Australia Housing Bubble about to Burst

Australia’s property bubble shows the lessons of the 2008 crash haven’t been learned .The Burst is coming and it is not a matter of if but of when .The end of Australia's property boom time is over and is going to be over for quite some time . According to expert we should be expecting a 40 to 45 percent collapse from the peaks . Australia has today the most inflated housing prices on the planet , and worse still Australian economy is more depending on housing than any other on earth .It means If mortgages now fail the entire Australian economy is threatened . Australian banks are tied by 1.7 trillions in mortgages , and that's about 65 percent of their total lending . That's higher on any other country in the western world by a long way . There is no other economy more exposed to the housing bubble than Australian economy . Australia today seems in the same situation as where the US was in 2006 and 2007 .Australia got a debt bomb , and a debt crisis and at some point they are going to explode . Australia’s household debt to GDP was 120.5 per cent as of September last year, according to the Bank for International Settlements, one of the highest in the world. In 2007, Ireland was sitting at around 100 per cent. At the same time, the RBA puts Australia’s household debt to disposable income at 188.6 per cent. Ireland was 200 per cent in 2007, while the US was only 116.3 per cent at the start of 2008. RBA figures also show more than two thirds of the country’s net household wealth is invested in real estate. In 2008, that figure was 83 per cent in Ireland and 48 per cent in the US. Meanwhile, 60 per cent of all lending by Australian financial institutions is in the property sector. In 2007, the International Monetary Fund gave the Irish economy and banking system a clean bill of health and suggested that a “soft landing” was the most likely outcome. Last month, the IMF said Australia’s property market was heading for a “soft landing”. Australian House prices collapsed approx 50% in the 1890's after the land boom of the 1870s - 1880s. They kept falling in real terms until 1950. House prices climbed since 1950 and accelerated from about 1980. Multiple drivers, including the baby boomers voting themselves massive tax breaks over time; in recent decades the fall in interest rates; floating of the Australian Dollar in 1983 and deregulation of financial markets with expanding availability of credit; and final blow-off from Chinese and criminal money laundering. 2008 All over Again .Only this time China ain’t coming to the rescue as it did in 2008.










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