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Sydney house prices rise by c. 20%

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Fears of bubble as Australian house prices surge

https://www.ft.com/content/ac7e3960-181c-11e7-a53d-df09f373be87

About 40 per cent of new mortgages are issued on “interest only” terms, under which borrowers do not have to pay back the principal of the loan for a specific period. 

Australia’s system of “negative gearing” provides investors with a tax break allowing them to claim as losses the financing and other costs of their rental properties against other income. The tax break has become so popular that 15 per cent of the electorate have become buy-to-let investors. 

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The Strine Prudential Regulator is clearly every bit as useless as its UK equivalent.

Quote

The banking regulator, the Australian Prudential Regulation Authority, wrote to all banks on Friday saying it expected them to tighten lending practices on interest-only and investor loans

The move was to ensure banks recognised the "heightened risk in the lending environment, and that their lending standards and practices appropriately respond to these conditions," APRA chairman Wayne Byres said. 

Banks will have to limit interest-only loans to no more than 30 per cent of their total new home lending under the new rules, which will affect both investors  and owner-occupiers.

All four big banks are currently over that limit. 

The corporate watchdog, the Australian Securities and Investments Commission, joined the crackdown on Monday by announcing targeted surveillance of lenders and mortgage brokers who are inappropriately spruiking interest-only loans

It follows a warning by Treasurer Scott Morrison that regulators needed to crack down harder on high-risk loans, particularly to real estate investors.

http://www.smh.com.au/business/the-economy/australian-house-price-growth-surges-to-sevenyear-high-20170402-gvc3d3.html

 

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I like '' Fears of bubble as Australian house prices surge''   'fears of a bubble'?  been in a bubble since 2001 or thereabouts.  What we have now is a foul puss filled boil on top of the bubble.  Think of a 3 legged stool where if one leg breaks it will fall down. Australian housing is a 10 legged stool where if one of them breaks it will fall down, which of course does not line up with physics but then again the house price rises do not either.

Negative gearing, putting your deliberate losses against your PAYE income, keep doing it until your tax is in a lower bracket.

1/2 price capital gains after holding for 12 months

Massive immigration in order to push up house prices and undermine workers of course, they cant afford to buy they will rent.

Money laundering, primarily from China, open house on that one.  Not allowed to buy established property but they do on a massive scale.

Banks lending into speculative investment in a major way

Banks lending to real people beyond real affordability.

Allowing self managed superannuation (pension) funds to buy into the speculative market, a new and increasing phenomena.

A more than complicit media, owned by real estate advertising and  (think the UK x 10) property bull mania.

All politicians, especially the right wing nut jobs running the show are up to their necks in house price speculation, far more so than UK

Deliberate restriction on new land releases, both by the state governments and by the land developers who get their paws on it then drip feeding the market.

Nimbyism in the leafy green suburbs. of which few allow development for people. New buyers can go and live out in B*mF**k

 

Its a sick place these days with an accelerating class divide and an increasing contempt for those with the least, just like the UK.

 

 

Edited by steve99
forgot

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I popped my UK salary into National Australia Bank's mortgage calculator, and they informed me I could borrow up to $1million

In the UK the most I could borrow would be 60% of that - lending is completely out of control is Australia, it's worse than the height of 2007 in the US/UK

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36 minutes ago, Kent Ambitions said:

I popped my UK salary into National Australia Bank's mortgage calculator, and they informed me I could borrow up to $1million

In the UK the most I could borrow would be 60% of that - lending is completely out of control is Australia, it's worse than the height of 2007 in the US/UK

Wow just did the same and got a similar figure, even with a 5.88 interest rate! Do they have a maximum multiple of salary out there? 

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30 minutes ago, crow said:

Wow just did the same and got a similar figure, even with a 5.88 interest rate! Do they have a maximum multiple of salary out there? 

Yes.

Somewhere around ~30.

 

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8 hours ago, crow said:

Wow just did the same and got a similar figure, even with a 5.88 interest rate! Do they have a maximum multiple of salary out there? 

Its done on 'affordability'  Which is everything you and most likely your partner earn after tax and an amount to live on comparable to the official poverty line wage. The rest of your pay is mortgage money on a normal 30 year loan.  Even worse, you went to a banks website,  go and see a broker and you will get far more, of course they will throw in a bit extra income and assets into the online application that you didnt know you had.   No subprime apparently.

Edited by steve99

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2 hours ago, steve99 said:

Its done on 'affordability'  Which is everything you and most likely your partner earn after tax and an amount to live on comparable to the official poverty line wage. The rest of your pay is mortgage money on a normal 30 year loan.  Even worse, you went to a banks website,  go and see a broker and you will get far more, of course they will throw in a bit extra income and assets into the online application that you didnt know you had.   No subprime apparently.

I wish that this wasn't true, but it is entirely accurate.

Four Corners ( one of Australia's better Current Affairs programs) even cited it in one of their shows last year. One of their business journalists - who pointed out that she was already on a very good salary- found out that her income on a mortgage application had been "adjusted" upwards without any input from herself.

Apparently the reason such massaging of income figures is done is to convince foreign lenders that Australian banks only lend mortgage money to the best of the best ( 40% of Australia's cash inflows are borrowed from overseas banks), so lousy borrowers have their incomes/assets adjusted so that they look OK, and good borrowers have their income/assets adjusted so they look like rolled-gold.

Its really a massive Put on the Australian federal government by the Australian banking and real estate sector. They figure if it all goes south then Canberra will ride to the rescue.

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10 hours ago, Society of fools said:

I wish that this wasn't true, but it is entirely accurate.

Four Corners ( one of Australia's better Current Affairs programs) even cited it in one of their shows last year. One of their business journalists - who pointed out that she was already on a very good salary- found out that her income on a mortgage application had been "adjusted" upwards without any input from herself.

Apparently the reason such massaging of income figures is done is to convince foreign lenders that Australian banks only lend mortgage money to the best of the best ( 40% of Australia's cash inflows are borrowed from overseas banks), so lousy borrowers have their incomes/assets adjusted so that they look OK, and good borrowers have their income/assets adjusted so they look like rolled-gold.

Its really a massive Put on the Australian federal government by the Australian banking and real estate sector. They figure if it all goes south then Canberra will ride to the rescue.

Also as well as, sometimes what they add onto your income is 'implied rent' so that your income = your income + the value your newly purchased place would rent for cause you are getting rent free for free and that is worth $500 per week say.  The government also uses this to assess family income to make Aus look better than it might, hence ministers will often quote some really fancy figures as being the median family income which includes this magic 'rent' figure and the compulsary part of your pension fund your employer pays in then tell us all that a house in Sydney only costs 4.5 times income (median is circa $1Mill).    We all look good through such financially rose tinted glasses but most people are close to the skint line.

Aus is in for one hell of a bust when it finally does, the bulls say it couldnt happen here for ....'' we have full recourse loans unlike the USA so people will not let go'', however being ignorant they dont realise that most states in the USA dont have legal jingle mail.  '' House prices should be high because you are in Australia, the best country in the world' ... 'or most people in Aus live near the sea so should pay more' .  and so on.

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