We examine the latest ABS data on housing lending finance, and consider the consequences.
AFR article: https://www.afr.com/business/banking-and-finance/citi-slams-residential-lending-brakes-amid-warnings-of-looming-property-crunch-20180611-h1195w
Hey Martin, my partner and i both live in sydney and have a 20% deposit for a median priced house. We are sick of renting and just want to buy a home. Is the next 3 months a good time to make a purchase?
Why do real estate agents call a downturn a "correcting market"? Doesn't that imply the rapid price growth of the last 5 years was incorrect ( I believe morally it was)? When is a house price correct? A house is only worth what a bank will lend an investor to buy it. Often leveraged against the equity of other highly leveraged properties... How is that correct?!
Thanks again Martin for your ongoing detailed analysis on the real financial news. What do you think of the bail in laws passed through on the 14th of Feb 2018? Also do you have any knowledge on the banking act 1959? I have questions I need people to help me answer them. Thank you
In the old days if you earned $100k they would say don't a home more than $300k (3 times household incomes), now certain cities rations are from 6-10 times that- ex- $100k now buying homes $600k-$1million plus.
I am currently reading book by Michael Yardney and all he talks is property growth forever. As the old saying for every action there is an equal and opposite reaction.
Walk The World....Yep crazy stuff....if the 7 - 10 year double rubbish continues for another 20 - 30 years the present median price in Sydney of approx. $1m ends up in the stratosphere and the current high 6 - 10 LTI blown apart.....it's complete and utter madness defying basic arithmetic.
Thanks Martin...the tide has changed, the impact of this is enormous with flow on impacting right through the economy. Just like a junkie the govt was/is addicted to that stamp duty revenue. The retail sector will feel this as well if lines of credit are restricted. When you have an economy that is built on consumer driven debt it was inevitable.
Great Stats and thanks for sharing.
I have always been sceptical when people say property only goes up in value or double every 10 years. It seems to me it is poor short sighted logic when everyone has reached their maximum debt levels and our economy is running on the smell of an oily rag
patrick salmon.....yep complete madness. Grab a calculator and wack in $1m (approx. Sydney median price) and compound at 7.2% - 10.28% (rate of 7 - 10 year double) for 20 - 30 years.....you end up with telephone book numbers. Then compound the current average wage of 100k at approx. 3% (wage growth rate) to work out the likely LTI. So unless the banks give people almost free money to play with or sell off all of the real estate to China, it ain't going to work.
Unlike most people on the internet claiming "Housing Bubble/Crisis/Downturn" with no references at all... DFA provides statistical and empirical evidence to support their argument.
Thanks Martin, cheers mate :)
Currently stuck and should be settling on the house Friday. Buyer has not yet been approved the final settlement amount. I think this is more common than is being discussed in mainstream media. I’m forced to charge the penalty interest as prices look set to slide further. What a mess! Great work again Martin. Love the new black background!
Thank's again Martin. A lot of us have been calling lower house prices for a while now but for me it's still somewhat of shock to see it happen so quickly. So many people I know are completely borrowed up to their maximum equity that if fear even a 10% decline could wipe them out.
Great content Martin, thank you so much for making it available. It would be great to see you interview other experts, i really enjoyed your most recent one. Steve Keen is someone who comes to mind but I'm sure you have your own ideas. Look forward to more content
The RBA's governance of the interest rates has all the subtlety of a country buck's night. It chooses a large sledgehammer that hits everyone.instead of having a range of interest rates that can be adjusted according to postcode thus cooling markets down when overheated while relaxing rates in depressed areas. One would think that it is all too hard for the federal government to regulate our monetary system and instead easier and a lot more fun to hand the keys of the blood bank over to Dracula because a bloodbath of one description or another seems inevitable. Asleep at the wheel doesn't begin to describe the lack of economic leadership in this country.
Its pretty hard to hide a house, loans are for specific purposes not a case full of money to run off anywhere you like with. They have varying rates for all sorts of loans so giving depressed areas cheap money makes perfect sense if they are for owner occupiers only.
Bill Hollingsworth I disagree. What's to stop people borrowing money from one part of the country to put it in another thats frothy? It's a pathetic state of affairs when a commodity like shelter dictates economic prosperity.
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