Value of new mortgages fall 21% in a year

Value of new mortgages fall 21% in a year

Looks pretty bad...

 

There’s a reason I suggested waiting to see several months loan data before calling a Sydney recovery ... and this data would be that reason

 

Thats what I call serious

..... and what does this tell you about Oz property???

 

makes sense. APRA was designed to limit the size of loans.

 

Looking back in a few years....it will either be APRA & RBA & RC saved Aus from recession OR did the opposite and sent Aus into a recession.

 

Yes, it worked

 

As much as it hurts to see my borrowing capacity come down, I am glad that measures were taken to stop bubble formation and the bursting of said bubble that follows.

 

Indeed.

Perhaps they will send us into a recession, but it will be a softer one for the measures of prudence they've taken. A little of both?

As always, more data needed!

 

Sydney recovery? People are dreaming. I think it'll be 2020 before the dust settles and a trend emerges (whatever that trend maybe - sideways is likely).

Yields are starting to suffer. A cousin had to drop the rent by 8% for a western Sydney property. I'll likely have to drop as well when the contract comes up for renewal in a few months.

When yields suffer, prices will follow.

 

Agreed! My borrowing dropped big time! Most people if you give them money they will spend it all... Give the funds to an investor with 2/3 or more properties they will invest more appropriately.

 

Sadly no such thing, it all depends on the individual investor and his/her mindset. I know of people who bought several in a mining town for ridiculous money or those that started off with 1 IP and when the market peaked, bought 2 more - not the wisest move.

 

Good points! Some good buys have come up already and more to come as the knife is still falling for most suburbs in Sydney/Melbourne...

 

Jan data isn't a good indicator for Sydney recovery calls (unless one is suggesting a recovery happened in December QTR). Loan data lags market outcomes by roughly 2-3 months reflecting settlement periods and when loan data is actually observed. But it does show a good reflection of how dire the last QTR of 2018 was. A recovery from that level is almost a certainty. If prices/activity drop at this pace for 3-4 quarters straight, there'd be a massive massive problem - so a partial recovery is almost natural/inevitable. The size of it is important too though.

Sydney loan data in March/April/May is far more useful for those suggesting that Sydney has recovered a fair bit since the markets been back open since Feb, with settlements rolling through in March/April/May. Notably Melbourne seems to be 3 months behind Sydney, so the macro loan data may actually be three months behind too. I.e. they're at their lowest point now.

Dec/Jan/Feb 'Sydney' (not available) loan data IMO will be the trough for credit during this credit cycle...reflecting the worst performance of Sydney housing in over a decade through those particular 3 months. Melb seems to be in the eye of the storm at the moment though, so the data may lag a bit longer to reflect their recovery taking place a bit later in the year.

 

Why is everyone jumping up and down with ~15% drop from peak when prices went close to 75% in 5 years? Just coz now some of u r losing money....?

Asset prices went up at a time when wage growth is next to 0, so either asset prices were too attractive at that time or measures such as credit availability, low interest rates etc. fuelled it.....

So when these things are in reverse.....won't be surprised to see further drops..

 

Price falls are more harmful than price rises in general. E.g. if prices fall back to their 2013 level in a quick time period, we'd have a mega recession, banks would fall over, economy would plummet. Hence no one will let prices fall as much as they rise. Part of the reason why lots of people like housing as a safer asset class.

 

I believe it reflects the worst loan data ever recorded.... since records started being kept in the 80's.

It would need to be some recovery . to be fair ... even if the next 2,3,4 quarters are "less bad" than the last quarters data, unless the recovery is a pretty mighty one, the trend will still likely be downwards or sideways - there just isn't any evidence of any genuine recovery anywhere besides the occasional bespoke property ie 1 in a million stuff. And that will mean the trend in car sales, retail etc will still be trending downwards.... This is all to be expected though...it's exactly as predicted ( for me at least ) 2 and 3 years back.... I have always maintained that late 2018 and into 2019 would tell the tale... and its why I said that calls of the P&I migration being largely done were 12-18 months premature.... and it's why I predicted rate cuts in 2019 would be a possibility, even when everyone else was saying they'd go up.... and it's why I talked about delinquencies having to be carefully monitored into 2019 and 2020, and it's why I am now suggesting that the regulators may need to consider a modest reduction in the assessment rate ( although I concede that's a long shot, but the odds are shortening quite a bit lately) and it's why I still say this is a decade to deleverage so cash cows and debt reduction are king

 

Hmmmmm...so we manipulate the asset prices...?

Eventually asset prices will come back to fundamentals irrespective of any external influences, we have learned what happens when u push up house prices without strong fundamentals....US anyone?

 

I miss the days of walking in to see my bank manager and asking for more debt please. But it made for lazy investing

 

Sad but true. What a world we live in, having to to protect out of control growth from reacting to market forces. Thank god for all the macro prudential measures taken.

 

I'm a bit curious as to why bank shares are still holding up relatively ok.. and are not also at 10+ year lows. Surely profits are going to be smashed this year with lending growth going backward? Nobody has anything better to invest in?