Let's begin the day looking at Bank of Queensland's (ASX:BOQ) $91 million first-half loss. People who think housing can never crash in Australia (because it's a cultural thing, you know) will be quick to point out that the bank got hammered on commercial and residential property in Queensland. It's a local thing. All real estate is local, just like all politics, right?
Well, not quite. It's true that there's no such thing as a national real estate market. There's our little neighbourhood in St Kilda...there's the Gold Coast...and there are the thousands of other little neighbourhoods and pockets of houses. The economics of each neighbourhood are different. There are many markets, not one.
But to paraphrase Tolstoy, every real estate market is different in its own away, but they are all alike (and unhappy) in one important way. Real estate may be local, but mortgage finance is national. The concentration of mortgage finance in a small number of banks is how local disruptions in the real estate market are transmitted across the country until you have a national problem. Read More