Treasury secretary John Fraser says Sydney ‘unequivocally’ in a housing bubble

Written by admin on June 1, 2015 – 8:20 pm

Treasury secretary John Fraser told a senate hearing today he has no doubt there is a property bubble in Sydney.

“When you look at the housing price bubble evidence, it’s unequivocally the case in Sydney. Unequivocally,” he told the hearing.

He warns bubbles have also formed in many parts of Melbourne, “Certainly I think that’s the case in the higher priced areas of Melbourne, and I base that on my own observation as well as the data,”

The warning follows a recent comment from ASIC Chairman Greg Medcraft, “History shows that people don’t know when they are in a bubble until it’s over”

Financial regulators have been working behind the scenes in recent months to implement macro prudential controls aimed at cooling the housing bubble and reducing the impact of a pursuing banking crisis. To their disappointment, little has been working. It is expected the RBA will hold off cutting the official cash rate when they meet tomorrow, waiting for any tangible evidence the first round of macro prudential controls is having an effect.

» Sydney housing ‘unequivocally’ in a bubble, says Treasury boss: PM Tony Abbott happy to see prices rising ‘modestly’ – The ABC, 1st June 2015.


Posted in Australian Housing, Banking Regulation, Monetary Policy, Sydney Housing Bubble | 24 Comments »

24 Comments to “Treasury secretary John Fraser says Sydney ‘unequivocally’ in a housing bubble”

  1. karl Says:

    too little too late …now all depends how far it all will fall

  2. THEO Says:

    Hockey’s and Abbott’s refusal to abolish negative gearing only confirms they is corrupt, publicly pretending to care, but in fact thinking nothing more than to promote their own political agenda. Their arrogance is limited only to the size of their ego as no one can seriously believe their party’s policy that getting rid of negative gearing is “increasing taxes” on all Australians. This borders on narcissism. They are economic despots and their only transparency is not their personal wealth portfolios and sources for their political party funding, but his protection of vested interets including the Banking and Real Estate sectors, repaying those who put them into power by selling off government assets at bargain prices. This is also celled nepotism. Lets not forget their party also supports and defends drug lords and likes to interfere in the internal affairs of other nations namely Indonesia. Hypocrites, as their party attempts to lower the minimum wage by attempting to introduce new laws that favour the employer only, citing, as they states, the high cost of labour that hampers Australia’s competiveness, but mention nothing about the high cost of land and houses. Pathological liars who reneged on many election promises. They may even be suffering from a ‘Napoleonic complex’ that has more to do with length rather than height. Megalomaniacs who lack empathy as they only care for nothing except buying votes, instead of promoting real social and economic equality, thus ensuring themselves into the next term of office. I would not be surprised if Hockey particularly has grand delusions on becoming Australia’s next PM. Deja vu anyone?

  3. leno Says:

    No shit Sherlock. I mean what a ning comes out with this kinda babblefish this late in the game?I mean aren’t we lucky having this guy looking after our countries finances.

    Dear God, have mercy on this ramshackled young nation of ours.

  4. Morpheus Says:

    According to the ASIC chairman there is a culture in Australian banking that is ROTTEN. Their short term gain at any cost policies are fleecing the people with inappropriate investments. He forgot to add financing the housing bubble at higher and higher valuations until it implodes. Take away the government guarantees for banks and the risky behaviour of blowing bubbles would not exist. This moral hazard is a result of collusion with government and vested interests. The solution is take away all guarantees from the big 4 and give them to small banks and building societies and reinstate a people’s bank.

    http://www.smh.com.au/business/regulators-put-banking-culture-and-incentives-in-the-firing-line-20150529-ghcmuk.html

  5. Matty Says:

    @ Leno

    We are blessed. What foresight. Lucky we also had the worlds best treasurer a couple of years ago hey.

    If not for Swan we would have had even more debt: Sarcasm.

  6. average_bloke Says:

    @ Theo

    Thing is though, Labor aren’t that much better.

    I will be really surprised if Bull Shitten and Chris Bowen put up sensible Negative Gearing reforms and actually stick to it, not just play word games.

  7. nsw2206 Says:

    “I hope so” Tony Abbott

    “Aren’t rising prices a good thing?” Joe Hockey

    “FHBG do nothing for affordability” Tania Plibersek, shortly before becoming minister for housing and tripling the FHBG.

    to paraphrase shakespear
    A sensible leader, my country for a sensible leader!

  8. Me Says:

    It really is a shame what’s going on in Australia. I think that having another passport is very handy considering where we will be headed in many facets. There are many good things here but for me a get a bitter taste in my mouth when I think of the future.

  9. Tiity Surprise Says:

    I remeber when Maxine McKew got elected a few years back and said in an interview “I dont see any evidence of a bubble in Sydney”..just goes to show how stupid our politicians are.

  10. THEO Says:

    average_bloke- OH don’t get me started with Labor. The least I can say is the word Labor is a total contradiction with the party. They are rich high society types who come from an affluent background who have absolutely nothing to do with who they claim they represent-the worker. They are irrelevant as a party with any ideals. What is worse is the workers and/or those on minimum wage know this but still vote for them. Sometimes I wonder who is worse-political parties and politicians or the voter?

  11. Skichaser Says:

    Well according to Channel Ten news here in Adelaide tonight, the REISA is lamenting that our market is lagging the eastern and needs even more rates cuts, and other support if it is forth coming. This is confirmed by the First Home Buyer interviewed, whom upon a linked in search, turn out to be the HR coordinator with a well known Adelaide real estate agency. Have not seen one of these type of stooge articles for awhile, and forgot how sick and tired I get being treated like a mushroom, especially from the REI crying poor.

    http://tenplay.com.au/news/adelaide/2015/6/2/sa-housing-market-lagging

  12. admin Says:

    Excellent find SkiChaser. I found her Linked-in profile and photo, looks very similar to that first home buyer on the news tonight.

    Times must be bad, I haven’t seen the real estate fraternity masqerade as first home buyers since 2009. Back then it was quite common: The Real Estate industry is increasingly misleading the public.

    Have you contacted Channel 10 Adelaide for comment?

  13. Bubby Says:

    @ SkiChaser

    OMG I was watching it and wondered if she was yet another RE employee with a setup story, I said to myself surely the nightly news is not as bad as the papers who do it for their friends in RE who pay them for advertising.

    She was going on about how it would be so much better if rates were lower and then she could even invest etc..!

    Terrible media!

  14. Andrew L Says:

    I think the quotes will come back to haunt people. My favourite is from Dr Spruik published here

    “There is the tooth fairy, there is the Easter bunny and there is the Sydney property bubble.”

    @11, has anyone reported this to Free TV Australia. I’m sure its a breach of the code of practice.

  15. Jj Says:

    @14

    That article is disgusting. Tooth fairy eh? No real growth eh? Underwhelming eh? Haven’t laughed that hard for a while. /sarcasm>

  16. THEO Says:

    average_bloke-Last but not least, the idea of negative gearing and the use of Self Managed Superannuation Funds for investment purposes was born by the Labor Party the self-proclaimed and supposedly champions for social and economic equality. They encouraged and allowed minority groups such as the Banking, Real Estate sector and private investors to become wealthy at the expense of the majority of us. The Liberals are equally guilty for continuing to allow this massive injustice. All these social and economic criminals are leading Australia down the same economic catastrophe that will soon befall the USA as the ‘rug will be pulled’ from under the US government’s ‘feet’ when creditors demand them to repay its $18 trillion dollar national debt. All this we can thank the voter.

  17. Nexus789 Says:

    It should be understood that politicians have a combined $300m portfolio of property investments. Easy to understand their self interest and motivation.

  18. average_bloke Says:

    The sad thing is that Tony Abbott just locked in quite a few votes with the “Labor wants the price of your house to go down” brain fart.

  19. 56andoverit Says:

    Good friends, the arithmetic does not make sense.Sydney apartment prices: 1 bed $600,000, 2 bed $900.000 and 3 bed $1,200,000.Rental $500 , $750 and $900.For cash buyers the yearly rental income is $28,000 on a 1 bed unit, $42 k 2 bed and around $50k for 3 bed .(nb; these are gross earnings).Now if you borrow the money, over thirty years,$600k loan becomes $1.2 million minimum and so on for 2 and 3 bed units.That means around 40 years repayments before you earn $1 profit for that one bed apartment.The middle class is history.Labourers wages ,on building sites, in 1980 $120 per day in 2015 $100 per day.Please note, a house with land in 1980, on the north shore , was $50 k . Please tell me, if above figures are incorrect.All common people have been shafted big time.

  20. md Says:

    56andoverit, the arithmetic didn’t make sense when prices were half what they are now.

    The housing bubble no longer requires Australians to keep it growing. There are enough buyers in China alone who are willing to pay top dollar and more. And anyone who wants to compete with rich foreigners with very deep pockets, is in a mad scramble to buy, because next week prices will have gone up even more.

    The result – just because a bubble should burst, doesn’t mean it will burst. This is especially true when we have both sides of government absolutely committed to do whatever it takes to kick the can down the road. And yes, all common people have been shafted big time.

  21. Jj Says:

    @19, you’re forgetting though… The value of those properties will increase 100 fold over the next 30 years…

  22. Me Says:

    We all love a coffee at our favourite cafe first thing in the morning, some pay 3.50 to 4.00 for a small and anywhere from 4.00 to 5.00 for a large depending where you are. If the coffee shop charged 12.00 it seems these same idiots would still buy a coffee but I would naturally say bugger that. Teabag anyone ?

  23. Rupert Says:

    @22 Tea is a joke in Sydney. $4-5 for a fancy little cast-iron pot of weak tea. Put tea in pot and add boiling water – no expensive machine to service, no barista to train. Yet… cafes in Sydney think if they can give it a fancy pot or put it on a wooden board and other ridiculous accoutrements, they can get away with charging more than a coffee. It’s a rort.

    Bit like the Sydney property market!

    Moral of this story – we have been brow-beaten into accepting being ripped off (whether it’s a cup of tea or a house) as the new normal. What suckers we have become!

  24. Me Says:

    Rupert
    You have made an even better point particularly regarding the tea. The people do deserve what’s coming….had to say it.