Seems like australia has beaten us to the punch.

http://www.theaustralian.news.com.au/common/story_page/0,5744,9500942%255E25658,00.html

http://www.theadvertiser.news.com.au/common/story_page/0,5936,9582834%255E421,00.html

Great article..... thanks for the post.

It seems that the Ausssies have beaten us to it. The pattern of falls in the big cities of Sydney and Melbourne with the rest of the country resting stable mirrors the 89-90 crash in the UK which started in London and spread outwards.

Of course there are significant differences between the Australian and British economies but the Aussie base rate of 5.25% is similar to where we should be a year from now and their amount of consumer and mortgage debt is comparable to ours. It seems like as close a comparison to our situation as any other nation I can think of. Any suggestions?

Batten down the hatches.

Beer

Interesting to see the crash actually happening somewhere and the parallels to the UK look significant. A word of caution though, earlier posts/articles have suggested that yields in Australia have reached even more stupidly low levels than in the UK - their bubble may be substantially larger than ours

The yields there are lower , but that is because of the negative gearing there.

FWIW. Negative gearing

You can claim back any loss from your investment property against your personal taxation. Therefore if you lose say A$10,000 on your investment you can claim 48% A$4,800 of it back against your own earnings.

The capital gain from a property is only tax at 50% of your highest tax rate.

Therefore there is a reason that rental yields are so low in Australia.

I think the article is majorly significant, and would urge anyone on here to read it.

They are talking about double digit falls in Sydney and Melbourne in a quarter - very significant stuff.

Also, notice that we're immediately talking about rental yields and capital losses and the financial ramifications. In Australia at least, all the fluffy side explanation about reduced availability of housing and the lack of faith in alternative investments and BTL-ers buying on dips and increasing immigrant populations forcing up costs forever and new paradigms and all the rest is rapidly going out the window.

Of course, it could just be a blip. Personally, I doubt it. You've got to expect the 'property only goes up' mantra to be taking a hit, in at least the big cities, with all the loss of confidence that entails.

best
TheFlaneur

p.s. Where is Bailystock? He was reporting this sort of stuff from his Perth base, - it could be the tide finally coming in for his long term predictions? Surely he hasn't just forgotten to log in??

p.s. Where is Bailystock? He was reporting this sort of stuff from his Perth base, - it could be the tide finally coming in for his long term predictions? Surely he hasn't just forgotten to log in??

Not sure what happened to Bialy but his sources and mine were saying that the property boom had come to a sudden end in Oz. Much more abrupt than expected.

Despite their fairly cosmopolitan society compared to the british dominated one it was a few years ago, australians still have a very anglo-saxon approach to property just like us rather than the european model.

But they do seem to be ahead of the game this time. Sadly its a game that's now spinning out a very vicious and messy downside. There is our future! And interest rate rises are only element of the extra cost. There's the taxes, National Insurance, petrol(which feeds into everything else), water rates, council tax.

Slowly boiling the frog, as someone said.

What will probably happen here is the BTL's(the amateur ones) will start baling out by selling their properties to realise the capital gain. Probelm is they'll all be doing it at the same time. Now where have we seen that before?

RB(hatches firmly battened)

That has turned amazingly fast, hasn't it. Wasn't long ago that the Australian equivalents of John Wriglesworth were predicting stagnation.

Presumably Australia has the same seasonally cyclic market as us, so their first quarter is our third quarter. What is surprising about this is that in the UK this is peak activity, when the market turnover and prices are at their height.

With regard to the UK, I can't see many BTLs being fast enough to beat the market, by the time it's in the news, you are well past the peak already, and you could easily follow the market down.

Remember the ARLA statistic - over 40% of landlords bought in the last two years. They aren't going to want to sell for less than they bought for, particularly seeing as they'll have made little or less than nothing on the rent in the meantime. I suspect they will hang on for a bit until it's clear whether the market is 'pausing for breath' or crashing.

It has probably turned faster, because they work on an auction system. Normally in the street outside the house.

Our process is much slower, and can take months to get through the system. In Australia it's a matter of seconds.

This is what I was wondering, with the Australian system the 'human interest' article was talking of sales in numbers of days as an indicator. Also with the auction clearing percentage (down to under 40% I believe) a very real response to 'grassroots opinion' can be tracked.

So in our case, does anyone know how the last crash was 'officially' announced? Surely by the time the land reg. or haliwide release figures which show significant drops and it hits the media the 6 week minimum completion time would make it impossible to find a buyer?

I have heard many people say when the market plateaus I will sell, but my opinion is that in the UK that may well be too late?

>> Remember the ARLA statistic - over 40% of landlords bought in the last two years. They aren't going to want to sell for less than they bought for, particularly seeing as they'll have made little or less than nothing on the rent in the meantime. I suspect they will hang on for a bit until it's clear whether the market is 'pausing for breath' or crashing.

-----

Catching a falling knife......they will make the same mistake most newbi equity traders make, wont admit a lose until they lose enough to make them loose heart and sell up. They didnt sell equity (aka pensions) before it went pear shaped, and i doubt they will bail out of BTL until its too late, the herd always buys at the top...cos its safe u see and a one way bet.

So in our case, does anyone know how the last crash was 'officially' announced? Surely by the time the land reg. or haliwide release figures which show significant drops and it hits the media the 6 week minimum completion time would make it impossible to find a buyer?

It wasn't really announced like that. Someone in the early days of this board put up an excellent link showing property market headlines from the late eighties and early nineties.

This is a London-centric view but the "crash" occurred in 1989, at least that's when house prices stopped going up, but I recall the headlines at the time saying that prices would soon rise again and this is why many people hung on. For those who had bought in 1988/89 (me included) the price of our properties had not risen at all. However it wasn't until 1991 that we were recording significant year on year drops but even then the talk was of an upturn in the market. We certainly never woke up one morning to discover that the bottom had fallen out of the property market

Come 1992 and interest rates were on the way down again but prices still fell. Following the collapse of Tory economic policy in 1992 after the election, when we had to leave the ERM, interest rates fell even further but house prices continued to fall year on year. It wasn't until 1993/94 with record repossessionsm that total realisation came that we had been through a house price collapse. That's also when we got the Trevor McDonald type programmes about how much everything had fallen in price. If you do get a chance to look at those headlines you'll never believe a word the likes of FPD Savills say again.

But the next crash may not pan out like the last one. The current house price madness has gone on far longer than I expected, and I think most of us here. At least with the last one we had the drawstring of rising interest rates to stop things going even madder but what will start off this next crash is anyone's guess. It could be an overnight thing this time particularly with the BTL's ready to flood the market desperately trying to offload their properties before everyone else.

But it will be very, very interesting watching.

Hi Rockbank

Any serious chance of a Wall Street type property crash, ie one that happens overnight:

http://www.btinternet.com/~dreklind/thecrash.htm

Has there ever been this type of a crash with property?

“What this means is that instead of buying your stocks with the money you have, you could purchase them with cash down and the rest on credit”

A bit too much like BTL, and cheapo mortgages!

I have heard many people say when the market plateaus I will sell, but my opinion is that in the UK that may well be too late?

Well of course it's going to be too late, when the media tell everybody the market is crashing then everybody and his BTL dog is going to sell ALL AT THE SAME TIME ! The smart money is getting out NOW !!

Gentle Slow Down, My ar*e, more like Gigantic Steep Decline !

I thought the most interesting parts of the first article were these,

Louis Christopher, author of the research on prices quoted by the Reserve, said the price falls were being driven by a lack of borrowers.

"They're leaving the market in droves and it has forced sellers to reduce pricing expectations in auctions."

So no huge hikes in interest rates, no huge increases in unemplyment, no major tax rises, just the buyers stopped buying.


Also this comment,

The [Commonwealth] bank said the turn in the housing market was extending to new home construction, citing Housing Industry Association research that commitments for new houses were about 35 per cent below the peak last year. However, there will not be a crash.

Not be a crash? An annualised rate of over 30% and it is not a crash. Heaven forbid we get a crash or things will be really bad.


Akiking

I said,

...just the buyers stopped buying.

And if you read on, The quarterly statement said housing loan approvals had peaked at about $15billion a month in October and had fallen in each of the four months to February to about $12billion.

So a 20% drop in the number of buyers* has resulted in an 8.7% drop in houses?


Akiking

*Yes I know you can't really be that accurate.

Well of course it's going to be too late, when the media tell everybody the market is crashing then everybody and his BTL dog is going to sell ALL AT THE SAME TIME ! The smart money is getting out NOW !!

That is my opinion too, but it was interesting to read earlier in this thread that in the early 90's crash the media was still pushing the 'on its way back up' / 'pausing for breath' spin for years. This makes me wonder if there is so much vested interested we may not even know it is crashing in the mainstream media for quite some time this time around as well.

Though I am sure a visit to these boards would enlighten you pretty rapidly.

I think a bit of caution is called for here. Yes, I know this guy's an estate agent, but this one "admits to bidding a record sum himself last week for a terrace in South Melbourne" - http://www.domain.com.au/Editorial/Article.aspx?a=articles/2004/05/17/1084646125811.html - and predicts falls in certain inner city apartments but continuing 5% to 8% gains in quality property "within seven kilometres of the CBD".

ING Australia's economist sees a steep dive coming in the "off-the-plan apartment market" but a softer landing for the housing market: "The housing market, including rentals and land prices, were expected to be "flat, flat, flat, and boring, boring, boring" for six years" - see http://www.domain.com.au/Editorial/Article.aspx?a=articles/2004/05/17/1084646124645.html

I did STL last Spring when there were signs here of a slowdown. Look what happened in the Autumn though.

You have to be careful reading too much into one set of figures.