Debt Bomb: Fears of housing 'fire sale' as interest-only loans roll into principal plus interest

Thanks John appreciated.
But with the 2 figures, one can change the other cannot.
Ie Debt cannot change unless paid down.
Housing market valued at, can change, affecting the ratio between the 2.
Paying down debt takes blood sweat and tears,
Revaluing the property market only requires sentiment.

Regardless, the metric I like is private debt to GDP, how much debt have we accumulated to the amount of produce/services we produce.

So, in the constructs of productive discussion, can our private debt to GDP go to 400% and be sustainable? Where is the range that is detrimental to society?

I ask this, as I see no reason to f----k a lucky and great country. This will happen unless people discuss ideas and change their thinking.

 

Absolutely, and a good plan with regard to buying OO dominated areas. In Dublin at any rate these places took a brief silly dip and have returned to normal quickly, whereas new developments often just got bulldozed (literally, in the end). When you're competing with disappointed builders and everyone's got a mortgage the size of king kong, the risk goes right up.

 

If we see any significant correction I'd say that's a definite. The market will definitely recover, though it's hard to say when to start scooping...

 

Hey Satanoperca,

Great chat.

Firstly, there is no reason to believe that this debt figure can't/won't come down, although I do understand that our fiat system depends on ever growing debt for economic expansion. But the numerator can come down here, and we know that most people have P&I structures for their PPR loans. APRA is also insisting on more P&I structures for investors.

Regarding the private sector debt: are you saying that mortgage debt is not informative enough, because consumers are being crippled by other forms of debt (credit cards, auto loans, corporate debt etc)?

I still think the 24% is reasonable because in honours the matching principle: ie it matches real estate assets and real estate debt. Happy to agree that there are many ways to look at this though.

Thanks,

 

I think Mues made the point below......know lots of people who over extended in these suburbs.

By the way when the majors put Bondi on the blacklist.....that is of a concern.....

By the way most Druie suburb houses are 500k range....but agree they will also get affected.

 

Anyone who has a greater than 500k mortage on house more than 30km west of cbd is in trouble. Its coming...

 

What about those in Perth?

 

That's a pretty broad generalisation. Provided mortgage repayments can be maintained... whats the distance from the CBD got to do with anything?

It might be fairer to say anyone anywhere with a mortgage they cant maintain when their repayments re-set may be in trouble... thats not necessarily going to exclude buyers who purchased within 30KM of the CBD

 

Anyone who has a house 30km west of Perth CBD will be truly underwater

 

Isn’t there an island with those cute smiley marsupials? That’s West ain’t it?

 

Well I guess that puts you on Rottnest Island!

 

@hobartchic Where do you register to get emails for mortgagee sales?

Thanks in advance

 

To see what's going on in that part of the market.

 

If you're in Perth or Darwin I reckon that time will be very soon.

 

??

 

I think @hobartchic read that as "Why" as opposed to "Where"
or politely dodging your question.

 

Hummmmm

 

I might be politely dodging the question.... It's market information that tells me things. If people can not figure out what that is, well, time to go to business school.

 

@hobartchic much appreciated but keep in mind not everyone has means to go business schools. Thanks though.

 

@SatayKing
For alot of ppl out there, the concept of looking squarely into a mirror to find blame is a revolutionary one. And sadly, that's not an exaggerated comment.

If I had a kid to raise, the #1 sin in my house to commit would be to blame anyone else for something they are unhappy about. I learnt this long ago, that taking complete responsibility for your own life is extremely empowering and starts the process for success to gravitate towards you.