A new meaning of 'Going Greek'

[Superoo]

a freezing cold room with a single bed a wardrobe and a chair.

... Luxury

 

[wide eyed and legless]

Getting back on topic, when will the housing bubble burst, everything has to come to an end, just like the mining boom also the folk with mortgages in Australia can't just walk away and leave the banks holding the baby, but I can only imagine how deflating it would be to have a mortgage on a property which is worth more than the property.
http://www.macrobusiness.com.au/2015/03/australia-one-worst-housing-bubbles-ever/

 

[goomboogo]

Wide eyed, people can just walk away and leave the bank holding the baby. There are precedents including Ireland, as mentioned in the article. There were similar outcomes in the USA in the past decade. The walk away scenario was not uniform in America and the effects of a bursting bubble in Australia is likely to be more damaging in certain areas like Sydney and Melbourne. Although, smaller towns in some mining areas are already experiencing significant drops in house values.

The thing most politicians don't understand is that households can't ride out unemployment/downturns whilst carrying high levels of debt. If they did comprehend this detail the Treasurer (in the last fortnight) wouldn't be talking about the ability of the private sector to drive the economy right now as a result of low interest rates. This is beyond irresponsible.

When will the bubble burst? No one knows, but the potential for a very nasty situation is very real. The degree of the problem could have been minimised if governments of all persuasions had not abandoned reasonable financial and banking regulations.

If the unemployment/underemployment rate continues to rise, asset price decreases are almost certain. No job, no house, no assets multiplied by one million or more people will be a disaster. If governments of the past twenty years have looked clueless when things have been going quite well, imagine what the current government will look like if the millions of debt laden households go beyond the tipping point.

 

[wide eyed and legless]

I agree people can just walk away from their commitments to a mortgage, in America it is called a Strategic default, we don't have that here, the bank would put the house up for sale as a mortgagee auction then go after the guarantor of the debt for the outstanding amount.
A lot of investment is going into banks at the moment since the decline of the mining boom I am sure that is not where I would want my money because the ones who will be hit when the bubble does burst are the banks, when a person owes the bank a few hundred thousand they are in trouble when, collectively the banks are owed billions of dollars then the banks are in trouble.
Everything does come to an end and the housing boom will also come to an end, but not this week I was looking at the auction results for Melbourne earlier 79%.

 

[Airgead]

Yeah... American mortgages are different. Just like American bankruptcy. In the US if you default on a mortgage, the bank takes the house... that's it. They can't come after you for any extra. So in a housing decline, the banks are left with the debt. Here, they can come after you for the full amount so in a housing decline, its the mortgage holder not the bank that's liable. The only option for the mortgage holder is bankruptcy.

Similarly if you are bankrupt in the US, your debts are wiped out but you can walk straight in and start up another company. Not like here where you need to discharge your debts or wait 5 (i think) years before they let you have another go.

 

[goomboogo]

Everything does come to an end and the housing boom will also come to an end, but not this week I was looking at the auction results for Melbourne earlier 79%.

Yes, the march continues. It must be distressing for people to see such a large percentage of their household income servicing a mortgage. Knowing that there is very little wiggle room if their employment situation changes must induce a particular kind of persistent anxiety.

 

[wide eyed and legless]

Yes, the march continues. It must be distressing for people to see such a large percentage of their household income servicing a mortgage. Knowing that there is very little wiggle room if their employment situation changes must induce a particular kind of persistent anxiety.

But it isn't only that, surely those buying houses must realise that if they are buying something today for $1 million tomorrow it has a possibility of only being worth $500,000, no if was in the market for a house I wouldn't be buying one in the current climate.