Things are a bit iffy in Sydney too. Houses being sold for between 20% and over 40% down from their peak value in some suburbs and some very young people declaring bankruptcy as a result of negative equity and a forced move.
Earlier this year Australia was being touted as the "soft landing" example the UK was expected to follow. Still, house prices are flat to rising slightly in other major cities there so we haven't seen the end of that story.
News Just In: Fannie Mae and Freddie Mac, the companies at Ground Zero of both the global credit bubble and the US housing bubble have been suffering of late. Between them they misplaced 15 billion Dollars, counting them in such a way as to fraudulently reward executives with huge bonuses as a result of alleged growth. After huge fines and a purge of the boardrooms, the talk was of reducing the amount of mortgage-backed derivativves held in their own accounts for speculative purposes. No less then members and ex-heads of the Federal reserve have called them a systemic risk to the US and global economies. They were required to divest themelves of parts of their portfolios, though were given time so as not to disrupt mortgage markets. meanwhile class action suits by shareholders are trying to force executives to return tens of millions in bonuses and golden handshakes.
Some no doubt regard it as mere coincidence that the US housing markets turned just when Freddie and Fannie received their spankings (though surely not anyone here?). In what's practically an admission, overseers of the GSE's in the US are now touting loosening the reins on the two miscreants particularly to try to staunch the bleeding of the US housing markets. Though they jointly own 1.4 trillion of mortgage derivatives on their own books, and insure the vast majority of US mortgage derivatives sold on to investors, the worries about systemic risk are to be shelved in favour of shoring up a US housing market that's looking more than a little sickly.
In short, attempts to strengthen the weakest link are being abandoned just at the point when the strain on it can be expected to rise considerably. Rather than wisely take timely steps to avert disaster, the US authorities take risks simply to provide short-term fixes to please a political constituency.
FoFP