Are we heading into a Recession?

Because assessments aren't done at 4%? I like to think of myself as quite happy to take calculated financial risks, but the thought of a $1.7m PPOR loan on take home income of 150k scares the **** out of me

 

Why does it scare you? you can easily obtain a PPOR loan for around 2% now. So there is quite a lot of buffer here. If you have other personal liabilities i.e. car loan, multiple credit cards, young kids, I can understand why banks will refuse you this amount. So its a case by case scenario. I don't believe we can make a sweeping statement like 'borrowings should be less than 7 times the household income'

 

I am not saying that loan should decline. But it is not an ideal situation.

Many things will happen in life apar from weekly repayment. Wife go on maternity, wife may go part-time after maternity, kids expenses, they may get pet, they may wish to travel overseas, one of them may lost his/her job, interest rate raises, recession, etc

50% plus income is going towards mortgage. It is not ideal situation for young couple. In my view.

 

Given a lot of restrictions are causing some industries their challenges, vaccinations & opening up should help get them back operating & employing.
Think tourism, hospitality, on-site retail etc.
Education still a challenge until international students return.
Many other industries at all time highs, logistics, infrastructure, housing, automotive with long lead times just as some examples and lots are already sold out throughout 2022.
Based on that and other forecasts I see a strong 2022 so no recession for me.

However, Nobody saw a COVID worldwide pandemic either so what others see happening is just someone’s forecast, which are always wrong, just depends by how much.

Pre Delta lockdowns employment was coming back extremely strongly (unemployment down) so I would back similar post current lockdowns.

So listen to bears and you are betting on a decline, listen to bulls and you are betting on a market increase. In the end it's your call.

if you are thinking liquid assets = cash, then you are effectively out of the market whether property, shares or other and betting on a market decline. You are also losing value of cash by CPI each year (less any earnings /return you get).

You mention your father suggested you complete your PPOR build so ensure you have sufficient funds to complete this and the hidden costs that will pop up.

Good luck with your choices!