4826monongahela, by no means am I an expert on Oz. I lived there for two months. I will say that given the metrics I know of Sydney in particular is 18 months behind us (or was when I left in December) in terms of denial, volume of sales and prices.
When I left volume of real estate sales had declined significantly for residential and had started in commercial. I talked to several commercial and residential agents at parties.
Second, Aussies do not have fixed rate mortgages, they are almost unheard of. Everyone gets what Americans know as an ARM, though I have no idea if they have lock in periods like ours do. These are basically pre-payment penalties.
Third volume preceeds price. When you see the drop off in volume which mimics our RE market of 12-18 months ago, and you start to see prices coming down in the outer suburbs as we saw 12-18 months ago, you start to see the pattern. What makes it all the more obvious is the fact that its a different country with a supposedly different economy.
Fourth, denial is not a river in Egypt. Aussies were so quick to jump on the “its different” here bandwagon it made my head spin with deja vu. They would do anything to claim that their economy was diversified. Its not and I can prove it. Its banks are getting crushed based on alot of foreign shenanigan investments. Aussie banks bankrolled quite a bit of downtown condos here in San Diego. Furthermore the strength of the AUD is directly dependent on people buying lots of commodities. At least in the near term that bubble has popped. “But but but, we sell to China, not the US!” Well who the hell do you think that China is selling to?
Finally its all about salaries. Sydney is WAY to expensive for most people who live there and has gotten measurably so over the last few years. I know, because I’m a software dev and the people I hung out with were either in IT, finance or recruiting. Ok one is professional photographer. None of these people could by any stretch of the imagination afford the places they lived. Most rented and scraped by. One I do know owns two condo’s and he is already deeply underwater and trapped. When people start losing their jobs, they’ll return to the places they are from, Brisbane, Adelaide etc.
