home starts in us fall to 26 year low , page-6

Hi trader_10 and others...

I see things this way...the aussie market has been subject to significant differentials across the markets. Yes, Perth has gone bananas, and may come back somewhat. In Sydney there are two markets going. In the west of Sydney, the situation is terrible already, with prices stagnant and its been that way for at least a year or two. But elsewhere in Sydney, it business as usual and if you look at the stats, Sydney has not gone up hugely. In Melbourne where I spend most of my time the market has been moving over the last two years, but I do not see much likelihood of a major pull back. I say that because housing starts have been at record lows and yet we still have significant inward migration. There is large pent up demand and not enough supply.

The whole thing depends largely on how well or badly our economy stands up to the global economic circumstances.

I would make one other final observation that sets the Australian situation apart from the US. That is that apart from our more prudent lending style, the typical Australian mortgages provide that borrowers are liable for any shortfall in the sale price of a house once it is sold by a mortgagee. In the US they typically just hand back the keys and it's the bank's problem. So here, our households are much more likely to tough out a situation and find the spare cash to meet the mortgage, thus reducing forced sales and therefore minimising the likelihood of a downward spiral in prices.

regards
DF