Headwinds for the housing markets especially Sydney/Melbourne

Discussion in 'Property Market Economics' started by TheSackedWiggle, 27th Jun, 2018.

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  1. TheSackedWiggle

    TheSackedWiggle Well-Known Member

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    Headwinds for the housing markets especially Sydney/Melbourne
    • #AvailabiltyOfCredit (aka #BuyingPower)
      This is currently restricted by Apras regulatory measures like
      • #TighterLendingDueToHEM
      • Potential #6xDTIHardCap
    • #AffordabilityOfRepayments
      Repayment rise due to
      • #500bnIO2PIBy2022
      • #OutOfCycleIRRise due to #FundingCostIncrease
     
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  2. Eric Wu

    Eric Wu Mortgage Broker Business Plus Member

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    true

    it is getting harder and harder to get loans. the high prices in Sydney & Melbourne make it challenging.

    BUT, the First Time Home Buyers are the favor of the time ATM, lenders are very friendly with them, higher LVR, lower deposit, lower rate.....
     
  3. TheSackedWiggle

    TheSackedWiggle Well-Known Member

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  4. Sackie

    Sackie Well-Known Member Premium Member

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    There is no widespread property bust coming.

    [​IMG]
     
  5. TheSackedWiggle

    TheSackedWiggle Well-Known Member

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    No thanks, trying to quit.
     
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  6. TheSackedWiggle

    TheSackedWiggle Well-Known Member

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  7. Sackie

    Sackie Well-Known Member Premium Member

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    I like that graph. Brisbane still has room to go for more allocation of income to mortgage. Brisboom is on the cards. ;)
     
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  8. ymmf

    ymmf Well-Known Member

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    How can the country's economy be productive when half of your income goes into the house.
     
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  9. Angel

    Angel Well-Known Member Premium Member

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    For people on really high incomes who are taking out really big mortgages to buy really expensive housing in Sydney - it is their choice what they do. They would still have plenty of cash left over to pay for their other stuff.
     
  10. TheSackedWiggle

    TheSackedWiggle Well-Known Member

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    In 2001 RBA IR was 5%, home loan IR was around 7.5%
    in 2018 RBA IR is 1.5%, home loan IR is around 4%
     
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  11. mues

    mues Well-Known Member

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    True. But it still takes money out of the economy. Would be better if they spent it on smashed avocado, getting wasted, going to the theatre, New sports kit, anything that just burns money rather than locking into interest repayments.
     
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  12. Sackie

    Sackie Well-Known Member Premium Member

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    Who cares? not their problem. Their income. Can spend it on anything they like.
     
  13. hobartchic

    hobartchic Well-Known Member

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    Retail spending is 60 per cent of Australia's GDP. If people are spending on homes, they are not spending on consumption, retailers suffer = job losses in retail. Everyone tightens their belts further. More job losses.

    We should all care.
     
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  14. mues

    mues Well-Known Member

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    Sure they can do what they like.

    But as a basic rule

    Consumer spending = good for economy growth.
    Paying interest / debt on less productive assets = not as good for growth.
     
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  15. Illusivedreams

    Illusivedreams Well-Known Member

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    Banks are owned by 1000000s of Australians
    Their profits go into retirement savings and build cash flow through dividend.

    Mostly all superannuation funds hold a large amount of Australian banking stocks.

    In Sydney a huge amount of people are employed by the finance sector.

    It's a stretch my how is Kmart spending more productive than Westpac spending?

    How about IKEA
    Pay no taxes
    Every SKu is made in China or Overseas
    Import most construction and fit out for their shops.

    Hey it least every one has a BOLMEN for $1.99 on sale now in an IKEA catalogue (printed in China)
     
  16. marmot

    marmot Well-Known Member

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    And how would it look if the market stood still for 8-10 years.
    All those sitting on interest only loans would be feeling pretty sad, spending 8 years for interest only and not even touching the principal of the loan.
    Heaps of people in Perth having the same dilemma , do you cut your losses or keep on soldiering on.
    No wonder the W.A economy is still a basket case.
    Its a vicious circle.
     
  17. Fargo

    Fargo Well-Known Member

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    Investing puts money into the economy ! If there is a buyer there is a seller, if the seller is in Sydney he is loaded with lots of moula to spend. Some of the money is going into regional towns that are booming as a result.
     
  18. marmot

    marmot Well-Known Member

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    So when you spend more money with westpac, do they employ more staff or just hand out more dividends , as opposed to spending more money at the shops and restaurants etc, they in turn will employ more staff and pay their current staff more, as a result workers have more money to spend and around and around we go.
    It was Joe Hockey that once said its mums and dads going out spending money in the local shops that really drives the economy .
    If you are pouring more and more into your mortgage, and everyone else is doing it , then it eventually drags down the whole economy
     
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  19. mues

    mues Well-Known Member

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    I think there is lots of stuff on this forum that has multiple angles for debate. This ain’t really one. There is pretty much economic consensus that things that restrict consumer spending slow economic growth. Here is a university professor saying so.

    Is household debt ruining the economy? | this.

    Also. The banks themselves do little to grow the economy. They don’t tend to introduce New resources New technology, add more workers to the workforce or make things much more efficient. Which are core tenants of economic growth.
     
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  20. mues

    mues Well-Known Member

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    Investing in infrastructure, capital works, new business, technology, tends to grow economies much better than investing in interest only loans on houses for example.

    Basically- you want investment to create things that can generate economic growth. A new road can allow a trucking business to run better. A new bit of technology can allow people to work more efficiently and get more done in a day

    Paying 1mil for a house that was 500k 7 years ago tends to just create locked in equity. A house in itself does not build more houses.

    More money does not grow an economy. More resources do. Money is just the fluid to keep things moving.