 5 years has been about), Aust real estate has done its' best to stay buoyant instead of depreciating in sympathy. The mining boom created an artificial reality where most thought that we were outside the sphere of influence and when prices did try to fall, most simply sat on their hands and said the boom will come back...Fail! Now they're holding nothing but the short straw.

ABC's Mortgage Fraud Report:

And let's face it, this is why it all happened:
The Middle Class lie.

Tue, 08/28/2012 - 21:41 | 2745380 hannah
hannah's picture

TwoShortPlanks - from what i understand...ALL home mortgages in australia are adjustable rate which means most people have gotten loans at the lowest the rate can be...can only go up AND the aussie banks have refused to lower rates when the aussie fed lowered rates so home owners where shit on around last year. it will be fun to watch and see if the next round of interest rate lowering also carries over to home owners mortgage rates.

Tue, 08/28/2012 - 23:24 | 2745593 TwoShortPlanks
TwoShortPlanks's picture

No, I'd say 50/50 variable to fixed actually. BUT, what does that matter when so many levereaged so high in that they merely wanted to meet their interest obligations and not pay off any principle debt. This was the scam, that since property always went up (doubling every 7 years according to General Relativity and Quantum Probability) that there was no need to pay-off the principle at all becasue it shrinks against rising asset prices. Even moreso in cities like Perth, Melbourne and Sydney where prices went expo. Also, this gave everyone an ATM in the basement so that withdrawals could be made anytime from an ever-expanding equity. Hell, why even bother going to work?!

Tue, 08/28/2012 - 21:06 | 2745282 Stormdancer
Stormdancer's picture

Yes it certainly has.  But, unlike the US, Australia will likely put at least a couple of loan brokers and a few real estate agents in jail.    Not holding out for a banker...but there might be one that's pissed off someone important.

Tue, 08/28/2012 - 20:33 | 2745175 chump666
chump666's picture

short asx200 mini contracts, AUD short, Aust bonds will be dumped, RBA cuts, oil inflation will slam into Australia like a freight train. 

hedge funds already shorting the AUD, the ASX200 for a small capped index is rife with HFTs.  It will collapse, as will most indexes after this Friday.

Tue, 08/28/2012 - 20:51 | 2745233 Arnold Ziffel
Arnold Ziffel's picture

Stunning presentation. Thank you!

I was in Sydney with my family in 2000 and my Dad almost bought a condo there for USD$235,000.  Too bad he did not.  That same condo soared up to $875,000 at its peak and is now The Sydney Bubble is out of sight! Many condos near Darling Harbor over $1,000 psf!But it is a direct result of the EZ Credit policies even worse then the Fed.  OzGuv handed out a whopping $16,000 "incentive" to purchase a new house (with almost no money down---sound familiar?)  while USA was cheap at only $8,000.

I wonder how the Oz CB will play this out?


Tue, 08/28/2012 - 21:48 | 2745401 chump666
chump666's picture

*The S&P ASX 200 lost 0.1%, weighed down by weakness in the commodities space after the price of iron ore crashed 4.6% overnight to its lowest level since November 2009.

Next will be Aust bonds, which funds the RMBS markets, once that blows.  Housing crash.

Wed, 08/29/2012 - 02:00 | 2745496 Anne Ominous
Anne Ominous's picture

Talking about our Aussie Housing Bubble has made me a leper at BBQ's - everyone is smoking property crack and don't like you saying the supply is going to stop.


None of the boom is supportable, our banks are worse than over their heads and our politicians are fucking clueless.


As Europe and the US go slow-Minsky so will China and then we are really going to get wiped out. By 'we' I mean every Mainstream News Listening, Housing Always Goes Upping, 4 Mortgage Holding, Houses Are My Retirement Griping, Stupid Herd-Mentality Arse-Wiping Fuck-Stain that believes the Hype.


I am short the banks and long gold and silver.

Wed, 08/29/2012 - 05:57 | 2745876 Munkey
Munkey's picture

Lucky Australia has the Obama endorsed "World's Greatest Tresurer" at the helm. Man, we are so fucking screwed.

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