Two potential approaches to a problem Australia will face: Jud August 17, 2012 at 3:52 pm basically I'm just trying to stress the importance of little differences between countries. Getting off topic a little bit, but I have an interesting story on that. We all know about the financial disaster in Greece. Their housing bubble popped back in 2008 and since then banks are surviving on Govt handouts, mortgage funding is frozen, median income is down, unemployment through the roof, housing stock through the roof, selling activity down 90%, new construction practically zero. Based on these things alone you would've thought that house prices must have dropped 80% or something. Well no, they have dropped 20% from the top of the bubble 4 years ago which, all things considered, is an incredibly slow melt. What's been keeping prices up? They have a law over there that says you cant foreclose a family property (with some exceptions). You can confiscate everything else, take them to court, the court will determine a viable repayment schedule for them, but you cant kick a family out of their home no matter what. IMF has been trying to lift that regulation but no Govt has the balls to do it. Considering house ownership over there is ~65%, that makes the majority of mortgaged homes. Further, "property ladder" type investment was never very popular, property investors were mostly corporates that made such huge profits in the bubble period (house prices doubled in 8 years, construction cost flat) that can afford to wait another 10 years "for the crisis to go away". There are literally whole vacant neighbourhoods in the outer suburbs, newly built. Rates over there are embedded in the electricity bill, therefore cost of ownership is near zero. from a comment here http://www.macrobusiness.com.au/2012/08/the-economist-on-australian-house-prices/ Presently Australian's super funds are increasingly being mauled by distressed home owners to pay home loans. But could Govt policy make the principal home untouchable in the future as in Greece? Not good I think. vs The Modern Debt Jubilee http://www.zerohedge.com/news/modern-debt-jubilee and look at this calculator 'Is It Better to Buy or Rent?' http://www.nytimes.com/interactive/business/buy-rent-calculator.html
