Property Markets
 

Ok this one is for you troubadour.

Once upon a time it was an Aussie dinner party favourite. Not sure it's going to get legs on here, but at least it might stop topics always turning in a discussion about cheap money, dodgy banks, negative gearing, property implosions and Sydney.

I see Leederville is in the "Safe" category according to this.

https://www.finder.com.au/boom-and-doom-property-index

That's bad news for you and the hope for a drop.

Anyway, over to you. What's news? What's property news?

Re: Property Markets
 

Not troubadour, but I note that all the metrics in their methodology are backward looking, with the vast majority of it down to "price change in the last 12 months". So overpriced suburbs being unaffordable with the new lending criteria wouldn't really become noticeable until AFTER it had crashed.

A real methodology would have what percentage of household income was going into the mortgage payments, and what percentage of mortgages were interest only types (who are finding it difficult to remortgage now). They are the suburbs that are most likely to face forced sales, etc. and thus lead the market down into 40-50% declines.

Re: Property Markets
 

Incidentally, over the years my casual observation is that stats show people have smaller mortgages than the prices bear out.

I can only surmise there is a lot more inheritance and money sloshing around as huge deposits or people having traded up in the market over what must be now almost 20 years.

The worst case scenario would be a 500k mortgage on a 2 income family on the edges, where that 2nd income earner has to get back to work asp once the kid is in school.

Re: Property Markets
 

Interesting points gents. In my opinion this time around was the availability of cheap money ..... or was it? The US has had cheap money for years.

Re: Property Markets
 

Interesting how far away banks are finding actual family spends

Now the banks are reviewing actual spends versus assumed average stats

All those netflixs, private schools, cars, trips, shopping comes back to roost

Re: Property Markets
 

Beoz, in WA there is some real trouble in the market. I've been hearing from realtors that the banks have been pulling back on everyone, and even solid candidates are getting rejected for mortgages. I don't know if that's just for the regions or if it applies to Perth as well.

That is for existing properties. Land sales supposedly are going OK.

Re: Property Markets
 

Same banks doing the same thing all over Australia care of the Royal Commision. We've been hearing the RBA, APRA, and the Treasurer tell the banks to ramp lending again. APRA being the ones who are the watchdog. Those who have investments in banks (most superannuation contributors) must be asking the same thing. It's like the banks are sending a "don't mess with us message". Sadly it's the knock on effects - the electrician, the brickie, etc, etc.

Re: Property Markets
 

Yeah. I wonder if it's that, a sign of severe stress in the banks (have there been many foreclosures in and around Sydney?), or a bit of both.

Re: Property Markets
 

Very few foreclosures. I believe it's the lowest it's ever been.

Foreclosures only occur when there is increased unemployment. The unemployment in Sydney is at an all time low. Sydney is a totally different economy to Perth.

However I don't expect such low foreclosure rates to continue. It looks pretty certain the federal government will be a Labor one and with that comes bad economic management and increased unemployment rates. The tinkering of negative gearing in a falling market should see vast swaths of workers who rely on construction out of work pretty soon.

It was great while it lasted though.

Re: Property Markets
 

I don't get involved in house price debates as they are pointless but if banks are not lending, how are they going to make money?

The whole point of a bank is to lend money and charge interest on this money. If they're not doing that, they ain't got a business

Re: Property Markets
 

Transaction fees
Credit Card interest

Re: Property Markets
 

Peanuts - and competition means fees are low or non-existent

If a bank doesn't lend money then it's not a bank

Re: Property Markets
 

They are just holding out until the Royal Commision Wrap Up. Then they will be back in action.

Re: Property Markets
 

Pretty much the case, I'm afraid as above. Banks will push for more government support. For example the lowering of tax as well as what has already happened get them on board in a scare campaign around ALP's NG policy. It'll be back to business in an attempt the arrest the necessary correction and push the problem to a future date.

Lending for housing is money for jam for the banks. A very poor use of resources, of course, which would be better used in more productive ways to grow the economy.

Re: Property Markets
 

I hope you bought a tonne of bank shares this morning on the back of that useless Royal Commission report. You could be well on your way to being a home owner had you done so.