VIC Melbourne price correction - post examples

Its all relative from ones perspective.

• Its bad if one is struggling with current/potential repayments, not a good time for a forced sale.
• Its not good if one can manage repayments (no forced sale) but already leveraged so can't stretch further in current environment (with cap on total debt and harder to extract existing equity under falling valuations) as there might be eye popping deals as realisation is finally hitting the market.
• Its good position to be in If one is cashed up with one's ability to borrow in current env still intact. The panic which will set in late 2019/20 will be unlike we have seen in OZ history for many many past decades.
• For valuation bears good time is soon approaching.
• For perma bears there is never a good time.
• Great time approaching for FHB who can get their spending under control and are saving for the deposit to get the best bang for your money come 2020/21.
• In terms of economy,
  • This forced deleverage is targeted towards froth with limited impact to those who can keep up the repayments,
  • APRA's action is preemptive rather then reactive towards reducing systemic risk which should be appreciated irrespective of why the regulators allowed to create froth in first place.
  • Periphery industry is a risk but gov debt is zip so we can print and fund employment if things goes in tailspin even at a cost keeping in mind alternate will be far worse.

'Ability to borrow' will become the most priced asset so spend wisely as the movie has not reached its half time yet.

 

Me too. Can someone ring the bell when the bottom is in please? Ta

 

Careful, using the C the word seems to get people emotional around here. But yes, even AMP's chief economist labels >20% drop, a crash.

 

I will keep a watch on investor credit growth figures.

 

Does anyone have a good handle on inventory stats for the Melb market and whether this is trending up/by how much?

 

Investor lending is down, also owner occupier was down 4 percent month to month in September. This is huge

 

I was joking but that would be really useful - cheers

 

Plunging mortgage lending levels in Australia mean 'further weakness in house prices is likely'

That is one steep drop-off in Vic Owner-occupied loans

 

from the link you posted






wonder if there is 'Investor loan' state wise chart.

 

Apra etc have gone in way to fast and hard ..... add the sob stories from the RC ..... the property market affect is going to have a massive impac on the current economy. Actual dwelling values will be least of worries the way this is heading. Retail will be one of the hardest hit.
ASX + dwelling values + retail ...... very dangerous cocktail.
RBA will have no choice (they are partly to blame in this as well) next move will be down.

 

Yup. The worst is yet to come. Next move is down for sure, but I'd be surprised if they go below 1% as RBA has indicated it never wants to do that. 0.5% cut is gonna get mostly absorbed by banks so they have little dry powder.

Any external shock at this point could cause a serious event.

 

Agree, they may not have a choice in going below 1% though. Depends on what the lenders do

 

Price of credit is not the issue, availability of credit is.

APRA's policy is targetted towards froth aka leveraged players, not OOs.

 

Yes, but it’s still affecting everyone, incl OOs. Scatter gun approach.

 

Just curious how is it affecting non leveraged OO's?

 

Lending capped?

 

Lending is no longer based on 'what you claim you earn and spend' but rather based on 'what you actually earn and spend', It should always have been this way.


OOs borrowing max to their limit is an unhealthy obsession, if at all they should be thankful to regulators for idiot proofing borrowing.

This forced deleverage will bring down the P2I froth and will be extremely beneficial to OOs who can control their emotions to jump in and wait till the major headwinds are cleared at-least till late 2020/mid 2021.

 

Sure, I don’t disagree. But you asked how does it affect OO’s.

Most OO’s will see what they can borrow, then shop accordingly. In the current environment they are just about all knocked down a few rungs. That’s the effect on OO’s. There’s definitely a total drop off of buyers in the 1.5m+ OO range in melb due to finance.

 

Booms have a tendency to mask one's flaws and gives an illusions of invincibility.
Forced sales due to poor planning becomes a bad strategy only during downturns as one has to sell when buyers are rare.

as they say "Only when the tide goes out do you discover who's been swimming naked."