Australian Housing Affordability Discussion

[cove]

Interest rates in China seem to have quickly moved from 2% to 4% so Australia may be affected by this change. Chinese demand for our houses may wane.

 

[cove]

When I married Mrscove she was a student drron so I didn’t exactly marry money. I have found money to be pretty handy seeing we bought our current home 26 years ago at an auction.
1991 was a tough year with a recession so it was an opportunity to buy when no one else was buying.

 

[RAM]

When I married Mrscove she was a student drron so I didn’t exactly marry money. I have found money to be pretty handy seeing we bought our current home 26 years ago at an auction.
1991 was a tough year with a recession so it was an opportunity to buy when no one else was buying.

And do you remember what the mortgage rate was at the time?

It began with a 1....

 

[Strategic Aviation]

Today's housing crisis is worse than the 17pc home loans of the 1980s - Sydney Morning Herald

 

[cove]

Both Sydney and Melbourne have had a housing price boom.
Over in Perth we have had a couple of years of falling prices.
If you can get a job here in Perth you can get a home for half those inflated Melbourne and Sydney house prices.
We are still living the dream in Perth......

 

[SponsorSFC]

Still glad we moved to PER from SYD 5 year go given our relatively modest mortgage (and the cheaper SQ redemptions), we are a fair way out of the city but.otherwise the lifestyle is great. Being able to build a 4 bed 2 bath theater study and pool all for less than what we were about to pay for a 2 bed 2 bath off the plan apartment in Wentworth Point and pretty much future proof our needs

Some very cheap properties about in our area, some only built recently on offer for below the build cost. It does feel like the market has started to turn a little (or at least bottomed out).

However I would say that the average person is probably worse off here than when the market was at its peak.

 

[Haplo]

i am not too sure if Sydney House price will fall given you can't "create" more land. Units on the other hand has an infinite supply.

 

[cove]

There are more reports of Perth home prices starting to stir after 3 years of tumbles. If you compare Perth with Sydney or Melbourne you can get 2 homes in Perth instead of one in the east.

 

[Denali]

i am not too sure if Sydney House price will fall given you can't "create" more land....

Hubby owns a bit of land in the burbs with transport & business infrastructure being developed already and nearby new residential areas almost sold out, starting to get developer phone calls more regularly.

 

[cove]

Just heard a story about a person who decided to sell his home in Perth to get rid of a $1.6 million mortgage that he was up to date with. Sale goes off and he approaches the sams bank for an $800,000 loan on a smaller home. Loan DENIED!
New lending rules are now in place.

 

[Quickstatus]

Just heard a story about a person who decided to sell his home in Perth to get rid of a $1.6 million mortgage that he was up to date with. Sale goes off and he approaches the sams bank for an $800,000 loan on a smaller home. Loan DENIED!
New lending rules are now in place.

His borrowing capacity could have changed?

 

[cove]

No just new rules that examine borrowing power much more closely. Proper cost of living calculations have reduced mortgage limits.
A person with $80,000 income in Perth could borrow 4 times the income 12 months ago. Today instead of $320,000 it could be about $100,000 less if the bank analyses true living costs of the borrower.

 

[Quickstatus]

No just new rules that examine borrowing power much more closely. Proper cost of living calculations have reduced mortgage limits.
A person with $80,000 income in Perth could borrow 4 times the income 12 months ago. Today instead of $320,000 it could be about $100,000 less if the bank analyses true living costs of the borrower.

Yes that’s true but could also be that his borrowing capacity has also changed?

 

[cove]

Folks with fixed interest loans for 3 or 5 years may run into problems on the loan renewal date under these changes if they have added to their cost of living.

 

[Happy Dude]

Folks with fixed interest loans for 3 or 5 years may run into problems on the loan renewal date under these changes if they have added to their cost of living.

Lets hope they've started to earn more, thus increasing their borrowing capacity, to cover those living costs and the costs of a dearer P&I mortgage.

 

[cove]

It could go poorly for folks who have added stuff like cars and furniture on hire purchase while they were not saving. The repayment difference could be an increase of about 20% or more when loans move to principal and interest.

 

[cove]

Certainly looks like UBS picked the real estate market top almost a year ago. Now they think the market will fall 5% over the next 12 months.
The change by banks assessing a loan applicants cost of living seems to be changing borrowing limits quite substantially.
I just read the auction results from yesterday and they were pretty dismal across Australia with only a few exceptions.

 

[pauly7]

Certainly looks like UBS picked the real estate market top almost a year ago. Now they think the market will fall 5% over the next 12 months.
The change by banks assessing a loan applicants cost of living seems to be changing borrowing limits quite substantially.
I just read the auction results from yesterday and they were pretty dismal across Australia with only a few exceptions.

It’s really interesting what is happening but as always with property the stats released are averages of averages of averages. Property is much more nuanced as we all know and micro markets appear everywhere. Units are a disaster either happening or waiting to happen and blind Freddy saw that coming in most cities. Free standing is another kettle of fish entirely.

There’s barely any free standing stock being released in inner city (5-10k) Melb and Syd now - the only people who are selling seem to those who ‘have’ to - divorces, aged homers, interstate/national relocates, people in financial difficulty etc. Imvestors have been vacuumed out of the freestanding market now as well with the credit crunch.

So although the headlines are great for non investors who are finally seeing hope to get into the market in Melb and Sydney - the stock available is average and highly restricted. I would say from my observations and friends in property on both sides that the prices of the freestanding stock that is going to market are still high for the quality of the property because of the increased competition for them!!

 

[cove]

Melbourne is quite a bit lower than Sydney in house prices but the market is quietening down in both cities.

 

[cove]

The banking Royal Commission seems to have made the big four banks really tighten their housing loan systems.
I read that CBA was dropping out of “no doc loans” so maybe they will use tax returns as a guide to a loan applicants ability to service a loan.