Let's hurt those evil investors

I remember that. Used to drive past it every day.

 

Ooo , a new D&G merchant .. First for PChat ?

Cliff

 

Great point you make. APRA is part of government. We should come to expect government acting as a nanny. Many would argue its actually fairly responsible behaviour on this occasion - myself included (for a change).
Will it make houses more affordable ? - maybe not. Will it change the mix of who is buying the houses going forward ? - Well it will have major impact for some under-capitalised types. If that's you - you could do a lot worse than read some posts by Mr Redom.
Some strategy revision could be required.
Good thread guys. Some real thought provoking comments from all sides.

 

APRA have made it clear they are unhappy with the rate of lending growth. This has mostly been driven by investor finance.

It's not about investors being evil, it's simply targeting the current source of speculative borrowing.


via: http://www.digitalfinanceanalytics....or-may-investment-property-lending-still-hot/

 

There coming out of the woodwork now gloating about the interest rate rises and the apra action

 

Your back hobo-jo. How's things over at MacroBusiness? You guys must be having fun with these interest rate rises and the apra actions.

 

Agree exactly with this bit. Explains why we've seen the RBA flappin' their gums like never before, including going places they shouldn't (arguably).
They are using every means available to dampen investor activity because they know that business needs lower rates to increase capex and provide employment opportunities post mining boom. APRA will effectively do the things the RBA can't. Definately a co-ordinated effort, and the banks are all in on it.
On the bright side - small business will get a boost from lower IR.
Its not always about investors at the end of the day.

 

"You guys"? I wouldn't tie myself to one site/set of views like that. I read and post there as I do here and other sites.

I think the move by the banks was necessary to stem the speculative lending orgy being seen in Sydney & (to a lesser extent) Melbourne, but the banks applying changes across the board may aid my plan to buy in Adelaide over the next couple of years. Here's hoping the weak local economic conditions and tap closing on easy credit brings about some cheaper property with better yields

 

Of course yields are important when buying an investment property but in the long run it is capital growth that is important. Isn't that something you should be focusing on more so unless it is a ppor you have in mind.

 

The operative words "in the long run". What if it happens in the very short run, wouldn't that make regulators feel "frisky" with the financial stability risks it poses?

FYI, our banks are currently too loaded with foreign debt. They need to fund their loans by borrowing from overseas wholesale markets, simply because Australian deposits are insufficient source of funding (no, the RBA does not lend money to the local banks in a major way.) When the spigot of low-cost money from global capital markets slows down and becomes costly (with the US Federal Reserve soon raising rates and affecting the global cost of funds), this poses a huge risk to our systemically-important banks. Who's gonna pay for the recapitalisation of failed banks? The government (i.e. taxpayer) will have to bail them out.

 

PChat needs a Reality Check Devil's Advocate on these forums.

 

Agreed but If you're putting your hands up for that role pls live up to it!

 

Just seems like yesterday,and if the bank manager did not like you or you went in your work clothes they would just say come back in six months,i started on 18%,now days if my dogs each had a "ABN"
they would have been able to get 500k no problems,27 points that's just a fly on the wall..

 

As you will find with most debates, you have about 4 sides trying to convince the other 3 that one of the 4 is right,and some are almost always unaware of the true complex subject of the original argument while they try to convince themselves and get lost at the first roundabout..

 

You're scary. I'm trembling in pure terror.

 

No problems with that . I'm always happy to listen to alternative views . My issue with most D&G proponents is that they never seem to be prepared to concede any points in a debate , though I'd have to admit I'm probably guilty of the same thing in reverse though from my view point now days with just cause for the simple fact .

I've been hearing the same profit of doom prediction for the last 14-15 years since I joined the forum . On no occasion in that time frame have the D&G predictions turned out to be correct. If I'd listened I wouldn't be in my current nice comfy financial position .

I will however concede one point which is a fairly basic fundamental issue , and that is how the current system does favor property investing over investing in businesses and how that bias is inbuilt in to the system in Australia . For the country as a whole , if we had the American preference for investing in business , as a nation we would be better off . However I can't change the system , so I will take advantage of the system as I see it in order to improve my personal financial system .

It is nice to see hobo-jo , now known as the 2340 on board. Welcome aboard BB . I've always found he is open to considering alternative view points and often raises valid points.

The changes in APRA were raised in another thread and this was my reply on that thread , specifically in relation to Brisbane being the next hot spot .


Hi Euro

I've also wondered about the impact of these changes and as i've said many times I tend to ignore fundamentals ( to a large degree ) and it's easy for me to put this into that category , but all of the points you raise are quite valid , so I put my thinking hat on.

Logic says that is if there is less money available Brisbane will move up slower but

Points I'd raise are

• Brisbane is a smaller market than sydney and prices are cheaper so we dont need as much fuel to heat the market up to the same extent that sydney has moved
• Australians are better savers now than they were prior to the GFC so there are more people out there with more cash available to help fund any gaps in LVR funding.
• It is a cycle . The property market in australia doesn't all go up at the same time . Historically Sydney moves up first , then Melbourne , then .....Brisbane .Sydney has boomed , Melbourne is moving up strongly .
• In the last boom most of the investors I knew in Sydney , looked north after sydney boomed .
• Sydney has boomed and there is a wide spread perception that it is getting close to the top . Investors have an appetite to make more money and are looking outside of Sydney . Outside the forum I have friends who want to know where we're investing in Brisbane .
• Most investors only had 1-3 IP's and won't be significantly impacted by the APRA changes . My daughter signed a contract for her first today and is already planning how much more she has to save ( let alone draw down equity ) to buy another assuming this one goes though . She bought a cheapie so she already has some money left over from her savings.
• I may be wrong , but I'd guess that the majority of people don't reach their maximum borrow capacity . I think more will
• Given the publicity about property investing , I expect the momentum around property investing to continue to build up . People will tighten their belts and make sacrifices in-order to be able to afford that IP . If they go in with bigger buffers this is good for long term stability of the market
• there is a large supply of units coming on in Brisbane , but most people I know aren't looking at that market . Where we're looking there are low vacancy rates and the people there couldn't afford to rent an inner city unit , just a 40-50 year old 3/1/1 and there not building too many of those any more . Most people on the forum are buying those sort of properties or more commonly houses closer to the city , which are much cheaper than their Sydney equivalents
• I'd already started reseaching where I was going to buy after Brisbane , talking to agents , checking out suburbs . I was planing on doing this once we'd finished in Brisbane , but with APRA changes I'm probably going to change our approach . Because the changes will limit how much I can buy ( we have multiple properties ) , I'm going to be more selective about where I buy and target the market I think will move next ( I ignore Melbourne ... ) so the end result is that we're probably going to buy more in Brisbane than we otherwise would have . I'll make my ( well , the banks ) money work harder in the short term , take a profit and then move on elsewhere and follow the cycle .
• Since we started buying in Brisbane two months ago I'm seeing the market change . There are still good deals around , but not as many as there were . we've seen properties that were on the market for a while because they were over priced sell as the market has started moving . I know closer to the city it's hotter than that .

Cliff

 

Umm I never mentioned anything about bubble bursting.

 

...although it already burst in some unmentionable places lol

 

Good to see you joined the site Hobo-Jo,everyones opinions are important one only has to drive 2 hours from Brisbane some of those small farming old money towns have more then 60% up for sale
and they are the ones with signs outside maybe more with the silent no sign listings..

 

I think its fair to say that rates where "cheap".
In March i was advising clients to fix at the super cheap rates that where around!!! but some people thoughts that rates would go down even further.

The economy in Australia has changed at an aggressive pace and banks need to prepare them selves. I would rather see rates go up our system is some what more secure vs what has happened in USA and UK.