It has been coming for quite some time but now it appears to be unfolding in earnest - the long-anticipated bursting of the Aussie housing bubble. Major cities such as Brisbane and Perth have experienced sharp declines in residential property prices over recent quarters, whereas prices in both Sydney and Melbourne have been more resilient.
However, the situation in Australia’s two biggest cities is definitely changing. In Sydney, property listings over recent weeks have soared, especially in those suburbs where the banker-belt is evident. Bonuses this year have been very poor, and over recent weeks there have been some very significant layoffs in the financial sector. At the same time as property listings are booming in Sydney and Melbourne, actual house sales are declining sharply. Not helping the situation is the incredibly expensive currency, which both inhibits potential offshore buyers and encourages the latter to sell if they already own. Unemployment is rising, household balance sheets are very highly leveraged - which has triggered a much-needed desire to raise saving - and mortgage rates are prohibitive. Second homes and holiday flats are increasingly being sold off and and credit growth has slowed appreciably.
The next few months will be very tough for Aussie property owners.