Not only does Australia have a two-speed economy, resources boom states v the rest, the biggest cities are running two-speed housing markets with life at the top rather nice while life at the bottom remains aptly described.
At the same time that the repossession rate in Sydney’s western suburbs is rising sharply with battlers falling into negative equity, record high prices are being set in the east: $6.75 million for a Paddington terrace, $9 million for a Bondi penthouse and a Darlinghurst penthouse and John Symond’s Walsh Bay apartment both expected to break the existing $15 million record for a unit.
It looks like there’s more than enough ticket-clipping continuing in financial services to keep the Emerald City’s top end tops.
On the fringes it’s a distressingly different story as prices fall. Even though its repossession figures are half a year old – you would expect them to be worse today – the Sun-Herald had a good splash:
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In 2002 there were 2189 repossessions after defaults by borrowers. In the 12 months to March the figure was 4873 – more than double the rate under Paul Keating’s 17% interest rate regime in 1990.
Politically, the suburbs setting real estate records are already welded to the Liberal Party. The places with the pain can swing. Not helping the Federal Government’s cause is the demolition by Macquarie Bank economist Rory Robertson of John Howard’s attempt to blame state governments for tough housing affordability.
An SMH investigation last month showed even Liberal politicians aren’t immune – MP Pat Farmer is having trouble unloading his own properties. And Farmer isn’t the only western suburbs aspirational to be punting on property. Other studies have found it’s often not the eastern suburbs landlord class that’s been punting on western suburbs bungalows – the western locals have been swept up in the national spruiking of real estate investment since the capital gains tax changes.
And the boom states might not be immune yet either. While West Australian real estate continues to boom, WA treasurer Eric Ripper is warning that it won’t last. In an interview for this afternoon’s Eureka Report, Ripper confirms there are land releases on the way and the boom is not sustainable.