"The Party's Over" Down Under
In this Fairfax piece titled "The Party's Over", the post-boom psychology is evident. Does the US media even know that property markets overseas are caving in? "The economic slowdown was first felt last year by real estate agents, with the lowest auction clearance rates since the last recession. They watched as house prices in Sydney fell every quarter from March last year after doubling in the six previous years."
"The deflating house price bubble triggered the end of a construction boom. Bureau of Statistics figures last week showed apartment building approvals plummeted by more than a quarter in March. Overall home building approvals are now lower than at any time since the GST-induced slump four years ago."
"The construction slowdown has hit the big building companies hard. Harry Triguboff's Meriton Apartments had previously given itself a $400 million line of credit to cover unsold apartments. No one close to the industry will be surprised if a large builder collapses soon."
"Consumers stopped shopping when their house prices stopped rising, and small businesses have borne the brunt of the spending squeeze."
8 Comments:
When I was in the U.K. recently, declining home prices were discussed matter of factly on TV. It was all kind of ho-hum - they'd say, on a positive note, lower house prices mean that more people can afford to buy homes.
"When I was in the U.K. recently, declining home prices were discussed matter of factly on TV. It was all kind of ho-hum - they'd say, on a positive note, lower house prices mean that more people can afford to buy homes."
Does this then mean that the folks in the UK AREN'T doing the house-as-an-atm thing?
I've read that the housing bubble in Europe was not combined with an associated amount of conumer spending/debt and that equity in their housing wasn't reducing like it is in the US.
So what you are saying makes sense and fits with the data. I seriously doubt that the US "correction" will be viewed as lightly considering people have been spending like drunken sailors until recently, and savings and equity have tanked.
I think what you said is correct - there are housing booms in all English speaking coutnries, but home equity extraction is largely a U.S. phenomenon.
http://www.atimes.com/atimes/Japan/GE07Dh01.html
Danger ahead for booming Japanese real estate
I thought japanese real estate was in recession for past 10/15 years
Gasman,
Thanks for answering the UK home equity extraction question. Keep us up on the Bay area.
I find it interesting when I read housing bullsnorters laugh at reports of downturns in Australia and the UK, "What the h*%ll does that have to do with the good ol' USA?"
Well, in a word, everything. World markets used to behave rather discretely. But now that the world financial system is interconnected, liquidity ebbs and flows globally as never before.
Just look at stock markets. Take a look at the S&P 500 chart since 1996. Then take a look at the UK's FTSE or France's CAC or Germany's DAX and so on. While the gains and losses vary in terms of percentages, the basic patterns are exactly the same.
This is a global economy. Within each economy, there may be micro-economies that run countertrend---i.e., Calif may be booming while Texas is lagging or vice versa. But the big picture remains the same.
Everything right now is linked to the U.S. Until very recently, during the 90's and early '00s, the U.S. represented 80-90% of the world's GDP growth. And we consume an outsized portion of the world's fuel and savings. So when we are awash in liquidity, everyone is awash with liquidity.
Some day this will change. It will change when Asian, for example, generates enough demand within its own sphere to not have to rely on the U.S. as its most important customer. Given that there is strong discussion of creating an Asian "common market" of sorts by 2010, I can easily see a day when the U.S. is struggling while other parts of the world (i.e., Asia) are doing well. But not yet.
Most Americans are very ignorant of world events and world economics. They base their views on the recent past (last 20-50 years). My guess is that we will all be learning a whole lot more about the world in the coming years.
***
---Danger ahead for booming Japanese real estate
I thought japanese real estate was in recession for past 10/15 years---
Well, it's been "booming" (if you can call it that) for about 6 months. A boom in Japan means that either 1) prices have stopped going down; or 2) they have gone up 1%. Over there, after 15-20 years of decline, that is indeed cause for celebration.
"I've read that the housing bubble in Europe was not combined with an associated amount of conumer spending/debt and that equity in their housing wasn't reducing like it is in the US."
It depends on what you mean by Europe. In continental Europe that is true. However, for the UK and Australia it's not true, they extracted just like us.
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