Has The Australian Housing Bubble Burst? – Have A Look At Canada

Has the Australian Housing bubble burst? That is the $Trillion question.

Not if the Canadian housing bubble is any sort of benchmark.

The Canadian housing bubble is defying government attempts to burst it with an unbelievable resilience. So is it a housing bubble? Do we even have a housing bubble?

Canadian housing bubble house price growth

Talk of a housing bubble has been driven by a lack of affordable housing and price growth. That has happened mainly in the Sydney and Melbourne markets.

The Biggest Real Estate Bubble Of All Time Just Did The Impossible | Zero Hedge

One month ago, we said that “the Vancouver housing bubble Is back, and it’s (almost) bigger than ever.”

Fast forward to today, when we can scrap the almost part: according to the latest data from the Real Estate Board of Greater Vancouver, nearly a year after British Columbia implemented a 15% property tax targeting foreign buyers, in May the biggest real estate bubble of all time did the impossible and in a testament to the persistence of Chinese oligarchs, criminals, money launderers and pretty much anyone who is desperate to park their cash as far away as possible, after a modest drop following last summer’s tax the Vancouver housing bubble has bounced right back to new all time highs, as prices of detached, attached houses and apartment all surged to new record highs.

In other words, all that the 15% surtax achieved was to drastically slow down the rate of transactions (or perhaps home flipping). Meanwhile, as sellers held out to find more aggressive buyers, they were in luck as the new wave of buyers has emerged, and undeterred by the 15% premium, they have been slowly but surely lifting all available offers. Via zerohedge.com

zerohedge.com

Canadian housing bubble Vs US market

Similarities with Canadian housing bubble are close

Our two economies share a lot

  • housing debt
  • inflation levels
  • wages growth
  • chinese influence in the property market.

Especially Chinese influence in the property market. Despite 15% tax increase Chinese investors in Canada have bounced back hard, supporting the market.

Like Canada perhaps we should be so lucky government policy doesn’t burst the housing bubble.

The Biggest Real Estate Bubble Of All Time Just Did The Impossible | Zero Hedge

Next, despite Canada’s low rates, the debt service ratio of an average Canadian household is nearly 40% higher than when compared to the US.

In retrospect, perhaps Canada was lucky that the attempt to deflate the Vancouver housing bubble failed, had it succeeded and spread across the nation leading to a historic crash and collapse in collateral values and widespread defaults, the “mean-reversion” outcome would have been devastating for the Canadian banking sector. Which of course, is not to say that Canada’s problem has been fixed, but at least for the time being, the can has been kicked once again, courtesy of Chinese buyers who would rather park their cash in Canada than at home. Via zerohedge.com

zerohedge.com

I wonder will similar comments be made about the government’s response to our housing bubble?

The Biggest Real Estate Bubble Of All Time Just Did The Impossible | Zero Hedge

In retrospect, perhaps Canada was lucky that the attempt to deflate the Vancouver housing bubble failed, had it succeeded and spread across the nation leading to a historic crash and collapse in collateral values and widespread defaults, the “mean-reversion” outcome would have been devastating for the Canadian banking sector. Which of course, is not to say that Canada’s problem has been fixed, but at least for the time being, the can has been kicked once again, courtesy of Chinese buyers who would rather park their cash in Canada than at home.

China has an unregulated $8.5 trillion shadow banking system. There’s more than enough money so that the oligarchs can continue to buy enough Vancouver real estate to inflate prices years into the future. Wish they would get interested in my city. I’d be dumping my real estate holdings like there was no tomorrow. After all, these Chinese are willing to pay millions for crack shakes in B.C. Via zerohedge.com

What does an investor do about a housing bubble?

You could try not investing but that won’t get you any closer to that retirement you are planning on.

You could look at investing in something besides property but…

  • You do know that property is the basis of all wealth.
  • You know long term it is a high performing asset.
  • You know it is safe and secure.
  • You know you can get great tax deductions.
  • You know you can leverage your money because banks will lend on property.

Well, you’ve only one real choice. Forget about the housing bubble, click on the link below and find out how MAcH10 leases can help.

  • Fully rented for ten years
  • Maintained
  • Leased to blue chip Australian registered housing providers supplying housing to key workers.
    • Nurses
    • Police
    • Firemen

 

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