Mortgage Prison: Sydney Home Prices Suffer Largest Annual Decline Since 2008

Authored by Mike Shedlock via MishTalk,

Home prices in Sydney and Melbourne are back to 2016 levels. That is a tiny down payment as to what is coming.

News AU reports House Prices Drop in Sydney, as Melbourne Prices Stall.

Tumbling house prices in Sydney and Melbourne are the main drivers behind the first annual drop in national property prices in six years, a new report shows. The national median house price fell 1.0 per cent over the June quarter and year, according to a report by property classifieds group Domain released on Thursday.

It is the first time values have fallen on an annual basis since June 2012.

The negative national growth rate reflects weakening house prices in Sydney and Melbourne, which together represent about two thirds of Australia’s housing market by value.

Sydney house prices fell by 4.5 per cent in the 12 months to the end of June for their largest annual drop since 2008. Sydney units also fell by 3.5 per cent over the same period.

The figures chime with those released this week by property data firm CoreLogic, which said overall Sydney prices fell 5.0 per cent in the 12 months to July 22.

“House and unit prices in Sydney are now back to values seen at the end of 2016,” Domain property analyst Nicola Powell told AAP. Tighter credit availability and a high number of units being built are key factors behind the dive, Dr Powell said.

Apartment Boom Comes to End

Next up, please consider Construction Set for Biggest Decline Since the Global Financial Crisis

Australia's building commencements, fueled by investor apartment construction, look like heading from boom to bust, according to forecaster BIS Oxford Economics.

In a reality check for investors who bought at the top of the apartment boom, BIS is predicting the biggest correction since the global financial crisis hit in 2008, with housing starts set to fall by almost 23 per cent by 2020.

Associate director Adrian Hart told the ABC's AM program that the slump would be led by high-density dwelling construction, which is set to halve over the next two years

A key factor in the residential slowdown has been tougher regulation by the Australian Prudential Regulation Authority (APRA) to curb investor lending, while the Foreign Investment Review Board (FIRB) and tax office has been clamping down on overseas buyers.

Mortgage Prison

Finally, and most importantly, please consider Aussie Homeowners Trapped in ‘Mortgage Prison’.

Australian homeowners are trapped in “mortgage prison” because of a rule change. And there is no easy way out.

Changes in bank rules around living expenses calculations have effectively wiped huge amounts off the maximum a bank will allow you to borrow.

Many people are now finding they originally borrowed more than a bank would lend them under current conditions, meaning they haven’t got the option of shopping around to get a better interest rate — no bank will lend them the amount they need.

Precise numbers of Australia’s mortgage prisoners are hard to come by, but Mozo investment and lending expert Steve Jovcevski told news.com.au that he expected most of them are those who have borrowed and bought in the last five years.

Oops!

Jovcevski gave an example in which a couple was able to borrow $800,000 a year ago can now only borrow $680,000 under the same rules.

They are now trapped in a mortgage with no way to refinance and no buyers because of declining prices.

Mortgage Slaves for Life

This is precisely what some us foresaw years ago. It's finally come home to roost, and at a time China is highly unlikely to bail out these buyers.

People may be trapped for decades. So expect to see more articles like this as desperation sets in: Australia Housing Insanity: Tent Outside, Full Use of Apartment, Cheap, $90 Per Week.

That was from a year ago. Rates will drop fast. Buyers will need tenants to stay afloat.

Special Mention

Dateline July 23, 2017

13-Year-Old Kid Buys $552,000 Home

Meet Akira Ellis a 13-year-old kid. He just bought his first piece of real estate, a $552,000 four-room one bath house in Melbourne’s Frankston.

Right at the peak of the market a 13-year-old kid (with obvious help from his parents), bought a house costing over half a million dollars.

I noted "Akira is already looking for his next property."

I asked "What can possibly go wrong?"

Today, we found out.

 

Comments

Giant Meteor Fri, 07/27/2018 - 21:47 Permalink

Down to 2016 levels eh. That is serious ..

Let me know when they get down to 1929 levels ..

There are a couple of medium size towns I'd like to purchase ..

Giant Meteor NidStyles Fri, 07/27/2018 - 22:47 Permalink

No doubt there Nid, no doubt ..

Actually though I prefer to think of it in another way. A shit load of PEOPLE in the world are gettin crazier every day. The world, as it always has, will simply shrug them off like a bad case of fleas .. (thanks George Carlin.)

Back in a day, many things once troubled me, and then an epiphany of sorts. Rich man, poor man, debtee, debtor, all are going to give up their lives one day. Nobody get's out of this life alive. I am much closer to that moment myself, than not.

I sometimes talk to folks whom are very concerned about all these recent, sordid affairs. The first advise I give them, turn off the fucking tv .. stop watching "the news" and engage in more worthwhile pursuits, things that would empower one in deed, faith, spiritual growth, personal satisfactions, in example. Obviously, reject indebtedness ..

Studies were done many years ago. What was discovered was, take any person who is "sane" and place them in confinement with those whom are clinically insane, well guess what happens. The sane become "insane" in very short order. It is personally a sad thing to watch , loved ones filled with anxiety, fear, paranoia, from all this largely meaningless shit ..

One big open air PSYOP ..

My motto is, let the other bastards go nuts .. and heh, let's all be careful out there!

In reply to by NidStyles

Giant Meteor algol_dog Fri, 07/27/2018 - 23:58 Permalink

"We have more time, more conveniences, and more comforts .."

I believe you have identified a good bit of the trouble.

I have always talked with old timers. Folks that lived through a lot of shit .. without all those comforts.

But mostly what I enjoyed hearing about were times when neighbors knew each other on sight, extended communities, families, folks looking out for each other. Never too busy to sit on the porch in the old neighborhood and talk, laugh, enjoy each other's company.

No one was concerned for a female family member to walk down the street at night. Kids played outside till dusk, no one was concerned, except maybe moms when the kids came home dirty.

People worked hard, because, well that is what people did. There was a sense of self sufficiency, personal responsibility, accomplishment, in the simple act of surviving, providing. There was no "gender confusion. Obesity was rare, drug addiction rare. THOSE were the outliers, now so normalalized almost as if that is the way it is supposed to be.

I go into the local gas and go, and observe folks waiting on me with rings through their noses, eyes, whatever, young obese women, looking more like men, with covered arms and necks in ink .. Generations of young men out of hope, cowed, and dependent, many given up on the notion of female companionship altogether. All completely normalized.

For all this techno, modern, time saving convenience, look at what has been lost. I routinely witness people walking about, in busy parking lots and streets, staring blankly into phones.

Zombified ..

Generation after generation of spoiled angry brats. The great dumbing down has occurred right under everyone's noses, IN their faces .. We are I'm afraid some twisted hybrid arrangement of both Huxley and Orwell ..

I believe the world will at some point receive it's cleansing. It will not come willingly or by popular vote.

Everything has progressed it seems, accept for man's humanity .. and no, more time, has not yet been invented .. although some peopLe had seemed to live longer for a time, a trend that is now apparently reversing itself, for the younger folks..

A reckoning of awaits .. for all of mans hubris .. a price to be paid.

In reply to by algol_dog

JohnGaltUk Giant Meteor Sat, 07/28/2018 - 04:08 Permalink

Great piece, I have tried many things in my house hold including "the great awakening", I have even abolished the TV from every room in the house but their phone and tablets are their messiah.

I look into the future and make my judgements, most folks won't alter their lives until they feel the pain.

It's like the Jews in the second WW. What law or action did the NAZI's have to take before you would think enough is enough. Those that were smart obeyed the signs of reality and left were rewarded with life. Those whom stayed because they thought things cant get any worse...... were wrong.

In reply to by Giant Meteor

Giant Meteor JohnGaltUk Sat, 07/28/2018 - 09:29 Permalink

Heh John,

Agreed of course, many folks will not altar, or self correct until pain becomes great. A very vexing part of the human condition. I have pondered old expressions such as, "a smart man will learn from his own mistakes, a wise man from the mistakes of other's. I sometimes share these thoughts with adult children. Then after giving the instruction, let them know that many, many folks in this regard, are neither smart nor wise.

In another work that I follow it is said, "pain is the touchstone to all spiritual growth." But even in this, folks will find objection, or reason to debate. Mostly I believe because they fail to understand the simple, but powerful meaning of it ..

Increasingly, or so it appears to me anyway, we are living in a time of greater confusion. I have the why covered fairly well. The solution? Well, the solution I believe is to be found on an individual basis in what I might term, an inside job.

You my friend appear to be already on that page, living by example, perhaps the very best thing that any of us may hope to do in this life. That is no small thing although I admit, it can be at times a lonely road, especially in regards to loved ones.

In reply to by JohnGaltUk

Killdo Giant Meteor Sat, 07/28/2018 - 11:35 Permalink

((psychopaths)) in charge of the loudest megaphone have managed to disconnect most Anglosheeple from our biology and our human instincts which took millions of years to evolve (and once lost they cannot be easily re-created). 

That's why you see so many confused, lost and zombified sheeple everywhere. that's why men are scared of women and women hate men in Anglo countries where sheeple watch far too much TV

In reply to by Giant Meteor

TheEndIsNear Giant Meteor Wed, 08/01/2018 - 01:38 Permalink

meteor said:  "No one was concerned for a female family member to walk down the street at night. Kids played outside till dusk, no one was concerned, except maybe moms when the kids came home dirty."

Places like that still exist meteor, and I am very fortunate to have found one of those places. Kids and dogs ride around in the back of pickup trucks without being hassled by the cops or having their children taken away by the government and placed into foster homes. There are no helmet laws for adults, although most motorcyclists do wear helmets, and no government permission is required to carry firearms either openly or concealed, and in fact the local sheriff encourages it. No Africans or Mexicans and therefore no crime. I wish I could tell you where it is.

Bye the way, if you're ever out this way, stop by "Dave's Gas and Guns" and fill your gas tank while purchasing a nice AR, AK, or sidearm with no paperwork (Federal NICS check is required however, but only takes a couple of minutes).  .

In reply to by Giant Meteor

Killdo algol_dog Sat, 07/28/2018 - 11:32 Permalink

that's what you get when most population has been brainwashed/child-abused into believing imaginary masters are there to worry about what we do (instead of us helping improve reality in real time). 

Sheeple fear reality and power to change things - they feel safer in mental slavery

Once you get them to think that way - they remain fearful and slavish and even more scared of reality (that's why they feel they must cover up their master's/Hilary's etc lies, otherwise their whole world will collapse. 

In reply to by algol_dog

shortonoil Giant Meteor Sat, 07/28/2018 - 09:09 Permalink

When a person is exposed to enough contradictory information at a high enough rate, at some point their brain shuts down. It's called speed stress, and load stress. The military studied it during WWII when fighter pilots began flying their planes into the ground. If it appears that the world is going bat shit crazy, that is because it is! For students of machine language programing its called "bombing your own registers". It results in a hung machine; often one that is going absolutely nowhere at several million bytes a second. The people you notice that have that very vague, distant look on their faces, and their eyeballs jammed into their IPad are just gong nowhere at several million bytes a second! They are a hung machine. They dropped a few bytes trying to process the over load. Then there is Washington; the exemplary example of our national epidemic. It results from that ancient, and time tested premise; "shit flows downhill"! Whacked out population, whacked out government. Who could have known?

In reply to by Giant Meteor

effendi algol_dog Sat, 07/28/2018 - 03:56 Permalink

Yes, Australia had the Chinese stoking our resource boom in 2008 so we missed the drop the rest of the world had. I work in construction (ground Zero, Sydney) and there is just so much work (I work 70+ hours a week) and get job offers every week. Even a 50% cut in construction will still leave the numbers under construction at high levels. Currently 247 tower cranes working just in Sydney compared to about 300 in all the US.

If construction (and prices) truly goes belly up then both Australia and China are F**ked as half the workers and half the materials seem to be from China and half the buyers are Chinese.

In reply to by algol_dog

pitz AUD Sat, 07/28/2018 - 03:48 Permalink

And that's precisely what they do, especially the Indians.  They arrive, get hooked up with subprime lenders, and basically build empires of highly leveraged RE.  If the RE goes up, great, everyone gets rich and the kids get sent to dental school.  Gold gets hoarded.  BMW's in the driveways.  Extravagant weddings.

When RE goes down, they simply pack up with their gold, fly back to India, let the mortgage holders eventually come and liquidate everything, and show up a few years later to start all over again at the bottom of the cycle.

Indians *love* to blame this stuff on the Chinese, because "Chinese" people don't speak English as well, and seem to maintain more of their 'foreign' flair as a cohesive ethnicity.  But its really not "Chinese" money involved at all, in Australia, on the west coast of North America, or even in Toronto where Chinese nationals receive a lot of the public blame.

In reply to by AUD

caesium HankPaulson Sat, 07/28/2018 - 02:09 Permalink

They sell stuff that the Chinese want. Lots of it. Australia should have joined the EU instead of helping to make China great again. If the US ever goes full retard against China the Aussie position will become untenable. Either way they will be owned as the Chinese will buy up the place up mine by mine, beach by beach and bar-b-que set by bar-b-que set. No brainer for them.

In reply to by HankPaulson

Ghost who Walks Fri, 07/27/2018 - 22:10 Permalink

When this event is dissected in the media by the usual experts I do not expect to see the comment "No one saw this coming, it was totally unexpected!"

This change in the relentless increase in Australian house values has long been predicted and explained, even to the Real Estate agents who claimed that this time was different. Steve Keen will finally be right!

The usual suspects in Government will be held accountable by the electorate when many people find themselves in difficulty. I am starting to believe the wisdom of the proverb "You only get the politicians you deserve!"

Silver Savior Fri, 07/27/2018 - 22:34 Permalink

It seems housing prices everywhere are 9/10ths too high. I mean how much money can they compact into a square foot? It's not worth it and the thing is people feel they have to pay it. 

Let the depression put it all into check.