Australian housing market – property Bubble & Banks, 2018 Insights

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May 2018. Observations of Australia’s crazy credit fueled housing bubble from a top international investment manager with a short position in australian banks.

Comments

sjappie says:

there's no short ETF?

The mind is a terrible thing to taste says:

Bring on relatively realistic house prices

Mr Nice Guys Buggy Channel says:

"That will take a while for the pig to go through the python"!!

A new piece of management talk .

"At the end of the day it will take a while for the pig to go through the python, but it is what it is."

philip` v jones says:

found this serendipitously (i believe the word is). Very interesting.

Rusty O says:

Australia's bubble is also partly funded by Australian taxpayers as high income earners can reduce income tax considerably with interest expense and depreciation losses. They may pay some back in capital gains tax but I suspect a lot less than they saved on income tax. It's hard to see that change because 75% of politicians are also invested in speculative housing. They should limit the tax breaks to new housing but that might slow house prices down and politicians are terrified of what might happen if, god forbid, house prices steadied or dropped slightly. It also means a lot of wealth is not getting invested in business shares or superannuation. This is going to have ramifications down the track because not investing in business will cost a lot of jobs over the longer term.

Paul James says:

Warren Buffett Jr.?

Spiritv says:

19,000 views, the other 20,000,000 are off watching stupid men kick a pig skinned ball around on an oval. Australia is such a useless country, no intelligence, no ambition, no innovation – just pure property speculation and immigration. YUCK.

peter pan says:

When u lose money between renting out vs how much u give back to the bank then that is called negative gearing ,saving and putting tax money in your pocket to help u pay off ,a very attractive offer that all investors do .long term houses in sydney and Melbourne 20 kms radius is and has always been attractive to rent out and live,I have property in Sydney and have had property from 2002 and has always been rented out and hardy any maintanencr issues ,still one of the best investments around ,it ain’t USA that property’s are built out of chipboard dumb dumb

peter pan says:

Australia lends money by how much u earn and lend 80% of the value of property ,if u borrow more then u need insurance ,it ain’t dodgy America ,don’t know much about Canada

Luke Warm says:

Its called negative gearing omg u know nothing about the australian housing market

Yacobus Fitri says:

Why are home owners mostly Asians in Sydney? Why are they so rich?

James Condylis says:

Question. Does the reserve bank printing money show up in inflation numbers ? Answer. Did QE in the US and Europe cause inflation ? No . The central banks are the gate keepers ,they make the rules and keep the score .

Max Hunt says:

what about the negative gearing of the lost money on the carry

bubba luv says:

he makes a lot of sense but man he must've drank a lot of booze to get that nose

Christian Libertarian says:

"They're losing money on the carry…" I don't think he accounts for negative gearing.

Chris B says:

Australia is cooling down. But the energy market may be the break as well for the Australian housing market.

Shawn Su says:

Don't forget about New Zealand. it's just as bad as Australia if not worse.

paul eglinton says:

Some other points, as to why people are favoring real estate. 1)Inflation proof your savings. That is, inflation is eroding the purchase power of cash sitting in the bank, because of the low interest rates, and fees. So they purchase property. May have no or little mortgage, so manageable risk.2) Protected against a bail in. If you have no cash, what can they take! the mortgage? Food for thought

SUSAN BARTLETT says:

The housing market today is highly dependent on money from abroad, the next clients are well off local businesses and private well off individuals that have nowhere else to put their money for it to have a plausible valuation. It is nowhere similar to the last housing bubble.
The last bubble happened because of the shoutdown of manufacturing jobs due to the opening of trade with China, causing millions of home buyers across the world to loose their jobs and consequently the banks landed with a lot of debt on their laps. Australia and New Zealand are dependant on Chinese buyers, the trouble is in 2 years time China business will go to the dogs. So by shorting banks in Australia he just might some money, but I have my doubts.

Jason Sampieri says:

There are definitely signs of an Australian recession looming. This could very well cause the bubble to burst. Just take a look at how quiet many shops are. Some shops are barely lasting for a lease period as it is. This time the recession is going to be because the cost of living such as rent, mortguage, energy and food dominate disposable income and pretty much beat beat it to a pulp. Could we end up with another 1930's on our hands? I doubt any Australian will completely escape the severity of its effects this time. All workers who loose their job are always another Job/Companies customer that has been taken out of the market. So next time you buy a movie ticket at a machine just remember that staff member who use to sell it is no longer your customer if they are still looking for work, a customer who might have bought and renovated a house if there was more affordability & security. Sadly that's just one very small example of things happening and alot more to come.

Jeremy North says:

Remember what almost happened to Mike Burry's fund? Careful betting against the Australian housing market. The Australian economy is awash with filthy* Chinese money. (* An understanding of Mao, and China since his death provides explanation and context). Australian authorities have been selling out at every turn for decades, and they'll continue to do exactly that. Good for the economy, with terrible social / infrastructure repercussions.

robertdmci says:

Good luck with shorting, rental in Toronto return is about 5% and mortgage is at 3% with less than 1% vacancy and about 200-300K people move into the GTA (5% population increase annually). If you buy a house you need to put 20% down at least and mortgage is about 4-5 times of your income. No income verification is about 50% down payment. Over 95% of loans are prime loans and default rate is less than 0.5%. Growth is slowed down but my neighbor sold her house in 3 days 10% over asking. (Sept 2018) Canadian is over taxed, only rich people and high income earner can afford a house. Get your facts right, big banks just made record earning, all my tenants are making more than 200K annually. Please cover your short position, Canadian Banking is a highly regulated place. No one with the right mind will sell their house at discount if they can rent our at 5% annually with appreciation which is taxed at lower rate.

Top Bird says:

who are these guys? anyone know?

aqualinknun says:

Who is this guy?

Al M says:

Sneans…..classy

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