6 months ago

Melbourne crash accelerates while negative equity looms

Assets are not assets when they’re just debt. – Michael Burry (the big short)

The situation in Queensland seems to be worsening by the day, here we have an observation of Mr Satterley - Financial Review. With bank delinquencies on the rise, expect it to be a matter of time before you start seeing some flash sales in the property market. That being said it could be worth waiting for the end of the year before making a decision to buy your first property! Check the video to see if your suburb is in negative equities.


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Melbourne housing lot prices will “quickly” tumble up to 10 per cent as Uber-driving speculators and foreign investors default on thousands of sales contracts, Financial Review Rich Lister Nigel Satterley has warned.

…”We believe that over the next 30 months 5000 growth-area lots (about 165 lots a month) will return to the market, either by defaults or speculators having to resell their blocks immediately,” Mr Satterley told The Australian Financial Review.

“This will be caused through a number of foreign house and land package sales where the purchasers were unable to obtain Australian bank finance or speculators’ inability to settle.

As I said then:

If it’s only 10% then I’ll hand up my shingle. As the entire market shunts lower, reducing demand for outlying property, we’ll see a more enduring bust than Mr Satterley describes. And that’s before we incorporate any immigration cuts.

Now today, also at the AFR, Mr Satterley returns:

…he said the situation was “much worse then I previously thought”.

“Our research (prepared for the major banks) shows that between 20 and 25 per cent of purchasers are cancelling and losing their deposit. This is up from 5 per cent in December 2017,” Mr Satterley said.

…Mr Satterley said the main reason for the high defaults were speculators not being able to sell-on their contracts via nomination due to falling prices and rising numbers of listings or an inability to get finance. “There’s no finance available for overseas buyers and very hard for local investors,” he said.

As Martin North noted this week, Melbourne sprawling western land market is negative equity ground zero:


appendix from By Houses and Holes in Australian Property


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