Let's hurt those evil investors

Is that you unloadmymind?

 

As Redom says, regulators are reactive to the market.

If what you're saying the true, then shouldn't policies be made to curtail O-O buyers?

Have observed a few people buying 2-3 IP in one year. If that's not rapid then I must be completely wrong.

 

Re OO's as far as the government is concerned , they want to make housing more affordable for owners , in particular FHB's

2-3 ...That's slow ... But that's not without limit ...

There aren't too many who do that .

Cliff

 

Didn't ring that bell , though could be . I recall ULMM was smarter that this guy and had some original thoughts unlike TKK who is just repeating everything parrot fashion .

Cliff

 

I guess to put it into a bit more context, 2-3 purchases per year in Sydney would be slow?

I can understand 2-3 purchases per year is slow in non-CBD area.

Not sure if there was poll thread in SS/PC on the average purchasing rate.

 

Maybe not for Sydney ... That comment was more tongue in cheek .

My main point was that most investors are limited by what they can buy .

Cliff

 

The increase is all about the banks showing APRA they are repricing I/O debt , or put another way, incentivising P&I debt. APRA wants their balance sheets rebalanced - at the moment the amount of imbalance towards I/O is considered a systemic risk by APRA. This should come as no surprise. It was always coming. The only surprise is that it's taken this long.

I don't think any of us will be able to properly assess what the effects will be for some months yet. The only thing we know to be true right now is that less money will be available to investors, broadly. This should slow down investor purchasing power and unless O/Occupiers or non residents take up the slack, that should result in a slow down in the speed of growth.

I don't believe that booms can happen without easy and cheap money. Every single statistic proves this. All periods of growth correspond exactly with credit booms. But I also dont believe credit rationing will collapse the market either. It would have to be severe and it would have to correspond with a deep recession.

 

The interests I'm paying at the moment are the lowest I've ever paid since I first bought a house in 1988 . That probably qualifies as cheap .

I've multiple millions of dollars to fund property purchases and at this stage can still buy more . For me that's easy .

There are some people who will be limited , but at the moment I think they are a very small group .

Cliff

 

I was thinking just that actually. Even if you are buying such high CF+ properties (I mean ones with ridiculous, 8-10%+ yields), your serviceability will run out at some point.

But remember ; only something like 3-5% of property investors have more than 5 properties, so we are talking about such a small portion of the AU population - maybe 20, 000 - 30,000 people??

 

Look, "without limitation" is probably an exaggeration on my side.

My point is someone who is buying to invest has it way easier to buy again(prior to recent APRA changes) than someone who bought PPoR with emotions.

 

Definitely qualifies as cheap. No doubt about it. It's the point really... ie cheap money facilitates taking on additional debt, which in turn facilitates higher prices being paid.
But the rate we pay is no longer what lenders assess. They will now consider you to be paying between 7 and 8%. That reduces everyone's previous capacity. For many, it will mean future capacity is exhausted or limited. And of course for some such as yourself, the changes may only mean they can now purchase several more instead of many, many more. But in all cases, capacity is less now than what was available previously.
We wont know the real effect of these changes for some time, but it's fair to conclude it will have a real, material impact, which makes for a different environment than the one that has facilitated previous cycles. It's for that reason I am not convinced we can rely on previous cycles as an indicator of future cycles.
This will of course, pass one day...but for now it appears that the tightening of supply is accelerating and will be the new norm for the time being.

 

Everything these bodies do seems counter productive. The Reserve bank was pushing up interest rates afraid of an inflation genie months before the entire world economy collapsed (GFC and yes exaggerated phrasing). If there's one thing you can count on; you can't count on government.

 

I imagine being able to buy property in SMSF in the past few years has been a contributor to increasing demand, stock levels and pushing prices up.

Mystery

 

Certainly will have had an impact for multiple reasons. Outside the obvious influx of capital in to the market, psychologically, for many people, it's a lot "easier" to spend super money and pay a little bit more..