Let's Check In On Australia


I don't want my readers down under to think I have forgotten about them. Let's check in.

Desperate Offers to Attract Tenants

Hmm. It seems we have a problem. Rents are Going Down: Landlords Make Desperate Offers to Attract Tenants.

Desperate landlords are offering tenants up to four weeks free rent just for signing new leases amid a rise in vacancies and drop in rental prices.

The offers have followed a surge in new housing construction that oversupplied parts of Sydney with housing, with nearly one in 10 rental homes sitting vacant in some areas

Additional data from CoreLogic showed median advertised weekly house rents have fallen by an average of more than $100 in parts of the north shore, northwest and Sydney’s far west.


  • Kellyville had the highest level of vacancies, with 9.2% of homes currently empty.
  • In Epping, where developers have started a mass of unit projects for the opening of the Sydney Metro Northwest rail line next year, 6.6% of rental homes remain vacant.
  • Gordon’s vacancy rate was 7.7%.

$1 Million Discount "Bargains"

Also consider Sydney’s Biggest Real Estate Bargains: Homes at Discounts of Up to $1 Million

Sydney’s cooling real estate market is delivering buyers hefty discounts that would have been hard to believe even six months ago.

A string of properties across the northern beaches, eastern suburbs and north shore are currently listed at up to $1 million below their original prices after languishing on the market unsold for months.

The deals have followed an 8 per cent drop in Sydney’s median home price over the past year and a 17.4 per cent lift in the number of homes listed for sale.

Compounding this, Sydney’s existing pipeline of new housing projects is forecast to increase the current supply of housing by 9.5 per cent over the next two years. And it’s all at a time when buyer demand is falling as purchasers struggle to get financing from increasingly cagey lenders.

Worse than Global Financial Crisis

Let's round out our trio of Australia housing reports with this grim assessment: Real Estate Prices Drop at Fastest Rate Since Global Financial Crisis.

CoreLogic head of research Tim Lawless said he expected the current downturn to last significantly longer than the one recorded in 2008.

Back then the market was hit by an economic shock but it quickly recovered because of heavy stimulus from government,” he said.


What the hell happened to that big housing shortage?

And where the heck are the government and the Central Bank when you need them?

Wait a second. Didn't the government and central bank combine to create this problem?

Mike "Mish" Shedlock

Comments (12)
No. 1-7

Two free months rent is equivalent to cutting the yearly rent price by 17%.

Having more than a 5% vacancy rate used to lead to bankruptcy

Most of these highly leveraged complexes will not survive.

Captain Ahab
Captain Ahab

Down Under is finally learning that their very popular real estate investment strategy of "negative gearing" has something to with "high leverage" and "default ratio," but in a bad way. Worse, an awful lot of Aussies put their retirement (SUPER) funds into negatively geared properties. Ouch!

The real panic won't start until "jingle mail" sends the banks into a "tizzy."

Short Westpac, ANZ, and CBA, or buy gold?


The dumbest and luckiest people I know work in real estate.


Waiting to see similar news in SF Bay Area!


In the Netherlands, 21% of home buying was by investors last year. Houses have risen more than 20% in price (year on year). The government actually pays for agencies to encourage this type of investment (because it makes everybody wealthier, they think). At the same time they have rent subsidies. The youth has been effectively priced out of the market. Waiting for the next unexpected crisis.


Here's something else that's being released quietly in the Australian MSM

Negative equity rising fast :

It's estimated that 10% of current mortgages are under water. A few more percentage values drops will see this escalate to 20%.

Of course these figures only concern mortgages. Foreign buyers of inner city apartments who have paid full price are looking at a real drop in value and their initial investments are well negative.

Friends from Indonesia bought a Melbourne dogbox apartment for 850K AU dollars. They bought it off the plan in Jakarta without even coming to Australia to check real values. No Australian in their right mind would have paid more than 550K dollars for it. It's current value is subjectively less than 500K if you could find a buyer.

  • Rising australian real estate prices created the impression that there was a shortage of housing. And that's outright wrong. Rising (real estate) prices are a sign that credit was freely available. In some neighbourhoods/suburbs of Sydney australian banks were willing to lend 12 times household income. And then, not surprisingly, those houses were priced at 12 times household income.
  • There are some 80,000 empty (sold but not occupied) dwellings in Australia, There are still some 120,000 dwellings under construction and when all plans are approved then another 80,000 dwellings will become available. What do you mean "shortage of housing" ?
  • No,it was rising prices that enticed australians to "invest" in real estate. And banks were VERY willing to lend them the money. But now A LOT OF australian mortgage holders have to start paying down principal on their mortgage.

Global Economics