It was not just the rich who were getting
super-rich, values of their multimillion-dollar homes with water views
rising faster than a tsunami. Every homeowner was making money, at least on
paper, and Australia is a country with one of the highest levels of home
ownership in the world. A midlevel office worker, for example, who bought a
house in a middle-class Sydney suburb for A$188,000 (S$236,000 at current
rates) in 1996 was offered A$720,000 in 2003.
Sound familiar? As in many regions of the United
States these days, house prices here seemed to defy gravity. They just kept
going up and up and up - in Sydney, by 11 per cent in 1997, according to the
Real Estate Institute of Australia, followed by a leap of another 21 per
cent the next year. After more modest increases, prices rose by 16 per cent
in 2002, and another 23 per cent in 2003. It was similar in other major
cities.
'It overshot all models, all predictions,' said Rod Cornish, head of
property research at Macquaire Bank.
Indeed it did. In the last two years, though, the
Australian housing boom has come to a halt, in a move that many experts see
as the first signs of the end to a housing bubble, not just in Australia,
but also in the United States as well as several other rich countries around
the world.
It is impossible to say for sure how the situation
will work out here - or in the United States, for that matter. But so far,
despite predictions that housing prices in Australia would plummet by as
much as 20 per cent to 30 per cent, there are no signs of a crash here.
Prices have levelled off noticeably or dropped slightly, at least in Sydney,
Melbourne and Canberra. They continue to rise at a modest rate in Perth,
Darwin and Brisbane, the major cities in resource-rich states, where the
local economies are being buoyed by China's insatiable demand for raw
materials.
Nationwide, for the year ending on March 31, the
rise in house prices was 0.4 per cent, the lowest since 1996, according to
the Australia Bureau of Statistics.
'It's been an orderly correction,' said Mark
Steglick, managing director of Gowings Properties, a Sydney property
development company, who said that there had been few foreclosures or forced
sales since the boom ended. 'There's no blood on the streets.'
Looking ahead, local housing experts expect prices
to flatten out, perhaps remaining stagnant for a number of years to allow
gradually rising incomes to catch up with the sharply higher level of home
values.
But there are significant differences within the
market that may provide some clues as to how housing booms elsewhere could
run out of steam. Prices for investor-owned apartments have fallen
considerably more than for owner-occupied houses. Nationwide, prices are
down about 10 per cent from the peak.
The most expensive homes, particularly those along
the coast, have held up better than the rest of the market. 'My jaw drops at
some sales,' Mr Steglick said, describing a house in Vaucluse, a posh Sydney
suburb, that recently sold for US$17 million. The home does not even have
direct access to the beach, though it does have spectacular views of the
soaring Opera House and of the Sydney Harbour Bridge. It last sold in 2001
for US$12.1 million.
Australia is no stranger to booms and busts in
housing prices. The latest boom began in the mid-1990s, following a bust
brought about by the recession of 1990, one of the worst in Australia's
history, and far more severe than the downturn in the United States at the
time. Unemployment soared to more than 10 per cent as interest rates reached
as high as 17 per cent.
Those high rates knocked many potential buyers out
of the market, but even more importantly, they also saddled many existing
homeowners with a greater debt than they had assumed when they took out
their loan.
House financing here differs significantly from
the United States, where the 30-year fixed-rate mortgage has been the norm
and most adjustable rate mortgages delay rate increases for several years
and then limit them to set annual amounts. In Australia, fixed rate
mortgages are very rare. The standard mortgage is a variable, with the rate
rising automatically whenever the central bank raises interest rates.
So someone who borrowed at 12 per cent in 1985
found that his monthly mortgage payments had gone up by nearly 50 per cent
five years later, when the rate was just over 17 per cent.
There was 'blood on the streets' then, with
thousands of foreclosures and forced sales. - NYT
6 July 2005
(SYDNEY) FOR several years, dinner party chatter
here did not linger on favourite Australian subjects like rugby, cricket,
sailing and surfing or even politics. No, all the talk was of real estate:
how much a house was worth, how much more this year than last, and how much
more valuable it would be next year.
Housing market about to burst
There must have been a groan of disbelief at
Australia's central bank yesterday when data showed a staggering 23 per cent
leap in August building approvals despite the housing market bubble already
being seen as fit to burst.
- 01 October 2002
South
China Morning Post
A
million
Chinese set to visit Australia:
state leader
A
million Chinese were expected to visit Australia each year from 2010,
Chinese number two Li Peng was told here Friday at a reception in the north
Queensland town of Cairns.
Queensland
Premier Peter Beattie said talks were underway with two Chinese airlines for
extra flights to Australia.
The state government was negotiating with China
Southern Airlines and China Eastern Airlines, he said.
China
was Australia's fastest-growing inbound tourist market.
"We
also look forward to November when the newly-launched Australian Airlines
will begin flying Chinese tourists into Cairns from Hong Kong," Beattie
said.
Australia
had become one of the first western nations to achieve Approved Destination
Status in China.
This
allowed residents of Beijing, Shanghai and Guangdong Province to travel to
Australia relatively easily, Beattie said
-
AFP
- ehotelier
28 Sept 2002
