In 2008, America demonstrated to the world what a housing bubble exuberance is like. It leads to a blood bath. When grandma’s with zero income are offered financing to buy over inflated properties, the signs are clear to head for the hills. But greed invariably wins. Housing bubbles are nothing new. Japan suffered a massive crash 2 decades ago and has not recovered since. Will America be any different? Question is who is next?
Many countries are lined up for the flag down in the race to the housing peak. In this race, there are no winners. All will hit the peak and crash. None will survive. Sydney Morning Herald carries this report:
The Australian real estate market is in the grip of the biggest housing bubble in the nation’s history and Melbourne will be at the epicentre of an historic “bloodbath” when it bursts, according to two housing economists.
Lindsay David and Philip Soos, who have written books on the overheated housing market, have berated the housing industry and politicians who refuse to acknowledge the existence of a bubble due to a perceived shortage of housing in the major capitals.
In a blunt submission to the upcoming parliamentary inquiry into home ownership, the pair claim there is actually an oversupply of housing, just as there was in the US before the market collapse that precipitated the global financial crisis.
And the largest oversupply is in Melbourne where there has been a frenzy of inner-city apartment building. They forecast the total available homes in Victoria outstrip demand by 123,000.
NSW has a surplus of more than 40,000, according to their analysis, which was based on data from the Australian Bureau of Statistics.
“Contrary to the analyses of the vested interests, the data clearly establishes Australia is in the midst of the largest housing bubble on record. Policymakers are caught between a rock and a hard place, as implementing needed reforms will likely burst the bubble,” Mr David and Mr Soos state in a submission on behalf of real estate and financial services research house LF Economics.
They believe the current bubble is worse than those in the 1880s, 1920s, mid-1970s and late 1980s.
For I was envious at the foolish, when I saw the prosperity of the wicked.