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Home lending defies property downturn, investor loan restrictions...

Discussion in 'General Property Chat' started by See Change, 16th Jan, 2016.

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  1. See Change

    See Change Timing Lord Premium Member

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    For those enthusiastic analysts who predicted that lending would crash with the APRA changes comes the reality of the situation...

    Home lending has surprised analysts with its strength in the face of tighter restrictions on investor loans and slowing major property markets ......

    For me , this is a confirmation of my thoughts that the APHRA changes , in reality , only impact a small percentage of property investors , basically the aggressive , multi property guns , who just happen to make up a significant percentage of the PChat members .

    Anecdotally I'm hearing reports of strong attendances at open houses in our area of interest ( somewhere in Brisbane ) Wanting to pick up one more before I put the LOC back under lock and key .

    Given lending's increasing and Sydney's stopped , I think this can only be a sign of further strength in Brisbane .

    Cliff
     
    Last edited: 16th Jan, 2016
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  2. MTR

    MTR Well-Known Member Premium Member

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    Cliff

    These figures were reported for November 2015, IMO its way too early I would want to be viewing figures at the end of January-February 2016.

    Also, APRA has impacted the market already in particular Syd market as majority were investors and markets are now falling. Just have to talk to mortgage brokers regarding the impact of serviceability, there are plenty of threads on this.

    Wont stop me investing, but I am not going to ignore this either.

    MTR:)
     
    Last edited: 16th Jan, 2016
  3. jpcashflow

    jpcashflow Well-Known Member Business Member

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    Hi ,
    I made a comment about this on another post. In Melbourne the market for investors has slowed down but PPOR buyers has picked up.

    In Melbourne the biggest issue we face at the moment is that there is a short supply of homes in various areas.
     
  4. MTR

    MTR Well-Known Member Premium Member

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    Yes, what is happening is FBH are in full force. I certainly have had no problems selling my OTP townhouses but its the price point of mid 350-375K that is the attraction.

    To ignore what is actually happening is like shooting yourself in the foot IMO

    MTR:)
     
  5. jpcashflow

    jpcashflow Well-Known Member Business Member

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    I agree, keeping a eye on the market is very important but also seeing where trends are heading.

    I agree under $400,000 homes are selling quiet fast... Speaking to agents in inner city, western suburbs or east have all had the same conclusions. Homes that are above the $500,000 are still selling but homes falling through due to finance has been a big one.

    The biggest issue allot of buyers / investors have is coming up with a decent deposit.
     
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  6. MTR

    MTR Well-Known Member Premium Member

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    Yes, times have changed. Be interesting what happens over the next 6-9 months
     
  7. See Change

    See Change Timing Lord Premium Member

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    Well , Jan - February figures aren't available yet .....

    If you read the linked articles , you'll find that in previous months there was a decrease ( as expectd after the APRHA changes ) but November showed an increase , against expectations .

    According to the article , lending figures tend to be a leading indicator

    Exactly , that makes it significant that the overall lending figures show an increase ....

    Plenty of threads on THIS FORUM ..... Hence my comments ( requoted below ) along the lines of this forum not being representative of the market / property investors as a whole .

    It's easy to have tunnel vision and forget that we represent a very small minority of property investors.

    Given that Sydney is slowing , Perth and Darwin are in free fall , an overall increase in lending could be construed as a very positive sign for the rest of Australia .

    Is this categorical evidence that Brisbane will boom ?

    Of course not , but for me , given all of the negative talk in the media about the economy it's a positive sign .

    Throw that in with the recent uncertainty in the share market ( that will encourage investors to look for safer investments , ie property ) , I think it's looking health for segments of the property market.

    Cliff
     
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  8. MTR

    MTR Well-Known Member Premium Member

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    Nothing is safe, all investment assets have risk.

    Clearly you see this article as a positive, That's fine, I just see this as insignificant in the big picture.

    I will just watch the markets, more importantly supply vs demand. This is what will dictates what will happen.

    MTR:)
     
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  9. Bullion Baron

    Bullion Baron Well-Known Member

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  10. See Change

    See Change Timing Lord Premium Member

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    Hi BB

    well , on the six month chart , all lending is still in established up trends . The investor line has turned down in the last three months , but is still above the preceding trough , so is still in an uptrend.

    The short term investor line shows a turn up with the last figures and that turning point is above the preceding trough , so that is also still in an estabilished uptrend . If you want to get into nit picking analysis , the bottom three troughs of the short term investor line form a perfect upwards trend line .

    looks good to me ...

    Given that Brisbane doesn't need the amount of funds available to move it that Sydney needs , I actually find the initial report and your graph quite reassuring . :cool:

    Cliff
     
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  11. See Change

    See Change Timing Lord Premium Member

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    Where we're buying , they're not building new properties in our price bracket.

    Increased lending , is an leading indicator of increasing demand ....

    Cliff
     
  12. MTR

    MTR Well-Known Member Premium Member

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    Great.
    I thought you were talking about property markets in general.

    MTR:)
     
  13. melbournian

    melbournian Well-Known Member

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    Yeah i saw a unit in doncaster east that was "under contract" for 2 weeks and then went on the market again. most likely finance didn't pull through. i am currently signing up my tenant to buy an IP hopefully it pulls through.
     
  14. Bullion Baron

    Bullion Baron Well-Known Member

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  15. See Change

    See Change Timing Lord Premium Member

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    BB

    I'd agree it may well be a medium term peak., but it's a bit like the weighting that some shares have on the ASX . Sydney ( and Melbourne ) have a similar impact on the overall property market .

    For me the important thing is , is there places to invest in Australia at this stage ?

    Sydney ..Peak .. no .

    Melbourne , maybe in places .

    Perth and Darwin are moving down so no.

    The rest haven't had a big recent run , so there are opportunities .

    For me , the point of this post was showing there is some sign that the whole of the market in Australia isn't doomed to crash as some people seem to be implying .

    Cliff
     
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  16. wogitalia

    wogitalia Well-Known Member

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    The interesting part of that chart is that the overall is basically neutral, so the brakes have been applied.

    It's really only refinancing that is growing on the charts, wonder how much of that is IP loans being refinanced as OO loans and the balance is just people taking advantage of historically low rates to get a good deal with all the talk of lending becoming more difficult in the media wouldn't shock if it triggered a lot of people to actually get out and do the refinance they've been meaning to do for years.
     
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  17. petewargent

    petewargent Well-Known Member

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    FWIW, Westpac's view:

    -Nov data pointed to stronger finish for 2015...however, 1 month's data not enough to form a view on trends;

    -Nov rise somewhat out of step with other indicators pointing to a slowdown in housing market activity: buyer sentiment, auction clearance rates & prices all pointing to a slowdown since mid 2015; and

    -next few monthly reads on finance approvals should start to show this more clearly. However, given market hiatus over Dec-Jan we're unlikely to get a clear reading on momentum until the Feb & Mar figures are published...in Apr & May!

    That's their national take, obviously. Tend to agree that investors are increasingly looking away from SYD, so in turn that's likely to be a net +ve for BNE & ADL.
     
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  18. See Change

    See Change Timing Lord Premium Member

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    That's my take .

    My interest in property investing came at the end of the previous Sydney boom. I was working in Mt Druitt , saw prices go from around 60-70 to peak around 240 . People sold up and bought in Brisbane for 60-70 . They were buying in the outer areas so I followed and bought several in that price bracket . Brisbane didn't really take off until Sydney peaked.

    With lots of Profits made in Sydney , and an acceptance by most that Sydney's peaked , then I think Brisbane will benefit.

    Cliff
     
  19. big max

    big max Well-Known Member

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    All major lenders are becoming more cautious lending in Sydney and Melbourne, but wanting to continue to make money, are increasing lending in QLD. Both Brisbane and Gold Coast will benefit from this over the next few years.
     
  20. euro73

    euro73 Well-Known Member Business Member

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    This is just investors heading to cheaper markets. But in modest numbers. 0.7% annualises to 8.4% per annum uplift in investor lending, and that's only if it sustains that trend across 12 months. Hardly anywhere near the 36% annualised increase to investor lending Westpac and CBA generated in the 12 months to June 2015, or the 16 and 17% NAB and ANZ generated, or the 20% + Macquarie and AMP generated and so on across many lenders - which we all understand led to APRA and ASIC's regulatory intervention. Not remotely close to those sorts of volumes. The biggest aggregators- AFG, PLAN, Connective, Mortgage Choice etc - are all reporting that investor lending growth has slowed dramatically across the past 3 months. One small increase of 0.7% 8.4% annualised v the previous years figures is not worth getting excited about just yet ....

    Just as I said would happen at the time , Sydney ground to a halt 3 months after the APRA changes, as pre approvals secured under pre APRA servicing rules expired and borrowing capacity exposed the market for what it was- driven mostly by cheap and easy money. Attendances at auctions across most of the city (inner west aside - its still quite healthy) dropped off dramatically from September - ie Spring, supposedly the biggest boom market of the year and auction clearance rates pretty much went into a steady decline each week thereafter.

    But APRA and ASIC didnt shut down the markets completely. Lending didnt stop. So naturally, the APRA changes were always going to work in stages. First - the regulations stopped Sydney's speculative frothy increases quite abruptly , which is understandable as loan sizes in Sydney are generally much larger than elsewhere, and existing debts in Sydney are also generally far larger than elsewhere. Double whammy when everything is being sensitised at 7.5%. The consequence of that is to push many investors to where they could afford to invest - outer Melbourne's sub 400K stock ,Brisbane's sub 350K stock , and now on to Adelaide low 300's stock. But the other consequence is to make Owner Occupiers a little more competitive over time, as prices plateau.

    This little uplift in cheaper markets will run for 6-12 months but then the same capacity constraints will start to bite there as well, requiring most investors to cool their heels for a while, and we will by late 2016/early 2017 be graduating back to a conversation about most people needing to focus on deleveraging in order to move forward.

    Owner Occupiers may get a little more competitive again during that time , and investors who can still invest will still invest, and keep things humming along albeit at a slower rate, but it will take longer to generate growth than it has in the past. Credit is still available after all... just higher barriers to entry now.

    Brisbane has been hyped for several years now as the next market to go boom - and I own several properties there so it would be welcome if it did, but there is a lot of apartment supply coming online, a lot of land available for house/land in pretty much all directions and a far smaller population that Sydney and Melbourne, so I suspect it will just do OK without being spectacular.

    Similarly, Adelaide will benefit from its lower price points, as money looks for a cheaper home - but it will be relatively short lived because what is absolutely inescapable is this; There is simply no policy capacity for I/O lending to grow at more than 10% per annum any longer so there are natural constraints that just cant be ignored. To keep growth driving along, Owner Occupiers will need to pile into the market to replace investors, and that's easier said than done with the size of deposits required. So all arguments lead to a medium term that's stable but unremarkable vs what we have become used to across the past 25+ years.

    All of this will really only change significantly for the positive in the short term if APRA relents on "actuals" and ASIC relents on the increased "HEM's" , or significantly for the negative if we have a large increase in unemployment coupled with another 75-100 bpts rate rises for I/O debt. Otherwise, for most mere mortals the reality is that growth across the next several years will be unremarkable in comparison to the growth achieved in the deregulated banking era in Australia ( post late 1980's) and they should instead be focused on debt reduction. That's what APRA wants as the outcome - deleveraging.

    Once that is achieved, I wont be at all surprised if in 7,8 years time, the banks get let off the leash a little more, and momentum starts building again for another credit cycle...but thats quite some years off yet.
     
    Last edited: 19th Jan, 2016
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