Slower growth in China to put further downward pressure on Australian house prices

Written by admin on March 9, 2012 – 10:37 am

In a report released yesterday by Standards & Poor’s, it predicted Australian House Prices could fall by more than 5 percent in 2012 should China experience a soft landing with a GDP growth rate of 8 percent.

Earlier this week China’s Premier Wen Jiabao announced his government would target a GDP growth rate of 7.5 percent in 2012. In China’s 12th five year plan, it has lowered growth to 7 percent during the 2011-2015 period to what S&P term a medium landing.

Other scenario’s tabled in the S&P report was a house price fall of greater than 10 percent if China’s GDP growth was 7 percent and a collapse exceeding 20 percent if China experiences a hard landing with GDP growth falling to 5 percent.

With the Australian banking sector having a large exposure to residential house prices, the report titled “China Soft Landing Would Moderately Impact Australia’s Housing Market” was one of three reports released on Wednesday. S&P is also focusing closely on the RMBS and LMI providers with reports titled “Australian LMI Providers Likely To Stand Firm Amid China Jitters” & “A Soft Landing In China Is Unlikely To Affect Australian RMBS”

» Lower GDP target is healthier – China Daily, 9th March 2012.
» China drop to hit house prices hard – The Age, 9th March 2012.
» S&P Articles Analyze Impact Of China Slowdown On Aust Sectors – Reuters, 7th March 2012.


Posted in Australian economy, Australian Housing, China | 23 Comments »

23 Comments to “Slower growth in China to put further downward pressure on Australian house prices”

  1. 2Big2Fail Says:

    Regarding ‘China drop to hit house prices hard

  2. Steve Says:

    So they are predicting 5- 10% drop from external shock alone. I take it this is ignoring the herd of Elephants in the room in OZ that economists and the MSM seem to continue to Deny!

  3. Steve Says:

    And that is from China alone!

  4. LBS Says:

    Look at this trade deficit. There wont be a soft landing…
    Countries are in a currency war with China (US, Europe) and guess what they are starting to win and get their manufacturing back. Yet Australia keeps it Dollar high and brags about in the meantime their main industries are dieing….. Stupid is stupid does as Forest Gump said.

    http://www.businessspectator.com.au/bs.nsf/Article/China-records-trade-deficit-of-A29bn-S9FER?OpenDocument&src=hp10

  5. sceptic Says:

    Do not believe anything you read on this site.
    The world is not ending and people always need a place to live.

  6. 2Big2Fail Says:

    sceptic – I’ve never come across someone on this site suggesting the world is going to end and people don’t need a place to live. I had not come across trolls on this site though, until now.

  7. sceptic Says:

    Theres no troll, just a different opinion.

    I dont ser house prices or the gloom spread on this site occuring.

  8. Yoda Says:

    Sounds like sceptic has some mortgage debt that is blurring the vision a bit.
    Yoda remedy – go punch a politician or your banker. You’ll feel much better and the economy will be more ‘solid’ as per Wayne’s analysis.
    Have you seen the Bubblepedia website? House prices are going up bigtime! Just stand on your head first.

  9. Douglas Says:

    sceptic where do you work? The REIV or are you a real estate agent? Those blokes are simply crooks.

  10. 2Big2Fail Says:

    Sceptic – I promise I’ll never shed a tear if the price of anything to do with food, clothing and shelter drops. Expensive banana’s, socks and houses equate to gloom.

  11. sceptic Says:

    No mortgage issues here. I purchased my first home 13 years ago 125k and sold it 6 months ago for 590. I just think that these things cannot be predicted or timed. And I cannot see any major drop in prices.

  12. fhb dreamdog Says:

    Ah good old sceptic. Sold his house but has 450k sitting in the bank earning no interest and getting taxed at 45c. The govt does no favours for you now mate. Best put it back into property if you think its such a dead certainty. Good luck.

  13. Tom Says:

    Have you brought another home Sceptic, or just renting? You do know “rents will go through the roof this year”, so you need to buy soon.

  14. sceptic Says:

    Tom. No I haven’t found anything I like yet. Everything that I have looked at has been worse than what I sold. I am going to broaden the suburbs that I look.

    I am not someone who thinks its a great thing that property prices are this high in Australia. Its not fair on young people and I remember how hard it was when I bought my first house.

    I have moved in with my parents until I find another place. I wish I never sold.

  15. BotRot Says:

    Hey Skeptic, if you’ve stashed it in a term deposit I know the tax you’re paying. I know it sux big time. Is it possible to put it in your parents name, and operate “off the books” or “outside the square” such that, despite earning income you can claim a CentreLink bebefit? That way you can at least get some money back from the taker.

    Speak to an accountant about your options to minimise tax (*** not a financial planner ***). See what commercial instruments are out there, foreign ones too.

    Don’t be so hard up on not being able to buy back into property, most people I know that bought back in, are now way over their crown chakras in debt, wished they never sold and bought back in, and act like their appart of the neo-aristocracy.

    No one here speaks of the world ending but, I will tell you the world has caved in for many people, the economy has crashed for many people. For some people things couldn’t be better.

    I hate it when the Government comes after the debtless or the prudent.

  16. Douglas Says:

    Sceptic, why don’t you go somewhere else. You are just wasting our time.

  17. Sceptic Says:

    Douglas, I don’t think I am wasting your time. Maybe if you read something you wanted to then its ok. Fact is that I have not seen prices come down as much as I would like to see it, it’s just not happening. Theres a lot of rubbish on the market, but that’s about it.

  18. arthur ponzirelli Says:

    It’s not only the tax system that disadvantages savers and those with liquidity, as opposed to mortgage holders with equity. Say Sceptic was married with two kids, had the $450K in a term deposit and lost his job. Centrelink would deny any payment until that $450K was down to below $10K. On the other hand, if he bought a house for $450K, took out a $100K mortgage and kept the remaining $100K in REDRAW, if he lost his job he’d immediately be eligible for over $650 per week in Newstart, Family Tax A and B. Then there’s the multitude of other discounts and benefits. The 100K has to be in Redraw, not an offset account. Centrelink quirk.

    Is it any wonder we’re a lazy, unproductive and expensive economy?

  19. BotRot Says:

    My god arthur ponzirelli…! You’re good! You should consult.

    Welfare certainly favours the better off. I guess thats’ how life works.

  20. Rupert Says:

    From Reuters –

    “Lloyds Banking Group has started the sale of A$2.1 billion (1.4 billion pounds) of non-performing loans on distressed property in Australia as the group seeks to wind down non-core assets. The move is the second round of sales after the bank offloaded A$1.7 billion in distressed property loans to Morgan Stanley and Goldman Sachs in November last year. A spokeswoman for Lloyds said only that the bank was looking at options for its non-core assets. “We are looking at a number of actions which will help us deleverage our non-core assets,” she said. Lloyds, in November, said that the group still had A$4 billion classified as non-core loans spread across property and distressed corporates and it would look to exit those loans as well. European lenders have been retreating from the Australian loan market to free up funds as they deal with the impact of the euro zone debt crisis.”

    Mmmm – doesn’t look good for the continuing propping up of the market does it? Prices will come down. Accept it. Sceptic by name, sceptic by nature – and having read your posts, you are entrenched in the ‘Denial Phase’. It’s hard being in that phase, but it’s liberating when you just hold your hands up and accept the inevitable – the party’s over.

  21. Sceptic Says:

    Dupery, I hope that the party is over.

  22. Surferchick Says:

    Hey arthur ponzirelli (like your info), Sceptic and the rest of you……have loved reading this thread. You have all given me food for thought….I am in the process of trying to purchase a home on the northern beaches of Sydney (which I am renting) from a landlord overseas (who tried last year to sell for 6months with no takers at his unrealistic price. He has now dropped it slightly and leased it out to me till the end of the year. My finances have now come through and I’m on the hunt for a home. How do I convince him (and his agent) to just sell the place to me. Need a reno job done on it but great location.

  23. Sceptic Says:

    Surferchick, my suggestion to you is to go direct to the owner. If the property is not for sale then he has no contract with any agents, meaning he does not need to pay commission 20k depending on the sale price. Keep drilling this into his/her head, and you might get a better price. Be carefull, renovations are expensive. I just spent 70k renovating and had a budget of 40 k. You do not get much for your money. One thing always leads to another and it does not matter how hard you try to cover all bases it never adds up. Good luck