Did APRA work??

Discussion in 'Property Market Economics' started by MTR, 23rd Mar, 2016.

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  1. Perthguy

    Perthguy Well-Known Member

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    Not at all. Business as usual for me. The upside is that properties are a lot more affordable in Perth. Rents also going up in some areas. One of mine is up for renewal next month. Rent is going up. Happy days!
     
  2. dabbler

    dabbler Well-Known Member

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    I think it is just starting, there is always changes, so now just change what were doing ..... until th e next fork comes along.....
     
  3. MTR

    MTR Well-Known Member

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    its a tsunami...... most wont realise this until they get stuck with around 40% tacked onto those IO loans. Imagine those holding 3 + IPs, i see lots of pain.

    Fire sale is one option
     
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  4. dabbler

    dabbler Well-Known Member

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    Well that all depends, if you bought them all in Sydney or Mel in later boom time, then your going to have a prob if they are all at 2 or 3 % with no prospects of changing.

    I have some loans with couple of years to run, and am going to convert early, the thing is, I always looked at return, and most were doing a high yield and that has only increased, as there was scope for it to increase, it is a bit of a pain in that equity cannot be used well atm, but that will change over time.

    If we have to sell, which is possible, it wont matter much, as was always intending to do some selling, but it will be irritating if we cannot go and buy others after selling though, so prob depends on where and what the markets doing.

    One thing that I know, is things ebb and flow.....as long as we can eat and have a home to live in, all is good.
     
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  5. mickyyyy

    mickyyyy Well-Known Member

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    Agreed! I've seen my borrowing capacity drop over the last 3yrs and my income has gone up. Ppl who maxed out borrowing capacity prior to 2015 will have problems soon unless really high yeilding, paid down loan or big cash buffers.

    Makes me wonder if Brisbane will boom in general or just specific areas...
     
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  6. Duck1234

    Duck1234 Well-Known Member

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    Know friends who borrowed 8 to 10 times income in Sydney, property yielding gross 3 percent
     
  7. MTR

    MTR Well-Known Member

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    ouch.... taking profits off the table is a good risk management strategy... What goes up, comes down
     
  8. Duck1234

    Duck1234 Well-Known Member

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    I guess the sunk cost is too high for them
     
  9. dabbler

    dabbler Well-Known Member

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    Yuck....hope they dont have too many....
     
  10. gty12

    gty12 Well-Known Member

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    They could just sell?

    Think about it, if you bought in 2013 to 2014 in Sydney, you made a pretty good gain, come 2019 to 2020 & we are down 15%. You sell when you can't afford the repayments and you've still made a fine gain.
     
  11. gty12

    gty12 Well-Known Member

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    I'm referencing 2019 to 2020 when the big switchover happens.
     
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  12. MTR

    MTR Well-Known Member

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    Yes I did
    Must sell prior to peak though
    I sold in 2016 a tad early
     
  13. gty12

    gty12 Well-Known Member

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    No I am getting at simple maths here:

    • Let say buys in 2013 for $1 million
    • 2018 it is worth $2 million
    • 2019 loan becomes interest only & can't meet repayments
    • 2019 market has reduced by 15% from 2018, your property is now worth $1.7 million
    • You sell=you still made $700,000 in 5 years
    Voila.
     
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  14. MTR

    MTR Well-Known Member

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    Yes i get your point
    Dependent on whether you can sell, sometimes its not that easy, all about your product and suburb etc
     
  15. Phar Lap

    Phar Lap Well-Known Member

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    So property doubles every 5 years now ?

    Wait till the bears see this!
     
  16. Duck1234

    Duck1234 Well-Known Member

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    not trying to be a bear. But lets see if it doubles from here in 7 years. The higher it is, the harder it is to double.
     
  17. gty12

    gty12 Well-Known Member

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    Nyet comrade, was a simplistic example to get the point across-if the maths was too difficult less people would read.
     
  18. virhlpool

    virhlpool Well-Known Member

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    There are many people who are holding 10+ properties and still sailing through safely, without pain. It's all bout how the mix of the portfolio is.
     
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  19. MTR

    MTR Well-Known Member

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    Agreed
     
  20. euro73

    euro73 Well-Known Member Business Member

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    Yes, if their portfolios are mature, so the mature rents allow for the P&I migration
    Or if they have paid down debt as they went along ( windfalls, lottery, inheritance) so their cash flows allow for P&I migration
    Or if they have very high incomes and can manage the P&I migration in spite of low yields and having paid off no debt.

    But for anyone who has less mature portfolio's with lower yields, hasn't had some form of windfall, hasnt been actively reducing debt and doesn't have a lot of surplus cash flow from salary.... the migration to P&I may bring real cash flow pressures

    if they are forced to sell and have been fortunate enough to enjoy real profits, they still walk away with some cash in their pockets, which ( if they are smart) they will use to reduce PPOR debt or any other non income producing, non deductible debt ( car loans, personal loans, HELP debt, credit cards) or in the absence of any such debt, pay down INV debt ....

    if they are forced to sell and havent made any profits.... it may just be case of walking away and being grateful you havent taken a huge loss...

    if they are forced to sell at a loss..... well, thats just sad and hopefully there arent too many of these people