“That’s where we are at the moment, in my view.” When that happens, all of the factors that were previously positively reinforcing become negative. “That has directly fed into the critical linchpin which is unemployment, because if people are still in work then the machine can continue until the point where unemployment starts to rise.” The cracks were already showing prior to the pandemic, but because we’ve had the pandemic, we’ve had the economic shock as well. “We’ve had a long-term problem of too much debt and too easy lending standards. North said the pandemic has only sped up a housing problem Australia was already heading towards, claiming fractures in the housing market were forming before the Global Financial Crisis. “Those are the sorts of things I’m worried about.” He said he’s concerned that Mandurah is the “canary in the coal mines” for other outer-suburban regions that have seen large-scale expansion without the infrastructure investment and associated economic support to back them up. “I come back to Mandurah in Western Australia, where I’ve been watching mortgage stress rise over the last four or five years… Mandurah has seen a 38 per cent fall in home prices from their previous peak, they’ve seen more than 20 per cent of households in negative equity,” North said. North identified those as population growth or migration driving demand and strong employment figures. It could be as much as 40 per cent or more in some places where all of the fundamental supports of price growth have gone away.” “We’re over-leveraged and we’re over-priced, so prices will come back.
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