another all-is-fine spruike. the end is nigh!, page-5

I actually saw that article, and found the reasons it listed why we were different from the US so farcical, I sent the following refutation of them to some of my friends. This is re-copied below: (my text in square brackets..it was better in email when I could make my text red haha)


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here are a number of reasons mitigating against a US-style crash in house prices.

Most people have jobs and as long as that situation continues, there will be few forced sales.

[- unemployment didn't increase in the US (or Ireland, Spain, and Japan) until long after the housing crash had commenced. Once the crash got underway, jobs in construction, real estate, etc all were shed. They are presuming causality in the wrong direction, as the records clearly show.]

Across much of Australia, housing supply is limited, unlike the over-supplied market in the United States. Red tape, infrastructure levies and an entrenched culture of nimbyism (not in my backyard) are keepinghousing construction below the levels needed. The approval process for building apartments has become so agonising that some major developers like Stockland have given up trying to build them. This will keep buyer competition strong for the limited choice available.

[- this has been refuted by almost every Real Estate Institute in Australia, which all now point out the surplus of properties for sale, and how properties for sale is ~50% above equilibrium. Hilariously, in California in 2005, they were talking about the massive shortage of homes, as they were in Ireland etc. Reading those articles now is funny.]

Further, loans in the United States were non-recourse, meaning the debt was secured only against the house. When mortgage repayments got too hard, or when house prices began to fall below what their owners had borrowed, thousands of ordinary families made a rational choice to post their keys back to the bank and forfeit the house. The bank had no claim over their other property or income, meaning the debt was as good as settled. Many continued to live in their houses as renters.
In Australia home loans are full-recourse. If you default, the bank will take your house and whatever else they can get their hands on until the full amount is repaid. If you can?t pay, you will go bankrupt. Australian home owners with mortgages will go to far greater lengths and make deeper cut-backs to their living standards, to keep up their loan repayments

[- This is the most superficially persuasive. Although it's 100% wrong. Only some US states are non-recourse. Florida, for example, is full recourse like Australia, and property there was butchered as bad as anywhere. Ireland, Spain, and Japan were all full recourse as well.]