Housing bubble in Australia
Feb 9th 2010, 8:07 am
#226
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Location: Dullsville
Posts: 672
Re: Housing bubble in Australia
Central Banks Should move Early on Bubbles.
Today's news, 9th February.
Told ya, everyone's talking 'bout the Aussie Housing Bubble, can hide from it or deny it - it's happening and it's worrying the RBA.
Central banks should move early on bubbles: RBA February 9, 2010 - 4:34PM
Central banks may need to become more pro-active in dealing with dangerous asset bubbles before they become destabilising to the financial system, the Reserve Bank said today.
In a paper co-authored by RBA Governor Glenn Stevens, the central bank argued that keeping official interest rates too low for too long could inadvertently fuel imbalances that would lead to asset price bubbles.
At a conference to mark the Reserve Bank's 50th anniversary attended by central bankers from around the world, Mr Stevens said central banks had to be wary of waiting too long during a boom cycle to curb imbalances.
"It also amounts to an argument to avoid having the boom get to that point and to err on the side, much earlier in the process, of not keeping interest rates unusually low," Mr Stevens told the closed-door conference in his speech, a copy of which was released to the media.
The problem was not solely asset prices, but the imbalances reflected in a combination of rapidly rising asset prices and credit and falling lending standards, he argued.
"It is unlikely to be credible for central banks not to move, in the next decade, at least somewhat in the 'responsive' direction," Stevens said.
He was addressing a meeting attended by top officials from the European Central Bank, the U.S. Federal Reserve, the Bank of Japan and other Asian central banks.
First mover
Australia was the first among industrialised nations last year to begin lifting interest rates from emergency lows, in part wary of fuelling another housing bubble.
The RBA has long challenged the prevailing view among central banks that they should not target asset prices and rather mop up the damage from bubbles afterward.
In 2002 and 2003, it nudged up interest rates and was effective in talking down a frothy housing market.
The US Federal Reserve's policy of keeping official rates low after the last downturn has been widely blamed for fuelling the US housing debacle that led to the global financial crisis.
http://www.theage.com.au/business/ce...0209-np7e.html
Today's news, 9th February.
Told ya, everyone's talking 'bout the Aussie Housing Bubble, can hide from it or deny it - it's happening and it's worrying the RBA.
Central banks should move early on bubbles: RBA February 9, 2010 - 4:34PM
Central banks may need to become more pro-active in dealing with dangerous asset bubbles before they become destabilising to the financial system, the Reserve Bank said today.
In a paper co-authored by RBA Governor Glenn Stevens, the central bank argued that keeping official interest rates too low for too long could inadvertently fuel imbalances that would lead to asset price bubbles.
At a conference to mark the Reserve Bank's 50th anniversary attended by central bankers from around the world, Mr Stevens said central banks had to be wary of waiting too long during a boom cycle to curb imbalances.
"It also amounts to an argument to avoid having the boom get to that point and to err on the side, much earlier in the process, of not keeping interest rates unusually low," Mr Stevens told the closed-door conference in his speech, a copy of which was released to the media.
The problem was not solely asset prices, but the imbalances reflected in a combination of rapidly rising asset prices and credit and falling lending standards, he argued.
"It is unlikely to be credible for central banks not to move, in the next decade, at least somewhat in the 'responsive' direction," Stevens said.
He was addressing a meeting attended by top officials from the European Central Bank, the U.S. Federal Reserve, the Bank of Japan and other Asian central banks.
First mover
Australia was the first among industrialised nations last year to begin lifting interest rates from emergency lows, in part wary of fuelling another housing bubble.
The RBA has long challenged the prevailing view among central banks that they should not target asset prices and rather mop up the damage from bubbles afterward.
In 2002 and 2003, it nudged up interest rates and was effective in talking down a frothy housing market.
The US Federal Reserve's policy of keeping official rates low after the last downturn has been widely blamed for fuelling the US housing debacle that led to the global financial crisis.
Feb 9th 2010, 8:27 am
#227
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Joined: Nov 2009
Location: Dullsville
Posts: 672
Re: Housing bubble in Australia
So how comes it hasn't been 'un-frozen', how comes investors still can't access their money, even now? Why should every bloody investment have to have a Govt guarantee anyway - I'll tell you why, because the banks are taking risks with our/your money, if they fail, who cares, the taxpayer bails them out and if the risk pays off then the Banks give themselves all jolly big bonuses. It's a joke system, happening around the world, even Australia.
Feb 9th 2010, 8:54 am
#228
Guest
Posts: n/a
Re: Housing bubble in Australia
Central Banks Should move Early on Bubbles.
Today's news, 9th February.
Told ya, everyone's talking 'bout the Aussie Housing Bubble, can hide from it or deny it - it's happening and it's worrying the RBA.
http://www.theage.com.au/business/ce...0209-np7e.html
Today's news, 9th February.
Told ya, everyone's talking 'bout the Aussie Housing Bubble, can hide from it or deny it - it's happening and it's worrying the RBA.
http://www.theage.com.au/business/ce...0209-np7e.html
- He was addressing a meeting attended by top officials from the European Central Bank, the U.S. Federal Reserve, the Bank of Japan and other Asian central banks.
- Australia was the first among industrialised nations last year to begin lifting interest rates from emergency lows, in part wary of fuelling another housing bubble.
Feb 9th 2010, 8:59 am
#229
Guest
Posts: n/a
Re: Housing bubble in Australia
Colonial reopened the fund to withdrawals about a month ago [November 25, 2009] after a year-long freeze that was aimed at protecting the fund as jittery investors poured savings into safer bank deposits.
Jittery Investors removing their money (to switch into guaranteed funds) or banks taking risks with the money ?
Jittery Investors removing their money (to switch into guaranteed funds) or banks taking risks with the money ?
Feb 9th 2010, 9:10 am
#230
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Joined: Nov 2009
Location: Dullsville
Posts: 672
Re: Housing bubble in Australia
Colonial reopened the fund to withdrawals about a month ago [November 25, 2009] after a year-long freeze that was aimed at protecting the fund as jittery investors poured savings into safer bank deposits.
Jittery Investors removing their money (to switch into guaranteed funds) or banks taking risks with the money ?
Jittery Investors removing their money (to switch into guaranteed funds) or banks taking risks with the money ?
Feb 9th 2010, 9:20 am
#231
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Joined: May 2008
Location: Perth
Posts: 838
Re: Housing bubble in Australia
So how comes it hasn't been 'un-frozen', how comes investors still can't access their money, even now? Why should every bloody investment have to have a Govt guarantee anyway - I'll tell you why, because the banks are taking risks with our/your money, if they fail, who cares, the taxpayer bails them out and if the risk pays off then the Banks give themselves all jolly big bonuses. It's a joke system, happening around the world, even Australia.
As I have stated CFM is not a Bank and has no fund guarantee
To invest in a mortgage fund you have to buy units its not the same as a term deposit
If you put it with a Bank they guarantee the funds and take all the risk
Feb 9th 2010, 9:25 am
#232
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Joined: Nov 2009
Location: Dullsville
Posts: 672
Re: Housing bubble in Australia
Emphasis on these bits ?
- He was addressing a meeting attended by top officials from the European Central Bank, the U.S. Federal Reserve, the Bank of Japan and other Asian central banks.
- Australia was the first among industrialised nations last year to begin lifting interest rates from emergency lows, in part wary of fuelling another housing bubble.
Oversea funders are worried that they are lending Aus money to sustain a housing bubble. Aus Bank lending for business is waaaay down (the kind of lending that creates jobs, growth and real wealth) but house lending is on the up, up, up and this does nothing for a susutainable economy in the long run. Our oversea funders are getting wary.
2) Rates are up .75% from the lows and yes, I believe the RBA is squashing the housing bubble but at the same time is jepordising business lending. It's a difficult balancing trick. Another way the RBA can squash house prices is to pull back on money supply, which it appears they are already doing.
Feb 9th 2010, 9:50 am
#233
Banned
Joined: May 2007
Location: Sydney
Posts: 564
Re: Housing bubble in Australia
Could you do the same comparison for the other countries so we can compare like with like...
The normal calculation is done on Gross incomes, but of course doing it on a net income does make it look much worse than everywhere else....
Check out this: http://www.insolvency.gov.uk/insolve...cialStress.pdf
Where do you get your median mortgage of $510,000 from ?
These are figures that I have seen being quoted.
And the ABS quotes the median established house prices as $447,000
The normal calculation is done on Gross incomes, but of course doing it on a net income does make it look much worse than everywhere else....
Check out this: http://www.insolvency.gov.uk/insolve...cialStress.pdf
Where do you get your median mortgage of $510,000 from ?
These are figures that I have seen being quoted.
And the ABS quotes the median established house prices as $447,000
I actually made a mistake. I was quoting median house prices in Sydney. Should have been $610,000. Difficult to keep up!
In that case, the repayments would be $4219 a month. Therefore, the repayments would be 50% of household income.
I can understand that the CURRENT median mortgage is @ $400,000. Being realistic, FTB looking to purchase at the moment will need to max out just to get somewhere liveable and it is for this reason that I have used the median house price as a mortgage value. When banks are willing to lend 6-8 times wages, this is easily achievable for people on these wages as you have shown previously.
I have read the article which was written in 2004 and I can see exactly the same happening here. We all know what happened to house prices in the UK.
Last edited by swigski; Feb 9th 2010 at 9:54 am. Reason: a
Feb 9th 2010, 9:56 am
#234
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Posts: n/a
Re: Housing bubble in Australia
'Demand for home Loans Dive in January'
Demand for home loans dived in January after three official interest rate increases and the removal of the federal government's generous first homeowners' grant, a mortgage broker says.
Loan Market Group says its home loan approvals have dropped by 40 per cent from a peak in 2009, after the company recorded its quietest month since 2006 in January.
Demand for home loans dived in January after three official interest rate increases and the removal of the federal government's generous first homeowners' grant, a mortgage broker says.
Loan Market Group says its home loan approvals have dropped by 40 per cent from a peak in 2009, after the company recorded its quietest month since 2006 in January.
The latest housing finance figures revealed the number of people seeking new mortgages collapsed under the weight of three consecutive interest rate rises and the end of the government's first-home buyer stimulus program.
Feb 9th 2010, 10:02 am
#235
Account Open
Joined: Jan 2005
Location: Brisbane
Posts: 4,298
Re: Housing bubble in Australia
Lets see what affect using NET income has and the actual Sydney median price?
Using the same figures as ABC.
Combined NET income = $101,400
57.4% of that = $4850 per month in repayments
That would cover a mortgage of about $700,000
However a mortgage for the median SYDNEY house would be about $510,000 with repayments of about $3530 per month, or 41.7% of the income.
A median house with two people earning median wages with repayments at 41.7% of NET income Considering the figure where mortgage repayments are considered at stress levels is 30%
Does this look like an affordable option for housing affordability?
Using the same figures as ABC.
Combined NET income = $101,400
57.4% of that = $4850 per month in repayments
That would cover a mortgage of about $700,000
However a mortgage for the median SYDNEY house would be about $510,000 with repayments of about $3530 per month, or 41.7% of the income.
A median house with two people earning median wages with repayments at 41.7% of NET income Considering the figure where mortgage repayments are considered at stress levels is 30%
Does this look like an affordable option for housing affordability?
Last edited by asprilla; Feb 9th 2010 at 10:09 am. Reason: removed my rubbish comment.
Feb 9th 2010, 10:05 am
#236
Guest
Posts: n/a
Re: Housing bubble in Australia
I got the feeling that this board was pretty well aimed at the UK market for people moving here, so they would be used to seeing the figures based in gross income, but your higher figure from net incomes would give them a false impression.
You saw the point to do that.... hmmm..
The Australian Bureau of Statistics quotes
Median Price of Established House Transfers ; Sydney ;
Mar-2009 $447,000
Mar-2009 $447,000
Feb 9th 2010, 10:19 am
#237
Just Joined
Joined: Jan 2010
Posts: 22
Re: Housing bubble in Australia
I'm pretty sure the bubble burst 2 years ago and everyone is waiting for it to boom again
Feb 9th 2010, 10:20 am
#238
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Joined: Sep 2007
Location: South Australia
Posts: 770
Re: Housing bubble in Australia
I think Sydney house prices might have picked up...
"Sydney house prices grew 5 per cent in the last quarter and 12.8 per cent over the year [2009]"
"...the strength of the jobs market and strong population growth would lead to annual house price growth of about eight to 10 per cent this year [2010]"
http://www.theage.com.au/article
Feb 9th 2010, 10:23 am
#239
Forum Regular
Joined: Oct 2005
Posts: 72
Re: Housing bubble in Australia
In general threads saying that the house market in oz are put on by people who are renting and hoping it will!
On the other hand people who defend the argument are buying or have bought their houses the facts are a growing population and demand for more new homes to be built in every state .
The powers that be know long before we do that house prices would boom if not kept in check with higher interest rates if anyone is waiting for house prices to fall forget it they will only go up but very slowly for the next few years.
I am a bricklayer by trade and have had my money cut 2 or three times in the past few years and only recently 2 of the project builders i work for have put the money back up without me asking even , what does that tell you .
They also tell me they have signed up hundreds and hundreds of new clients to build for meaning busy times a head for 1 to 2 years at least.
Good luck to any one sitting on the fence waiting for prices to come down!, the time to buy is now builders will be rasing prices every 2 months just like the last boom they no longer need the work, i will not be wrong!
On the other hand people who defend the argument are buying or have bought their houses the facts are a growing population and demand for more new homes to be built in every state .
The powers that be know long before we do that house prices would boom if not kept in check with higher interest rates if anyone is waiting for house prices to fall forget it they will only go up but very slowly for the next few years.
I am a bricklayer by trade and have had my money cut 2 or three times in the past few years and only recently 2 of the project builders i work for have put the money back up without me asking even , what does that tell you .
They also tell me they have signed up hundreds and hundreds of new clients to build for meaning busy times a head for 1 to 2 years at least.
Good luck to any one sitting on the fence waiting for prices to come down!, the time to buy is now builders will be rasing prices every 2 months just like the last boom they no longer need the work, i will not be wrong!
Feb 9th 2010, 10:31 am
#240
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Joined: Aug 2005
Location: Perth (ex Oxford)
Posts: 411
Re: Housing bubble in Australia
Perhaps they should get together for a coffee or something and discuss their pet subject to their heart's content ... and please spare us from the most inane and directionless thread on this forum.
Last edited by Kalenge; Feb 9th 2010 at 10:39 am.
