There are still some who reckon that a half glass full is fuller than those who swear by a half glass being half empty. I cheerfully belong to the latter mob. You know the saying; “a pessimist knows the world is crook, an optimist is always finding out.”
With the Christmas over and the traditional Sydney to Hobart finished, the Boxing shopping spree exhausted, with millions having scored yet another T-shirt or Blue Tooth bargain, we can all take stock prepare for the coming year. Prepare will be the buzz word alright. Get ready folks. Tighten you belt and hold on, it’s going to be a wild ride. If anyone through their chardonnay’s-addled brain managed to get a look at the last of this year’s Newspaper they would have found articles with some rather depressing set of numbers. Unbelievably but irrefutable, according to those whose job it is to churn through the stats, there are now over 60.000 families whose mortgage is higher that the value of their ‘own-home’. In other words, our almost impenetrable conviction that property never ever goes down is getting a bit of a dog’s leg cocking up.
I’ll refrain from stating the worst States in falling prices, but falling they are in all States and that is with the two interest rates cuts. Gloomy figures, and who wants that to ponder over just when we get ready to stroll and watch the fire-works?
Many eternal optimists reckoned that the fall in real estate would never happen and they had theories of migration and under supply that would hold the housing-market up. Then that old time worn truth or excuse; to own our own home is the ultimate fulfillment of the Australian Dream, it’s not very patriotic to go against that. It ought to be the ultimate aim and ambition for all families and all peoples. “We need our own home,” and the more the merrier. It stood the test of decades. Every time the prices took a bit of a dip, hordes moved in, bought up into the slack and yippee, up and up, our ‘own home’ went again.
At parties and dinners, people would regale the most fantastic tales of millions having been made from juicy real estate deals. You could buy a house, sweep it out, bang it back on the Internet Market and make thousands. Thousands they repeated, rocking back on their chairs or heels, while masticating the croutons.
What about those numbers a while ago that Australian City housing apart from being the largest were now also the most expensive in the world. Australian property is more expensive than Hong-Kong, oh no, surely not? Of course Hong Kong had that dubious distinction some years ago as Tokyo did, but now, down, down and more down as the Coles ditty rambles on.
Instead of taking heed of the old saying that what goes up will go down, we increased our buying orgy and till about the middle of this year it rocketed on regardless, it had a life of its own, but…. look at it now? Each week brings a new set of numbers confirming that the downward spiral is increasing its tempo. Most real estate sections in Newspapers still try and put on a brave face but they can’t deny that auction figures have slumped which is an indication that sellers are now faced with either sitting tight and risk further downfalls or meet what the market might still be offering.
Those who bought on speculation with taking mortgages out on equity in own homes to buy more property are getting a bit nervous, and so they should. No party goes on forever. We do not have the ‘strategic default option’ that many in the US enjoy. In the US if the value of the house gets much less than the outstanding mortgage you can simply walk away and the debt belongs to the bank. That’s why the US banks went broke. Here in Australia, people still remain in debt even when walking away from the home.
Here is the optimist view:
The fall in prices is just a blip. Soon they will go up again. You just have not reckoned on how many of us, true blue Aussies, are going to welcome boat people. We have always relied on migrants and refugees to join our society, get jobs and pay tax, become enchanted with the idea of owning own home and become part of the Australian dream. A drop in prices will just be seen as an opportunity to get back in again. It has always been like that and migration has been the backbone of real estate prices going up decade after decade.
The party will just take a rest, a kind of nap or fiesta. We might just have to change our attitude to boat people. We just know we were a bit stupid to try and put in place ‘deterrents’, instead of ,as we did in the past, put out the welcoming mat. Refugees are the salt of the earth and have always underpinned our economy. Above all, they have also always helped to put a solid ceiling under our national dream, our ‘Own Home’. Think about it!