Gottliebsen

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The building of inner city apartments in Melbourne and Sydney has slowed to a dangerous level, according to The Australian columnist, Robert Gottliebsen.
He suggests governments are making the looming unit shortfall worse.
"Not only is substantial employment and business activity at stake in both states, but in Sydney the NSW government has dreamt up an unbelievable plan that will halt apartment construction in many areas, potentially for years," he wrote.
He says apartment building has slowed dramatically because communities and councils across the city are making it as hard as possible for high density living projects to find a way through the approval processes.
"Normally such decimation of an industry is caused by demand, but in June 2019 demand is not the problem."
The supply in both cannot be generated to meet looming demand.
He noted at the moment in both cities there is excess supply but demand momentum helped by the return of Chinese to the market has already lifted Sydney apartment prices by 10% after they had fallen by 20 to 30%.
"During 2020 the demand-supply ratio will change markedly."
In both Sydney and Melbourne it takes about three years for a development to get through the approvals, while in other states the apartment approval process takes less than a year, he said.
In Sydney the current approval mess means that production of apartments is now down 40%.
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Governments making the looming 2020 Sydney and Melbourne apartment shortfall worse: Robert Gottliebsen

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Investors expecting to retain the ability to negatively gear their properties when the Labor Party win government next year are taking a big risk, says economist Robert Gottliebsen, The Australian columnist.
"At the moment, while the auction clearance rates in both Sydney and Melbourne are low, they are being boosted by investors seeking to retain the ability to negatively gear in anticipation that the ALP will win government next year," Gottleibsen said in his column in The Australian.
"But in my view those investors are taking a huge risk," he added.
If the Labour Party win government in May 2019, negative gearing will still be available on new homes, but not on existing homes.
"That means that after July 1, if those investors currently buying houses want to sell then the buyer will not have the benefit of negative gearing," Gottliebsen said.
"Investors buying old homes after July 2019 will want positive gearing — ie interest and costs must be lower than rental incomes.
"The only way to achieve positive gearing on pre-owned houses is for the price to fall sharply and/or rents to rise.
"Banks under the close day-to-day supervision of the regulators will lower their house valuations and then reduce the amount they are prepared to lend, accelerating the fall in prices." 
Gottliebsen called the Labor Party negative gearing policy an "atom bomb". 
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Investors taking risks in negative gearing purchasing: Robert Gottliebsen

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Fasten your safety belts for a nasty downturn.
That's the warning from The Australian columnist Robert Gottliebsen.
"My fear is that on top of the APRA squeeze, we will have royal commission recommendations and then a series of class action court cases against banks.
"Combined, they will deepen and extend the credit squeeze.
"If the vicious downward spiral was broken today there would be minimal damage.
"But the squeeze looks like not only continuing but getting worse.
"If that happens, fasten your safety belts for a nasty downturn," he wrote earlier this week in the national newspaper.
Robert Gottliebsen says the credit squeeze juggernaut is being driven by the regulators, led by APRA.
He says bank chief executives, bank boards with greatly reduced power and the local bank branch managers are scared by what they describe in low tones as the APRA “Gestapo”.
"There is no doubt that APRA is the main force behind the credit squeeze.
"Unless much clearer boundaries are drawn, APRA, aided by the royal commission, will drive house prices lower and lower and construction rates will fall."
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Bank lending squeeze heading for nasty property and construction downturn: Robert Gottliebsen

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Dwellings with price tags above $1 million where there are no Chinese buyers in the market are the most vulnerable to price falls, in the spring selling season, according to the business columnist Robert Gottliebsen.
"We are watching a concentrated squeeze on the housing market the like of which we have not seen for a long time," he advised his readers in The Australian.
Large areas of the dwelling market are looking soft, particularly in Sydney and Brisbane, partly as a result of tighter bank credit in recent months on investors, he suggested.
"The bank finance squeeze is set to get tighter as several banks are becoming much more serious in implementing an APRA-imposed lending curb on residential homebuyers."
Gottliebsen says an important issue is that many buyers who entered into large loans in the recent past believed their income would rise.
"Not only has it not increased but there is now greater job insecurity and this is lifting stress levels.
"Falls in the price of dwellings will lift those stress levels," he said.
"The great risk is that as prices start falling there will be a bank panic, which tightens lending further.
"I don’t think this will happen this time because hopefully the banks understand that their liberal lending policies are a key reason the prices of dwellings have risen so far.
"Obviously there have been other forces, including supply restrictions, but if the banks cause severe price falls it will lift the levels of bank problem loans and reduce activity in the building industry.
"They are trapped," he concluded.
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Spring's most vulnerable property markets: Robert Gottliebsen

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A major slowing trend was emerging internationally with three key real estate markets showing the same nervous signs.
Vancouver, Sydney and Melbourne were the key cities, according to The Australian columnist, Robert Gottliebsen, who pinpointed a reduction in Chinese buying and reluctance by the non-Chinese locals to buy at the high prices.
"The slower real estate sales combined with no rises in non-public servant salaries is causing motor and retail sales to stall," he reported on the local economic consequences.
"The share market is clearly nervous.
"And we are just at the start of the process," he wrote today.
"Traditionally, once dwelling buyers lose the flower of abundant confidence there is a period of much lower volumes because sellers are reluctant to meet the market.
"That’s what we are seeing in Vancouver."
He suggested Vancouver was ahead in timing which would help understand what could happen in Melbourne and Sydney.
"A series of clamps and higher taxes have been imposed on overseas investors in Vancouver.
"Accordingly, Vancouver has seen an easing of prices but, more importantly, volumes have been slashed because sellers can’t move their stock.
"In April the volume of detached Vancouver houses sold fell a staggering 50 per cent."
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