"Borrowing crackdown could mean an $80k income makes you eligible for a $200k loan"

Eric is right. Politically we have no ceirtnty what lies ahead and what strings will be pulled to win the next state/federal election.

Negative public sentiments about private and foreign investment seem to gaining steam.

Looking at countries like Canada it seems small well meaning tweaks can easily run things of the rails.

Consider those matters together with the fact that to date in Australia it has been state gov and independent government bodies that have changed the game.

IMO this is wait and see time. No point putting your money on the table in a game which you don’t know what the rules are

 

Hmm I wonder what that would do for rents?

 

Probably rents will go up. Not every renter can transition to be a first home buyer, and unowned properties (coz investors cant get lending or can only borrow peanuts) cant be tenanted as far as I know.

 

House prices fell in Vancouver a couple of years ago after the Govt put restrictions on foreign ownership.

Anyone with booots on the ground there/close to know what the situation is now? Have house prices stabilised? What was the drop? Are rents picking up?

 

Wasn't that in 2017? I'm pretty sure Aus, Can and NZ put the same policies through at the same time.

Canadian real estate prices drop the most in 7 years — led by Toronto

Toronto’s Housing Bubble ‘Has Expired And Gone To Meet Its Maker’

 

Depends how government deals with the other vexing issue of low wage growth.
Some have argued that taking an axe to immigration for a year or two would kick start wage growth ,unfortunately it has unintended consequences for areas that have benefited from high levels of immigration . The tap can be turned of quite quickly .
But housing construction has a longer lag time .
You end up with an oversupply of property ,especially in the rental markets.
Which can be quite contagious as tenants will move to cheaper digs or ask for a rent reduction on a take it or leave it basis.
Perth was a good example when immigration/high pop growth comes to a dead stop, it took over a year or two for the construction industry to stop building houses and apartments/units, by that time the market was oversupplied and you had all these brand new apartments/units/houses coming online, they had to drop their rent to attract tenants, and renters suddenly realized they could move into brand new apartments & houses for cheaper than their current rent in a 20-30 year old place.
For many landlords they struggled with the concept of offering a better product than their competitors at a lower price

 

Many in singapore rates are around 1.6 - 2% much lower.

 

Interest rate is low while gross rental yield in Singapore is high. But entry and exit cost is very high.

 

Anyone else think these changes if going into effect are the black swan event for Australia’s economy? Less home loans= less jobs. Less renovations, less construction which means less employment for all construction workers and labourers etc. This will be the straw to break the camels back in our economy and send us so far into recession..

 

It’s a big “if”. Why are people taking this report so seriously? I’m seeing it every where and thought it was just clickbait.

The royal commission reminds me of the Trump-Russia investigation all over reddit.

 

Plenty of scope for public housing construction to keep those workers going. Higher interest rates could lead to cheaper asset prices and recession (then fast recovery).

Although keeping interest rates low will do it too. High asset prices=low retail spending=job losses.

 

It wouldn't kill just investors, it would kill the whole property market.

 

Its UBS headlines again. I imagine they're having a laugh there at how they can influence sentiment by headline. Perhaps its an actual attempt at doing it.

A single person on 80k is not going to have a HEM of $50k. It barely makes sense, given a person on 80k gross income (~$65k net), may actually not be able to fund a roof over their head (at least in Sydney) with the left over income. So it'd mean that anyone with that profile is currently dissaving.

That'd be the biggest change in borrowing power calculators, and would be about x2-3 the overall impact of the APRA round one intervention in 2015.

Basic assumptions are very close to current figures anyway, someone on 80k with nothing else looking for an OO loan isn't too far away from their basic calcs.

 

Haha the good old bs Russia investigation.. it’s because we don’t know the ins and outs of the investigation tbh so it scares people when there is uncertainty..

Thanks Redom. So you think it’d be ridiculous for them to implement this?
What other measures are out there that apra may implement do you reckon?

 

APRA - nothing. I don’t think they think there’s a problem at the moment.

Others - more verification on living expenses, rather than a general uplift on floor rates. Doesn’t mean much for overall borrowing capacities for majority, just more paperwork for all those involved.

 

It all depends on China really. If anything big happens to their economy to the downside, our iron ore,coal, natural gas exports will be hit pretty badly, then other sectors like Agriculture/Tourism/Education, probably enough to trigger a real recession here even if RBA drops rates to 0%(we only have 1.5% to go, not much of a buffer for crisis times).

And if their economy just continues to bubble and hum along, and avoids the crash Japan had, then we wont have a recession for another decade lol..

We'll just have to see how this trade war situation plays out.