Australian Real Estate August 15

Posted: August 3, 2015 in Uncategorized

I found two interesting researches on Australian real estate.

A research done from Goldman Sachs on impact on energy prices and economies in Canada, Australia and Norway (oil exporters) shows that when oil plummeted in 1985 the real estate market underperformed the market in the following years with a lag of 1 to 2 years.

Yes it could be different as there was no Chinese investors at that time. I find it funny (false) that a lot of media are citing the Chinese market crash as the start a new wave of Chinese investors in Australia seeking refuge for their money – when the Government and various agency say that the residential Chinese national demand is residual and of low effect in the Australian market. But as negative Australian houses were not 20% overvalued in the 1980s by international standards.

Also the new APRA rules (increase of lending rates for investors) spurred a survey from Mortgage Choice.

1000 first time real investors got interviewed and 54% said they would proceed with the investment (or if you want to be negative 46% changed their mind). In NSW this data is 50%.

What is the take home result?

Not a crash, but real estate probably will under perform other sectors in the following years.

And if real estate underperforms, also Australian Banks will underperform and have to go through capital raisings (specially ANZ)

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