- 5 January 2008
lolThat graph above that has been posted so many times on this thread I believe simply demonstrates the current major supply problem we have in Oz for new housing - especially affordable housing.
Wow, don't know where to start here.
The property boom has been caused by 2 major factors.
1. Psychology - the willingness to speculate.
Some property buyers over previous years have been quite open about the fact that they paid too much for the property, but it doesn't matter because they believe that it will probably go up by even more next year. This attitude I believe has changed. As you can see from the chart the number of people applying for home loans has fallen off a cliff. The only supply problem the property market has is a shortage of speculators.
Here's a chart of latest housing finance figures. Looks to me to be falling off a cliff.
2. Finance - the ability to speculate.
Speculators can want to buy houses all they want but if they can't get the finance for it how can they pay more for the property than the vendor did and push the price up? Finance though still freely available in Australia but lending standards may tighten as the credit crunch takes hold.
These so called blue chip areas that rocketed up in price may fall just as fast and are the most risky.As that happens over time, the average house prices will adjust back closer to the norm, but that doesn't mean your house in Sydney 10km's from the CBD is going to see any real drop in value.
House prices are falling here in Australia. Here's a chart of investor emotions. Does the denial stage ring any bells with you Beej?