A Result Of A Debt-Fueled Housing Bubble
A report from the Sydney Morning Herald in Australia. “Opal. It may be apt – after the huge New Year’s Eve rail-fail left people muttering ‘Sydney is over’ – that our transport card should name-share with the building that may come to symbolise Sydney’s final fall from grace. There’s been much talk of cracks and crackdowns after the Opal Tower fiasco forced Olympic Park residents of new apartments to spend Christmas in their cars.”
“The immensity of the boom, and the abject failure of successive governments, to sustain either built quality or essential services, could transform this glorious city into a sad hole where trains don’t run, buildings collapse, cladding combusts without warning, homes are unsafe.”
“Here we are, with people who’ve slaved for years at some soul-destroying job, scraping together sufficient deposit to plead with dishonest banks for a lifetime’s mortgage on a tiny chunk of exorbitant Sydney and now, through no fault of theirs, they can’t inhabit even that tiny chunk.”
From News.com.au. “As a number of design and construction issues have been confirmed in Sydney’s cracked Opal Tower by an independent investigation — subcontractors who worked on the building have revealed some worrying details Australian Subcontractors Association spokeswoman Louise Stewart toldThe Saturday Telegraph workers were employed at ‘bargain basement prices’ and claim they were not paid on time.”
“However a spokeswoman for the tower’s builder’s Icon said the firm ‘categorically rejected’ any claims of late payments to subcontractors. It comes as the independent investigation has found numerous building faults.”
The Daily Mail. “An additional 50 apartments in Sydney’s troubled Opal Tower have been gutted as engineers attempt determine a cause for the structural damage. After a preliminary independent investigation confirmed a number of design and construction issues, residents returned on Saturday to find their homes ‘absolutely trashed’.”
“Pictures reveal one unit has had its ceiling and flooring torn away to allow equipment to prop up the concrete slabs separating each floor. The ground level of the building has also been jackhammered and pavement ripped up.”
From ABC News. “Engineers engaged by the NSW Government say Sydney’s Opal Tower building, which was evacuated after a crack formed in concrete, has ‘a number of design and construction issues.'”
“Residents have previously been warned the investigation may take 10 days but there was no guarantee when they would be allowed to return. They have been put up in nearby hotels and compensated.”
The Australian Financial Review. “A half-built apartment project is up for sale in southern’s Sydney’s Cronulla, after developer Lainson Holdings’ non-bank financier called time on its unpaid loans. Builders walked off the 25-29 Tonkin Street property after the local developer’s unidentified private lender called in administrators on the 28-unit project, six months before the scheduled settlement with buyers.”
“There is growing distress among apartment developers amid slowing sales in a slumped and credit-starved housing market. Other recent private lender-led receiverships include the 100-unit Royal Plaza property in Woodville Street in Hurstville and the 176-apartment towers at 30-32 Guess Avenue, Wolli Creek, both in Sydney. But unlike Lainson’s tower, the Royal Plaza was mostly completed while Wolli Creek had not even commenced when lenders swooped in.”
“While unfinished properties are not common in Australia, they are often a symptom of a housing crisis and a reminder of how things can turn against overambitious developers. In China, there are more than 60 million empty apartments sitting in eerie ghost towns, a result of a debt-fuelled housing bubble, leading to many projects being left either unsold or uninhabited.”
“In many parts of Asia, many apartment blocks were left uncompleted when the Asian Financial Crisis hit in the late 1990s.”
From News.com.au. “There is perhaps no better symbol of Sydney’s transition from a glittering world city to a sad urban wasteland than the image of tens of thousands of New Year’s Eve revellers waiting on choking rail platforms for trains that never arrived. When NSW Premier Gladys Berejiklian flatly refused to refund people’s wasted train fares, it was arguably another illustration of Sydney’s rapid downfall.”
“Overall cost of living has skyrocketed, with groceries and general costs higher than other capitals, while the night-life has died and dozens of venues have closed. The roads are choked and the majority of infrastructure problems meant to fix traffic congestion are over budget and well past schedule.”
“And increasingly, fed-up and frustrated locals are fleeing to other states, particularly Victoria, at the fastest rates in several years. The statistics speak for themselves — Sydney officially sucks. Just what went so horribly wrong?”
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‘Overall cost of living has skyrocketed, with groceries and general costs higher than other capitals, while the night-life has died and dozens of venues have closed. The roads are choked and the majority of infrastructure problems meant to fix traffic congestion are over budget and well past schedule’
‘And increasingly, fed-up and frustrated locals are fleeing to other states, particularly Victoria, at the fastest rates in several years. The statistics speak for themselves — Sydney officially sucks’
Bubbles make you poor and then they pop.
Yet there aren’t ANY conversations about how reckless and destructive these central bankers’ policies are. WHY? This stuff is absolutely rotten to the core, and it’s no way to manage economies.
Seattle WA Housing Prices Crater 22% YOY As Vancouver BC Housing Bust Spreads Like Ebolahttps://www.movoto.com/seattle-wa/market-trends/
Seattle WA Housing Prices Crater 22% YOY As Vancouver BC Housing Bust Spreads Like Ebola
https://www.movoto.com/seattle-wa/market-trends/
Chula Vista, CA Housing Prices Crater 5% YOY As San Diego Mortgage Meltdown Heats Up
https://www.movoto.com/chula-vista-ca/market-trends/
https://www.google.com/amp/s/m.huffingtonpost.ca/amp/2019/01/05/global-housing-downturn_a_23634322/
“If you’ve been following news of the slowdown in the Toronto and Vancouver housing markets, you’ve likely heard the narrative built around it: Tough new government regulations, combined with interest rate hikes at the Bank of Canada, are slowing down Canada’s most strained, overpriced markets.
But the same slowdown seems to be happening in many major cities around the world, and the causes are often very similar: Rising interest rates, new regulations, a volatile stock market and — in many cases — the disappearance of demand from Chinese buyers.”
But why do the realtors assure me RE is local?!
“And increasingly, fed-up and frustrated locals are fleeing to other states, particularly Victoria, at the fastest rates in several years. The statistics speak for themselves — Sydney officially sucks. Just what went so horribly wrong?”
Well for starters, greedbags cutting corners to turn fast profits. Long as it looks good on the outside right. Sweep the dirt under the rug, throw another shrimp on the Barbie and crack open a fosters.
Debt is great for stimulating the economy, up until the point when it has to be repaid, but cannot.
Opinion
Beware: The worldwide debt monster is rearing its ugly head
by Quin Hillyer
| January 03, 2019 02:18 PM
…
“The world has never had as much debt as it has right now – nearly $250 trillion,” reported the Journal. Worse, the “biggest borrowers” are “the U.S., China, the Eurozone and Japan, which [together] have more than two-thirds of the world’s household debt, three-quarters of corporate debt and nearly 80% of government debt.”
…
(snatched from the above link …)
“Mortgage debt is approaching its financial-crisis peak of $10.7 trillion. Average per-person credit-card debt stands at $6,826, up 11 percent since 2011. Car-loan average debt of $30,977 was ‘the highest for any third quarter on record.’ Monthly payments on new-car loans also hit a record. Worst of all, ‘U.S. corporate debt has climbed to roughly 46% of gross domestic product, the highest on record'”.
Truly, a nation of dummies.
“Average per-person credit-card debt stands at $6,826, up 11 percent since 2011.”
Does this “average” include persons who are debt-free?
That’s a great question. Technically it should, to represent all “persons”, as the description suggests. If so, it would be interesting to know the percent of 0s and the average among those who keep a revolving charge balance (aka “non-deadbeats”). For instance, if 25 percent of people keep their revolving credit card balance at $0, the average among those who carry a nonzero balance would be $6,826/0.75 = $9,101.33.
The reason I ask is because back when I was a repossessor it was normal to see debtors with credit card balances around $25k, which did not include the vehicle lien.
Your repo customers would naturally have been biased towards folks who like to carry large credit card balances.
Maybe some variant of the 80/20 rule applies: 20% of the people hold 80% of the credit card debt?
20% of the people hold 80% of the credit card debt?
It’s a bell curve searching for a hammer.
“In China, there are more than 60 million empty apartments sitting in eerie ghost towns, a result of a debt-fuelled housing bubble, leading to many projects being left either unsold or uninhabited.”
Whatever became of the command-and-control plan to relocate hordes of rural villagers into these multiple millions of vacant new apartments?
Is foul economic “weather” in China blowing an ill wind over your favorite companies?
Technology & Ideas
Apple’s iPhone Warning Comes Years Too Late
The company has reached the end of its denial phase.
By Shira Ovide
January 2, 2019, 2:42 PM PST
China could be the new “weather” for sales shortfalls.
Photographer: Greg Baker/AFP/Getty Images
The optimistic narrative about Apple Inc.’s iPhone business is falling apart in front of our eyes.
The company on Wednesday stunningly slashed its own revenue forecast for its first fiscal quarter that ended in December. Apple led by blaming a slowing economy in China and the trade skirmish with the U.S. for worse-than-expected consumer transactions in the region that includes China, Taiwan and Hong Kong. Apple said its first quarter revenue is now expected to fall about 5 percent from a year earlier. China may be the new “weather” — a go-to excuse for companies whose sales aren’t up to snuff.
…
Are mortgage applications normally pretty high around the holidays?
U.S. mortgage applications tumble amid concerns over economic outlook, gov’t shutdown
Source: Xinhua| 2019-01-04 03:19:29|
WASHINGTON, Jan. 3 (Xinhua) — Mortgage applications in the United States dropped sharply last week, as homebuyers were concerned about a slower economic growth and ongoing government shutdown, according to Mortgage Bankers Association (MBA) on Thursday.
For the week ending December 28, MBA’s market composite index, a measure of mortgage loan application volume, saw a significant 9.8 percent drop from one week earlier.
“Mortgage applications fell over the past two weeks, even as the 30-year fixed-rate mortgage decreased to 4.84 percent, its lowest since September 2018,” said Joel Kan, associate vice president of economic and industry forecasting of MBA.
…
There’s been much talk of cracks and crackdowns after the Opal Tower fiasco forced Olympic Park residents of new apartments to spend Christmas in their cars.”
If it’s any consolation, at least they weren’t throwing away money on rent.