Australian Housing Affordability Discussion

[get me outta here]

A long time since I had a housing loan so a basic qn from me .. .my daughter finalised all her studies and has a 'proper' job with a good income. She has mentioned ME Bank. If she fixes some of the loan, can she still use the offset account?

 

[cove]

I believe it offsets against the variable part of the loan.
With ME Bank they can pay a spotters fee so make sure she names a friendly who will pass over that fee to her.

 

[CaptJCool]

I believe it offsets against the variable part of the loan.
With ME Bank they can pay a spotters fee so make sure she names a friendly who will pass over that fee to her.

Which just goes to prove there's fat in dem loans....every man and his 'pig' feeding from the trough of profit...
Which we can lay blame to 1998 when mortgage broking was privatised out of downsizing banks.
Pricing for essential shelter has become profiteering which holds no bounds, including heavy premiums for 'river or harbour' views.

our thinking has been driven by the Kangaroo court of 'mad money' soaked up in 'billionaires row'.
Just what do these profiteers think they're going to do with all this excess cash - preen my ego babe,
The thirst and lust for money never ends...have we gone mad ? Yes, consigning us to an existence of 'rent for life' never get ahead like Europe (only saving grace is the pension funds own a lot of rentals) and Asia "lodging in a shoebox", and homeless sleeping on the street.

and thus the camel wins because the 'fat rich cat' can't fit through the eye of the needle.....

 

[eastwest101]

Another possible issue that I don't think has been mentioned before-
Is Airbnb fuelling an Australian apartment bubble? - Government News

Yes that article about Airbnb was interesting in that areas with the greatest capital gains (most expensive property) such as inner Sydney and Melbourne had the highest participation in Airbnb sub-rentals. Sort of makes sense when you think about it as the "land shortage" which has pushed up prices and got big capital gains has also affected the main competitor to Airbnb - the hotels industry. So underinvestment/excessive prices in hotels industry (take your pick) coupled with a property market bubble has resulted in Airbnb becoming an attractive yield proposition for owner occupiers and for property investors. Obviously owner occupiers have to leave the property so it can be a massive inconvenience for them (unless they have another residence to go to) but not so much for property investors maybe?

With more apartments coming online at the moment and with real rents not rising quite as quickly there was some interesting stats in there that some investors only had to get to around a 50% occupancy rate with nightly Airbnb'ers over the year to exceed the return of 100% occupancy for a normal "long term" weekly rental contract. Don't forget that this Airbnb is part of the sharing economy and is unreported and essentially un-taxed at present. Once the state and federal governments realise this and start to address the leakage of revenue implicit in this, then things may get interesting.

The thing with property prices is that shrinking incomes (or lack of growth in incomes) should curb the "frothier" end of capital gain 'specufestor' related activities. But if these areas of inner Sydney and Melbourne start to see serious job losses or job insecurity brought about by globalisation then that really takes the wind out of the sails of the market very quickly. I only had to go to an auction here in Townsville the other day to see a very nice house fail to attract any bids over the reserve to see that large scale job losses is the fastest way to correct a market that I have seen.

I still maintain that 25km outside the GPO of Melbourne and Sydney that the rest of the country has most definitely been in recession for more than a year now, private investment, jobs growth and incomes are negative in all states. If something happens to the property markets of inner Sydney and Melbourne this quarter then we will really see how much of this property bubble has been "hiding" the state of the overall Australian economy.

 

[Jeffrey O'Neill]

I still maintain that 25km outside the GPO of Melbourne and Sydney that the rest of the country has most definitely been in recession for more than a year now, private investment, jobs growth and incomes are negative in all states. If something happens to the property markets of inner Sydney and Melbourne this quarter then we will really see how much of this property bubble has been "hiding" the state of the overall Australian economy.

just wait for when the NSW and VIC govts have to face up to no longer being able to lie about ever increasing amounts of SD revenue in the budget forecasts.

just have to look at WA to see what is in store for the rest of the country, and WA still has another year or 2 of mining investment losses to get through before there's a bottom for them.

anyone geared up is leaving themselves exposed for the coming recession. we've been in an income recession for years, with govt deficits propping up the ailing economy, along with a massive increase in offshore debt for housing. Once the AAA is shredded, the banks no longer get a the AAA glow and their borrowing costs rise to reflect their true risk, it's not going to be pretty.

strap in, it's going to be a wild ride.

 

[whatmeworry]

Article today showing how the boom in apartments, Townhouses and units have led to shoddy buildings in Melbourne.

Meanwhile, there are reports standalone houses built in the past 10 to 15 years have already been demolished because of substandard builds – in suburbs including Drysdale, Reservoir, Caulfield and Balwyn North.

Melbourne's faulty building crisis

 

[eastwest101]

This article is a good sign that we have reached "Peak property speculation" - good one to bookmark for when they start to clean the mess up, there are a few important bits of information missing from the article, such as some incredible luck coupled with very high gearing but I think most will get the gist of it.

Investment properties: Gen Y couple rentvested their way from $15K to $10m and quit their jobs


“When you buy that first one — let’s say you purchase it for $400,000 and it grows in value to $500,000 over a few years, then you can go back to the bank and refinance 80 per cent, hypothetically, of the new purchase price. That will give you access to $80,000 — 80 per cent of the $100,000 growth — and you can use that to put a deposit on the next house.” But they key to making sure you’re taking on good debt that you can handle is to focus on rental yields, rather than just capital growth. “You have got to make sure the rent covers that extra debt you have caused on the first house and then the new debt on the future house. You don’t want to create an inward debt that just spirals,” Mr O’Neill said.

Interesting that the journalist didn't ask the obvious questions along the line of - and what happens when rental yields start to drop and/or vacancies jump up suddenly?

I pity the shareholders of whichever bank is on the hook for this disaster in the making.

 

[whatmeworry]

This article is a good sign that we have reached "Peak property speculation" - good one to bookmark for when they start to clean the mess up, there are a few important bits of information missing from the article, such as some incredible luck coupled with very high gearing but I think most will get the gist of it.

Investment properties: Gen Y couple rentvested their way from $15K to $10m and quit their jobs


“When you buy that first one — let’s say you purchase it for $400,000 and it grows in value to $500,000 over a few years, then you can go back to the bank and refinance 80 per cent, hypothetically, of the new purchase price. That will give you access to $80,000 — 80 per cent of the $100,000 growth — and you can use that to put a deposit on the next house.” But they key to making sure you’re taking on good debt that you can handle is to focus on rental yields, rather than just capital growth. “You have got to make sure the rent covers that extra debt you have caused on the first house and then the new debt on the future house. You don’t want to create an inward debt that just spirals,” Mr O’Neill said.

Interesting that the journalist didn't ask the obvious questions along the line of - and what happens when rental yields start to drop and/or vacancies jump up suddenly?

I pity the shareholders of whichever bank is on the hook for this disaster in the making.

It is almost like your saying we're going to have our own housing crisis soon?

 

[Jeffrey O'Neill]

This article is a good sign that we have reached "Peak property speculation" - good one to bookmark for when they start to clean the mess up, there are a few important bits of information missing from the article, such as some incredible luck coupled with very high gearing but I think most will get the gist of it.

Investment properties: Gen Y couple rentvested their way from $15K to $10m and quit their jobs

it's up their with the articl about the uber driver and his 1.5M property portfolio

 

[Quickstatus]

The RB is caught between a rock and a hard place. Australian economy slowing and recent rises in commodity prices have been subdued. RB is unable to juice the economy with rate reductions and they dont work anymore. Too much public and private borrowings. Risk rating for Australia slowly creeping up.
No appetite by government and public for wholesale reduction in spending and with the government maxing out its credit card little scope for borrowings for infrastructure building.

Stagflation is on the way!

 

[eastwest101]

The RB is caught between a rock and a hard place. Australian economy slowing and recent rises in commodity prices have been subdued. RB is unable to juice the economy with rate reductions and they dont work anymore. Too much public and private borrowings. Risk rating for Australia slowly creeping up.
No appetite by government and public for wholesale reduction in spending and with the government maxing out its credit card little scope for borrowings for infrastructure building.

Stagflation is on the way!

Reserve Bank miscalculated - every single rate rise since 2007 has been unnecessary and they have had to backtrack on rate rises, when we had the very high AUD from 2011 to 2015 they should have been cutting interest rates to supress the runaway AUD, instead the RBA had to put the brakes on because the post GFC stimulus was still in full swing during the resources construction boom. The Australian response to the GFC was too big and too late and probably contributed to more problems than it avoided in hindsight. High AUD kills all Australian exporters from farmers through to miners and service providers and our own tourism industry making all our products and services uncompetitive.

Its unfortunate that for stagflation to happen, we need to have inflation but there is no inflation in the Australian economy at all except for residential property in inner Sydney and Melbourne which are looking overpriced now, the rest of Australia's residential property market is much less "toppy" than these small areas that the media love to talk about. Business investment is fairly flat and wages are going nowhere so its a topic of debate here whether this supposed property boom in inner Sydney and Melbourne is a result of monetary policy settings, the tax system, demographics, money flooding out of the reach of the Chinese government, lack of labour mobility or failures of the planning system. Or a combination of these.

 

[Quickstatus]

Chinese govt clamping down on exodus of capital. I think about 30% of their 3-4 trillion in foreign currency reserves have taken flight. I dare say some have found a home in the SYD/MEL residential property market with 3-5% clipped by the State Govt.

 

[RAM]

Chinese govt clamping down on exodus of capital. I think about 30% of their 3-4 trillion in foreign currency reserves have taken flight. I dare say some have found a home in the SYD/MEL residential property market with 3-5% clipped by the State Govt.

So the State Govts are profiting from the proceeds of crime yet again...

There is also a very strong correlation (in NSW at least) where the highest proportion of Chinese purchases are located and where the NSW Police's Triad taskforce operate out of Local Area Commands.

Who'd thought Randwick!

 

[Buzzard]

In Perth it is currently easy to buy and hard to sell so it is quite different from Melbourne and Sydney. Prices have slid a bit and if you get stuck with having to rent out your home the market has fallen about $100 a week for the median 3 bed home compared with 2 years ago.
Good luck with your buying and selling GarrettM.

In ADL they are still almost giving houses away.
There are blocks of land ~7k from the CBD selling for around $500,000 IIRC that nobody wants to buy.
You can buy a 3 BR house ~18K from the CBD, walk to Westfield, a hospital, schools etc for under $400,000.

 

[RAM]

In ADL they are still almost giving houses away.
There are blocks of land ~7k from the CBD selling for around $500,000 IIRC that nobody wants to buy.
You can buy a 3 BR house ~18K from the CBD, walk to Westfield, a hospital, schools etc for under $400,000.

Quick, get onto the media about the housing affordability crisis in Adelaide!

We cannot have affordable housing in Australia - that's unAustralian!

Increase the 457 visas I say!! We need more KFC workers in Adelaide surely?

 

[Jeffrey O'Neill]

Quick, get onto the media about the housing affordability crisis in Adelaide!

We cannot have affordable housing in Australia - that's unAustralian!

Increase the 457 visas I say!! We need more KFC workers in Adelaide surely?

technically Adelaide has the most expensive land, on a per sqm basis, of any strayan capital city.

makes perfect sense.

 

[RAM]

technically Adelaide has the most expensive land, on a per sqm basis, of any strayan capital city.

makes perfect sense.

Always dangerous to believe what a real estate agent tells you.

Looking at the actual price data it ranks as one of the cheapest - Sydney is the most expensive per square metre and per lot despite SEQ having the largest new lot size which only just fell below the 500 sqm mark in the 2015/16 financial year.

"Sydney lot prices exploded in 2015. Sydney lot prices grew by 29.7% to $440,725, breaking through the $350,000 mark for the first time. Prices in Sydney rose in response to high demand in the face of falling releases and stagnant lot sizes."

"Adelaide also experienced falling prices, down 2.3% to $159,156 in 2015. Prices in the Adelaide market are now lower than they were in 2008,
reflecting a general weakness in the Adelaide land market."



[h=3]State of the Land Report - Urban Development Institute of Australia[/h]www.udia.com.au/_literature_210584/UDIA_2016_State_of_the_Land_Report


price of land in Sydney increased by $228 per square metre, ... In Melbourne and Adelaide, lot sizes fell to 430 and ..... in median lot size, the price per square metre of land ...

 

[GarrettM]

I was until yesterday unaware that Virgin Money has also moved into the mortgage market. On the surface some competitive rates and fees there, but I can't see myself taking that option.
More likely to see us go with one of the traditional majors, while P&N, ME, and Teachers were also discussed yesterday.

Shows what I know. Of the options available to us, Virgin has the best rates by some distance - both variable and fixed - the lowest fees by some margin, and even at our max possible borrowing amount it has the overall interest over the life of the loan by some $40,000. Owned in Oz by BoQ as well, so not really an unknown entity. The wife likes their numbers so looks like that's what we'll do.

They also throw in some VFF points , but the amount is so tokenistic it can be discarded as sweetener.

 

[penegal]

Why have information when you can have misinformation?

 

[whatmeworry]

Perth real estate might have to change their growth legend.