A new study shows 57% of Australia mortgage holders could not handle a $100 increase in their loan repayment.
Stress has turned up in even the wealthiest cities.
But who is truly wealthy? Paper profits on homes with enormous mortgages does not constitute wealth.
Please consider $100 Tipping Point for 57% of Mortgage Holders.
A staggering 57% of mortgage holders could not handle a $100 increase in their loan repayments, according to new research by Finder.com.au.
This additional $100 is equivalent to an interest rate rise of just 0.45% based on the national average mortgage of $360,600. This means the average standard variable rate of 4.83% would only have to rise to 5.28% to put more than half of mortgage holders in stress.
“The typical mortgage holder will begin to struggle once interest rates reach around 5.28% – that’s a pretty small window before borrowing costs start to hurt,” she said.
With the research also showing that 39% of all mortgages are interest-only, this highlights why the Reserve Bank of Australia (RBA) and the Australian Prudential Regulation Authority (APRA) have shown some concern, she added.
Comparing genders, 63% of women and 50% of men would struggle to repay their mortgages with an increase of less than $100 per month.
Across the states, South Australian borrowers were the worst placed with 70% saying they could not handle an increase of less than $100 per month. This figure was lower in New South Wales, Tasmania and Western Australia at 59% and further dropped to 51% in Victoria.
Stress in Wealthiest Areas
Also consider Severe mortgage stress is cropping up in some of Australia’s richest suburbs.
Severe mortgage stress is cropping up in some of Australia’s richest suburbs, revealing that wealthy Australians have been guzzling at the debt fountain. Thousands of households in suburbs like Mosman, Brighton and Nedlands are in mortgage stress, with some at risk of mortgage default in the next 12 months, according to new data from Digital Financial Analytics.
Wealth is impossible to see if the person doesn’t want to flaunt it, and easy enough to fake. You can mortgage yourself to buy a grand home and the car to match, and have the trappings of wealth while actually being so far in debt you’re in financial hell.
Looking rich and being rich are not the same thing at all, but when times are good, it’s difficult to tell the difference. As the saying goes, ‘When the tide goes out, you see who’s not wearing any swimmers’.
Financial Hell Coming
When top finally blows off the Australian housing bubble, the results will be devastating.
Mike “Mish” Shedlock
A massive bet of your entire life’s savings plus whatever you may earn in the medium future (Australia lets the banks come after you for mortgage debt – recourse country) at a 40:1 leverage ration on an asset that does not cash flow…
All in the hopes of finding a greater fool so you can make some money.
What ever could go wrong?
The implied put is the same as in America: That as long as the idiocy is widespread enough, the idiots self righteous enough and the government unlimited and totalitarian enough; the idiots can, by the force of government, force those slightly less idiotic than themselves to come to their rescue. Via confiscatorily low savings rates, beggar-thy-neighbor-and-everyone-else zoning and land use laws, tax benefits for engaging in real estate related idiocy, and, as a final Hail Mary; outright bailouts. Forced on the less idiotic at the point of a gun.
Unless those less idiotic recognize the above for what it all is; straight up theft of the crassest sort; and steel themselves to be no more accommodating of the theft than the Somalis were with regards to Barre’s government attempting similarly confiscatory stunts; chances are the idiots will, relatively speaking, win this one, too. As is par for the course in properly well indoctrinated, progressive dystopias.
@2banana,
Thank you for the prodigious preponderance of internet postings you turn out on a daily basis. I gotta ask, between Mish’s site, Ben Jones’ housing bubble blog and whatever other alt-econoblog I’ve been frequenting this week, how in the world do you even find time to eat? I ask in all seriousness, as I have been lurking for quite some time on numerous blogs and your name and your ‘equation’ keep popping up. How do you do it, man?
Oh what a tangled web we weave.
When first we practice to deceive. – Sir Walter Scott (Marmion, 1808)
“When top finally blows off the Australian housing bubble, the results will be devastating.”
…
Yes.
Australia is a resource nation.
So goes China … So goes Australia.
China on the clock for going TU.
Not that I doubt this study, but how does one possibly measure these things? It’s like trying to take the earth’s temperature.
If I had to come up with an additional $100 each month, I wouldn’t be happy about it, but I’d just cut something else out (movies, ‘steak night’, flu shots, etc.).
What you just wrote, is the crux of why economics never has been, never will be, an empirical discipline. And why all attempts to pretend that it, in any way whatsoever, is; won’t ever amount to anything more than the purest of charlatanisms.
Mish – Any idea of how this compares to the US?
I believe Australian and Canada are much worse than what happened in the US. What kept those bubbles going is an inability to walk away as happened here. Canada has lots of govt loan guarantees fueling speculation. Banks offering mortgages don’t care about credit risk when they have a guarantee. Perhaps someone from Austraila of Canada can chime in if I have something wrong.
A full 39% of Aussie mortgages are interest only.
I don’t believe, in our most depraved moment of Big Short subprime madness that we, here in the US ever got quite that deep into the interest only quagmire. I stand corrected if somebody has the figures from 2007-09.
Mish, I wouldn’t say it’s so much government subsidies as most people won’t get anything from the government if they by a house. In Alberta, even though the economy took a hit, people are still borrowing and spending like mad. The mall parking lots are full everyday of the week in Edmonton and people are coming out of Costco with flats of everything they don’t need.
In my opinion the low interest rates without a housing crash have changed our culture. Everyone thinks its normal to borrow money for cars, trips, furniture, etc. I say that if you buy a Mercedes or BMW on credit, you can’t afford it so you should buy a Kia instead. I have yet to meet an Albertan who agrees with me. Easy credit is Canada’s opium epidemic.
Anyone in Canada buying with less than 20% down must purchase CHMC insurance protecting the banks in effect putting the taxpayer on the hook.
Will Canada’s housing bubble make Americas look tiny?
http://www.macleans.ca/economy/economicanalysis/canadas-housing-market-looks-a-lot-like-the-u-s-did-in-2006/
I actually think it’s worse than that. A lot of the houses being built are not made to last and are built on tiny blocks of land. You are being asked to pay premium for these “paper” houses so from day one they are a depreciating asset.
Yes, not only are a large proportion of Aussie mortgages interest only, a large proportion of mortgages are for individual “investment properties” and a sizeable number of people have built up reasonable size property portfolios i.e. via the perpetual re-mortgaging route.
The average Aussie believes that owning property is the one true route to getting wealthy and the idea that property could crash does not compute — this belief was cemented when China rode to the rescue during the GFC with a stimulus package, preventing an Aussie recession and also preventing a wholesale implosion of the property market (it went through a weak patch but nothing more). In other words, the average Joe here believes Australia is “different” and the economy and property market are under-pinned by a “secret Aussie sauce”. Risk, what risk? People are happy to be mortgaged to the hilt because tomorrow, house prices will be another 20% higher …. guaranteed!
Gonna be a blood-bath here, despite government attempts to prop the market up with a very aggressive immigration program.
Canadian non-mortgage debt per capita is somewhere around 26,000 and going up. The reset to reality is going to be ugly. But so far, the savers are holding the bag.
The lending in the US was FAR WORSE from say 2002-2007 then it has ever got in Aus and Canada. At one point I believe around 2005/2006 70% of all mortgages in the US were a combination of interest only + ZERO down + no income doc + horrible credit. I think Canadian and Aus lending never got even close to that loose. People put much larger down payments there. Foreign Chinese largely buy houses with all cash & no leverage, so they cannot lose the house to default since there is no loan against it.
The way it works is this: when borrowers no longer qualify for mortgages, lenders loosen standards — this happens multiple times through the cycle until the whole edifice topples over. Sub-prime US was an egregious example of this but similar things are happening in Australia (and I have no doubt, Canada). It’s just what happens. Mortgage fraud in Australia is also rife – the press has been full of stories recently and studies have been done by several people. Sub-prime is happening in these places – it just looks slightly different.
In addition, the magnitude of the Aus/Can bubbles are much higher now than the US bubble was at its peak, measured by price/income ratio (among other measures).
The larger down-payments in Aus are a myth: if you don’t have the 20% deposit to put down you have to pay an indemnity fee (a mortgage insurance payment), which simply gets rolled up into the mortgage itself if you don’t have the cash upfront.
Yes, a lot of the Chinese buyers are ‘cash’ buyers, partially black money being parked in Aus/Can but a lot of it is speculative (and borrowed from Chinese banks and family members, so not strictly cash buyers). If the property has a sharp reversal the spec buyers are not going to hang around. When the Chinese get the hell out of Dodge, they tend to do so in style. They love a gamble but hate the losses, as we all do.
Hi Mish. I’m in Sydney Australia and work 2 jobs to be able to save to escape the coming sh!tstorm. My main job is on an apartment construction site (Chinese financed, sold to Chinese investors). My moonlight job is security in a pub. One of the casual barmaids is a Chinese lass (moved here 3 years ago to complete her masters). With her fiancee they have purchased 2 newly constructed apartments as an investment (being in their mid 20s they probably only stumped up the minimum deposit). On Friday night she got into an argument with a patron (Irish male construction worker, moved here to find work after Ireland’s boom went bust) and she put him down saying that without Chinese investment money he would have no job. Once China goes bust or once Australia’s construction frenzy goes bust it will be a total disaster as all 3 of us will be unemployed (the pub mainly serves construction workers) plus the Chinese lass will be on the hook for over a million dollars (until they flee Australia and leave our banks with the debt).
Oh, and once Australia goes bust the little Aussie bleeder (AUD) will halve against the USD so I’m saving for the turmoil in bullion.
Neal, you nailed it. Many of the foreigners who find themselves drowning in mortgage debt when this crashes will simply buy a one-way ticket back to whence they came, leaving the banks (and potentially tax-payers) hanging.
Neal, It seems that both Labor and Liberals will look to Beijing – with its strings attached – to get everyone out of this mess with as little pain as possible – pump more people in, sell of more assets etc – Unfortunately it seems Australians are not as pro freedom as the Americans so it will be interesting how this plays out.
In Australia if you do not have 20percent deposit the banks charge you extra thousands to insure them. So the risk is on insurance companies like Genworth. Last time I heard of Genworth it had around 2 billion in reserves. Rough figures would be like
Aust mortgages AUD 1 trillion
60 70 percent of bank assets are mortgages
X amount are insured as buyers have less than 20 percent equity. A couple of billion or so to cover it all.No worries mate!.
Check out a blog called macrobusiness. They have covered this on and off over the years
This is going to be the biggest financial wreck since 1720….
Elliott wave theory supports the degree of your view of a long financial winter. The 1720 South Sea bubble popped quickly, but the bear market didn’t technically end until the 1770-1780’s
– The state of Western Australia (Australia is a federation) is already in “a recession”. The video below is talking about “Western Australia’s Great Depression”. Real estate prices for the top end of the housing market in Perth are already down some 30%.
https://www.macrobusiness.com.au/2017/04/abc-wa-economicproperty-bust/
– Another video on the same topic:
https://www.youtube.com/watch?v=ZXZMHvgueQU
– A video on how some affluent neighbourhoods are under (heavy) mortgage stress.
– Keep in mind that A LOT OF australians have “Interest only” mortgages.
Sounds like Canada.
There will be no bust.
Canada and Australia are just transitioning ownership from weak local hands to strong foreign hands.
The overstretched locals will fade away gracefully
How will the politicians be held accountable unless a big bust occurs?
sarc / off.
Yeah pols like Sadiq Khan?
“Your Worship where did all the white people go?”
“Who cares”
Saving cash to pickup bargains when it busts…
+1
But one has to be careful even when buying bargains, because the whiney socialists will cry and complain that their failure to save is somehow your fault
Your cash will be confiscated except for the government guaranteed $250,000.
The big four banks will be nationalised just like the early 20th century debacle.
Some of the bigger building societies and credit unions are government guaranteed however if you have a mortgage with some financier outside those them you a S%$# out of luck.
The Australian private debt is one of the largest in the world. Mortgages comprise about 60% of that.
Australia has other problems beside the financial. The governments will be struggling to keep the lights on in a few years. The war on coal will bring Australia to its knees.
Elon Musk and his batteries plus the SA windmills will be lucky to keep Adelaide with power this coming summer.
Les – apart from your touching faith in the gubermint’s $250K ‘guarantee’ your comments are spot on.
We owe a lot to the Greens & other cultural Marxists (and of course our chameleon PM).
It will end in tears and will be the end of the Australia that many of us knew and loved. She won’t be right, Mate.
There you go.
When I was a kid it was pounded in my head that if you can’t pay for it don’t buy it. But to keep Capitalism alive credit was promoted big time, borrowing was no longer a sin,if you did no borrow you where stupid. Every week a credit card is in the mail box. Guess what? the chickens are comlng back to roost .and Mc Donal won’t do it for you anymore , without money your worthless.
+1000
Interest only loans are the loan of choice for property investors. IO loans gained huge popularity back in 2012 and have grown exponentially ever since.
There is a catch.
After 5 years repayments revert back to principle plus interest.
That 5 year period has just expired for the first of these loans with the rest to follow.
Living in Alice Springs in the 80’s, I bought a house with a 15yr variable-rate loan (fixed-rate were only for short term). Rate in 1988 was 13.5%, which had risen to 17% by 1990 when I sold it. And they’re crying about 5%!
Tom, back then the size of the debt was not as high, even compared to incomes. Now a 1 or 2% increase would be like a 17% increase in the 80s since everyone is hocked to the eyeballs.
I expect very little to happen in Aus or Canada. People have been predicting a real estate crash in both countries for 10 years. I expect they will still be predicting a crash 10 years from now.
I just looked up the number of mortgages in arrears in Canada. It is 0.25%, the same as it was 10 years ago. Nothing to be concerned about.
Official figures?
Mortgage arrears or mortgage stress? I would like to see the official figures for mortgage stress.
I know someone who recently sold their own home due to mortgage stress. Their bank gave them every opportunity to sort out their mortgage before taking any collection action. They hadn’t made a mortgage payment for almost a year. Bank sent them to a financial counselor, offered deferred payment conditions, offered to make the loan interest only for a few years until conditions improved. Many letters threatening legal action. No related major credit default on their file with the credit agencies. (I suspect this was to allow these people to apply to refinance through some other institution and get them off their current banks NPL books).
After agreeing with the bank that their home would be sold, the bank dropped any threatening action. After selling their home and repaying out the mortgage, a subsequent check of their credit rating didn’t not show any mortgage default.
The big four banks in Australia are way up there on the Stock Board. A bad NPL list might affect one of their values.
F.W.I.W. The major banks and mortgage lending institutions have black listed entire suburbs from mortgages or interest only housing loans. Certainly CBD apartments.
Late report had 55,000 apartment sales in the last financial year – 40,000 to overseas buyers.
Actually I think its been more like 15+ years now people have been predicting a “imminent” crash in Vancouver house prices.
Please, dude. Stop trolling. You know nothing about anything – in particular, economics and finance.
Your argument is: because it hasn’t happened, it won’t. Seriously? Can you not even present some credible evidence? With all these bubbles you are watching a metaphorical elastic band stretching to ever greater extremes. It will bust.
– Canadian real estate expert Ross Kay told “Howestreet.com” that the housing market in Vancouver already peaked in 2015 and the housing market Toronto peaked in mid 2016.
– But Mr. Kay also told that it will some time before this change in the real estate markets will show up in the “official” figures.
Actually, the argument is that if you believed the market would crash 10 years ago and went short, you would have lost all of your money already. Doom and gloom predictions may get attention, but they are almost always wrong. Only idiots believe that they can get the timing right.
You’re clearly not a trader. There are options aside from ‘going short’, which is strictly for professionals (and outside of that, ‘idiots’). Investing in bonds 10yrs ago would have left you a decent return.
… not quite as good as equities, but then, when the next draw-down in equities occurs bonds will outperform equities and the only ‘idiots’ around will be those still in equities: 10yrs of equity returns wiped out in a matter of months. While that is not a prediction, it is certainly not without precedent.
In any event, I wish all the ‘idiots’ out there well. Good luck!
– Landlords in Brisbane (Australia) are offering all kind of freebies in order to attrack tenants (for their investment properties). And rents are falling in Brisbane. Seems more and more australians are desparate and are forced to lower their rents.
http://www.abc.net.au/news/2017-05-27/freebies-with-brisbane-rental-properties-amid-apartment-glut/8555420
– There’s another sign Australia is heading for more trouble. Real estate in Perth, (west coast of Australia) already has taken a beating (in price). Real Estate on the top end in Perth has already dropped some 30% since 2008.
http://www.abc.net.au/news/2017-05-01/perth-has-weakest-real-estate-market-in-australia/8485386
(minus 6% in the time frame from mid 2016 up to mid 2017)
– And what about this article: Real estate price rises have been “tepid” (june 2017)
http://www.skynews.com.au/business/business/market/2017/06/13/property-prices-drop-nationally.html
I am actually visiting friends in British Columbia, Canada right now. They tell me that real estate remains very expensive here, making it difficult for young people to get into the market. People keep moving further away from where they work and commuting longer distances. They certainly are not expecting a crash anytime soon.
Do you remember any blogger, economist, or investor in 2009 that was predicting in the next 8 years US stocks will triple and US home prices will double? I doubt there was one. People would have had you committed to an insane asylum had you said this in 2009 when everything was in ashes. Another example to me that NO ONE consistently can get the future right. There were some that did call the 2006 housing bubble. But I know no one that called this run the last 8 yrs. In fact most were saying the exact opposite of hard times ahead.
Bob Brinker is getting $185 for an annual subscription to his newsletter. He had you going back all in to equities in Mar 2009. It was a nice call.
I’m not sure if Bob got you out in time to avert the Q4-2008 bloodbath.
Jim Cramer is on tape assuring Bear Stearns stock holders that they were okay just days before it hemorrhaged away 75% of its value. This is a guy who threw a tantrum on air at CNBC in Aug 2007 and apparently got someone at the Fed to listen. By October, new all-time highs were in on major indices.
It’s mostly Kabuki theater at this point, but stocks are all there is.
Those are the winner of the central banking lottery, and the government criminal negligence regarding money laundering.
I’m in debt up to my eyeballs…
The issue is interest rates. There is no inflation in the global economy so rates are staying low for a long time. Mish looks forward to a crash thinking there is justice in the world but there is not. Central banks and spivs get away with it because of massive deflation. The market is not moral, the market is not malevolent, the market simply does not care.
If there had been inflation in the economy these huge asset bubbles could not have formed.
If there is an endgame it will be a currency crisis but where and when is anybody’s guess. Or a war which creates inflation. Either way everyone suffers, the prudent as well as the feckless.
Gold is good in the meantime but I don’t think the global property market is able to collapse in a low interest environment. I think the next stage is cross generational mortgages like in Japan and zero or negative rates. There is plenty of road left to kick the can down in a deflationary environment.
Subprime collapsed in a relatively low rate environment but these were people with hardly any income in the first place to cover the most basic of repayments. The banks have been bailed out once and are still too big to fail. The entire global monetary system is bankrupt.
Crypto offers the possibility of a less corruptible money system but whether it will be able to supplant the current one remains to be seen. So have some good, crypto and move to Argentina, the only decent country on the planet which has not succumbed to the power of the banks. A flat in BA is actually good value.
People keep saying there is no inflation yet rents are up 50% in many cities in the U.S. in the last 4 yrs. Rent is not included in CPI yet is by far everyone’s BIGGEST monthly expense! How can that be? Try telling someone in Seattle, Denver, Portland, San Diego, etc… who’s rent went from $850/mo to $1,500/mo in 4 years there is no inflation. And anyone who wants to buy a house now vs. 3 years ago in many U.S. cities has seen massive inflation in prices (thus there monthly payment).
Also another one of everyone’s bigger monthly budget items, health care premiums have inflated big time since 2014.
“If there had been inflation in the economy these huge asset bubbles could not have formed.”
Dude, the asset bubbles ARE the inflation. You pump up the money supply and you get inflation. Always.
It just enters the system in discrete places …. like financial assets, the property market etc.
The only people who take measures CPI seriously are demented academics with Economics majors.
Dude, the asset bubbles ARE the inflation. You pump up the money supply and you get inflation. Always.
Exactly!
– Quote:
“Dude, the asset bubbles ARE the inflation. You pump up the money supply and you get inflation. Always.”
Disagree !!! One needs rising prices in one or more asset classes (stocks, bonds, real estate, commodities, etc.) to get (credit) inflation. If all prices go down (like in the 2nd half of 2008) then it’s impossible to get inflation. So, one needs rising prices first and then (credit) inflation follows.
– The problem is that prices have gone up more than wages have gone up (to put it friendly) and that’s why people are complaining about (price) inflation. But when more and more people complain about “rising prices” then it’s guaranteed that deflation will follow.
Keynes. You are wrong – but don’t worry, you make the same mistake as 99/100 people.
Rising prices are not inflation – they are a symptom of inflation.
Asset prices rise because of increases in credit – not the other way round as you state.
When asset prices crash, the following happens:
People sell assets and repay loans – money supply falls
People default on loans – money supply falls
Risky assets are sold and funds go into bonds or gold … or stay in cash
The next crisis will be interesting because bonds are already in a massive bubble, so what will the CBs do? Start selling their bond portfolios to buy stock ETFs? Who knows.
When the bond bubble eventually bursts that’s when gold and (possibly) crypto-currencies will really shine.
In the meanwhile you’d be best advised to drop Keynes and immerse yourself in a bit of Mises instead – that way you’ll actually have a proper understanding of what’s going on 😉
– Quote: “Rising prices are not inflation.” Agree. See my reply above.
– Quote: “– they are a symptom of inflation.”. Disagree. See my reply above.
– (Credit) Inflation is defined as an increase of money (banknotes) and credit/debt. NOT as rising prices. And to get (credit inflation) one needs rising prices.
– Rising prices is only Price Inflation, not necessarily leading to credit inflation. A good example is the reduced rainfall in western parts here in the US. Since say the year 2000 rain- and snow fall has gone down significantly in western parts of the US, reducing production of fruit, vegetables and meat in e.g California. and pushing up prices of these things in the US and even in Europe. So, those rising prices was the result of reduced rainfall, NOT as a result of increased money & credit. Supply & demand, remember ?
– I did read some stuff from Mises but he – like the other austrians – doesn’t understand how a number of things work in the financial world and therefore draws the wrong financial/economic conclusion(s).
– I would recommend reading Steve Keen’s (a keynesian) work. E.g. “Debunking Economics” in which he makes mince meat of the neo-classicals and the austrians. Steve Keen already had in the early 1990s an economic model which predicted the crash in 2008. And that model also predicted WHY the financial would crash. Keyword: “Wages”.
I disagree with Keen on his solutions and on some other things but he is generally correct on debt deflation.
Keynes, I’m familiar with Steve Keen – we corresponded for a while after the GFC, then he sent me an invitation to subscribe (for $800, or so) to some or other economics blog he was setting up and that’s where it ended. Mish is right: Keen understands the debt problem to a degree and the dynamics of debt-deflation but his solutions are, frankly, nuts. Anyone who proscribes a debt jubilee as a solution (for example) has absolutely no idea what is going on, for reasons very easily explained.
“And to get (credit inflation) one needs rising prices.” – sorry, but that has to rank as the most illogical statement I think I have ever read. It’s effectively saying that the cart was invented before horses or oxen were discovered.
You are clearly keen on Keynes but his theories are central to creating the mess we’re in today — all Central Bankers and establishment economists are Keynesians,, to one degree or another, and the mess we’re in will lead (sooner or later) to an economic and financial cataclysm.
I think Mises is tough to read (and possibly understand) so those who want to gain a proper grounding in economics are best off starting with Henry Hazlitt: ‘Economics in One Lesson’ followed by ‘The Failure of the New Economics’ — in which he crushes every one of Keynes’ theories. If you are loyal to Keynes, it’ll be a tough read: the truth has a habit of being painful.
Good luck!
– Hazlitt makes A LOT OF good points but still omits/overlooks a few crucial things.
– Keynes recommend to run a budget deficit in bad times and a surplus in good times. This happened in the 1920s and in the timeframe say 1950 up to say 1970. In that regard we here in the US never followed all Keynes’ recommendations after say 1970.
– But in spite of running a budget surplus there was a credit bubble in the 1920s.
– A debt jubilee happened regularly in ancient tmes (e.g. in Mesopotamia). Read Michael Hudson’s (http://michael-hudson.com/) work for that. It’s nearly impossible to do that today because today the debt/bonds are held by so much different individual investors while in ancient times those debts were held by a very few wealthy individuals. (Keen did read Hudson !!!).
Basically, the standard of living in Australia is slowly being eroded. It was pretty high, so it will take quite a long while to fall. Everything is locked down economically. Keynesians have full sway. The end is nowhere near in sight. Things will keep getting worse for a long time to come.
– One also has to take into account that 2 things make australian houses much more expensive.
1) Negative gearing: An “Investor” (even a private person) in real estate can deduct the (interest ??) costs for that real estate from his/her taxes.
2) Capital Gains Deduction (introduced in the year 1999): If people make a profit on an investment (stocks, bonds, etc.) then people must to pay a “Capital Gains Tax” (like here in the US) when they sell the investment.
But if those capital gains are made with real estate investments then the taxpayer doesn’t have to pay the full capital gain tax, then they can claim a deduction.
No wonder, that australian investors LOVE real estate. Steve Keen has talked about this more than once.
The last time people expected a real estate crash in Canada, I loaded up on Canadian banks at distressed prices, and doubled my money in two years. I can only hope that people knock the Canadian banks down again so I can load up once more. They have very well run banks in Canada. Aus banks are pretty good too.