Credit crackdown putting heat on home buyers and developers (Part 2) | 7.30
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- Опубликовано: 10 дек 2018
- Property prices have fallen in Australia many times before - often in response to rising interest rates.
This time is different - the cash rate is at a record low but house prices are dropping faster than they have since the global financial crisis - they may still fall further.
Experts believe the years of easy credit for property investors are over.
In part two of our housing special, reporter Geoff Thompson and producer Alex McDonald investigate the impact of the credit squeeze on the market.
For Part 1, click here: • What is the future of ...
For Part 3, click here: • Negative gearing chang...
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regarding the bloke who needed a 20% deposit on his 1.6m property up from 10%. If he struggled to pull together 20%, how on Earth does he intend to pay off the remaining 80% before he retires? Doesn't look like he has decades left in his career...
Justin Foord ; under tables $$$, gifts, bonus
He's expecting it to go up to 5mil in 2 yrs.
@Justin Foord - you are right. However I think part of the issue is that the playing field changed for the bloke. He needed to find an extra 10% quickly as opposed to being able to save for it over time.
He was expecting it to double every 7 years. That WAS his retirement plan. In 14 years time, it's gonna be 6.4m, right? RIGHT???
That was taken care of when he signed mortgage contract. This additional 10-20% is the issue. Also monthly payments should reduce after new valuations. Moot question is, why chase notional valuations of 40% crash and all ?
Do what I did.
Sold my home on the upper north shore of Sydney at the peak, paid back the (fortunately) small amount I still owed (65k) and moved to Adelaide.
Here I bought a home for cash in an equivalent suburb, took a lesser paying but more satisfying job and my quality of life is so much better.
I even have some money left over.
No more horrendous traffic jams to deal with, a much better climate, (no humidity) and a lovely lifestyle. Did I mention the wineries!
I''ve been here for 2 years now and love it. Would I ever return to Sydney......NEVER. I'm 45 years old and have never been happier.
That's Awesome Dude!
So what do you want, Harold's biscuit?
Adelaide is secretly the nicest city to live in. Unless you like doing things after 9pm on weekdays, then you get to chose between a handful of 24/7 places like the Pancake Kitchen or Villi's.
Good job mate you did it well
Great that you could get a job there unfortunately not all have that kind of opportunity.
and you buy a 1.6 Million Dollars property and have to borrow from family and friends to rack up a 20pc down payment???? Maybe you can t afford it????? just guessing....
Yep, stupidity at its finest. What's that saying with age comes wisdom, not so in this case.
Well, they had already put down a deposit to purchase off the plan, which they would lose if they forfeited on the contract. It is a good example however, of why not to buy off the plan, as the final value can be quite different to the price you pay.
So a construction loan looking backwards and a bank that does not do fair market appraisal at closing. the $600k mortgage Will double to $1,200,000 it has already dropped $300k . what is the real cost of construction. Will bankruptsie of the developer. Create a $150,000 fair market price? Will the buyer be required to buy down the loan to a new fair market price?
In 1988 my roommate was a construction suptintendant in corona CA. His company bought a tract of development lots. Phase 1 they built a 2400 as ft home total cost $100k sale price $125k. By phase 10 they were selling the same house plan for $350k. The recession hit 3 years later the fair market price was back down to $+25k the real value and banks were having to take the offers and write off the debt because the federal Reserve required they set aside the full $350k as risk to the banking system to depositors. My neighbor was a bank appraiser and was told rubber stamp the appraisal at $350k regardless of the true value. The Ghwb admin solution was accept a brokers drive by appraisal for any property less than $249k my friend the appraiser so he was laid off. Then the loans were sold to Fannie Mae so the bank had no liability. Then developers started buying the banks and cooking the books more. Sounds like the same in your country.
Inflation - in 1980 I called a bank for a loan rate to build 12 duplexes. I was quoted 12% I wrote an earnest money at 12% the next day the banker quoted me 14%. Within six months it went to 21%... That was the first mortgage casino. The second casino in 2008 was $11t now we have casino 2019. China has 50,000,000 unoccupied homes alone. Loans in China are 50% down 30% interest and payoff in five years. With an income of $12k per year to pay $100k for a house
Natural Selection
So really this all about those who want to mortgage 100% of their property with documents that used to not be verified, and expect 63% growth in 10 years, and developers who want to sell to those, and everyone makes a lot of money in a short time, can no longer do this, and once upon a time when everyone could afford their own home will maybe soon return where lenders actually check real time you can afford something and property prices go back to where they should be not over inflated. It's amazing too where every article about property values is just about Sydney and Melbourne; what about the rest of Australia like regional towns? Some are experiencing steady growth and are at little risk...no drama in that I suppose.
I giggled at old mate $1.6M apartment - man if you're friends need to give you money for a deposit, you can't afford the risk and should buy something cheaper!! The banks even hinted this to you by kicking you out!!!
Biggest debt scam in history
hellhole
ALL?!? If you don’t think some of us can prosper from this then you just don’t get basic economics.
And it’s HAVE! ...not HAVE heeded... Not OF.
Not quite.. but bad for Australia..
IHATE M ; debts leads to greed leads to curruption lead to deteriation to the system lead to failure lead to lost confidence lead to depressions lead to copycat..
@Jeffrey Levy This is all like an eerie echo back to mid-2000's in the US. A bubble definitely does burst eventually and in the end that's a good thing
10:50 He makes "A little over $100K a year" .... He has a Mortgage of $600K >>> And he can't pay his mortgage off ???
Advice:
*Sell the 4WD SUV
*Cancel all paid subcription to netflix and cable
*Stop going on Holidays every year
*Stop eating out and learn to cook at home
*Cut down on the Luxuries
*Send the kids to public schools
*Prepaid mobile plans
***STOP SPENDING***
>>> If you are making $100K and you owe $600K mortgage and don't know how to pay it off, you deserve to lose it.
a lot of judging going on here.
>didnt show car
>didnt mention Television service subscriptions
>didnt mention holiday frequency
>didnt mention dining habits
>didnt mention luxuries
>didnt mention what school the kids are at
>didnt mention cellphone contract structure
I agree.
How the fuck can someone on $100k a year not get there shit together
Jane Smith unless that amount is net , that is to big a loan the interest will gobble most of the repayments
@@rickjames3034 Enlighten me... where is the 50-100K (gross or net) going to ???
Because it doesn't matter where he spends it... 1 + 1 = 2
Income - Expense = Savings
If you can't afford it, don't buy it.
If you can't afford it, get rid of it.
@@A.I.- true. Well said. My dad earns like 60k and we have a 450 loan. And we work it out. We don't spend recklessly yet live happy lives.
Must be nearly time to go out and buy that yellow jacket.
And Guillotines.
The protest movement is already dead thanks to a false flag operation in Strasbourg, France...
@@AdamSahr-cj4kf It's not over yet. The populist revolution is spreading across Europe.
@@anonymouspatriot604 Marshall law by Macron will soon bring that to a stop.
@@paulryan5984 Hasn't stopped things before.
Too many greedy developers out there turning our cities into concrete wastelands.
more like rubbish quality shoe box houses...
Chinese mate
@McK Ode LULZ
And they provide 10% of Australians a job though. How do you find a balance that won't send thousands into jobless.
Too many stupid home buys paying them to do it...what's your point?
1.6 mil for an apartment?
I wouldn't pay 100
When I was 21, which was in 1980, on a dental nurses wages, I had managed to save $4000 (living at home and not going out a lot). Following my parents advice I bought a two bedroom flat in a rather scruffy at the time, beach side suburb of Perth. The property was $18000 and I took out a mortgage for $20,000 to cover furnishing and decoration. I rented it to several tenants over the next few years, single mums, couples and singletons. I always managed to pay off a little more than my designated repayments and even with 17% interest at times had paid it off by the time I was 30. My twenty-something kids today have trouble believing this was ever possible but it was. 17% interest!! Can you imagine that today?
income to debt ratio was a lot different back then. its different in 2018
Carolyn Abbott try 17 percent on 600 000. Thats 85000 just for the interest
Yes OK but median house prices werent 10x the average salary.
Interest rates were high because wage growth and real inflation was high, if you could service the 17% (which you could on even a dental nurses salary) you were a winner.
Did you forget to factor in the change in PRICES?? Hello? Earth to Carolyn? Tell us how much that $18K flat in Perth would cost today? Typical Boomer idiot.
Was Australia not watching American and Europe after 2008....Just look at that construction Graph post 2008. Jesus lads it was only 10 years ago.... not a lifetime
boohoo. I blame everyone but myself because I cant control my own greed and gorged on debt. no sympathy here. unfortunately, those of us who have lived within our means will get screwed some more to pay for the greedy ones
Pretty much
I do agree, but still feel sorry for the fact that some people are maybe not as well educated, or took on huge risk without considering the downside.
Loads of smart people made by let loads of money during the boom
Agree. Personal responsibility is a forgotten concept in this politically correct world. Unfortunately if these risky suckers start defaulting, and banks start feeling the pinch, the government of the day will do everything in their power to avert an economic tsunami. Lifelines, Loan cuts all for the risky operators, while the sane people sitting on the sidelines will get jackshit. Even when prices crash, the sane person is lumped along with the other risky operators and needs higher deposits and tighter evaluations to get something. Moral of the story the payoff for the risky operator is always better.
Georgia A Yeah I agree with you! Wonder if anybody has ever heard of saving your money and then buying the purchase later??
yeah, exactly! Isn't that always the case? Here in the US nobody builds small houses on small plots anymore. It's always gotta be a mini-mansion .. or else.. (they say!) 'you gotta just rent'. No way! High-rises are not a good way for families to live and thrive. There needs to be average housing that is affordable by average people and any speculation on a basic human need should be stringently regulated and seriously punished. However, banks that covertly tempt people into what they cannot afford should still be held responsible for their part in the tragedy. Loaning and debt should never be an all or nothing practice. Loan freely to those who buy within their means and be prepared to help them in crisis, that is surely a reasonable ask and risk, but do NOT lend for properties that people cannot afford. However, the other side of the coin should be policies that keep housing affordable. Forget the word 'growth' - stability is far more important in a commodity that is a basic human need. Making it a vehicle for someone's investment and 'growth' is downright immoral and stupid in terms of what's good for your country's future, and individual owners should never be tempted to think this way. A home is always an expense, not a profit. Simply teach this attitude in schools and support it with reasonable laws and policies against greed on the part of ANYONE in the equation, and even stupid people who can't read fine print or think logically will 'get it'.
Did I hear that correctly? 1.6 million for AN APARTMENT?! OMGGGGGG. When shit hits the fan I'll be getting in my van and driving the hell outta the city. The world's gone mad. Why would ANYONE pay that?
That flight attendant can't see the end of paying his mortgage because you live beyond your means. Credit cards, nice cars, big house, having the best of everything, it's just all material and won't make you happy. It does the opposite
His father could see a finish line because he had a plan, he knew what he could put away and worked through their means, if you dont plan the same then you cant complain about not being able to see the end of the tunnel as you have been ignoring that fact that all rollercoasters come to an end.
No. The problem is usury (interest). The usurious bankers change the usury rate and in effect change how much you will pay for the house. Down with usury, down with the usurious!
losing your 10% deposit cause of bank revaluation on settlement date after approval +6months ago, this is nothing more then a transfer of wealth to bankrupt the buyer who will lose their deposit if they cant come up with the shortfall required after revaluation....everybody (buyer/developer) loses besides the bank
that's the idea m8 ;) now You getting it ;)
Bingo!!🎯🎯🎯
The games been rigged. Some people are just now waking up to this scam.
If you can't afford your mortgage, can't see how you will pay off the mortgage then SELL and get something within your means. Bunch of drongos can't see the obvious.
can't pay high rent and save for a house. salaries have not kept up.
"Something within your means" doesn't exist anymore. Low wages, minimal hours, high rental costs, tax incentives for the few people to own many houses (negative gearing), etc.... have led to very few people with incomes that can cover the cost of a (relatively) cheap home.
@@ryanrobinson5019 Google '''real estate Ipswich Region Queensland", its affordable and not bad at all, close to Brisbane, Gold Coast, Sunshine Coast and Moreton & Stradbroke Islands. It's a tiny bit bogany but nothing major. My house was 220K in 2017, half an acre 600m from a shopping centre and main rd..
Just the normal human behaviour of pride from the driving seat of a BMW while bills are collecting in the mailbox. Problem is, the human behaviour on a national scale.
Most people don't drive BMW while they can't pay their bills. False stereo type
It's a strange paradox, isn't it?
@@Patricia-zt8ub, please tell them that
ruclips.net/video/-KWUIkcmrhw/видео.html
A decade ago was with credit cards, and now with mortgages...
It's not NATIONAL Scale, it's International Scale.
It's NOT a National scale.. it's only Melbourne and Sydney. Australia actually is way larger than that, or didn't you know?.
The guy should have just walked away from his deposit, that crappy apartment will be worth 300k less in two years, worst financial decision he ever made.
“Credit availability and regulation has led to the current downturn”... Well, sure, it created the boom-the availability of credit unfettered by regulation. That’s why for the first time in history the downturn is not accompanied by rising interest rates and unemployment. The reason Sydney property has become unaffordable is because, well, it was unaffordable-for many who bought, not just those who couldn’t.
property prices where they should be is the answer - ordinary familys cant afford a million $$ for a house !! get real
Speaking as a Yank, I don't know if this applies to applies to Australia, but...
The two reasons housing is so expensive in major American cities:
1. Anyone from anywhere in the world can come here and buy housing.
2. There is no limit to how many housing units anyone can buy.
As a result, housing, a survival commodity, has been turned into a speculation investment commodity.
The system is fundamentally flawed. But no one seems to be talking about this. Politicians don't dare mention this problem, nor do they want to change this flawed system.
= = =
The problem with being money motivated is that it's never enough.
hello from the other side... we will join you soon ... vancouver canada
We're closer in the Three Eastern Islands.
Ben Chi USA as well
@@jameshartley7345
Yup. USA as well. We'll join Australia soon. Our Fed are propping up this fake housing game but it'll all correct soon enough.
It looks like a copy of Spain in 2007. And we haven't recovered yet
Gustavo Adolfo what happened in Spain housing
@@sunnybrisbanesingh8076 at the beginning it was the classics house bubble, from the middle of 90's to 2006 the prices got higher and higher every year, even 26% in the last years. There was a huge cash flow from French and German banks. The wages in Spain are low, so banks "invented" two generations mortgages, 40 and 45 years long. Because the 2007 crisis everything go down, the unemployment rate went to 8% to 15% in 2009. People couldn't pay mortages and all the economy collapsed. In 2012 the unemployment rate was already at 25%. It didn't get lower until 2017. Houndreds of thousands of families live from the grands parents retirement. The things have got better but not even near levels of 2007.
12-18 months and the end of bricks and mortar is now a reality. Good news is, is that the rest of us who waited with good credit will finally have our Aussie dream and for the real price the property is worth finally. As the person below me in the comments said, they couldn't afford it to begin with! And also a unit!? Why!!?? You could get a stunning house for less to begin with!!
5:00. Shouldn’t that guy prefer to lose his deposit and walk away from the deal, rather than come up with another 10% deposit on a property that has just lost $300,000? He would have lost 10% of $1.65 million = $165,000. He then could have bought the same property or something similar for $300,000 less. If the property has depreciated by more than your deposit then it’s best to walk away. He seems adamant that he wants IN on a really crap deal and a lifetime of debt.
He could have but no-one can predict where the market is going. What if it has risen 10% as soon as he bailed?
@@Longtack55 that is the risk one takes mate. All over the world, here in Canada and the USA its the same. Interest rates are/were too low and with increases coming it could be a disaster. In Canada we have the buyer stress test where a bank would only lend you the money if you could afford a 2 percent increase in mortgage after all your expenses are calculated to service the existing debt. The stress test is causing a lot of stress to many buyers and sales have dropped off some what. Also buying off plan, as you say there, is very risky as it can take the developer a few years to build you new abode and market factors can change, not in the buyers favour. Also too many foreign investors bidding up prices to astronomical values.
You have got a valid point here. Wisdom will dawn on him when he can't raise that additional. Do monthly repayments also drop with revaluation?
David Renwick
Well the property had already lost that much before he took possession, and it’s not going to reverse and go UP 10% as soon as he bails.
Seems to me he had the option of a small loss or a big loss and he chose the later.
I would rather live in a tent or igloo than owe the bank one single solitary cent.
Thumbs up if the GFC brought you here.
Make sure you do a follow up story in a couple of years on this nancy flight attended with the $600k+ mortgage.
He owns a house in Mossman. It's probably worth over 2mil at this time. He will downsize and be debt free.
@@touchstar68 with falling prices it may not be that easy but yes if he down sizes he will be out of debt. But what an expensive small house that would be. All those years paying interest.
@@yusuf.alajnabi He's in a premium location. Even 1.5 mil buys you a lot of house in most other locations in Australia.
I don't feel sorry for someone who wants to buy a property for 1.6m and found it's hard to support that property.
Sydney/Melbourne property is greatly overvalued.. I couldn’t imagine paying $1 million + for a small block in the middle of suburbia.
A flight attendant on (a little) over $100,000... Could this be the real problem with the Australian economy?!
Adam no its all relative.
If they earned 30k then houses wouldn't be so expensive.
Cash rates RBA won’t help as US is already put up it’s cash rates and our big banks are in debt to them not to Australian RBA. Guess who will pay for that...
Can someone please explain how on earth a waitress in the sky earns $100k a year? Lots of overtime? What is the average wage?
Shift work dealing with potential and real arseholes deserves good pay.
Bravo Australia we are truly a USA follower
I have no sympathy for greedy people who borrow more then they could afford!...……..let interest rate go to 8% happy times!
People with 6 million dollar apartments and 100k a year jobs crying about their exclusive suburb properties while young people are desperate to buy anything affordable to get out of the rent trap.
Rent will follow suit... Mortgagees who are struggling will have to vacate their properties and rent them out. Where they will be living after that is another question.
You can always buy affordable houses in the regional centres. Why everyone want to live the cosmopolitan life?
100k per year is not a lot of money, the expense is high these days if you want keeping a reasonable living style. Even with it doubled you have to take great caution when you spend the money as tax is high especially the land tax and council rates and red taps which can almost break your neck.
Pay attention junior! $1.6m not $6.0
What about not getting into such huge debt?
RBA cutting rates further? Poor savers... Punished at the expense of those who carlessley spend more than they earn
This has sealed Australia to have a recession 😞
No it hasn't. Australia doesn't rely on real estate for it's economy. It relies on mining and stock and crops. Australia is the second richest country in the world. What the fuck did they teach you in school?. If real estate drops in two cities it doesn't foretell the economic collapse of a nation.
Very rarely has there been a greater than 20% reduction in values in the western world, outside of major mining type withdrawals. So more pain to come. And expect a significant hit to the whole economy for a long long time.
Aussie John is the last guy who should comment on lending practices
At Aussie, we'll save ya! God I hated those smug adverts.
It’s strange people see houses as a different type of investment from other assets. You can lose money when you buy something and it’s value drops, welcome to the real world
Australia has been arrogant enough to think it couldnt happen here - it is and will continue
making over $100k as a flight attendant, wait what
I work 40-50 hours a week as a truck driver and don't come close.
In Australian dollars not real dollars
There are many countries where flight attendants work really hard and make no more than $10,000 a year. Could this be the real problem with the Australian economy?
Unions
I’m a flight attendant and I’m over 100k?
Flight attendant $ 100,000 a year ! And you cant pay your bills? I dont feel sorry for you
There's also a problem with the planning process. I see way too many advertisements on buildings for luxury living and whatnot, rather than affordable housing for eveyday people. I'm not sure if councils actually can have a say on what the building will be used for however?
🤑Who else is sitting here fanning their hot face this summer🌞 with their hard earned saved up deposit waiting⏳ for the property market to cool down?? 🤑
As long as the bank you have your money in doesn't go under and then use the new law called Bank bail in where they take your hard earned money to dig the bank outta the gutter. This law was passed in Feb 2018 I believe be careful what you wish for.
Lol wait until they start doing QE like they have just signaled they are going to do 😂
@@AviationSports1978 but if i keep up to 250k in each bank then the government/bank needs to allow me to deposit it right? What changes effects us?
Me.. I'll be making lowball cash offers in 6 months.
I don't think it matters what you have the more you have in the bank be prepared the more to lose. if the bank goes under the age old promise of the government insuring you for anything under250k would be a little lie on their behalf. have a look at what happened to Cyprus and what is happening in NZ. @@bign1667
It saddens me to see Australia falling into the same hole as the UK back in 2008.
I read that you managed to not follow the rest of the Western world into recession back then.
Now I’m sat here watching g the same stuff playing out - credit squeeze, lenders giving money to folk on the back of dodgy documents etc.
So sad to see this playing out now.
A $400k house on the outskirts with $100k for a small car like a toyota or a VW passat and a superbike for daily commute to the CBD for work makes a lot more sense to me.
I can't believe Australia's bank can be so irresponsible.
I have zero sympathy for investors who relied on the expectation that property would keep going up by ridiculous numbers year on year. Those who made it work were hailed by the media as some sort of template for others to follow - caveat emptor.
3 years later and the housing market has boomed. Investors who bought then will now have significant equity in their properties. If they sell, cash iin their pocket.
Here in Norway, you are required to have at least 15% minimum down payment for a mortage. More is better. And here the banks do check everything about your credit and incomelevel and also how you can handle a increase in the intrestrate you pay back for the housemortage.
This is so similar to what happened in the U.K, i am so surprised that the Australian government allowed this to occur, its like the learned nothing/thought they where somehow different.
Its almost word for word what occured in other countries 10years ago.
It took a massive Dose of Q.E to save the Banks and Economy, and at least 5years before things started to turn round.
No mention of foreigners, especially the Chinese, that bought for cash with no regard for value, driving up values above reason. Wait until rents fall and then the real crash will come as investors lose their properties. Banks will become property managers, then sell at discount to the same cash investors. Just like 2009-2014 in the U.S.. This creates major inequality and a low owner-occupancy ratio.
If you go out looking to buy an expensive car, wouldn't you look around for a good deal? Wouldn't you sit down and calculate whether or not you could afford it?
I agree that lending standards were lax. And that banks took advantage of the widespread dream for home ownership or speculation by flipping houses.
But surely, wouldn't potential mortgagees do the same due diligence as when buying anything expensive? How can you blame all of this on the people selling mortgages or overpriced houses?
If you can't afford something, don't buy it!
One of the big contributing problems is how CITY centric the States and Federal governments are. From time to time(usually around elections) they talk about making rural cities and towns more attractive but refuse to support it with infrastructure spending. Forward vision seems impossible for them.
Yammering in Parliament as always about policies which have next to no assistance to the regular Joe.
Blame the customer... Very smart.
When that doesn't work, the finger points at salesmen.
Their job is to sell.
It's not a credit squeeze. It's rising rates and rising costs. A Big trap created when the government printed 300 to 500% currency supply over the past 10 years. Credit supply is printed virtually on top of that as a temporary currency.
Australia revenue is 60 to 70% dependent on real estate income, thus the banks are all controlled by the gov. Building more to bring in drying investment from overseas is a complete fail.
So misleading.
Anyone who believes this wasn't meticulously orchestrated are either delusional or at best naive. The Bank's with any clout will balance their risk profile by any means and it will be the likes of me who refused to play this game of excess and greed that ultimately pay.
$1.6million for some floor space in an apartment block. Serious?
*Pitchfork sharpening intensifies*
It's a house of cards and the deck is going to fly everywhere
I live in California and I see many parallels. I had no idea Australians have this kind of money. I mean your economy is miniscule. $100k a year for a flight attendant is good money. As much as an Engineer in Silicon Valley or Biotechnology. What drives your economic growth!!!! Here growth is tech, financial services or healthcare and, not much else. We have a cost of living that due to regulation is driving out business out. The remaining jobs are largely trades and govt sector. My point is California had a housing bubble explode and at the same time saw a explosion in business costs. Yet prices Still rose! My point is it's unsupportable. California used to be agriculture and to that I may well return b
100k per year in Australia equates to 70k in US dollars!.... A pair of brand sneakers in the US that costs $70 costs $100 in Australia. A cup of coffee at Starbucks that costs $2.95 there will cost $4 in Australia. A 20oz bottle of Coke that costs $2 there costs $4.5 in Australia. Australia's GDP comes from services in IT, finance, tourism, education and industry like mining and agriculture. 18% of GDP comes from exports like coal, iron and university education. GDP in Australia is 1.6 trillion which is same as Canada.
One word .."GREED!"
Aussie market conditions are remarkably similar to U.S. conditions in 2008. One of the big five banks, Washington Mutual, was notorious for giving away loans. The joke was if you had a heart beat, you qualified. You could get interest only loans which converted to 15 year term with balloon. Of course, no one held these loans until they converted which led to market churn and price appreciation. The unlucky folks got caught in the downturn and when their loans converted, they were in real trouble. 2008-2010 were very bad years until low interest rates started to kick in. Our market came all the way back and then some but we are facing headwinds and it could cycle down again.
WAMU they started making loans on land in the California Central valley. It was crazy easy money. Homes today worth $200,000 were selling for $400,000. The banks took a bath on that!
I guess by 2020 prices will be low enough to buy. At least I will be getting a huge discount.
what !!!!!
600 k loan for 100k plus wages is too hard .HMM.........big house around harbour side. what about us ?????? i am not complaining .
Why should the public pay for this royal commission? The banks should fit the bill.
Amanda what happens Australian economy will suffer if they raise rates the housing market will collapse but if they lower rates compared to other markets in the world our dollar will suffer there for importing inflation on any imported goods and since we are a net importer as opposed to exporter of finished goods this does not bode well for the consumer.
Bearish AF
Loan lending on housing has to return to lending conditions of only 2.7 times the principal buyer's yearly income and not to include overtime which is shrinking daily. That way there is an end date on loans. Just rip the band-aid off and get on with it. The private small-time investors are done for unless they sell quickly. This was always going to happen. This stalling is only to help the big end of town get out of all property in every city in Australia. The smaller cities like Adelaide and Hobart are 1-2 years behind what happens in Sydney so stay away from them. Anything less than this and your kidding yourself. Interest only loan should have been an illegal day one. All these people are homeless now but don't know it. The balance left on these houses when the families are forced to leave should only be absorbed by the real owners (Banks) and not the community taxpayers who have had nothing to do with these stupid decisions made by bankers management and directors. The average income is under 60K so work out where housing will end up in all the suburbs across every state. Whats and see -- it's coming so jump if you can
How can you buy a property with less than 20% deposits? It is too risky to bank as well as macro economy
Prudent lending is required but it maybe too late to enforce lading policy since most borrowers
are on the verge of delinquent
Housing entropy, will fall under the rule of thermodynamics economic rule, Which is: if you try to control it { making overpriced housing } and maintain the high prices that don't reflect the marketplace, it will collapse and entropy will ensue. This one rule has proven to be true everytime there is a stock market crash.
Slim Charles how dare you ...
To state the facts in this day and age.
Thermodynamics? It's an interesting analogy but it might be a stretch to proclaim the principles from steam engine design determine house price changes. Just my 2 cents anyway. No rudeness intended.
@@jasonvoss1984 None taken, if you want, go watch the talk by the financial advisor/ regulator for the EU, Terms such as the "invisible hand," laissez-faire policy, and free-market principles suggest that economic growth and decline in capitalist societies seem to be somehow self-regulated. Now, scientists Arto Annila of the University of Helsinki and Stanley Salthe of Binghampton University in New York show that economic activity can be regarded as an evolutionary process governed by the second law of thermodynamics. Their perspective may provide insight into some fundamental economic questions, such as the causes of economic growth and diversification, as well as why it’s so difficult to predict economic growth and decline.
Almost all people interviewed in the doco have a vested interest in maintaining the property boom. But what they don't highlight are Australia's 5 current claims to fame globally. 1. The most inflated (expensive) property on earth. 2. The highest taxed country 3. The highest cost of living on earth. 4. The highest ratio of household debt on earth 5. The only country in the developed world where property affordability/home ownership is diminishing, not increasing. wake up and smell the roses. The honeymoon is finished.
I'm guessing in the next five years there will be a lot of property developers inline for new start
This is why you must have 20% minimum deposit no if and buts. Otherwise house prices just go insane and you get further irresponsible lending
You need to deduce prices of house .It's criminal.
Problem is that house prices dont seem to be included in the Inflation index, So both interest rates and wages do not adjusted to combat it, well wages shouldn't really. The current program which seems to be a directive from the reserve bank is for the banks to reduce there lending, so far you can see this has started, this will save those with loans by not having higher interest rates on there princple, it will help with less pressure on wage growth as the heat is taken out of the market. Unfortunately if you bought a house with the idea you could just sit on it and it will be worth 50k more in 12months, well your a sucker.
Housing is not an investment, never has been, people get lucky sure, but it is inert. Any one that has made alot of money know this, put it into business, there is higher risk, much greater returns... but... you also are supplying goods and services with your money and doing a bit for everyone.
Buying a house and parking it with renters till it is worth more is very high risk long term.
Both Australia and Canada are next for a housing bubble crash.
Just take a look at Toronto, one of the fastest growing cities on the planet. Condo towers and new homes being built 24/7 365 days a year all over the place. I used to live there before I moved. Now the average home price in the Toronto area is about a million dollars give or take and that bubble will have to burst sooner or later. The same could be said for Vancouver as well.
Off the plan with a 20% deposit....for a 1.6m property! And finding the deposit was risky. These people are speculators not buyers. Accept the risks then!
Google says property prices are going down in Australia some finances saying house boom
cOMING TO CANADA TO A THEATRE NEAR YOU LOL.
Aussies are slow. It's not even been 10 years since the 2008 housing crisis.
There's a big descrimination how to get loans ,how the bank knows the person could pay in 30 years the person could day a week later sick,car smash plane crash
10% deposit on $1.65 million property in Sydney? We had to pay 20% on our $265,000 property in SE Queensland! Who's laughing now?
A Bank that should take some blame is the RBA but nobody is looking at them. Pushing interest rates to record low levels creates he environment .
Welcome SYDNEY & MELBOURNE to the real world.
Same problems the US faced 10 years ago.
Going home at 3am Saturday morning through the city of Melbourne you can already see it's turning into slum. I'm guessing most apartments are rented.
Just an observation.
10 years left in the work force? When do these people retire 50? 55? People don’t understand that more people will have to work more towards 70 because of increased life span
Stunning. Didn't anyone in Australia watch what happened in the United States from 2006 to 2009? Poor lending practices such as not verifying income? Are you kidding me? Australia really needs to review WHY this happened (when it had already happened elsewhere). The banks in Australia are very culpable for the issue you all are now facing.
Its not what your house is worth but what its competing against,
interest only house loans for investment properties, what a huge mistake, increase demand which in turn causes increase prices,
then not investigating clients income, expenses, out standing debt, classic
sounds like the Australian Banking system considered the American system as a good example on how to fail in dramatic fashion.
6x income is haunting example of a profit taking banking system, limited government oversight & a view of champagne & blue sky future.
Current cocktail for a market correction, over supply, constricted mortgage money, stagnate incomes, high personal debt ratio.
Banks keeping foreclosures a secret: too much supply decrease in house prices banks can loose!
Las Vegas is a prime market to review for current home owners to see how house market reacts to over supply & very limited buyers with banks constricting mortgage capital
And here I was planning to buy a house
Fact of the matter is, little or no penalties was and will be issued against the banks. taxpayers will have to deal with the issues caused by the banks and government
A healthy economy requires balance, and small to medium businesses are the core drivers of a healthy economy. An economy such as ours, is out of balance, having such a substantial proportion of household income going towards housing and this sector has caused catastrophic damage to the economy as a whole. We were greedy and extremely irresponsible as a nation over the past 20 or so years, and we have walked our whole economy out on one tiny limb. But, we can be sure, that the way out of this mess is to not maintain and make this problem worse.
It's all about greed. The notion that property values would always go up is/was always a delusion. Like the Yanks 10-15 years ago, Aussies bought into the notion that banking deregulation meant cheaper loans and the opportunity to get something for nothing (or very little). And now the chickens are coming home to roost ... Virtually all the Aussie properties I've viewed over the last couple of years have been GROSSLY overvalued. A 50% "correction" is, I think, quite possible.
Australia and zeal turning into closed markets
Central planning has gained a strong tailwind
The fun part will be when the real GFC kicks in this year in full force. You know, the one they blew more air in to in 2008 instead of allowing the correction. Haha it is going to be brutal.
Why does the ABC allow advertising on their RUclips account?
Wow take some personal responsibility. You borrow a million dollars you might not be able to pay it back. What a shock