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

Great post

 

Euro

Those figures you quote were generated by a boom in Sydney ( and melbourne ) . No where near that amount is needed to generate a boom in Brisbane …

Cliff

 

Hope you're right about a "boom" in Brisbane Cliff... I have several Brisbane properties - but I suspect not . It think it will be less spectacular than a boom, but I do see room for Brisbane to do OK.

Don't forget - banks are estimating that over 55% of all investor funding available for 2016 (if the 10% threshold is adhered to - and I expect it will be) will be soaked up by the OTP apartments due to settle in Sydney and Melbourne and Brisbane alone in Q3 and Q4 of 2016... so there isnt going to be a lot of available funding left for a Brisbane centric credit boom after June this year...

Now, it may well turn out that non OTP investors get into Brisbane in droves in the next 6 months ahead of Q3 and Q4 and soak up more than their "estimated" 45% share of available investor funding and it's the OTP buyers left high and dry, without enough available funds to settle all the OTP deals...but banks have a lot of commercial lending skin in the OTP developments so I think you'll find they quarantine some funding quite deliberately for those ends.

In the end....people have to be able to borrow more to pay higher prices... and when that capacity is limited, growth is limited as a consequence.

I'm not a bear on capital growth. I am a realist though. The ever expanding availability of credit from the post deregulation era (late late 1980's until mid 2015) just cannot be matched in this period of regulated lending we have entered. Add to that the fact debt levels are higher - much higher in dollar terms and in multiples of income terms. Incomes increases have slowed as we move out of the mining era and wage growth is projected to stay below CPI for several years yet. But more importantly - there's just less capacity to borrow now, whether you live in Brisbane, Sydney, Perth or the back of Bourke. That doesnt mean no growth - just slower growth.

But I suspect there's no convincing you, as you haven't ever seen a constrained credit environment driven by a regulator- because its never happened before . This is not like the short period after the GFC where LVR's were reduced and Lo Docs went AWOL. This is a structural and permanent change to how servicing calculators are used, interest only lending is funded and capital is provisioned by banks, and household expenditure is measured.

For every $1 Million in debt , 40K or more is now being sucked from most lenders servicing calcs.

For even 500K of debt, thats still 20K being sucked from the calcs...

That cannot NOT have an impact on every market, no matter its price point - eventually

 

For me; anecdotally - we bought a property on Dec 29 for our next PPoR as many might know.

It was not on the market for even 24 hours, and the agent who sold it to us (who is one of my customers at the workshop and a friend as well) said that he had received literally over a hundred phone calls about the property since we bought it...

The "for sale" board didn't go up for a few days after we bought it, and he hadn't put an "under contract" sticker on the board, or on the internet listing...hence the proliferation of calls and inquiries....lots of angry inquirers apparently as you could imagine.

So; this is a sign of how the market still is, as Seech has been saying.

 

BV
You can not gage the entire Australia property market by the sale of one property.

Booms don't last forever, BTW Melb is not booming, it was 2 years ago, some markets in Melb are still going strong, and some markets are starting to slow down, auction rates have dropped and this is fact, not prediction.

What Euro is stating makes sense to me he is not making predictions it is fact that funds are tightening and this has already impacted on various property markets, if investors/buyers can not source finance they can not continue to buy its that simple. I am not too interested in looking at charts/graphs I am far more interested in what I am seeing on the ground.

Does not mean markets are crashing but why ignore what is actually happening at the moment. Another one to factor in big time is China is slowing down, this has already caused us pain.

MTR

 

agree with your analysis -quite an interesting take on the what caused the boom from a macroeconomic point of view. I think other aspects besides lending play a part of what can or cannot cause a high growth boom these would be migration figures, job prospects, infrastructure and population growth, good universities and schools. if not mistaken, melbourne, sydney and brisbane led in population growth and migration between the states however brisbane was half of what melbourne was.

i think brisbane has a lot of potential however to compare with melbourne and sydney (lots of the main corporate jobs have their headquarters situated in sydney and melbourne so majority of these jobs contribute to people having the finance to get loans purchase property and push demand.it also adds to the reason why suburbs like 25-50kms in sydney and melbourne have risen as many have been priced out of the inner suburbs. Also top tier univerisities like melbourne univerity, UNSW, university of sydney and monash are all situated in these 2 cities and have various combined degrees with overseas institutions.. i had a work colleague whoses son missed on his course out he actually had to apply to university of queensland as the course he wanted was easier to get into due to the lack of demand. There is also not many direct flights into brisbane besides qantas, virgin, emirates.Hence the reason why the schools and univeristies are not so highly promoted as others. there is no direct flights from garuda and malaysian airlines has basically cancelled the route as it is deemed not profitable, although china eastern is opening new routes to brisbane direct from shanghai. So it is macro economic level - u can say brisbane should boom but there are also a lot of micro economic factors that are needed to contribute to a boom.