Shades of 2006: That’s What Australia Housing Bubble Looks Like From US Perspective

Courtesy of Mish.

The Australia housing market did not bust when it should of and the delay is going to be painful. The bigger the bubble, the bigger the crash, and the Australia bubble is bigger than we saw in the US.

On a timeline basis, Australia is about where the US was in 2006, essentially  a state of denial.

Developers are offering massive incentives such as cars, furniture, and vacations to move homes while chanting the ever-popular “now is a great time to buy a house” mantra.

Gifts Galore

The Age reports Gifts galore boost flagging unit sales

Developers are slashing apartment prices and handing out tens of thousands of dollars in incentives – including rebates, cars, furniture and holidays – to lure buyers into Melbourne’s new-unit market.

While many industry players say the offers are good news for buyers, others worry that the discounting could fuel a “race to the bottom” that could harm property values.

“There’s no question there are a lot of apartments under construction, so everyone’s trying to attract attention to get people to inquire about theirs,” said Robert Pradolin, general manager at developer Australand.

“It’s probably a very good time to buy because there are a lot of incentives around, but buyers still need to be really careful that they are picking a place based on its location, quality and who the developer is.”

In one case, Maxx Apartments announced a “massive St Kilda apartments sale” in a series of large advertisements. The promotion saw $121,000 cut from the cost of a two-bedroom flat and the price of a $415,000 one-bedroom unit reduced by 18 per cent.

Late last year, a $65,000 Mercedes was offered to the first buyer of one of four luxury apartments that remained unsold in a Brighton development. Rubicon Pacific used the teaser despite already dropping prices by $150,000 to $200,000 on apartments first listed at up to $1.3 million.

Other developers have followed suit, launching campaigns that provided $5000 to $20,000 rebates on top of the $13,000 available to first home buyers before July 1. Some have tried to lure investors with offers of guaranteed rental income for up to five years….



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