Will the government do anything to destroy current boom trajectories?

Yeah this is us, we save around 40k/yr, after 15% donations and other spending. (Paying 5x insurance/registrations for the toys hurts a bit too). People are just impatient.

 

@Clean Cookie what exactly is your trade, sparkie?

 

I cant speak for other states, but don't first home buyers get very generous support with states generally wiping off Stamp Duty? This would also save FHB in Sydney and Melbourne a truck load of money that they would otherwise have to save before purchasing.

 

FHBs in Victoria don't have to pay stamp duty for properties costing up to $600K, and then it's on a reduced rate to $750K.

I reckon in Melbourne the sensible thing would be to buy a block for under the limit and build on it if you wanted to spend more.

 

i think they may slow down investor loans, but they can't afford for the housing market to drop suddenly, as it would disturb bank balance sheets.

 

https://www.theage.com.au/business/...precedented-housing-boom-20210419-p57khg.html

Pretty balanced comments from the NAB Chairman in terms of the likelihood of macro prudential as well as how effective / ineffective it would be.

 

Yeah sparky + whatever is required to get the job done. Been a plasterer and painter on multiple occasions. Tomorrow I will be cabinet maker to custom build some built-ins.

I take home $1k/week so if I can get a loan for $1+m of property, others can too I'd hope. I don't feel too much sympathy for those my age no one listens to my advice about saving and goal setting.

 

Sorry but how many FHB are spending 1mill straight away there lies the problem, get into to the market first, problem is everyone wants to skip the steps in between

 

I'd say most of my peers have done the buy existing $4-600k Reno job in Brisbane tbh. Only two I know have 1m+ homes and they're on 5x the wage as myself.

Syd/Mel are a different kettle of fish.

 

Your attitude is spot on.

 

Other's would disagree! (one of my old apprentices who's switched on and got himself a rental a few years back!) I'm known for working holidays. Another apprentice said I hadn't learnt what the definition of "holiday" was haha.

 

Another article on the challenge for APRA to reign in this boom:

APRA’s daunting double challenge

"So the big question in banking circles is what sort of rules is APRA likely to introduce to put the brakes on the property market.

And that’s where it gets tricky. Because unlike the last housing boom when investors were piling into the Sydney and Melbourne markets and pushing prices higher, the current house price surge is being driven by owner-occupiers.

What’s more, an encouraging feature of this housing boom is that first home buyers have been out in force."

 

I forsee a pending Treasurer or Finance Minister announcement. Morrison's been copping bad press so its likely on backburner. Maybe announce it on a new case covid announcement day so it gets less focus ? Budget next month ?

UK (2017) and NZ (2021) changed rules to supress investor demand and not first home buyers or occupiers. The UK adapted after initial outcry. NZ have imposed a requirement on lenders to ensure investor purchasers have a high deposit requirement and a 40% LVR. They are also adopting or adopted in the UK example tax policy that tapers interest deductions out. ie you get no interest deduction or a slimmed down amount. They dont attack negative gearing as such. They stop neg gearing occurring. It doesnt break election commitments directly. Treasury must be looking at UK and NZ data and the impacts.

RBNZ targets residential property investors with new high LVR restrictions: Most investors to need 40% deposits and most owner-occupiers 20% deposits NZ
https://www.moneyadviceservice.org.uk/en/articles/buy-to-let-property-investments UK

I query if / how they would expand it beyond direct property investment eg trusts and that shouldnt be too hard to do. But what about deductions where investors are buying shares etc. using borrowed funds? If they do this they may also need to consider offsets as offset rich investors can manipulate and preserve a loan for later re-deductibility maybe ?

The current surge is being fuelled by cheap credit and equity out and investors competing with owner occupiers. And lenders eager to sit inside rules but lend away to make profit

Who knows ? I wouldnt be betting on them doing nothing

 

The Housing Market and Financial Stability | Speeches

Interesting speech from Michele Bullock, Assistant Governor of RBA. She highlighted indebted households as one of the key risks to the financial system. Though she is not from APRA, chance of a DTI cap of some sort for new lending is getting higher.

 

Now CBA CEO suggests to cool the market somewhat.
Grim warning for housing market

 

It always bothers me when governments try to put out the bubbles that they created. Blaming the property market for going up in response to unprecedented stimulus is like blaming the thermometer when you get a cold.

The property market is just reflecting the insane monetary and fiscal policies prevalent at the time, and how horribly mismanaged the economy is.

If the RBA doesn't want bubbles, then stop blowing them up!

The government trying to reign in the bubble is like someone setting your house on fire and then coming over to help carrying a bucket of water.

 

Yes DSR ratios are increasing. I.e. people are borrowing more relative to their incomes, with over 20% of loan orginations now 'stretched' relative to their income. We are seeing this quite commonly, where owner occupier borrowers need to borrow 30-40% more to buy the same thing they did last year in Sydney.

The very obvious change here is to uplift assessment rates a bit. Another way to achieve, although controversial, is to allow banks to price for risk based on DSR ratios. I.e. make them hold more capital for DSR ratios above 5, push up the cost of borrowing high amounts. I'm sure the policymakers will have both drafted up - the second would have an implementation difficulty so may not be favoured. The first is simple. Aussie regulators like simple, market based approaches to interventions.

IMO this won't make too much of a dent macro wide though and its a fairly small change. Reducing BC's will have some impact on the margins though. Bigger changes like fundamentally changing affordability (no IO loans, bigger deposit requirements, high cost of credit, etc) are unlikely.

Prices are rising fast because they should - rates are very low and prices are simply responding to a change in the cost of credit. It's still got some steam left, before it will naturally peter out as a lot of the adjustment has already occurred.

 

I agree that it won’t make a big difference but it can change market sentiment, which might have a bigger psychological impact that flows through to market, I.e more sellers want to sell before they think price can drop; buyers can delay a bit.

This topic should get more coverage next year with the election looming. Seeing last few weeks with election in Canada that housing became a hot policy promise and I guess it will be the same here next year.

Unfortunately they might make some changes after the market has stabilised a bit as they can only rely on data to make a decision and could be a bit time lag. Don’t think any big changes though.

 

Mate just play the game and build your wealth.


What's gonna happen is gonna happen with the RBA, government , APRA et all. Who cares.

Make ya moolah and be happy

 

This is the problem with the interference. While taking moderate measures 6 months ago might,'ve been welcomed, they usually step in much later when the market has started to correct itself and then the swing of the pendulum is too strong, throwing everyone off-balance. Next year conditions will be different again.