Kicked From Full Steam Ahead Into Reverse
A report from The Australian. “One of Australia’s largest developers, Mirvac, revealed the number of apartments failing to settle had increased in recent months, raising fresh fears about the sustainability of the nation’s apartment market. More than 20 per cent of Mirvac’s pre-sales are to mainland Chinese. BIS Shrapnel residential property manager Angie Zigomanis said settlement risk was rising across the new apartment market as banks tightened lending standards, especially for foreign buyers.”
“‘The buyers who are settling now probably bought their apartments two years ago and in that time in Melbourne and Brisbane the prices have been flat or in some areas may have gone backwards,’ he said. ‘At that time, the buyers may have planned to borrow 90 per cent of the purchase price but prices could have gone down and wiped out that deposit and they’ve got to find effectively another 20 per cent.’”
From The Advisor. “Mortgage brokers are in no way shocked by tighter credit controls on certain suburbs announced by one major bank this week, which they expect will continue into 2017 and beyond. Media reports over the weekend revealed that NAB had compiled a ‘blacklist’ of more than 100 postcodes across the country where buyers will need to pay as much as a 30 per cent deposit to secure a mortgage.”
“Perth-based broker Bianca Patterson of Calculated Lending, who was crowned Broker of the Year at the 2014 Better Business Awards, told The Adviser that she is not concerned about NAB’s announcement, but feels disappointed for those who own properties in areas where the bank has capped LVRs at 70 per cent. ‘It will have a direct effect on those investors. My advice to investors buying in areas that are quite speculative is that this is one of the risks. With properties that offer greater returns there are greater risks,’ she said. ‘[NAB’s announcement] was to be expected.’”
News Corp Australia. “It’s a great time to be a tenant with vacancy rates hitting a record high in Brisbane’s middle ring. It’s the first sign that suburbia is losing the battle to keep tenants as owners of rampaging levels of new inner-city apartments up the ante. REIQ chief executive Antonia Mercorella said the middle ring was being hit by a triple whammy.”
“‘Inner-city property managers and landlords are particularly sensitive to the oversupply question at the moment and rents have become extremely competitive, luring tenants from the middle ring into the inner ring,’ she said. ‘Also, a significant level of development has come online in the middle ring and some agents have reported that without being able sell, many of those properties have been put into the rental pool.’”
The Northwest Star. “In news that will surprise few home owners in the North West, a new report says the Mount Isa property and rental market has weakened by over a third in the last three years with the likelihood it may not have bottomed out. The Herron Todd White ‘Townsville in Focus August 2016′ mainly looks at Townsville but also has a section on Mount Isa’s market and the prognosis is not good.”
“‘The Mount Isa property market has been progressively weakening over the last three years, with average sale volumes remaining low and prices tending to soften,’ the report said. ‘The median house price trend has lowered from a trend level of $383,200 in the June quarter of 2013 to $248,600 during the June quarter of 2016, an apparent reduction over the three years of 35%.’”
“‘During the June 2016 quarter the median house rent came down to $355 per week while the median unit rent reduced to $215 per week,’ it said. ‘House rents have reduced by 37%, and unit rents by 43%, over the last three years.’”
From ABC News. “Western Australia’s slide to the bottom of the economic ladder in Australia has seen the state’s property market kicked from full steam ahead into reverse. But while property professionals see the post-mining boom market to be a readjustment to more ‘normal’ price levels, a looming apartment glut has many analysts concerned about further pain in that sector of the market.”
“‘We’ve had a lot of development of apartments in the inner city ring and that’s where the developments sites have really gone from being feast to famine, they were red hot a couple of years ago, not so much in mind today,’ said Gavin Hegney, an independent property valuer. ‘People are bailing out of their investment properties, saying I’ll just quit the investment property, I don’t like this investment property anymore. So that usually spells when you’re at the bottom of the market, from here we should see some hope,’ said Mr Hegney.”
“Mr Hegney believes the price falls in Perth are a sign of things to come for the east coast capitals. ‘Off the plan sales creates demand for two properties, when the real demand is only for one. When people move into their new apartment they have to move out of their rental accommodation or sell their existing home,’ he said. ‘That’s when you get the problem and that’s what’s coming for Sydney, Brisbane and Melbourne.’”
“In those east coast capitals, a recent survey revealed there are more cranes building apartments than in major United States cities.”
“With building activity in trouble in Perth, investors are trying to offload their units. Retiree Ron Campbell is selling his investment property after 10 years. His concern is that in a falling rental market, upcoming changes to the pension asset test will mean he would be left with nothing to live on. ‘What happens there is of course the rental value drops that there’s less income coming into your wages and plus you’ve got higher water rates, shire rates, all those sort of things come into play and your income is not enough to support, especially going back to January 1, where I might not have any income at all,’ he told ABC News.”
Mr Hegney believes the price falls in Perth are a sign of things to come for the east coast capitals. ‘Off the plan sales creates demand for two properties, when the real demand is only for one. When people move into their new apartment they have to move out of their rental accommodation or sell their existing home,’ he said. ‘That’s when you get the problem and that’s what’s coming for Sydney, Brisbane and Melbourne.’
You know Gavin, I’ve been saying the same thing to some posters here. Unless a bunch of people are living in cardboard boxes, it’s more supply. And if we had a glut a few years ago, and we’re still building, how can we not still have a glut?
What the heck is a “property professional?”
Something that any one of us can be, after taking a few dozen hours’ worth of classes.
I was picking up my mail tonight at the private mailbox business, and the conversation between the employee and another customer was whether the customer was going to become a massage therapist or a real estate agent (”because I hear they can make a lot of money”). I just kept my mouth shut and walked out, because sometimes there is just no point.
I don’t always manage to keep my mouth shut - a few days ago I was talking to my elderly neighbor who had just had a family gathering, including a grandson who works for Twitter. She was shocked when I told her that Twitter doesn’t make any money, and wished that he had been there to hear that. I told her that everybody that works for somebody else better be looking out for themselves - you can’t count on your company, your boss, or your coworkers to look out for you.
If you are working for a non-profitable tech startup, you had better be closely watching the monthly cash burn rate and months of cash left. A good friend of mine taught me that after he went through Dot Com 1.0. He started putting his resume out on the street when his employer had about 6 months of cash left to burn.
Why not just get more low-rate loans when cash gets short?
Secured by what assets?
Secured by what assets?
Thin air?
Secured by what assets?
Hope!
What the heck is a “property professional?”
I’m guessing that’s Aussie for “Realtor”.
In the UK they are called “Estate Agents”
‘Retiree Ron Campbell is selling his investment property after 10 years. His concern is that in a falling rental market, upcoming changes to the pension asset test will mean he would be left with nothing to live on. ‘What happens there is of course the rental value drops that there’s less income coming into your wages and plus you’ve got higher water rates, shire rates, all those sort of things come into play and your income is not enough to support, especially going back to January 1, where I might not have any income at all’
Do they have WalMart in Australia Ron? How do you say, “Welcome to WalMart” in Australian?
If shire rates become too high…
He can always move to Mordor.
“…upcoming changes to the pension asset test…”
WTF?
Guhd-dye maayte, c’mon in water’s fieyn at Whale-maht, crikey!
the pension asset test
“Currently, for every $1,000 of assets you own over the assets test free area, your pension is reduced by $1.50 per fortnight. This is called the taper rate.”
From 1 January 2017, your pension will reduce by $3 per fortnight for every $1,000 of assets you own over the asset free area.”
From humanservices gov au
Poor fellow. He might have assets over half a mil and have “no income at all”! I’m thinking that if he sells the building for what it’s “worth” he’ll have to do some fancy hiding of the cash to keep his old age pension.
Skye, you’re pretty much dead on.
Also from the au gov:
=================
The assets test free area is increasing. Your assets don’t affect your payment if they are below the assets test free area. The new assets test free areas will be:
$250,000 for a single homeowner
$375,000 for a homeowner couple
$450,000 for a single non-homeowner
$575,000 for a non-homeowner couple
The family home is still exempt from the assets test.
=================
Pension calculator:
I am single.
I own my own home: Yes
My assets are $250,000…$500,000…$543,000
Based on what you have told us, your asset tested pension rate on 1 January 2017 will be $877.10…$127.10…$0 per fortnight.
=================
The problem with the rental property is that it is an asset with upkeep costs. So if Campbell keeps the property, he loses pension, has to upkeep the property, and deal with lower rents. Selling is definitely better. He still loses pension because of his cash assets, but at least he no longer pays upkeep.
He could sell his rental property and use the proceeds to buy a fancy “family home” for himself and store the cash that way. Or, he could sell the rental property and simply spend the cash down to $250K and collect max pension. Several options.
‘Zigomanis said settlement risk was rising across the new apartment market as banks tightened lending standards, especially for foreign buyers.’
‘The buyers who are settling now probably bought their apartments two years ago and in that time in Melbourne and Brisbane the prices have been flat or in some areas may have gone backwards,’ he said. ‘At that time, the buyers may have planned to borrow 90 per cent of the purchase price but prices could have gone down and wiped out that deposit and they’ve got to find effectively another 20 per cent.’
It’s worse than that Angie. Practically all banks have said zero lending to foreigners. You might have caught the FB fest on the HBB recently. And would you believe, some of these Chinese people were considering walking away, right to your face!
Leverage works both ways…
It’s ironic there is no reporting on this when borrowers are getting wiped out left and right, here and abroad. Not much you can do except take the loss when you’re competing with new product at a much lower price.
There is reporting, that’s what I’m posting. There’s no connecting the dots. Most global bubble markets are falling or in free fall. Miami Beach luxury condos are off 29%!
In a way I can see: it’s hard to go from saying there is no bubble to the bubble has popped.
The warnings are out there, interspersed with frequent “no bubble here” idiocy from the porcine beauticians.
Project Syndicate
Opinion: Biggest risk to economy: Fed-fueled bubbles could pop
By Martin Feldstein
Published: Oct 27, 2016 8:32 a.m. ET
Economy is in good shape, but high asset prices are a danger, writes Martin Feldstein
…
A swing, and a miss!
Amazon.com, Inc. (AMZN)
772.00 -46.36 (-5.66%)
After hours: 7:59 PM EDT
P/E Ratio (ttm) 654.69
http://finance.yahoo.com/quote/AMZN?p=AMZN
Hey, they have that Jeff Bezos magick, just like Tesla has that Elon Musk magick.
Just imagine how profitable they will be after opening up 2000 new brick-and-mortar grocery stores (with all non-union labor of course)!
over @cnbc the FEd is being eyed again today. LMAO
Hearst used to have a reporter jump over the side of a ferry when things were slow… the afternoon addition, “Man Overboard, Read All About It.”
“Extra! Extra! Read all about it! Two men swindled!”
“I’ll take one son. Hey! There’s nothing in here about two men being swindled!”
“Extra! Extra! Read all about it! Three men swindled!”
Whole clown show eCONomy is headed off a cliff. You thought 2016 was wild? 2017 is gonna make this years madness look like a Sunday picnic.
Check (((soros))) funds holding, biggest positions are puts on the broad market indices and high yield / junk debt.
Hi, Jeff!
http://www.meerkatpr.co.uk/wp-content/uploads/2014/06/meerkat-homepage.png
Yellon the felon says that’s normal.
“People are bailing out of their investment properties, saying I’ll just quit the investment property, I don’t like this investment property anymore. So that usually spells when you’re at the bottom of the market, from here we should see some hope,’ said Mr Hegney.”
So the bad news can now be transmuted into great news…. Nobody is interested in these properties, time to load up!
What utter bullshit, if they simply looked at what the locals can actually afford, as in not the I am so f’in rich, I’ll take the whole block bitchez.., but the real end of the month reconciliation, and, what do I have to actually work with, they would find the “value” of the house..
Now, if the Australian collapse could please spread to the completely OTT NZ bubble, that would be nifty.
Here’s why bond yields are rising around the world
By William Watts
Published: Oct 27, 2016 6:54 p.m. ET
AFP/Getty Images
It comes back to the central bankers.
A global bond-market selloff sent the yield on the 10-year U.S. Treasury note to its highest close in nearly five months on Thursday.
The 10-year Treasury yield (TMUBMUSD10Y, -0.03%) rose 5.3 basis points to settle at 1.843% — the highest since June 1.
The yield on the 10-year British government bond, or gilt (TMBMKGB-10Y, -1.18%) hit its highest level since the Brexit vote on June 23. The yield on the German 10-year bond (TMBMKDE-10Y, -6.62%) known as the bund, which was negative as recently as early October, also jumped to its highest level since May. Yields increase as debt prices fall.
Thursday’s move was no “flash crash,” bond watchers said. The selloff in Treasurys was orderly and accompanied by high volumes in both cash and futures markets, noted Ian Lyngen and Aaron Kohli at BMO Capital Markets, in a note.
…
I wonder if this news helps explain why I convinced my parents to dump their super-safe balanced stock-bond index fund for retirees last month?
It’s never a happy time when traders wake up after drinking too much of the Fed’s alcohol-spiked Kool-aide.
Bond Market’s Slide Deepens as Traders Waken From Stimulus Coma
Yun Li and Anooja Debnath
October 27, 2016 — 4:57 AM CDT
Updated on October 27, 2016 — 4:18 PM CDT
…
Lending squeeze: financing condo construction still a challenge in South Florida
Lending market still difficult as condo presales slow and lenders put the screws on developers
October 27, 2016 10:30AM
http://therealdeal.com/miami/2016/10/27/lending-squeeze-financing-condo-construction-still-a-challenge-in-south-florida/
Media reports over the weekend revealed that NAB had compiled a ‘blacklist’ of more than 100 postcodes across the country where buyers will need to pay as much as a 30 per cent deposit to secure a mortgage.
All of these myriad, choking regulations, all of this dancing around the core issue, all to avoid dealing with the root cause of bad debt:
1) Allowing lenders to shed repayment risk
2) government (public) insurance of private debt
The two items above enable the “privatize the profits, socialize the losses” economic model.
Opinion: Biggest risk to economy: Fed-fueled bubbles could pop
By Martin Feldstein
Published: Oct 27, 2016 8:32 a.m. ET
Economy is in good shape, but high asset prices are a danger, writes Martin Feldstein
http://www.marketwatch.com/story/biggest-risk-to-economy-fed-fueled-bubbles-could-pop-2016-10-26
I was considering the true cost of the financial crisis. I’ve seen reports that the bailouts actually made a profit for the government. Seems hard to believe but this site has been tracking the bailouts and it reports a profit of about 70 billion.
So - we should have more financial crises, right, considering how well it worked out last time?
Maybe not: the federal government’s debt has ballooned, ostensibly due to massive spending to offset the financial crisis, as detailed in this chart.
And the Fed’s flat out money printing in response to the financial crisis has ballooned it’s balance sheet to the tune of 4 trillion dollars, as detailed in this chart.
The Fed’s money printing is simple redistribution, as it’s not the slips of paper that people want but the purchasing power they represent; the debt is simply pulling consumption forward - eventually the piper will be paid - is being paid.
What the bailouts and subsequent actions did was to preserve a deeply flawed system; to maintain that system seems fabulously redistributionist and expensive as the charts above suggest.
The Financial TimesUS Interest Rates
Investors pour $1.1bn into inflation-protected bond funds
Inflow is largest since April 2015, according to EPFR
© AP
4 hours ago
by: Joe Rennison and Nicole Bullock in New York
A sell-off continued to reverberate across global sovereign debt markets on Friday, pushing yields on the debt higher at the end of a week when investors poured $1.1bn into inflation-protected bond funds, amid lingering fears that inflation will push interest rates higher.
The inflow is the second-largest since the start of 2007, according to EPFR, and the largest since April 2015 and the data chimed with the nervous feel to trade across the market.
There was no let-up on Friday. US Treasury yields rose 2 basis points to 1.86 per cent, its highest level since May, extending Thursday’s rise of 6 basis points. Germany’s 10-year Bund yields climbed by a further 2 basis points to 0.20 per cent. The UK’s 10-year gilt yield rose 3 basis points to 1.28 per cent. The more policy sensitive US 2-year yield is steady at a near five-month high of 0.89 per cent.
…
I thought this was kind of amusing, conflating the flash crash trader with the architects of the financial crisis.
Why It’s Crazy That the Flash Crash Trader Could Get 350 Years in Jail
by Stephen Gandel
October 24, 2016
Fortune
Wall Street critics often complain that market manipulators never go to jail. Tell that to Navinder Singh Sarao, who lost his fight against extradition from the U.K. to the U.S. in mid-October. Sarao is accused of causing the May 2010 stock market “flash crash.”
Even if he was the mastermind behind the mayhem, the maximum sentence he faces—350 years—seems extreme. Bernie Madoff only got 150. A lack of financial prosecutions has left populists looking for sacrificial lambs; Sarao may wind up wearing wool.
http://fortune.com/2016/10/24/flash-crash-trader-navinder-singh-sarao-jail-conviction/
No, we’re not looking for sacrificial lambs. We want those responsible for the fraud that led up the crisis, to be held accountable and stopped, because of their destructive effect on society. We don’t really care about having some basement dweller, who may or may not have caused a blip in a server for 20 minutes, be sacrificed in their place.
London real estate prices are crashing.
http://www.zerohedge.com/news/2016-10-27/london-real-estate-prices-are-crashing
The catalyst for inflation is likely to be yet another head fake on a rate rise in Decemboer.
Listen Up, Bond Market. Inflation Is Coming.
By Marcus Ashworth
Three Lions/Getty Images
Oct 24, 2016 6:09 AM EDT
GOLDMAN SACHS GROUP INC
From Washington to Tokyo, the message is loud and clear. Unfortunately, a big swathe of investors aren’t listening.
Central banks want steeper yield curves. They want inflation, and inflation is coming. Expect yields on long-term government bonds to rise relative to their shorter counterparts.
The catalyst is likely to be a Federal Reserve rate rise in Decemboer. The Street has spotted it, and so has the relatively smart money.
…
http://original.antiwar.com/andrew-p-napolitano/2016/10/26/what-happened-to-the-fbi/
“Then some agents did the unthinkable; they reached out to colleagues in the intelligence community and asked them to obtain Clinton’s medical records so they could show them to Comey. We know that the National Security Agency can access anything that is stored digitally, including medical records. These communications took place late on July 4.
When Comey learned of these efforts, he headed them off the next morning with his now infamous news conference, in which he announced that Clinton would not be indicted because the FBI had determined that her behavior, though extremely careless, was not reckless, which is the legal standard in espionage cases. He then proceeded to recount the evidence against her. He did this, no doubt, to head off the agents who had sought the Clinton medical records, whom he suspected would leak evidence against her.”
Dirty cop. Dirty, filthy, stinking cop.
A handful of giant investors have the fate of the bond market in their hands
Matt Turner
Oct. 25, 2016, 1:52 PM
The fate of the bond market lies with a handful of giant investors.
The top five investment companies hold $264 billion in US high-yield bonds, according to a big report from Stephen Caprio and Matthew Mish at UBS. That’s equivalent to 20% of the market.
The top 20 hold $605 billion, equivalent to 46% of the US high-yield market, and mutual funds and separately managed accounts hold 70% of the market.
That could be a problem, according to Caprio and Mish.
…
Ben, if you don’t want to let this one through, I understand. In which case, FYI, this person has done a great job of summarizing the top 100 most damaging Wikileaks, with links. Great for people who want to know, but don’t have the time to wade through it all.
http://www.mostdamagingwikileaks.com/
Excellent no BS post.
Doesn’t include today’s dump, which seems to be rather spicy, so far. Includes stuff like Israel bashing, communications from the infamous Robert Creamer and his “hit list” of 32 republican representatives, a narrative against Marco Rubio, etc.
Best place to get the latest, with highlights and commentary, is here:
https://www.reddit.com/r/The_Donald/comments/59u66w/new_wikileaks_podesta_emails_part_21_email_id/
And as a final note, someone is running a brutal meme campaign about sending women and girls into war on behalf of Hillary, #draft our daughters, # die for her and others. This is just a sampling
https://i.sli.mg/2PSwuW.jpg
http://i.imgur.com/Nn0Dmuw.png
https://i.reddituploads.com/a33d00ee72af49009f8bb630420ab2e4?fit=max&h=1536&w=1536&s=b51ab9600fc8fd9c9bf1f38728e34766
https://i.sli.mg/e4X9VB.jpg
https://i.sli.mg/0t8ush.jpg
Brutal stuff. Goes beyond Hillary, IMO, right to the heart of the bloody warmongering of the military industrial financial complex. Frankly, this should have been done during the Bush Administration.
Feck them. All of them. Let their children go first.
Did you say spicy?
https://www.theguardian.com/us-news/2016/oct/27/trump-twelfth-woman-sexual-assault-accusation-ninni-laaksonen
Feck them. All of them. Let their children go first.
Sounds about right. Fook Them!
Let Chelsea, Bush bimbos and Obama girls to go to their daddy’s wars.
Men with strong personalities are admired. Women with strong personalities are “nasty.”
Do you notice the double standard?
Nah, it’s not a double standard. It’s possible to be strong without being nasty. Some women just don’t know the difference though.
In all fairness, some men don’t know the difference, either.
Strong “personality” has nothing to do with it.
Julian Assange won’t survive a Hillary presidency.
Many more casual unprotected sex in Julian’s future then.
Heh, sometimes it looks as if he may not survive the Obama tyranny.
After all the crap that has come out, I could never, ever consider H anything other than a corrupt, installed tyrant. The fact that she’s even running is pathetic and beneath contempt, especially after the DNC collusion to reject Bernie. I’m no fan of Bernie, but that was just mind-blowing. And then that ridiculous performance on the stage at the convention with the balloons coming down and she’s all wide-eyed with her mouth open in a “WOW!” Like she actually “won” something.
Someone please explain to me how any of the fraud, corruption, collusion and lawlessness is “winning” anything?
3rd qtr gdp comes in @2.9% . After the election it will be revised to 1.0%.
It seems like the bond vigilantes have caught a whiff of inflation and have pulled the plug on the bond bubble in response.
Have you dumped your bonds yet?
Given how rates have been just ratcheting up and back down over the last several years, it might just be a good time to buy some Treasuries—of sufficiently short duration that you don’t mind holding them at historically-low yields until maturity, if necessary…
Comment by Blue Skye
2016-10-27 07:55:06
“reflect the state of our economy”
Now that right there is funny! ??
Well you must be Sea-Sick….So, Mr. funny guy, what would be the circumstances in the US that would reflect 1% home loans ?? Or are you like just Channeling Palmy and want to be argumentative ??
Hey, dave, didn’t you say you were a feminist?
https://i.redd.it/y6738lng47ux.png
Feminist in the mold of Anthony Weiner?
Enlist for WW3 today:
http://imgur.com/a/CPXbm
Great photo album.
Yep, Hillary said she wants women to be eligible for the draft. I’m all for it - in fact in the name of equal rights I think the next half dozen or so wars the US wages (probably cover just the next 2-3 years, lol) should be fought by women alone! Catching a bullet in Syria or Russia beats that crummy barista job anyday. Dont worry gals, youre #strongertogether!
http://www.huffingtonpost.com/entry/hillary-clinton-draft_us_57617765e4b09c926cfdc0a8?28wpm8zdmahh0k9=
I guess the coastal markets are all bought up…
‘Three of the biggest real estate deals this year in Dallas have something in common. All three office buildings — two in Uptown and one in downtown Dallas — were bought by foreign buyers who paid top price. The high-profile Dallas property purchases were fueled by a wave of billions of dollars of foreign money pouring into U.S. real estate’
http://www.dallasnews.com/business/real-estate/2016/10/28/foreign-buyers-snapping-dallas-office-towers
What’s for November surprise?
–Do the dems have more duck tapes?
–More women coming forward?
–Rethugnicans staging a coup?
–Pence pulling a stunt?
–Obama marshal law?
Trend is not their friend. They are about to have a huge meltdown if none of the above exists.