The new normal and misguided FHB stamp duty grant

With 3.5pc as new normal for official cash rate and APRAs imposition of higher capital requirement and recent crack down on generous serviceability.

Loans will become more and more expensive.
for eg. If the IR for PI goes from current normal of 4% to 6% in next two/three yr, that's an increase of 50%(of interest component) in monthly repayment for PI holders.
For IO loans well... it wont be pretty.

Old normal : Credit was cheap and available = boom
New Normal: Credit is getting expensive and restricted = ???

Isn't the recent NSW FHB stamp duty rebate for FHB very misguided?,
as FHB they will end up buying at the tail end of Sydney boom and end up holding massive debt in an environment where CG will be a thing of past (negative CG very likely) due to rising credit cost and restricted credit availability.

 

isnt that the idea?? buyers are dwindling so lock the fhb youngsters into big debt and locked into working life. no more free spiritedness

 

Happens every cycle just in different ways.

I recall interest rates were capped for old loans at 13.5% at one stage when all new borrowings went up to 18%+

Others took a govt product which had a cap as well but rates tanked and they had to continue to pay at the capped rate.

 

GC is never a thing of the past for too long. This is how cycles in RE run.......nothing new to see here.

Successive governments have a long history of interfering in and propping up the property market in Australia. It is not always fair and open market forces at work. Just accept that and use it to your advantage.

 

That's what happens when people wait for/rely on the government to provide 'incentives' for them. It will always be a vastly inferior option. The only way to ever get ahead is to decide to leave the herd majority in society and learn how to think for yourself and take some calculated risks.

Re CG being a thing of the past, don't kid yourself. If you think property prices are expensive now, just wait till 2025. The game goes on and on and on. Either you watch from the sidelines or you decide to roll the dice and play.

Playing is a lot more fun than watching others constantly win.

 

eh those FHB youngers from 10-15 years past now enjoy framable Domain feature articles

 

I haven't seen any evidence to even suggest there has been or will be a large scale take up of the stamp duty offer. There are a small number of buyers who probably deferred their purchase a few weeks/months to get it but it is certainly not going to change the overall trends with FHBs IMO

 

Agree, I'm not seeing a huge impact in the market with FHB.. i think it was stronger FHB activity in the weeks leading up to it! (misconception about the impact it would have..)

FHB are buying at peak, but they are not purchasing anywhere near the median due to where the discount applies (possibly to avoid this specifically as well..)
not a great outcome, but i wouldn't say they are in 'massive' debt.. IO on the other hand..