ANZ says Australia's housing slowdown is almost over with prices set to rise again

Discussion in 'Property Market Economics' started by Propertunity, 1st May, 2018.

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  1. Silverson

    Silverson Well-Known Member

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    Thanks very much for the detailed reply, appreciate it!
    All my loans have been/are p&i as that was always drilled into me from a kid, especially ones I never want to sell. (I know that's a dirty phrase p&i on an investment, but that's my choice).
    I'm just waiting to do my tax (self employed) and then see how I'm situated.
    Aiming to continue buying divvy stocks, can't see much growth to be honest (actually more of a dip)however I'm happy to collect a nice dividend, planning to borrow 30% of portfolio just to help accumulate an amount that will pump out a decent income. Pretty low lvr but It'll help me sleep at night.
    Thanks again for the detailed reply
     
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  2. PandS

    PandS Well-Known Member

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  3. PandS

    PandS Well-Known Member

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    Don't worry it wont be a dirty phrase going forward, you will be laughing when other sand castle start to crumble.

    there is a saying in the market, the market can stay irrational longer than you can stay solvent

    what that test of time phase saying is people think they can manage high leverage and work it all out, but the market can go all crazy and blow out all your assumption and prediction and can stay like that for a long time, a lot longer than you can sustain your repayment or stay solvent
     
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  4. sash

    sash Well-Known Member

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    Yep spot on...see my post .....but I think people are forgetting how severe it is in Sydney and parts of Melbourne...it has gotten. They keep sticking their head in the sand....this market has turned. It has to do with finance.....no finance ..no buyers dems the rules.

    Australian house prices will ramp up in 2019, according to ANZ economists
     
  5. dabbler

    dabbler Well-Known Member

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    They have done an about face it seems today.....maybe it was a distraction ?
     
  6. euro73

    euro73 Well-Known Member Business Member

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    I called them "generously optimistic" a while back ... and that's what they proved to be.

    I'm still calling a 30% chance of 2019 RBA cuts .
     
  7. radson

    radson Well-Known Member

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    Only 30%

    Im a 50% guy myself :)
     
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  8. Barny

    Barny Well-Known Member

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    I'm gonna go with 100% chance of cuts coming this way
     
  9. euro73

    euro73 Well-Known Member Business Member

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    It will all come down to delinquencies.
     
  10. Satanoperca

    Satanoperca Active Member

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    Come on, with the treasurer announcing GPD at %3.1 why is the need to cut rates. If we are to believe our pollies, rates should be going up, inflation will start growing.

    Delinquencies have nothing to do with IR's.

    The RBA is not here to save property investors or that be it mum and dad's trying to put a roof over their childrens head.
     
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  11. hobartchic

    hobartchic Well-Known Member

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    The RBA rate decision's may affect sentiment, and they do have limited affect on savers, but all the lenders are doing their interest rate calculations separate to the RBA board decision.

    Lenders, and more importantly overseas lenders, are looking to increase interest rates. Couple that with a flatlining, though I expect further devaluation in the AUD, and you have the perfect storm.

    A rise in RBA rates would at least give savers a bit more incentive to place more money in the bank and lenders could access AUD to lend out. There in lies a compelling argument for the RBA raising. I doubt they will reduce the interest rates further. Though, they may continue to hold to reduce delinquencies and therefore, and more importantly, contagion in market sentiment. The RBA appear to be trying to keep things safe for as long as they can.
     
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  12. euro73

    euro73 Well-Known Member Business Member

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    I’m simply saying that if delinquencies became a big problem, a banking system reliant on securitised funding could quickly find itself dealing with significant increases to cost of funds

    If that were to happen, it would lead to much higher retail rates and that could lead to even more delinquencies - and then things could start to unravel.

    It’s not hard to see the potential domino effect if that happens ....

    Just consider for a moment - On top of the @50% of total Resi mortgages having their repayments increase by more than 50% in the next year or two or three as they re-set to P&I , imagine another 150- 200 + bpts hitting 100% of loans as well , if delinquency rates cause global securitisation markets to demand higher rate for risk because Australian banks spin rates go from 1.5% to 5% , or 10% .

    If that were to happen , delinquency rates would escalate even further . And fast! Then , rather than just dealing with higher cost of funds, Australia’s banks may find they can’t refinance their RMBS at all - most of which is on short term (90 day or 180 day ) terms .

    If that were to happen , there is potential for a credit crisis in Australia . The Govt would have to step in and guarantee the RMBS or employ AOFM to become a buyer of the RMBS - and we are talking 1.6 Trillion

    The banks share prices would be decimated - destroying superannuation balances . Small business loans would dry up - leading to mass unemployment . Commercial loans would dry up - leasing to construction industry stalling , and all associates supplier industries stalling - meaning more mass unemployment .

    Government debt would become outrageous . Weighing down economic growth for decades ...

    So It’s much bigger than house prices . Australia’s big 4 banks - which have more than an 80% share of the mortgage market - underpin the entire economy and ASX.

    While I’m not suggesting these things are going to happen , it’s foolish to argue that delinquency rates don’t affect rates. We are a massive importer of wholesale ( securitised) money . So stopping mortgage delinquencies from escalating to unsafe levels is a much bigger deal than you perhaps appreciate
     
  13. Deck

    Deck Well-Known Member

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    RBA could cut but banks are quite likely to raise as their short term funding cost increase.
     
  14. Duck1234

    Duck1234 Well-Known Member

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    Majority of funding for the big banks are actually sourced domestically.
     
  15. Duck1234

    Duck1234 Well-Known Member

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    The probabilities of all of these playing out is fairly low
     
  16. Deck

    Deck Well-Known Member

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    40% sourced overseas
     
  17. Duck1234

    Duck1234 Well-Known Member

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    More like 30 or even less now
     
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  18. BoatArrival

    BoatArrival Well-Known Member

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    Withdraw 30% of total funding and see what happens to interest rates.
     
  19. Deck

    Deck Well-Known Member

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    and I m wondering if the RC will impact overseas investor confidence in the quality of these Residential Mortgage Backed Securities
     
  20. euro73

    euro73 Well-Known Member Business Member

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    Doubt it . The performance of the RMBS is what matters . Which kinda comes full circle to my broader point that protecting this significant funding source from becoming much more expensive,may warrant a rate cut.


    I havent ever said these things would happen. I called a 30% chance of rate cuts - not 100%
    But only a fool would dismiss the potential for domino effects to take place if things began to unravel because of rising levels of mortgage delinquencies

    At the very least, I think this almost ensures that the RBA cant safely lift the cash rate for a good, long while.

    So use this prolonged period of low rates to pay down some debt ...

    #cashcowsrule

    #aheadofthecurvesincebeforeAPRA
     
    Last edited: 8th Jun, 2018
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