We've never really had a really really serious property collapse in Australia.... nor the associated banking crisis that such a collapse may bring on, but I wonder whether Australia has a tsunami forming....especially if multiple lenders stay away from lending to non residents who have purchased a large percentage of the apartments coming through the pipeline in the next 1-2 years? Im not posting this because I believe this will happen. We dont even know how many non residents are relying on borrowing to funds these purchases, but there are other considerations as well... what about the resident/local buyers who may not be able to settle either, because their borrowing capacity is far less today than it was when they purchased... they could be a much bigger risk in this debate, than non residents... and then there's the valuers, who will be seek to protect their backsides and will quite likely ( in my view at least) start whacking the valuations either way...just so they are protecting their own interests..... Of course, all of these things are yet to play out, but they are all quite real possibilities... and as more and more lenders tighten lending for locals and non residents, all we need is for sentiment to turn south, and these things could move from being possibilities to strong probabilities... Then , what happens to banks ratings? If they fall, cost of funds rise.... securitisation/refinancing of mortgage bonds gets tougher...LVR's may be forced lower still... it becomes self perpetuating.. What everyone needs to realise is that our entire range of mortgage products , the cost of mortgages , the cost of LMI, the LVR's we are able to get... all of these things depend on our banks maintaining really good ratings on their mortgage bonds, and that means low arrears and low delinquencies. So if this got ugly, the consequences are not ring fenced to a few hundred thousand apartments.... no siree...... My personal view is that this is probably strategic and political... ie do this now, during the election campaign in order to be seen to be good corporate citizens, weeding out those dodgy foreign borrowers and fraudulent brokers... appeal to the xenophobic Australian core, and then when Malcolm gets back in - IF he gets back in... the banking royal commission will go away and they will open up for business again... just in time for the first tranches of apartments to start settling... But if it runs deeper than that... could be a really big problem... Boom to bust: how many is too many apartments for our big cities?