Archive for February, 2010
Despite the Global Financial Crisis, an event triggered by debt, the Reserve Bank of Australia figures show Australian Households have punched through the big $1 trillion dollar mark in home mortgages.
This is almost 15 times more than 20 years ago. Loans to Investors to purchase houses have gone up 30 times in the same period.
» In the red, mortgage burden soars to $1 trillion – The Sydney Morning Herald, 27th February 2010.
Posted in Australian Economy | Comments Off on Housing mountain of debt reaches one trillion
For years Real Estate agents have been saying you can’t lose with property. Despite this reassurance, Residex research shows 24% of Sydneysiders who have brought and sold property in the past five years have lost. The average shortfall has been more than $54,000 or in many cases, the value of two years rent.
Residex CEO John Edwards says as many as a third of homeowners who bought their properties in the past five years would realise a loss if they sold today, yet few were aware of their mistake.
The problem comes from over valuation of property. In a slow market, the problem is likely to get worse, and as Australia’s property bubble nears the top the risks of paying too much will greatly increase. Buyers may also overbid with farce competition with cashed up Chinese buyers now that FIRB legislation has been relaxed.
In Melbourne over the same period, 15% of properties were sold at a loss. In Brisbane this decreased to 5.6% and Adelaide recorded 5%.
» Our real estate losers – a quarter of Sydney homeowners have lost money The Sunday Telegraph, 28th February 2010.
» Buy, sell and lose – the property trap – Adelaide Now, 28th February 2010.
Posted in Australian Housing, Foreign Investment Review Board | 3 Comments »
According to a report from FirstAmerican CoreLogic, more than 11.3 million mortgage holders have negative equity – they owe more on their mortgage than what their home is worth. This represents almost 25% of all Americans with a mortgage.
Worst still, more than 10% of people with a mortgage owes 25% more than what their home is worth. Another 2.3 million only have 5% equity which could be soon wiped out if house prices continue to fall.
This can only be another blow to banks who are licking their wounds from the collapse of the U.S. Commercial Property Market.
» 11.3 million homeowners underwater on mortgage – Marketwatch, 23rd February 2010
Posted in United States Economy | 1 Comment »
The FDIC on Wednesday has indicated there are 702 banks on the FDIC trouble list which is in danger of defaulting. This is the highest level in 16 years.
Last year 140 banks failed in the US, with another 20 this year. The FDIC Chairwoman, Shella Bair says this pace is likely to quicken.
Commercial real estate loans have been the latest problem to hit US banks. On the 31st December 2009, almost $1.1 trillion in commercial loans and $211 billion in loans for apartments were held by U.S. banks. Collectively banks face $300 billion in losses on loans made for commercial property and development.
» Almost 10% of FDIC-insured banks “troubled” – Market Watch, 23rd February 2010.
Posted in United States Economy | Comments Off on 702 U.S. banks on FDIC trouble list at risk of default
With the onset of an election, the government has seized at data from the Australian Bureau of Statistics showing Australia’s unemployment rate is trending down from 5.5 percent in December to 5.3 percent in January. But while more Australian’s are in work, is the result really as rosy as the government makes out?
Looking closely at the data, the number of hours worked continues to fall after a little blip late last year. So while the number of people in work has increased, they are working less hours which can’t exactly help the mortgage repayments or contribute to more discretionary spending.
The Sydney Morning Herald also points out that two thirds of the 52,700 newly created jobs or three quarters of the jobs created since October have been male.
”When men outnumber women so much it has to be an industry story,” said a Deutsche Bank economist, Phil O’Donohue. ”The building industry is the obvious candidate. Since mid-last year almost 8000 primary schools have been building halls and computer labs and libraries with $14 billion allocated under the Primary Schools for the 21st Century program,” he said.
”I think in January with school about to come back the tradies put on more blokes. It has to be the stimulus. Away from mining, private non-residential construction is flat.”
Until recent, I have been working in the security industry and can confirm Phil’s suspicions. We have had builders ring up after as many employees we have to get jobs done for the BER (Building the Education Revolution) program before the school year started.
The question is, is this work sustainable? What happens when the BER program comes to an end?
» Male employment raised by building stimulus – The Sydney Morning Herald, 13th February 2010.
Posted in Australian Economy, Australian Housing | 4 Comments »
Demand for mortgages has dropped for the third consecutive month in December, with approvals falling a seasonally adjusted 5.5 per cent according to official ABS data. This follows falls in November of 6.1 per cent and October of 2.85 per cent and brings the quarter fall to 13.74 per cent.
There has been two significant falls in mortgage numbers since 2000. The falls in 2003 (when Sydney homeowner’s hit peak debt) and in 2008 (after the start of the GFC, but before the First Home Buyer’s Boost) both resulted in falls in house prices in subsequent months as demand for houses evaporate.
» Home Loan Approvals Retreat – Herald Sun, February 10th 2010.
Posted in Australian Economy, Australian Housing | 6 Comments »
Large falls in mortgage applications is surfacing among mortgage brokers suggesting not all is well in the housing market.
The Loan Market Group has indicated home loan approvals have fallen 40 per cent from its peak in 2009. LMG has recorded its slowest month since January 2006.
But falls of this magnitude isn’t isolated to the Loan Market Group. Last week, AFG, Australia’s largest mortgage broker with 10 percent of the market announced it had sold $1.5 billion worth of loans in January, down from $2.9 billion in September 2009. The 47% fall comes after four consecutive monthly falls. AFG said it was the worst January since 2005.
» Demand for home loans ‘dives in January’ – Yahoo 7, Friday 5th February 2010.
» Mortgage market under pressure as rising rates spook buyers – Sydney Morning Herald, 1st February 2010.
» 47% Slump in Mortgage Sales : AFG warns RBA on another rate rise – AFG, 31st January 2010.
Posted in Australian Economy, Australian Housing | 2 Comments »
Data from the Australian Bureau of Statistics (ABS) show the prices for houses in Australia has surged in the December quarter. The weighted average for the eight capital cities increased 5.2% for the quarter, bringing the annual gain to 13.6%, once again outstripping wage growth and inflation.
» 6416.0 – House Price Indexes: Eight Capital Cities, Dec 2009 – The Australian Bureau of Statistics, 2nd February 2010.
Posted in ABS House Price Indices, Australian Housing | 2 Comments »