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One of the world’s biggest bond investors, Pimco, was the latest to weigh in, recommending against buying [https://www.australianinvestmentproperties.net.au/ Australian investment properties]. 30 billion that Pimco manages in Australia.yourinvestmentpropertymag.com.au While little of Tepper and his colleague John Hempton’s analysis was new — apart from lurid anecdotes of lax lending practices among mortgage brokers in western Sydney — they assembled some startling facts. 1 million. Rents are rising at less than 1 per cent a year — a 21-year low — and population growth has slowed to a decade low. At the same time, home building (especially apartments) is at record levels.youtube.com More than 40 per cent of loans (about 70 per cent for investor loans) being issued are interest only.


"This is truly Ponzi financing where home buyers only make money if their houses keep rising in value," Mr Tepper said. He might have alluded to Australia’s biggest ever house price crash in the 1890s: a dwelling price slump of more than 30 per cent in Sydney and Melbourne, which resulted in half of Australia’s banks shutting their doors. Australia’s big four banks have grown enormous on the back of home lending. They are in the top 25 banks globally by market capitalisation and have among the highest ratios of loans to deposits — more than 120 per cent. They are also among the most leveraged.


From 1880 to 1940 Australia’s major banks had equity and retained earnings of between 15 per cent and 25 per cent of their assets — but today they have little more than 5 per cent. "Australia is a unique housing market and sometimes offshore investors don’t realise the key differences," said a Sydney director at JPMorgan, Sujit Dey, according to a Bloomberg report. "Shorting the Australian housing market has been a widow-maker trade and I think it will continue to be the case," he added, echoing the conventional wisdom in Australia. Indeed, for all these apparent risks Australia’s housing market still looks solid.


Short-sellers of major bank stocks have been burnt following gains in bank shares over the past week. Tepper and Hempton argued dwindling building approvals were a good predictor of falling prices — builders have a strong interest in building only what they can profitably sell. But approvals have been falling steadily for 10 months. Indeed, a week after their analysis was revealed, the ABS said building approvals dropped 7.5 per cent in January, twice the fall economists had expected. Yet over the past three months Sydney prices have stabilised, while Melbourne’s moved up almost 4 per cent. Australia’s housing market shows signs of a bubble on almost every metric except, ironically, the most crucial one: affordability.


At the same time, the house price surge hasn’t emerged unprompted, Dutch Tulip-mania style. Falling interest rates — to a great extent because of deliberate decisions of policymakers here and abroad — have dramatically increased borrowers’ capacity to pay. Property investors and homebuyers don’t typically decide whether they can afford a dwelling based on its price relative to their income, but rather whether they can afford the repayments. The RBA’s interest payment to income ratio has fallen from above 12 per cent in 2008 to about 9 per cent last year, despite Sydney and Melbourne house prices rising 80 and 50 per cent, respectively, over the same period.


Low, even falling, rental yields are not an indicator of a poor-value purchase when returns on other assets are equally bad. Australian house prices have simply ratcheted up to maintain the pecking order of returns across different assets. In a world where central banks in Japan, Switzerland, Sweden and others are charging negative interest rates on bank reserves, assets that offer meagre returns look appealing. Moreover, returns that seem low might turn out to be higher if those who fear deflation is on the horizon are proved right. Australia’s housing market and banks’ resilience to any crash are also bolstered by a few local peculiarities too. Fewer than 15 per cent of new housing loans are for more than 90 per cent of the property’s value. And as the RBA has long argued, household debt is held by high-income Australians who can afford to bear it.


Families in the top 40 per cent of the wealth distribution have almost 80 per cent of owner-occupier and investor housing debt. Last year economists at the RBA modelled the impact of a 25 per cent fall in house prices and shares and a 6 percentage point jump in the unemployment rate. They found a "high level of household financial resilience and limited expected loan losses for lenders". As Chinese cash floods in, Sydney houses are becoming safety deposit boxes for the world’s ­financial elite. Reader comments on this site are moderated before publication to promote lively, but civil and respectful debate. We encourage your comments but submitting one does not guarantee publication. You can read our comment guidelines here. If you believe a comment has been rejected in error, email comments@theaustralian.com.au and we'll investigate. To join the conversation, please log in. Subscribing to The Australian enables you to leave a comment below.stayz.com.au By posting a comment you are accepting our Subscriber Terms and Conditions and Commenting Guidelines. To find out more read our FAQs or please email comments@theaustralian.com.au.


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Updated: Mar 31, 2019. Save time and save money. Work with a top Brisbane real estate agent. When trying to understand Brisbane home prices, the first and most often real estate trend looked at is either average sale price or median home sale price. The average price can be pushed up by a particularly expensive home being sold. Much less often an especially low price for several homes can push the average price down. The sales price of a Brisbane house is affected by its size. Looking at price per square foot gives a partial adjustment for differences between houses.


Furthermore if you look at the average size of a Brisbane house sold you will see that it varies with time. Brisbane Real Estate Trends - House Sales Prices vs. Home buyers and sellers want to know the typical relationship between list price and sales price. This relationship varies with city and time. The plots below show this relationship Brisbane houses using color coding which generally highlights changes in the market. More Brisbane homes being sold over list price is a very good indicator of rising home prices. More homes being sold under list price is a very good indicator of falling home prices.


Quarterly Average Brisbane House Sales Price vs. Monthly Average Brisbane House Sales Price vs. Yearly Average Brisbane House Sales Price vs. A quick estimate of how active the Brisbane real estate market is can be found by looking at the number of houses sold. Locally there is a strong seasonal change in the number of houses sold. The lowest number of houses sold typically occurs around December & January. The highest number of houses sold typically occurs around May. Price changes do not track the seasonal change in the number of houses sold.missionaustralia.com.au Many people look at "Days On Market", the average number of days a house is offered for sale before it sells, to spot changes in the Brisbane real estate market. Increasing DOM implies buyers are not being as competitive to buy homes.


This statistic also tends to have a seasonal variation. DOM is typically greater late in the year. Seasonal variation in this statistic can make it difficult to use this statistic to predict either rising or falling house prices. The behavior of buyers and sellers can be somewhat different depending on the price of the house. There are times when low to mid-range homes are selling quickly but higher priced homes aren't or the reverse may be true. Generally house price is proportional to size in a given area. Locally newer homes are often larger than older homes. Looking at the average size of houses being sold can provide additional insight into the Brisbane real estate market. As mentioned above generally house price is proportional to house size in a given area. Another factor is lot size.


Most local cities limit the maximum size of house that can be built depending upon the lot size. A larger house can be built on a larger lot. Additionally local cities may allow a secondary dwelling if the lot is greater than a specified size (typically 8,000 sf). Looking at the average lot size of houses being sold can provide additional insight into the Brisbane real estate market. Lot sizes over 150,000 sf are excluded from the statistics to prevent the uncommon sale from pushing the average much higher than the median. A brand new Brisbane home typically sells for a premium price compared to a similar sized home in the same neighborhood. When looking at average Brisbane home prices, the average age should be checked to see if prices are changing because of demand or because different types of houses are being sold.


When trying to understand the Brisbane real estate market, it is useful to take a look at the extremes of the sales price range. Average buyers and sellers in each price range may act differently. Short summary of 4 key Brisbane real estate trends for townhouses which can be printed. When trying to understand Brisbane townhouse prices the first and most often real estate statistic looked at is either average or median townhouse sale price. The average price can be pushed up by a particularly expensive townhouse being sold. Much less often an especially low price for several townhouses can push the average price down. By looking at both average and median price a quick judgment can be made about any unusually high or low prices.


When a townhouse development is offered for sale, the high number of units offered can shift both average and median prices. The average sales price of townhouses is typically affected by the average size of the townhouses sold. If a new development comes up for sale, the average size can be affected which in turn affects the average sales price. This same development may affect statistics a second time about five years later if many of the first purchasers decide to sell and move to a bigger home. Looking at price per square foot gives a partial adjustment for changes in the typical townhouse sold. Brisbane Real Estate Trends - Townhouse Sales Prices vs. Brisbane townhouse buyers and sellers want to know the typical relationship between list price and sales price.


This relationship varies with city and time. The plots below show this relationship using color coding which generally highlights changes in the market. More townhouses being sold over list price is a very good indicator of rising demand for townhouses. More townhouses being sold under list price is a very good indicator of falling townhouse demand. Comparing Brisbane townhouse prices to Brisbane house prices can give you more insight into whether there is a general change in Brisbane home prices or if something unique to townhouses is happening. Monthly Average Sales Price vs.stayz.com.au Yearly Average Sales Price vs. Quarterly Average Sales Price vs. Monthly Average Sales Price vs. Yearly Average Sales Price vs. A quick estimate of how active the Brisbane townhouse real estate market is can be found by looking at the number of townhouses sold.


Locally there is a strong seasonal change in the number of townhouses sold. The lowest number of townhouses sold typically occurs around December & January. The highest number of homes sold typically occurs around May. This seasonal variation is often altered for townhouse sales by a large new development beginning to sell their townhouses. Price changes do not track the seasonal change in the number of townhouses sold. Many people look at "Days On Market", the average number of days a townhouse is offered for sale before it sells, to spot changes in the townhouse real estate market. Increasing DOM implies buyers are not being as competitive to buy townhouses.


This statistic also tends to have a seasonal variation. DOM is typically greater late in the year. Seasonal variation in this statistic can make it difficult to use this statistic to predict either rising or falling townhouse prices.bloomberg.com New townhouse developments can change the typical DOM.tandfonline.com The behavior of buyers and sellers can be somewhat different depending on the price of the townhouse. There are times when low to mid-range townhouses are selling quickly but higher priced townhouses aren't, or the reverse may be true. Builders try to match what they build to what is selling well. It can take several years for a townhouse development to begin selling but it was surely built to target expected demand.