SOS Australia Home Sale Sink, Luxury unit sale for Half Cost

Figure1: Australia housing loans

AUCTION PRICE SOLD HALF THE COST AFTER

more than 18 months on the market, the luxury Riverview On March apartments finally went under the hammer yesterday — and about 140 people came to watch as they sold for a song.Valued at $650,000 to $700,000-plus each, four of the six units sold. They fetched $510,000, $320,000, $339,000 and $300,000.

HOUSING LOANS DROPPED TO 10 YEAR LOW BUYERS are deserting the housing market at a pace that threatens a slump in housing prices and a risk to the economic outlook.The number of new housing loans approved by the banks dropped 5.6 per cent to a 10-year low in February, after a similarly sharp drop in the previous month.

UNSOLD UNITS MOUNTS The buyer retreat comes as the stock of unsold houses mounts. Figures compiled by property analysts SQM Research show there are now 356,600 properties on the market, which is almost 50 per cent more than a year ago.

BUYER EXHAUSTION

Buyer Exhaustion - Pool of Greater Fools Runs OutAustralia is suffering from buyer exhaustion after the Australian government foolishly stimulated housing to stave off the last recession. Buyer exhaustion would have set in whether the Reserve Bank made that last rate hike or not. .Now what?Housing inventory is both huge and rising, few can afford homes, and those who can afford homes already have one (if not more).Simply put, the pool of greater fools has run out.

PARTY IS NOW OFFICIALLY OVER Please pay attention to those struggling retailers. Australian retail sales will collapse once the housing bubble bust pick up more steam. That collapse in retail sales will crucify banks that made poor commercial real estate loans and it will bankrupt store owners who paid too much for their stores.Look for the Reserve Bank of Australia to cut rates. It will not matter when they do. It was one hall of a party Australia, but the party is now officially over.

Hells bells it took massive stimulus and silly bank loans to reach peak housing insanity in the US, in Australia, in China, in the UK, in Spain, in Ireland, and for that matter everywhere there was a housing bubble. (Source: Mike Shedlock)

MyView

Australia property bubble comes to an end. Speculators beware (not house owner), run now or get busted. This scenerio seems similar with many countries, only different is the degree and magnitude. In Malaysia, people actually feel "proud" when they did a "no money down" purchase. I like to reiterate what are the signs of bubble (not necessary burst immediately, may takes years):

1. easy credit to speculators or DEVELOPERs


2. prices increase significantly in a SHORT TIME


3. bullish sentiment by all PARTICIPANTS and EXPERTS


4. historical LOW INTEREST

ALSO thanks to government STIMULUS, great way of misallocation of resources.

WHAT ABOUT MALAYSIA

The cracks can be seen once there is/are

1. contraction on housing loans and loans to developers (must monitor closely)


2. auction price goes below reserve price


3. housing inventory gradually peaking up


4. housing affordibility reach historical high


5. number of foreclosure increases

A month to month monitoring will be good. Sometimes the music stops because of DOMINO effects, again, due to CHANGE of SENTIMENT. Look at Greece, Ireland, Portugal, and sPAIN.

Loan in Malaysia for ressidential properties more than doubled in the last 5 years from 2005 to 2010 from RM98 bil to RM218 bil (figures from BNM).