Bricks and slaughter: Part one - Exposing Australia's housing crisis | 60 Minutes Australia

it's no secret Australia is experiencing a downturn in the property market but if you own your own home or have a mortgage there's worse news many believe calling it a downturn is foolishly optimistic the slump we're currently in is more like falling off a cliff real estate and finance experts you're about to meet predict the value of your house could slide by as much as 40% in the next year yes 2/5 Sevilla homes worth wiped out in just 12 months and if numbers like that eventuate there's only one certainty our entire economy faces catastrophe this is looking right in the teeth of a gale and that gale could lead us to a recession it's coming and it's not if but when the end of Australia's property boom time party's over it's definitely over and it's going to be over for quite some time tonight experts across the industry the market analysts the estate agent the investor the data scientists and the liquidator deliver their sobering verdicts get out while you can't get out where you can absolutely at the worst end of the spectrum if everything turned against us we could see property prices forty to forty five percent down from their peaks which is a huge deal who loses that big in the next couple of years everyone home ownership is our national obsession but are we finally waking up from the Great Australian dream I gotta get home this guard of the Tendo the fruits on the ground the birds have all moved back into my every house has a story young for more and more of us that story is going south it's a shameful experience especially when I'll have dynamo and then to put my hand up and say look I'll do need help help fluid in streets and suburbs across Australia families are losing the mortgage battle I don't think I'm the only one who's struggling I don't think I'm the only one there's a lot people out there struggling I mean this minute I'm talking to you not knowing if I'll be here for the next six months or not for some it's become a debt trap existence with no way out what we've got on the market now we've had on the market for 18 months and still not sold it's something that you think about all day for as long as most of us care to remember or perhaps only as long as we want to remember property prices in Australia have only gone in one direction at least in our big cities now not only do we have the most inflated housing prices on the planet but our property frenzy has generated statistics that stagger the rest of the world a personal mortgage debt is stratospheric actually at levels America reached just before the GFC and worse still Australia's economy is more dependent on housing than any other on earth for decades housing loans have been country's financial bedrock it means if mortgages now fail the entire Australian economy is threatened how much does Australia have tied up in mortgages so there's one point seven trillion dollars held by the banks in mortgages for own occupies and investors and that's about sixty five percent of their total lending that's higher than any other country in the the world by a long way data scientist Martin north of digital finance analytics says the problem is blindingly obvious Australia is addicted to debt there's probably no country in the world more susceptible to the ramifications of a housing crash than Australia we are uniquely exposed at the moment because as a society and as a government and as a regulatory system we're all banking on the home price engine just goes on giving and giving and giving right but it's not going to the US has in crash in the mid-2000s was triggered by homeowners forced to foreclose by soaring levels of mortgaged economies around the world 43 went into free food everything and more has been completely wiped out I'm doing parallels Australia now and where the US was in 2006 and 2007 we've got a debt bomb we've got a debt crisis and at some point it's going to explode in our face muddin streams advice and data to the market based on his surveys of homeowners in mortgage distress what he's seeing out there more and more of us going deeper and deeper into the red we've got a lot of people sitting on big loans with no ability to be able to service them increasing mortgage distress means a new word is now stalking our suburbs foreclosure 20 developers in desperate for buyers desperate for buyers major real estate companies refuse to our requests to interview their agents on the housing front live short health that brave agent Peter Yunnan is defying his industry colleagues to speak the truth the market is down and still a long way from the bottom did you guys youth always sit in the office thinking right the good times are good answer 100% 100% doesn't last forever in his patch of Sydney's West house prices are plunging probably the median price in an area like this you're looking at about a million dollars and what would it have been a year ago about 1.2 so they've lost $200,000 in the space of a year yeah Peter has seen foreclosures rise 600 percent in his area and other agents we spoke to off-camera confirmed that number the mortgage stress is definitely being felt especially in this area people are coming and asking to put their property maybe back on the market because it might have been on the market for four to six weeks and it's struggling to sell now big mistake believing that house prices will keep going up and up forever we all in fantasy land there for a while the market was clearly overvalued there's no doubt about that even when we went to the real estate industries most respected market analyst Louie Christopher of sqm property appraisal he couldn't have been more blunt or vote to him and the industry it's not a crisis it's a correction is it the correction we had to have for Sydney and Melbourne yes it was a correction we had to have on our numbers Sydney was effectively over 40% over vade and and Melbourne was over value by about the same amount I've got the view that there were so many people all on the same drug right the banks the Reserve Bank and individuals and everyone was expecting and hoping that prices would always go up as house prices drop banks claim they're working with homeowners in distress truth is for many it's payback time I've had the power turned off three times four times I've put into the service station to put $20 worth of fuel in the car and pretended them Cardinal worth knowing that there's been their money in my account Bradley Hart is a suburban trading a change of jobs and reduced income triggered a downward spiral of falling behind on his mortgage and he's now being hounded by his bank the bank made it clear that our or mr. payment they had the ability to come and foreclosed on my house give me a vacate notice within two weeks sell the property Dease a plenty more people defaulting on their home loan over the next year or two these are individuals and households that are actually right up against it and therefore my prediction is that over the next 12 months as oh yes defaults are going to rise we've got about 52,000 households we think that will default over the next year in Melbourne an illness has Mohamed zu8 on the mortgage ropes he knows that knockout blow is coming even though everyone in his tight-knit family is pitching in we haven't had any holidays at all living house for the last four years we didn't have a good car for the last four years yeah you can't enjoy the life you're supposed to enjoy at your own house those like Mohamed who bought at the market peak now face being trapped in a mortgage prison so a lot of people start out trying to buy this straight off the bat that's not the way to go that's the mistake you put a dirty great noose around your neck and you can't do it odelay property investor pushy Martin blames us that any coming crisis Australians who mortgage themselves up to their eyeballs buying their dream house before they could actually afford it it took bushi 20 years to buy his dream house he did it by renting where he wanted to live but buying investment properties where he could have fought he calls it rent vesting but it's not the way that most of us have bought our houses we've had a very comfortable for a long time in this country and because of the way of the world now operates we expect to have everything now and I've blamed the iPhone for it that's the iPhone I own everything now routine that we've all become used to people just scroll Instagram and go I should be living like that that's me that I want to be I want to be them absolutely right but it can go belly-up very quickly very quickly absolutely very quickly if you're getting into those sorts of areas at the very peak of the market and having to live a very basic lifestyle just to cover the mortgage there don't never be too many changes in anything to tip that over the edge coming up the bank's latest tough tactics so nightmares no but it's not completely understand our you can beat them some people can afford to sit others car that's next on 60 minutes hello I'm Tom Stafford thanks for watching to keep up with the latest from 60 minutes Australia make sure you subscribe to our Channel you can also download the 9 now app for full episodes and other exclusive 60 minutes content

Channel: 60 Minutes Australia

Views: 812,713

Rating: 4.3518734 out of 5

Keywords: 60 Minutes, 60 Minutes Australia, Liz Hayes, Charles Wooley, Tara Brown, Liam, Bartlett, Allison Langdon, Tom Steinfort, property market, Australian real estate, mortgage, homeowner, property prices, Gareth Harvey, Joel Tozer, real estate

Id: smPR0s2W-Ck

Length: 11min 15sec (675 seconds)

Published: Mon Sep 17 2018

Reddit Comments

[u/A0lipke]

Are you saying unattainably inflated prices can't be sustained indefinitely?