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Warning On Home Loans

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Warning on home loans

(Taken from: News.com.au - 29 May 2006)

OVERINDULGENT, yes, but Sydney is now branded an underperformer, according to the latest house price data from the Australian Bureau of Statistics.

While Perth houses soared 8.8 per cent in the March quarter, Sydney continued to fall, by 1.2 per cent, the nation's worst performing capital.

This should be a warning for anyone with a high loan-to-value ratio, Infochoice warned. These are those whose loan is 85 to 90 per cent of the value of their home, Infochoice's Denis Orrock said.

"There's a very good chance that if the prices continue to fall they will find themselves with negative equity," he said. "This is especially true of anyone who has bought over the past two years."

Home owners in this situation should work to lift their equity and the best way to do this is by making extra repayments, he said.

"The tax cuts are a good start," Mr Orrock said.

If banks decide to make the call on the value of the property and revalue it downwards, these property owners could be in trouble, especially if they are hit for higher repayments.

Compounding this predicament is the fact that Australians are still spending at an unsustainable rate, shelling out more than they earn, according to Access Economics.

The economic forecaster's director Chris Richardson said the spending was prompted by the previous boom in housing prices, with Australian wealth reaching a higher per-head peak than that experienced by the US during the dot-com boom.

Mr Richardson warned that world commodity prices may fade before housing prices moved closer to fair value.

"Australia went from a housing boom to a commodity price boom," Mr Richardson said.

"But if that boom peters out before housing prices are closer to fair value, profits may be squeezed and the Australian dollar could fall. That could occur if China slows or if new (world) commodity supply began to catch (world) commodity demand."

Mr Richardson said real growth in Australia had slowed since housing prices peaked, but the commodity boom meant the world was pumping $40 billion a year in extra income into Australia.

"Today's record profits, record rates of investment, strong share markets, the robust Australian dollar and surging tax revenues are all due to the strong commodity prices Australia is experiencing," he said.

Mr Richardson said tax cuts announced in the Federal Budget had created little advantage for Australians because interest rate rises will erode their effectiveness.

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Guest Winners and Losers

Hey! :angry:

It's my job to post rubbish about the Australian property market that has absolutely no correlation with the UK property market, because it can never happen here.

;)

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Hey! :angry:

It's my job to post rubbish about the Australian property market that has absolutely no correlation with the UK property market, because it can never happen here.

;)

Lol! Just had my relations from Perth 'round for a cuppa ... were saying how prices are rocketing there in comparison to some places on the East coast, but they almost spat out their tea when I showed them how much property is going for over here in Blighty! Might have to ask them about sponsoring me for entry into the country! :ph34r:

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Lol! Just had my relations from Perth 'round for a cuppa ... were saying how prices are rocketing there in comparison to some places on the East coast, but they almost spat out their tea when I showed them how much property is going for over here in Blighty! Might have to ask them about sponsoring me for entry into the country! :ph34r:

I was in the back of a Vietnamese-immigrant-Ozzie's cab the other day. He was one of the boat people from the 70s. He has a 800 sq m gaff in Sydney. Positive chap.

Bonzer!

JY

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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