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Housing market....again

Housing market....again

Old Apr 9th 2010, 12:16 am
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Exclamation Housing market....again

I keep hearing that the Australian housing market is different to other property markets because the average aussie owner pays off their loan faster.

It's been reported time and again that home owners are (likely) using the record low interest rates to pay off their 'extra large' home loans.

Even the RBA has said that Australians can handle larger home loans because they manage their finances better than UK/US counterparts.

But then I read this...
"Rather than paying down debt when interest rates were low, households have been taking on more debt."
SURGING property prices appear to be driving a spending spree in Australia

Looks like the average 'Australian' is more like the rest of the world afterall.
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Old Apr 9th 2010, 1:48 am
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Default Re: Housing market....again

Originally Posted by coolshadows View Post
I keep hearing that the Australian housing market is different to other property markets because the average aussie owner pays off their loan faster.
They do ? Not what I have seen.

Originally Posted by coolshadows View Post
Looks like the average 'Australian' is more like the rest of the world afterall.
They are
 
Old Apr 9th 2010, 2:10 am
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Default Re: Housing market....again

RBA Deputy Governor Ric Battellino, from end of 2009:
"borrowers are continuing to take advantage of the low level of interest rates to make accelerated loan repayments"

"Australians seem to spend less of their income on non-housing consumption than is the case for US households, with a significant part of this difference explained by lower health costs in Australia. Australian households therefore have greater capacity to service housing loans"

"The faster pay-down of mortgage debt in Australia reduces the risk of borrowers subsequently getting into financial difficulty"

"Overall, the experience of the last few years suggests that the Australian household sector as a whole appears to have the financial capacity to sustain a relatively high ratio of housing prices to income."
Arthur Karabatsos, vice-president of Moody's rating agency, from 7th April 2010:
"Indeed, it is fair to say that most mortgage borrowers can absorb much greater upside in interest rates"
Mortgage borrowers can absorb much higher interest rates

Last edited by coolshadows; Apr 9th 2010 at 2:13 am.
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Old Apr 9th 2010, 2:32 am
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Default Re: Housing market....again

>>Even the RBA has said that Australians can handle larger home loans because they manage their finances better than UK/US counterparts.<<

I bought into this before settling down here - that Australians are more financially savvy than anyone else on the planet.

It's a load of b*lls - like most of the other self generated myths about Australians.

The average Australian doesn't "invest" - he gambles. He probably doesn't even do his own tax return, and knows less about the tax system than most of us who have arrived and take the trouble to learn a bit about it.
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Old Apr 9th 2010, 3:11 am
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Default Re: Housing market....again

RBA Deputy Governor Ric Battellino, from end of 2009:Quote:

borrowers are continuing to take advantage of the low level of interest rates to make accelerated loan repayments"
"Australians seem to spend less of their income on non-housing consumption than is the case for US households, with a significant part of this difference explained by lower health costs in Australia. Australian households therefore have greater capacity to service housing loans"

"The faster pay-down of mortgage debt in Australia reduces the risk of borrowers subsequently getting into financial difficulty"

"Overall, the experience of the last few years suggests that the Australian household sector as a whole appears to have the financial capacity to sustain a relatively high ratio of housing prices to income."
Rate were slashed during 2009 and people paying off their mortages didn't bother to lower their repayments and just kept paying at the higher previous rate. Nothing to do with financial savvyness of the Aussie public.

Last edited by pomtastic; Apr 9th 2010 at 3:21 am.
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Old Apr 9th 2010, 3:19 am
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Default Re: Housing market....again

Arthur Karabatsos, vice-president of Moody's rating agency, from 7th April 2010:
Quote:
"Indeed, it is fair to say that most mortgage borrowers can absorb much greater upside in interest rates"
That's funny, Moody's are now concerned that Aussie Banks have to much of their risk portfolio in residental housing loans. So our Banks are going to make it harder to get home loans, as they don't want to get downgraded by Moody's as the Govt bank guarantee ended at the end of March.

From today's papers:

Credit ratings agencies including Moody's have urged Australian banks to diversify the make-up of their lending book, arguing that a large exposure to housing has left the sector vulnerable to a sharp drop in prices.
Ho hum,

http://www.theage.com.au/business/bi...0408-rv7y.html
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Old Apr 9th 2010, 5:21 am
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Default Re: Housing market....again

May I suggest there is one major factor that is being overlooked in this housing debate.... comes down to distance and travel.... Aus Cities are very spread out as we all know.

Fuel Costs... they have to jump considerably and fairly soon I would say. It has to creep up on mosts peoples blind side within the next 48 months.

That'll put a dampner on the Housing market more than most factors
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Old Apr 9th 2010, 5:22 am
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Default Re: Housing market....again

So responsible lending may become the order of the day - hardly a bad thing!
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Old Apr 9th 2010, 5:25 am
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Default Re: Housing market....again

Originally Posted by ozzieeagle View Post
May I suggest there is one major factor that is being overlooked in this housing debate.... comes down to distance and travel.... Aus Cities are very spread out as we all know.

Fuel Costs... they have to jump considerably and fairly soon I would say. It has to creep up on mosts peoples blind side within the next 48 months.

That'll put a dampner on the Housing market more than most factors
Also the cost of gas, electricity, and water are all expected to increase considerably.
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Old Apr 9th 2010, 5:29 am
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Default Re: Housing market....again

Originally Posted by ozzieeagle View Post
May I suggest there is one major factor that is being overlooked in this housing debate.... comes down to distance and travel.... Aus Cities are very spread out as we all know.

Fuel Costs... they have to jump considerably and fairly soon I would say. It has to creep up on mosts peoples blind side within the next 48 months.

That'll put a dampner on the Housing market more than most factors
Especially in those First Home Buyer outer suburbs.

Here in Perth when the oil price went up to $140 a barrel, the outer suburbs started to tank in price as people started to realise that the cost of oil would be a huge factor in living far from the City. Not a problem if you work locally or from home though.

Of course, there is the increasing costs of food and goods that have to be transported. On the last oil spike all the local supermarkets raised their prices but failed to lower them when the oil price subsided.
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Old Apr 9th 2010, 5:34 am
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Default Re: Housing market....again

Originally Posted by hotfuss View Post
So responsible lending may become the order of the day - hardly a bad thing!
It has to be done otherwise we'll end up like the Yanks with high personal debt levels brought on by people tapping into their ever increasing house equity. It's how the GFC started in the first place.

Responsible lending it a fantastic idea and will keep Australia out of the proverbial. Bring it on I say (.... and in the meantime it will dampen house prices - )
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Old Apr 9th 2010, 5:35 am
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Default Re: Housing market....again

Originally Posted by coolshadows View Post
Also the cost of gas, electricity, and water are all expected to increase considerably.
Don't forget taxes, state and local will have to rise, these $900 handouts, pink batts and school sheds have to be paid by someone.
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Old Apr 9th 2010, 5:44 am
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Default Re: Housing market....again

Originally Posted by pomtastic View Post
Don't forget taxes, state and local will have to rise, these $900 handouts, pink batts and school sheds have to be paid by someone.
Yeah and isn't it next year when 'fuel duty' is added to LPG for the first time? (raising again in 2012).
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Old Apr 9th 2010, 5:52 am
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Default Re: Housing market....again

Originally Posted by pomtastic View Post
It has to be done otherwise we'll end up like the Yanks with high personal debt levels brought on by people tapping into their ever increasing house equity. It's how the GFC started in the first place.

Responsible lending it a fantastic idea and will keep Australia out of the proverbial. Bring it on I say (.... and in the meantime it will dampen house prices - )
Or end up like Ireland, where peoples' taxes are going towards bailing out the greedy, irresponsible bankers who are still being paid overinflated salaries and getting away scot free with their completely reckless actions of the last number of years.

Not that the bankers can be blamed for everything - personal responsibility has to come into it too, but it's been well proven that people will take what they're offered, so if responsible lending comes as a result of this whole GFC mess, that has to be a hint of a silver lining..
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Old Apr 9th 2010, 5:53 am
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Default Re: Housing market....again

LPG >>>

thanks to the RAA...
Currently, fuel excise tax does not apply to Autogas, whereas petrol is taxed at 38.14 cpl. Starting in 2011, fuel excise tax will be added to Autogas at a rate of 2.5 cpl. This will increase by 2.5 cpl for five years, until the fuel excise on Autogas reaches 12.5 cpl in 2015. In today's terms, this will mean that in 2015, motorists will be paying approximately 30% more for Autogas when they fill up.
they couldn't go higher than that as you use at least 30% more LPG than petrol anyhow.

(wonder what will happen to the 1000s employed in the LPG conversion industry?)

Last edited by coolshadows; Apr 9th 2010 at 5:58 am.
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