30% Drop in House Prices
Oct 11th 2003, 7:57 am
#1
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30% Drop in House Prices
http://finance.news.com.au/common/st...55E462,00.html
APRA warns of loans risk
By Tim Boreham
October 10, 2003
HOMEOWNERS would default on mortgages worth $14 billion under a worst-case scenario of a 30 per cent plunge in property prices, the banking regulator warned yesterday.
The Australian Prudential Regulation Authority said a downturn in the overheated housing market was "inevitable", with a 30 per cent slump in house prices over a year likely to see defaults on mortgages rise from the current 0.12 per cent to a massive 3.5 per cent.
The regulator said the nation's banks were well placed, with no institution likely to go the wall in the event of such a significant property downturn.
But the wider economic impact of such a "conservative but realistic" collapse in property prices would still inflict considerable pain on borrowers, APRA said.
The regulator noted that the loans were getting "younger", with 42 per cent less than a year old and 77 per cent less than three years old. And borrowers were most vulnerable early in the life of a loan, because they had not built up sufficient equity in their property
APRA warns of loans risk
By Tim Boreham
October 10, 2003
HOMEOWNERS would default on mortgages worth $14 billion under a worst-case scenario of a 30 per cent plunge in property prices, the banking regulator warned yesterday.
The Australian Prudential Regulation Authority said a downturn in the overheated housing market was "inevitable", with a 30 per cent slump in house prices over a year likely to see defaults on mortgages rise from the current 0.12 per cent to a massive 3.5 per cent.
The regulator said the nation's banks were well placed, with no institution likely to go the wall in the event of such a significant property downturn.
But the wider economic impact of such a "conservative but realistic" collapse in property prices would still inflict considerable pain on borrowers, APRA said.
The regulator noted that the loans were getting "younger", with 42 per cent less than a year old and 77 per cent less than three years old. And borrowers were most vulnerable early in the life of a loan, because they had not built up sufficient equity in their property
Oct 11th 2003, 8:17 am
#2
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Cant wait for prices to fall, we are in the buy cycle again, would make our life a hell of a lot easier!
Oct 11th 2003, 8:18 am
#3
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Originally posted by MrsDagboy
Cant wait for prices to fall, we are in the buy cycle again, would make our life a hell of a lot easier!
Cant wait for prices to fall, we are in the buy cycle again, would make our life a hell of a lot easier!
Oct 11th 2003, 8:33 am
#4
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Originally posted by bondipom
My thoughts as well. There are crap apartments going for 600,000 round here all because of that f***in block program.
My thoughts as well. There are crap apartments going for 600,000 round here all because of that f***in block program.
.This time its a toss up whether to buy something established or either get a removal home or build something.
Oct 11th 2003, 8:36 am
#5
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Originally posted by MrsDagboy
Yeah shows like that & the spots on A Current Affair like "How to renovate your house with $5000 in a single Weekend" piss me off no end. The market up here is flooded with beautiful old houses that people have totally destroyed by putting in a $3000 kitchen & another lick of paint over the 12 already there. Costs you more to fix the stuff-ups than it cost to put them in in the first place. All because people think that they can make money by doing it. Well I guess some people must have no taste, someone ends up buying them .
This time its a toss up whether to buy something established or either get a removal home or build something.
Yeah shows like that & the spots on A Current Affair like "How to renovate your house with $5000 in a single Weekend" piss me off no end. The market up here is flooded with beautiful old houses that people have totally destroyed by putting in a $3000 kitchen & another lick of paint over the 12 already there. Costs you more to fix the stuff-ups than it cost to put them in in the first place. All because people think that they can make money by doing it. Well I guess some people must have no taste, someone ends up buying them
.This time its a toss up whether to buy something established or either get a removal home or build something.
Oct 11th 2003, 9:56 am
#6
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Originally posted by bondipom
Good taste and Australia ha ha
Good taste and Australia ha ha
, I'm Australian & I know that I have good taste, hell, for a start I married Dagboy 
.
Oct 11th 2003, 10:35 am
#7
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Aussies do have good taste. I have been looking at the properties for sale in bargo NSW and although there are some good ones in our price range $400,000 they get snapped up wuick and we are not yet out there to stake a claim. However We have been spoilt for what we want by the look of friends and cousins places where they ahev designed their own places and really made a super job of it. It spoils me as I do not want less than that which means all the 'old range type' places are no no's as I want an open plan large expanse rather than rooms off rooms as the homesteads were.
Oct 11th 2003, 11:05 am
#8
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Dont bet on a downturn in house prices either in Australia or the UK.
The UK National Press has been attempting to frighten the UK housing market into crashing. In their attempt to sell newspapers they've been printing headlines telling us "House Prices Set To Crash" since last xmas. They usually quote some Economist has predicted this but it hasnt happened yet. It did slow down during the middle part of this year, probably due to scare mongering by the Press. We are a nation easily swayed by what we read in the newspapers, we're more suppressed than the Chinese people in that respect. I took part in a couple of polls to see if people thought that house prices were about to crash, I was one of the few (around 20% ) that said NO. My point is, that as many as 80% of us believe what we read in newspapers and magazines far too easily. The thing to remember is that another Human Being wrote that to make money. They dont care if its true or not.
If what other economist say is true, which is that we all have more disposable income than ever before then that means we can afford higher house prices.
At the time of the UK House Price crash around 1990 we were spending a much larger proportion of our income on mortgages than we do now.
I'm not sure what the Economic climate is like in Australia but I keep hearing that their economic growth is steadily growing at a healthy rate and is not affected by world events as easily as the UK, USA and Japan are.
Yes, I'm a grumpy old man. Still some optimism in me tho.
The UK National Press has been attempting to frighten the UK housing market into crashing. In their attempt to sell newspapers they've been printing headlines telling us "House Prices Set To Crash" since last xmas. They usually quote some Economist has predicted this but it hasnt happened yet. It did slow down during the middle part of this year, probably due to scare mongering by the Press. We are a nation easily swayed by what we read in the newspapers, we're more suppressed than the Chinese people in that respect. I took part in a couple of polls to see if people thought that house prices were about to crash, I was one of the few (around 20% ) that said NO. My point is, that as many as 80% of us believe what we read in newspapers and magazines far too easily. The thing to remember is that another Human Being wrote that to make money. They dont care if its true or not.
If what other economist say is true, which is that we all have more disposable income than ever before then that means we can afford higher house prices.
At the time of the UK House Price crash around 1990 we were spending a much larger proportion of our income on mortgages than we do now.
I'm not sure what the Economic climate is like in Australia but I keep hearing that their economic growth is steadily growing at a healthy rate and is not affected by world events as easily as the UK, USA and Japan are.
Yes, I'm a grumpy old man. Still some optimism in me tho.
Oct 12th 2003, 1:22 am
#9
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Originally posted by migrantoz
Dont bet on a downturn in house prices either in Australia or the UK.
The UK National Press has been attempting to frighten the UK housing market into crashing. In their attempt to sell newspapers they've been printing headlines telling us "House Prices Set To Crash" since last xmas. They usually quote some Economist has predicted this but it hasnt happened yet. It did slow down during the middle part of this year, probably due to scare mongering by the Press. We are a nation easily swayed by what we read in the newspapers, we're more suppressed than the Chinese people in that respect. I took part in a couple of polls to see if people thought that house prices were about to crash, I was one of the few (around 20% ) that said NO. My point is, that as many as 80% of us believe what we read in newspapers and magazines far too easily. The thing to remember is that another Human Being wrote that to make money. They dont care if its true or not.
If what other economist say is true, which is that we all have more disposable income than ever before then that means we can afford higher house prices.
At the time of the UK House Price crash around 1990 we were spending a much larger proportion of our income on mortgages than we do now.
I'm not sure what the Economic climate is like in Australia but I keep hearing that their economic growth is steadily growing at a healthy rate and is not affected by world events as easily as the UK, USA and Japan are.
Yes, I'm a grumpy old man. Still some optimism in me tho.
Dont bet on a downturn in house prices either in Australia or the UK.
The UK National Press has been attempting to frighten the UK housing market into crashing. In their attempt to sell newspapers they've been printing headlines telling us "House Prices Set To Crash" since last xmas. They usually quote some Economist has predicted this but it hasnt happened yet. It did slow down during the middle part of this year, probably due to scare mongering by the Press. We are a nation easily swayed by what we read in the newspapers, we're more suppressed than the Chinese people in that respect. I took part in a couple of polls to see if people thought that house prices were about to crash, I was one of the few (around 20% ) that said NO. My point is, that as many as 80% of us believe what we read in newspapers and magazines far too easily. The thing to remember is that another Human Being wrote that to make money. They dont care if its true or not.
If what other economist say is true, which is that we all have more disposable income than ever before then that means we can afford higher house prices.
At the time of the UK House Price crash around 1990 we were spending a much larger proportion of our income on mortgages than we do now.
I'm not sure what the Economic climate is like in Australia but I keep hearing that their economic growth is steadily growing at a healthy rate and is not affected by world events as easily as the UK, USA and Japan are.
Yes, I'm a grumpy old man. Still some optimism in me tho.
However the amount of debt people of racked up to finance housing is worrying. At the moment the market is HIGH RISK.
Oct 12th 2003, 4:38 am
#10
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Same headlines last year, what happened, well most stuff we own has gone up at least 30% some little gems 100%. Really glad I didnt listen
Had I bought an apartment in Melbourne I might have lost 10% tho, it depends on the area and what you buy.
Make your own mind up based on the area, you simply cannot generalise over the whole of Australia its too big, markets are diff. Buy quality, each thing we have bought has to have some unique feature that sets it apart or feature that is in very high demand.
Not on property, but general investing, we were advised here by a top notch financilal planner in one of the top banks to follow a investment plan mainly based on borrowing (which we dont ever do) negative gearing eek, shares and super. For every $100,000 we would have invested his way we would have lost $30,000. Each $100,000 we invested ourself has returned an average of $70,000 in two years.
Top tip if you borrow, work the calcualtions out on repayments 2% higher than they are now, if you can afford that you can sleep at night. As for banks here, dont get carried away with them, my Doctor has a $800,000 mortage, and severe stress because of it.
By the way, UK headlines also predicted a huge drop, still waiting I am Tell me when it happens wont you
Had I bought an apartment in Melbourne I might have lost 10% tho, it depends on the area and what you buy.
Make your own mind up based on the area, you simply cannot generalise over the whole of Australia its too big, markets are diff. Buy quality, each thing we have bought has to have some unique feature that sets it apart or feature that is in very high demand.
Not on property, but general investing, we were advised here by a top notch financilal planner in one of the top banks to follow a investment plan mainly based on borrowing (which we dont ever do) negative gearing eek, shares and super. For every $100,000 we would have invested his way we would have lost $30,000. Each $100,000 we invested ourself has returned an average of $70,000 in two years.
Top tip if you borrow, work the calcualtions out on repayments 2% higher than they are now, if you can afford that you can sleep at night. As for banks here, dont get carried away with them, my Doctor has a $800,000 mortage, and severe stress because of it.
By the way, UK headlines also predicted a huge drop, still waiting I am
Tell me when it happens wont you
Oct 12th 2003, 4:52 am
#11
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Originally posted by dotty
Same headlines last year, what happened, well most stuff we own has gone up at least 30% some little gems 100%. Really glad I didnt listen
Had I bought an apartment in Melbourne I might have lost 10% tho, it depends on the area and what you buy.
Make your own mind up based on the area, you simply cannot generalise over the whole of Australia its too big, markets are diff. Buy quality, each thing we have bought has to have some unique feature that sets it apart or feature that is in very high demand.
Not on property, but general investing, we were advised here by a top notch financilal planner in one of the top banks to follow a investment plan mainly based on borrowing (which we dont ever do) negative gearing eek, shares and super. For every $100,000 we would have invested his way we would have lost $30,000. Each $100,000 we invested ourself has returned an average of $70,000 in two years.
Top tip if you borrow, work the calcualtions out on repayments 2% higher than they are now, if you can afford that you can sleep at night. As for banks here, dont get carried away with them, my Doctor has a $800,000 mortage, and severe stress because of it.
By the way, UK headlines also predicted a huge drop, still waiting I am Tell me when it happens wont you
Same headlines last year, what happened, well most stuff we own has gone up at least 30% some little gems 100%. Really glad I didnt listen
Had I bought an apartment in Melbourne I might have lost 10% tho, it depends on the area and what you buy.
Make your own mind up based on the area, you simply cannot generalise over the whole of Australia its too big, markets are diff. Buy quality, each thing we have bought has to have some unique feature that sets it apart or feature that is in very high demand.
Not on property, but general investing, we were advised here by a top notch financilal planner in one of the top banks to follow a investment plan mainly based on borrowing (which we dont ever do) negative gearing eek, shares and super. For every $100,000 we would have invested his way we would have lost $30,000. Each $100,000 we invested ourself has returned an average of $70,000 in two years.
Top tip if you borrow, work the calcualtions out on repayments 2% higher than they are now, if you can afford that you can sleep at night. As for banks here, dont get carried away with them, my Doctor has a $800,000 mortage, and severe stress because of it.
By the way, UK headlines also predicted a huge drop, still waiting I am
Tell me when it happens wont you
As Dotty points out the market is different from suburb to suburb. Melbourne apartments are supposed to be a no no for investing. Beware of get rich schemes being run where there is a seminar accompanied with off the plan sales push.
Get on the ground and get untainted local advice.
All I want is somewhere I can afford along with all the other first time buyers priced out of the market. If first time buyers are priced out the chain stops.
In the mean time I am enjoying renting free of council taxes and water rates which my landlord picks up.
Current yields for property investors are 2% which is 2.75% below interest rates. Rents have not risen with the property prices so something has to give.
Oct 12th 2003, 5:13 am
#12
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Originally posted by bondipom
I have been offered mortgages that I would have no chance of meeting the repayments. I am sure there are plenty out there who have bitten more than they can chew. If there is a 2% change in interest rates then the market will go down. It has happened in the past and can happen again.
As Dotty points out the market is different from suburb to suburb. Melbourne apartments are supposed to be a no no for investing. Beware of get rich schemes being run where there is a seminar accompanied with off the plan sales push.
Get on the ground and get untainted local advice.
All I want is somewhere I can afford along with all the other first time buyers priced out of the market. If first time buyers are priced out the chain stops.
In the mean time I am enjoying renting free of council taxes and water rates which my landlord picks up.
urrent yields for property investors are 2% which is 2.75% below interest rates. Rents have not risen with the property prices so something has to give.
I have been offered mortgages that I would have no chance of meeting the repayments. I am sure there are plenty out there who have bitten more than they can chew. If there is a 2% change in interest rates then the market will go down. It has happened in the past and can happen again.
As Dotty points out the market is different from suburb to suburb. Melbourne apartments are supposed to be a no no for investing. Beware of get rich schemes being run where there is a seminar accompanied with off the plan sales push.
Get on the ground and get untainted local advice.
All I want is somewhere I can afford along with all the other first time buyers priced out of the market. If first time buyers are priced out the chain stops.
In the mean time I am enjoying renting free of council taxes and water rates which my landlord picks up.
urrent yields for property investors are 2% which is 2.75% below interest rates. Rents have not risen with the property prices so something has to give.
Gov has a catch 22 on its hands, interest rates up = dollar up = exports down. Plus they cant upset the farmers after the drought with scary rates. Cant myself see big rate rises here, small ones only. However rates got to 17% in OZ, figures up here we saw showed houses were still selling!
Typical house owner still needs somewhere to live, just lock in your % now in case they go up.
Going to buy, buy in a area that has huge growth, and watch apartments they usually topple first.
As for property seminars, Bondi I too would run a mile, if its good you dont need a seminar to sell it
Oct 12th 2003, 5:22 am
#13
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Property prices will fall again, theres no doubt about that, its just a matter of when & by how much. As dotty says, its dependant on area & what you buy, every suburb is different. I agree with you bondi, when interest rates finally do rise there will people who will be hurting in the hip pocket. Like dottys doctor. There will be many many people out there who will be getting rid of property as quickly as they can & the market will do a complete about face. Dont be fooled into thinking that if you buy a house you will automatically make money - as the song says "It aint necessarily so". Its dependant on far too many things.
The share market has been steadily been creeping up & up over the last 12 months, our shares are now worth almost 50% more than they were this time last year. Most of that rise has been in the last 3 or 4 months. Traditionally when the market goes up, property goes into decline. Its happened before, I have no doubt it will do it again!
The share market has been steadily been creeping up & up over the last 12 months, our shares are now worth almost 50% more than they were this time last year. Most of that rise has been in the last 3 or 4 months. Traditionally when the market goes up, property goes into decline. Its happened before, I have no doubt it will do it again!
Oct 12th 2003, 5:29 am
#14
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Originally posted by dotty
However rates got to 17% in OZ, figures up here we saw showed houses were still selling!
However rates got to 17% in OZ, figures up here we saw showed houses were still selling!
Oct 12th 2003, 5:35 am
#15
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Originally posted by MrsDagboy
Property prices will fall again, theres no doubt about that, its just a matter of when & by how much. As dotty says, its dependant on area & what you buy, every suburb is different. I agree with you bondi, when interest rates finally do rise there will people who will be hurting in the hip pocket. Like dottys doctor. There will be many many people out there who will be getting rid of property as quickly as they can & the market will do a complete about face. Dont be fooled into thinking that if you buy a house you will automatically make money - as the song says "It aint necessarily so". Its dependant on far too many things.
The share market has been steadily been creeping up & up over the last 12 months, our shares are now worth almost 50% more than they were this time last year. Most of that rise has been in the last 3 or 4 months. Traditionally when the market goes up, property goes into decline. Its happened before, I have no doubt it will do it again!
Property prices will fall again, theres no doubt about that, its just a matter of when & by how much. As dotty says, its dependant on area & what you buy, every suburb is different. I agree with you bondi, when interest rates finally do rise there will people who will be hurting in the hip pocket. Like dottys doctor. There will be many many people out there who will be getting rid of property as quickly as they can & the market will do a complete about face. Dont be fooled into thinking that if you buy a house you will automatically make money - as the song says "It aint necessarily so". Its dependant on far too many things.
The share market has been steadily been creeping up & up over the last 12 months, our shares are now worth almost 50% more than they were this time last year. Most of that rise has been in the last 3 or 4 months. Traditionally when the market goes up, property goes into decline. Its happened before, I have no doubt it will do it again!