It's the economy, stupid!

 
  Groundrelay Chief Commissioner

Location: Surrounded by Trolls!
...We're p*ss weak and a walk-over, that's the core of the problem. And the more we let them get away with the worse it will get.
don_dunstan
It's not a p*ssing contest and we'd lose that big time.

Detach emotion, think consequences. This is the 21st century and so it seems, China's. It's only going to get more challenging for many countries.

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  don_dunstan Minister for Railways

Location: Adelaide proud
...We're p*ss weak and a walk-over, that's the core of the problem. And the more we let them get away with the worse it will get.
It's not a p*ssing contest and we'd lose that big time.

Detach emotion, think consequences. This is the 21st century and so it seems, China's. It's only going to get more challenging for many countries.
Groundrelay
Appeasement will not work, not under any circumstances. I'm not emotional about it, I'm looking at the lessons of history - the more we let them walk all over us the more they'll do it. Don't give them any exceptions, don't allow them special privileges - throw the full force of the law at any transgressions. If they're shown to be behind the cyber-attacks then there's got to be hard-hitting sanctions.

They'd do that to us if we were doing it to them.
  don_dunstan Minister for Railways

Location: Adelaide proud
McGrath Real Estate of Sydney, the wonderful 2016 IPO has sunk like a stone to just 12% of it's IPO price.

Terrible news if you threw your money into that float and also a sign that the real-estate boom is well and truly over...
  Groundrelay Chief Commissioner

Location: Surrounded by Trolls!
Appeasement will not work, not under any circumstances. I'm not emotional about it, I'm looking at the lessons of history - the more we let them walk all over us the more they'll do it. Don't give them any exceptions, don't allow them special privileges - throw the full force of the law at any transgressions. If they're shown to be behind the cyber-attacks then there's got to be hard-hitting sanctions.

They'd do that to us if we were doing it to them.
don_dunstan
We appease all the time, it's called diplomacy. We're not a superpower and not Britain and France in 1939.

Yes enforce our laws but you need to get your hands on the perpetrator. Sanctions. How exactly do you see that playing out?
  don_dunstan Minister for Railways

Location: Adelaide proud
Appeasement will not work, not under any circumstances. I'm not emotional about it, I'm looking at the lessons of history - the more we let them walk all over us the more they'll do it. Don't give them any exceptions, don't allow them special privileges - throw the full force of the law at any transgressions. If they're shown to be behind the cyber-attacks then there's got to be hard-hitting sanctions.

They'd do that to us if we were doing it to them.
We appease all the time, it's called diplomacy. We're not a superpower and not Britain and France in 1939.

Yes enforce our laws but you need to get your hands on the perpetrator. Sanctions. How exactly do you see that playing out?
Groundrelay
They know exactly who these people are, it's a secretive unit of the Red Army that does all the hacking including some prolific hacking of US commercial interests.

I'm not sure what the answer is either, we can't continue to ignore and appease forever though. At some stage they'll use their exceptional economic power over us to try and force us into their camp or they'll punish us. What will we do then?
  don_dunstan Minister for Railways

Location: Adelaide proud
Meanwhile what's left of our economy burns to the ground - Roger Montgomery:

Today’s Australian is leading with a story (see picture below) about property price falls that far exceed the national average. Box Hill in Western Sydney has declined 41.3 per cent in January year-on-year and Red Hill on Victoria’s Mornington Peninsula is down 32.5 per cent.

We make a couple of observations. Many of the owners in the suburbs listed will now be in negative equity. JB Hi-Fi and Nick Scali will not be seeing those families in their stores any time soon. As I will write about in coming days and weeks, we are entering a period of deleveraging.

With house prices now declining substantially, the record debt is what households will turn their attention to reducing. Credit growth is already slowing and possibly faster than GDP. And that means a decline in retail spending. Unsurprisingly, that is what we are now seeing.  Big ticket items are the first to see the tide go out, and car sales are slumping. By way of example, national Mercedes sales fell 43 per cent year-on-year in November alone. Ford reported a 41 per cent decline in the same month. Retail sales slumped in January and the fashion category fell by 3.8 per cent – annualise that! Meanwhile foot traffic is plunging, and Westpac reported consumer confidence had “evaporated”.

All these figures are absolutely dreadful - Mercedes Benz Australia sales down 43% in one year? That tends to suggest that the wealthier segment of the population are not spending. At all.

The list of suburbs with the largest losses was surprising too - Vermont, Blackburn and Clayton in VIC all around 20% capital loss in the last 12 months? That's huge - on a million dollar house that's a loss of $200,000. Imagine the amounts of wealth being destroyed in our economy right now.

We're already in a wages and incomes recession - the housing crash on top of that will probably turn it into an economic catastrophe.
  RTT_Rules Dr Beeching

Location: Dubai UAE
Meanwhile what's left of our economy burns to the ground - Roger Montgomery:

Today’s Australian is leading with a story (see picture below) about property price falls that far exceed the national average. Box Hill in Western Sydney has declined 41.3 per cent in January year-on-year and Red Hill on Victoria’s Mornington Peninsula is down 32.5 per cent.

We make a couple of observations. Many of the owners in the suburbs listed will now be in negative equity. JB Hi-Fi and Nick Scali will not be seeing those families in their stores any time soon. As I will write about in coming days and weeks, we are entering a period of deleveraging.

With house prices now declining substantially, the record debt is what households will turn their attention to reducing. Credit growth is already slowing and possibly faster than GDP. And that means a decline in retail spending. Unsurprisingly, that is what we are now seeing.  Big ticket items are the first to see the tide go out, and car sales are slumping. By way of example, national Mercedes sales fell 43 per cent year-on-year in November alone. Ford reported a 41 per cent decline in the same month. Retail sales slumped in January and the fashion category fell by 3.8 per cent – annualise that! Meanwhile foot traffic is plunging, and Westpac reported consumer confidence had “evaporated”.

All these figures are absolutely dreadful - Mercedes Benz Australia sales down 43% in one year? That tends to suggest that the wealthier segment of the population are not spending. At all.

The list of suburbs with the largest losses was surprising too - Vermont, Blackburn and Clayton in VIC all around 20% capital loss in the last 12 months? That's huge - on a million dollar house that's a loss of $200,000. Imagine the amounts of wealth being destroyed in our economy right now.

We're already in a wages and incomes recession - the housing crash on top of that will probably turn it into an economic catastrophe.
don_dunstan
Q1
I own a house worth $500,000.

In 5 years thanks to a boom its now worth $1m

The correction finally comes and its now worth $800,000 over following 1-2 years.

Inflation is 2.5%

Q, have I lost or gained money over this time (say 7 years)?


Q2
The average turnover of a suburb housing stock is say 5% YoY,

In the above time frame and price variation, what is the net wealth created or lost from the suburb in this time?

Q3
If I do borrow money to buy a house at the peak and now in negative equity.

How much do I need to panic?


Yes there are winners and losers in any market, but the govt and banks looks at big picture, not individual.
  don_dunstan Minister for Railways

Location: Adelaide proud
Q1
I own a house worth $500,000.

In 5 years thanks to a boom its now worth $1m

The correction finally comes and its now worth $800,000 over following 1-2 years.

Inflation is 2.5%

Q, have I lost or gained money over this time (say 7 years)?
RTT_Rules
Let's start by defining what some of the official parameters are here - and let's just stick to Melbourne as our example.

Median house prices in Melbourne went from around $550,000 in 2010 to touch $700,000 in 2016, so they really didn't double as you asserted - not on average anyway. The gain was still a rather hefty $150,000 for the average house.

Every year around 85,000 houses and apartments change hands in Melbourne - so in 2015/6 at the peak of the boom there were 170,000 houses and units changing hands at premium prices. Now the official decline since the peak has been 6% but there are individual suburbs and local government areas that have been hit much harder than that - in particular City of Boorandara and City of Stonnington have experienced the worst falls so far and suburbs like Blackburn, St.Kilda, Prahran, Vermont, Clayton etc have had falls of between 15-20%. So the pain is currently confined to the nice parts of the inner and middle ring eastern suburbs so far, not spread evenly across the metro area (yet).

It's the buyers who bought in 2015/16 who are most at risk of negative equity - perhaps 100,000+ households. Even if your house only declined by 10% in those suburbs many people who bought at the peak may find their deposit wiped out and if it keeps going then the losses will probably wipe out all the gains made in the last 7-8 years. There might be something like 200,000 or so households in that boat depending on when they bought and how much irrational exuberance they put into their purchase.

Are you beginning to see why people are slamming their purses and wallets shut now? Technically there's a lot of people paying off mortgages on houses and units that are potentially worth less than they paid for them - and that's a massive problem that will only get worse the longer the slump goes on.

Not just a problem from those households but also for the banks that loaned them the money... and ultimately for all Aussies because the destruction of wealth will completely kill the consumer economy we have now, nobody will have any money to spend. Are you beginning to see why these real estate problems are going to be everyone's problem?

Q3 If I do borrow money to buy a house at the peak and now in negative equity. How much do I need to panic? Yes there are winners and losers in any market, but the govt and banks looks at big picture, not individual.
RTT_Rules
It's a problem when:
  • You don't have a choice about selling into a depressed market (ie divorce, probate, moving interstate etc).
  • You try and borrow against the equity in your house
  • Or if you're an investor you try and cash in.
People who are heavily leveraged investors are the most exposed to these slumps but they're not in trouble unless they're forced to sell for some reason. But again, sometimes you don't have a choice.

The real problems will emerge if the losses continue to be sustained for the next two or three years and people who are waiting for the market to improve only find it getting worse... what then?
  RTT_Rules Dr Beeching

Location: Dubai UAE
Q1
I own a house worth $500,000.

In 5 years thanks to a boom its now worth $1m

The correction finally comes and its now worth $800,000 over following 1-2 years.

Inflation is 2.5%

Q, have I lost or gained money over this time (say 7 years)?
Let's start by defining what some of the official parameters are here - and let's just stick to Melbourne as our example.

Median house prices in Melbourne went from around $550,000 in 2010 to touch $700,000 in 2016, so they really didn't double as you asserted - not on average anyway. The gain was still a rather hefty $150,000 for the average house.

Every year around 85,000 houses and apartments change hands in Melbourne - so in 2015/6 at the peak of the boom there were 170,000 houses and units changing hands at premium prices. Now the official decline since the peak has been 6% but there are individual suburbs and local government areas that have been hit much harder than that - in particular City of Boorandara and City of Stonnington have experienced the worst falls so far and suburbs like Blackburn, St.Kilda, Prahran, Vermont, Clayton etc have had falls of between 15-20%. So the pain is currently confined to the nice parts of the inner and middle ring eastern suburbs so far, not spread evenly across the metro area (yet).

It's the buyers who bought in 2015/16 who are most at risk of negative equity - perhaps 100,000+ households. Even if your house only declined by 10% in those suburbs many people who bought at the peak may find their deposit wiped out and if it keeps going then the losses will probably wipe out all the gains made in the last 7-8 years. There might be something like 200,000 or so households in that boat depending on when they bought and how much irrational exuberance they put into their purchase.

Are you beginning to see why people are slamming their purses and wallets shut now? Technically there's a lot of people paying off mortgages on houses and units that are potentially worth less than they paid for them - and that's a massive problem that will only get worse the longer the slump goes on.

Not just a problem from those households but also for the banks that loaned them the money... and ultimately for all Aussies because the destruction of wealth will completely kill the consumer economy we have now, nobody will have any money to spend. Are you beginning to see why these real estate problems are going to be everyone's problem?

Q3 If I do borrow money to buy a house at the peak and now in negative equity. How much do I need to panic? Yes there are winners and losers in any market, but the govt and banks looks at big picture, not individual.
It's a problem when:
  • You don't have a choice about selling into a depressed market (ie divorce, probate, moving interstate etc).
  • You try and borrow against the equity in your house
  • Or if you're an investor you try and cash in.
People who are heavily leveraged investors are the most exposed to these slumps but they're not in trouble unless they're forced to sell for some reason. But again, sometimes you don't have a choice.

The real problems will emerge if the losses continue to be sustained for the next two or three years and people who are waiting for the market to improve only find it getting worse... what then?
don_dunstan

You can use any value from anywhere, doesn't matter.

http://happychiro.com.au/2017/05/melbourne-housing-prices-vs-getting-healthier/
This one shows the house price in 12mth prior to Mar 2017 rose from $700k to $800k in 12mth.

Yes, for those who bought at the peak, they will loose for now and yes for those who loose most these are the upper 25% for which most will be ok and won't be sticking their hands out for welfare, mostly.

If you are a forced sale, ie divorce, then you both know the risks of selling and knowing they will both need to pay the bank after the sale they can make a decision to sell or hold on and rent the property in the short term.

If you moving interstate, then selling one to buy another. No different to moving to a different suburb.

Listening to the Auction clearances for Sydney, things are starting to improve (at least this week), however the price still needs to drop more to be more realistic and I'd say all the improvement is is people starting to re-enter the market as prices improve ie become more affordable.

Anyway, overall the wealth created by the boom, including factoring in a 20% lose is nothing less than huge and a correction is needed. Once the market rises above normal, there is no easy way back and certainly not the first time some home owners owing more than they are worth.
  Transtopic Assistant Commissioner

It's the correction we had to have.  The continued boom in property prices was never sustainable, fuelled by low interest rates, questionable lending practices and buyers overcommitting beyond their means.

From my observation, many younger buyers today want everything up front, regardless of the cost.  When I bought my first home, I settled on a 60 year old property in virtually original condition and progressively renovated it over the years.  It wasn't in the suburb of my first choice either because I couldn't afford to buy in my preferred location.

Part of the problem is that while the Reserve Bank endeavours to boost a struggling economy by lowering interest rates, there are also negative consequences in the property market, by encouraging home buyers to borrow beyond their means pushing the market to unsustainable levels.
  don_dunstan Minister for Railways

Location: Adelaide proud
Interesting to see my old stomping ground of Windsor/Prahran now headed firmly into negative territory - Domain:

A five-bedroom Prahran home slated for redevelopment sold at a $561,150 loss at auction on Saturday.

The vendor of 273 Dandenong Road was developer Icon Co (Jessamine Ave) Land Pty Ltd, public records show. The same records show the company paid $2,586,150 for the home in 2016, before it sold for $2,025,000 under the hammer.

The developer had planned to build a boutique apartment complex on both 273 and the neighbouring block, 271, according to industry database Urban.com.au.

Public records show the company sold 271 Dandenong Road at a $713,850 loss earlier this year as well, for a combined loss of $1,275,000.

Capital growth for Prahran houses at the moment is -4.6% for houses and a whopping -15% for apartments, that's probably why they couldn't get the development off the ground. Interesting to see the inner east is under the most stress, who would have thought it three years ago?
  RTT_Rules Dr Beeching

Location: Dubai UAE
It's the correction we had to have.  The continued boom in property prices was never sustainable, fuelled by low interest rates, questionable lending practices and buyers overcommitting beyond their means.

From my observation, many younger buyers today want everything up front, regardless of the cost.  When I bought my first home, I settled on a 60 year old property in virtually original condition and progressively renovated it over the years.  It wasn't in the suburb of my first choice either because I couldn't afford to buy in my preferred location.

Part of the problem is that while the Reserve Bank endeavours to boost a struggling economy by lowering interest rates, there are also negative consequences in the property market, by encouraging home buyers to borrow beyond their means pushing the market to unsustainable levels.
Transtopic
I cannot find the value of the Sydney real estate market but an ABC report from Sept last year says it dropped $38B, likely $50B now. Meanwhile the ASX is worth ~$2,000B so a 10% fall is around $200B which happens frequently and again you only ever hear about it going down, not up.

The ASX is purely for investment and wealth creation. For most down ward trends, the usual response, "long-term investors will be ok."

The bulk of the housing market is for a home. You buy, you pay off over 2-3 decades, you die in it and the off-spring spread the wealth inherit the wealth! You may actually buy and sell a few houses in your life time, but its mostly just transferring your accumulated wealth from one location to another, maybe upgrading and spending more, maybe new location etc, very few people actually realise that property wealth themselves, ie move somewhere cheaper and live of the difference to improve their standard of living, holidays, do something different.
  RTT_Rules Dr Beeching
  DirtyBallast Chief Commissioner

Location: I was here first. You're only visiting.
The bulk of the housing market is for a home. You buy, you pay off over 2-3 decades, you die in it and the off-spring spread the wealth inherit the wealth! You may actually buy and sell a few houses in your life time, but its mostly just transferring your accumulated wealth from one location to another, maybe upgrading and spending more, maybe new location etc, very few people actually realise that property wealth themselves, ie move somewhere cheaper and live of the difference to improve their standard of living, holidays, do something different.
RTT_Rules
Kinda sorta.

Working, paying off, moving to better digs as you go, paying off again, then realising wealth by staying put and investing instead of downsizing and cashing in. Works for me.

To extrapolate your scenario, ppl would sell the farm to invest elsewhere, spend up, and end up with a smaller asset base. No thanks!
  Transtopic Assistant Commissioner

Leaving Sydney for Melbourne due to price

https://www.abc.net.au/news/2019-02-17/nsw-election-cost-of-living-in-sydney-in-spotlight/10814616
RTT_Rules
Exactly as my son did as well as some of my closest friends' children.  It's little wonder that Melbourne is Australia's fastest growing city, with the greatest influx of intra-state migration from Sydney.  On current trends, Melbourne is destined to become Australia's largest city in the next 20 years.

Both major parties in NSW have been negligent in not addressing the rising cost of living and exorbitant property prices within a reasonable distance of the CBD.  This is no doubt partly due to the CBD being geographically concentrated on the eastern seaboard, while Melbourne still has affordable undeveloped land to the north and west close to the CBD.  

Sydney can't afford to lose its status as Australia's only Global City and the kudos that goes with it, and that would be put in jeopardy if Melbourne becomes the larger city.  The stakes are high, and there will need to be some radical policy decisions to enable Sydney to maintain its superiority.
  Carnot Chief Commissioner

What housing downturn?
https://www.realestate.com.au/news/melbourne-auction-market-bounces-back-with-big-sales/

Probably depends on lot on the suburb and prices.  Apartments in wealthy areas going bust, but detached houses in places with good PT and somewhat affordable holding their own.
  don_dunstan Minister for Railways

Location: Adelaide proud
Not sure if I agree with you there, Carnot, when you dive into the data there's a lot of premium parts of Melbourne that have suffered double-digit falls. It's quite disparate, Yarraville, North Melbourne, Prahran, East St Kilda - all near 20% falls since the peak; houses as well as apartments slumping. Sure there's lots of mediocre areas that have fallen too but it's very hard to characterise those Melbourne falls, they're all over the place.

Meanwhile NSW Treasury has announced that stamp duty receipts have fallen by $1.2 billion over the last 12 months. That's a lot of money that will have to be made up from elsewhere.
  RTT_Rules Dr Beeching

Location: Dubai UAE
Not sure if I agree with you there, Carnot, when you dive into the data there's a lot of premium parts of Melbourne that have suffered double-digit falls. It's quite disparate, Yarraville, North Melbourne, Prahran, East St Kilda - all near 20% falls since the peak; houses as well as apartments slumping. Sure there's lots of mediocre areas that have fallen too but it's very hard to characterise those Melbourne falls, they're all over the place.

Meanwhile NSW Treasury has announced that stamp duty receipts have fallen by $1.2 billion over the last 12 months. That's a lot of money that will have to be made up from elsewhere.
don_dunstan
Fall of 20% from the peak on the back of a 20, 30, 40% etc rise in the Premium suburbs funded mostly by high and very high income earners and listening to an interview some time back by Real Estate guru the higher the property value the less likely the property was purchased with finance.

NSW budgeted for a drop in stamp duty, I posted previously on same subject how much, I cannot remember but I believe it was around $1B reduction and the state still has a comfortable surplus with plenty of room to go before going into deficit also noting NSW is in the rare position of a govt in Australia of not just being deficit free but net debt free as well.

Meanwhile south of the Murray and north of the Tweed, the respective brains trusts in those states is increasing their debts at a time of a weakening global economy. Qld in particular is already up to its neck in debt!

So, as usual the next recession busting expenditure across the country will be funded by the Sydney based taxpayers.
  neillfarmer Chief Train Controller

No need to worry about Queensland. Our Government composed of Union heavies and Labor true believers is expert at debt creation and management. They have assured all Queenslanders that it is not a concern. Even the $ billions being expended on Cross River Rail and then the Nambour Upgrade will not stretch the credit rating.
  don_dunstan Minister for Railways

Location: Adelaide proud
There's a lot happening on the China/Australia front at the moment... Andrew Robb has mysteriously resigned his $800,000 job at the Chinese company he was employed at to lobby at. John Brumby has also suddenly resigned from the board at Huewei Australia and Bob Carr has also resigned his director-ship at the Australia-China UNSW faculty (or whatever it's called).

IN addition Bloomberg reports that Australia's exports to China are being held up at port by up to 40 days seemingly in punishment for refusing that Chinese billionaire his Australian residency.

Lots of economic relationships on the line; looks like we'd better tow the Communist line or else!
  Transtopic Assistant Commissioner

There's a lot happening on the China/Australia front at the moment... Andrew Robb has mysteriously resigned his $800,000 job at the Chinese company he was employed at to lobby at. John Brumby has also suddenly resigned from the board at Huewei Australia and Bob Carr has also resigned his director-ship at the Australia-China UNSW faculty (or whatever it's called).

IN addition Bloomberg reports that Australia's exports to China are being held up at port by up to 40 days seemingly in punishment for refusing that Chinese billionaire his Australian residency.

Lots of economic relationships on the line; looks like we'd better tow the Communist line or else!
don_dunstan
Yes I fear bad vibes indeed, but I don't hold out much hope for any of our current political leaders to have the intestinal fortitude to tell China to stick it. We are now so reliant on them, particularly for our exports, that we can't afford to get them off side.  It reminds me of a basic business adage, that you don't put all your eggs in one basket.
  don_dunstan Minister for Railways

Location: Adelaide proud
Fall of 20% from the peak on the back of a 20, 30, 40% etc rise in the Premium suburbs funded mostly by high and very high income earners and listening to an interview some time back by Real Estate guru the higher the property value the less likely the property was purchased with finance.
RTT_Rules
I don't believe there's any evidence for saying 'high end' houses are not purchased with borrowed money. But prove me wrong.
NSW budgeted for a drop in stamp duty, I posted previously on same subject how much, I cannot remember but I believe it was around $1B reduction and the state still has a comfortable surplus with plenty of room to go before going into deficit also noting NSW is in the rare position of a govt in Australia of not just being deficit free but net debt free as well.
RTT_Rules
Lucky them, I guess that's also an artefact of not spending any money on public infrastructure. Bin Chicken would rather rebuild 25-year old stadiums.
So, as usual the next recession busting expenditure across the country will be funded by the Sydney based taxpayers.
RTT_Rules
Paying with what, flat rocks?
  don_dunstan Minister for Railways

Location: Adelaide proud
Yes I fear bad vibes indeed, but I don't hold out much hope for any of our current political leaders to have the intestinal fortitude to tell China to stick it. We are now so reliant on them, particularly for our exports, that we can't afford to get them off side.  It reminds me of a basic business adage, that you don't put all your eggs in one basket.
Transtopic
This is the conundrum I was trying to explain (rather clumsily) to Valvegear, there's just no way that we can win this. We either acquiesce to everything and anything that they want or we put our foot down and they'll economically punish us. It's a dichotomy that means we just can't win.

I say get it over with early and punish the Red Army hackings, if we don't they'll just think we're too weak and won't defend our democracy and rule of law. It's really as serious as that, if we don't defend these institutions then they'll be hopelessly corrupted by foreign communist influence and it's all over, we'll end up like Tibet or another satellite state.
  Transtopic Assistant Commissioner

Yes I fear bad vibes indeed, but I don't hold out much hope for any of our current political leaders to have the intestinal fortitude to tell China to stick it. We are now so reliant on them, particularly for our exports, that we can't afford to get them off side.  It reminds me of a basic business adage, that you don't put all your eggs in one basket.
This is the conundrum I was trying to explain (rather clumsily) to Valvegear, there's just no way that we can win this. We either acquiesce to everything and anything that they want or we put our foot down and they'll economically punish us. It's a dichotomy that means we just can't win.

I say get it over with early and punish the Red Army hackings, if we don't they'll just think we're too weak and won't defend our democracy and rule of law. It's really as serious as that, if we don't defend these institutions then they'll be hopelessly corrupted by foreign communist influence and it's all over, we'll end up like Tibet or another satellite state.
don_dunstan
I concur.  Although we are a minnow compared with China, we can't afford to acquiesce to their ideology.  They are a threat to our democracy.
  RTT_Rules Dr Beeching

Location: Dubai UAE
Fall of 20% from the peak on the back of a 20, 30, 40% etc rise in the Premium suburbs funded mostly by high and very high income earners and listening to an interview some time back by Real Estate guru the higher the property value the less likely the property was purchased with finance.
I don't believe there's any evidence for saying 'high end' houses are not purchased with borrowed money. But prove me wrong.
NSW budgeted for a drop in stamp duty, I posted previously on same subject how much, I cannot remember but I believe it was around $1B reduction and the state still has a comfortable surplus with plenty of room to go before going into deficit also noting NSW is in the rare position of a govt in Australia of not just being deficit free but net debt free as well.
Lucky them, I guess that's also an artefact of not spending any money on public infrastructure. Bin Chicken would rather rebuild 25-year old stadiums.
So, as usual the next recession busting expenditure across the country will be funded by the Sydney based taxpayers.
Paying with what, flat rocks?
don_dunstan
It was early last year, I was listening to a guy from a real estate company about the high end properties in Sydney, he basically said properties over $15m are always cash. Up to a few million is finance but tends to decrease with price and over $5M rarely financed.

People buying these are wealthy, not your normal PAYE earners, often CEO's etc ho's salary is often many times larger than the property value and either paying cash or using their company to buy which is cash.  

Again back to Sydney, average property price is $900k or so, so at $2-2.5m and above who's buying these? You are talking high paid jobs like experienced Specialist medical practitioner, lawyers, maybe medium sized business owners etc The kind of people who if they borrow, don't need to borrow a large amount and less likely to fall on hard times.

NSW spending on public infrastructure is well documented Don, and you are a full to say otherwise. It was the backbone of the Australian economy for a few years now, a major cause for the house price rises in Sydney and a key driver for migration from WA and Qld into Sydney. The NSW govt has spent more (non-borrowed) money on infrastructure in last 8 years than other states combined, most of which is borrowed and retired debt at the same time.

Income tax and GST receipts from the jobs they have, but the likes of NT SA, WA, Qld and Tas don't.

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