The future of Australian property prices

[Starcraftmazter]

Which bank in Australia got bailed out?

All of them; it was called the "First Home Owners Boost" bailout package. The money went directly to the housing - which means it ended up in the banks' coffers through interest, along with a lot more debt taken on by the sheeple as a result.

Nab and CBA under TARP wait a few more months and see how it will pan out once ex-home owners walk.

IIRC they were bailed out by the (US) Fed - not through TARP. TARP was for US banks only (or US branches of foreign banks).

There are no safe havens anymore...no place to hide.

Gold?

No Australian bank was bailed out by anyone.
The banks paid a significant amount to the government for the government guarantee.
Why do you make it sound as though the Australian taxpayer actually gave the banks something for nothing?
So misleading and inaccurate.

The only misleading and inaccurate thing here is the above. Banks got FHOB money - provided by the taxpayer.

 

[Glen48]

The south African scammers only get you for few K at the most, the FHOB gets you for 100's of K and could even cost you your marriage or life as well as every thing you own or likely to own.

The scammers would be be in worshiping from afar Howard and Rudd for implemented it and spewing they can't run the same scam.
The banks pushed it as well introducing their own schemes.

 

[Glen48]

Who will be the first to start printing money Swan or The Libs, as the Oz economy tanks and China/India fails to deliver what options do the feds have they will tell us they are cutting back just like UK is claiming but not doing, baby boomers are at the door with their hands out now and will be for awhile.

 

[Starcraftmazter]

The RBA doesn't print money.

 

[Glen48]

Yet!!

 

[Starcraftmazter]

Well I'm not intimate with the inner workings of the RBA, but given they did not print during the panic times of the GFC, what makes you think they will/can print anytime in the future?

The Australian banking system does not allow banks to borrow money from the RBA afaik, there would need to be a lot of changes to allow something like that to happen. As for government debt, I can't see RBA monetising federal debt nor can I see the federal government going into any significant amount of debt (the economic repercussions would be too severe).

 

[Glen48]

This time its different the feds will do any thing to stay afloat as you can see over seas, Spain has introduced a law saying how much of your money you can take out.
Once they want your super you know its timeto take steps

.upTimes are tough in Spain. Half her youth are unemployed - if they haven't emigrated. Her economy, banks and real estate industry are in tatters.

They built too many homes in Spain. Homes that nobody would ever want. Speculators snapped them up, betting that prices would go even higher. Then the party ended in 2007. By 2008, activity in the real estate market stopped completely.

Estimates put the total of Spain's excess supply and distressed inventory as high as two million units. Much of this inventory (50% is a reasonable guess) is along the tourist-friendly costas.

No genuine efforts have been made to sell this inventory. Until now.

Recently, a banking contact called me with an opportunity that grabbed my attention: Newly completed condos in a historic area minutes from Granada's old town. A bank has foreclosed on the developer. Prices start from under $100,000. Up to 95% financing is available. Five minutes later, I booked my flight.

Sitting there in bright warm sunshine looking at the snow-covered Sierra Nevada Mountains, things didn't feel so bad. Bright blooming flowers lined the streets. Cured meats hung from the ceilings of little tavernas.

Home to three UNESCO world heritage sites (the Alhambra, Generalife and Albayzin), Granada is steeped in history and attracts visitors from across the world.

Its international airport has flights from most major European cities, and it's within a two-hour flight range of Northern Europe's major population centers. I flew into Malaga, a town that's less than 90 minutes away on the coast.

Culture, beaches, world-class golf and other outdoor activities are easily accessible. This area appeals to visitors on a weekend break, golfers, history buffs and even as a wedding destination.

Domestic visitors and North Americans come in large numbers. And it's a beautiful place to retire.

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Granada escaped the major over-development seen on Spain's costas. Development has been tasteful, and there isn't the major oversupply problem that we see elsewhere. This part of Spain has intrinsic value. It will always hold appeal.

This also means that distressed completed condos in the right part of town are almost non-existent. That's why I booked my flight within minutes of hearing about this opportunity.

The area where these condos are located is peaceful, quiet and classy. It's surrounded by high-end villas with pools. The area is known as "Little Vatican" because of the churches and convents dotted around the neighborhood. Granada's historic center is seven minutes away.

Construction of the condos is complete (to a very high standard). When scouting for distressed opportunities, I'm only interested in construction that's complete. I'm looking for somewhere that doesn't have a supply overhang. This is a stunningly beautiful place that ticks all these boxes.

With prices for an 800-square-foot condo starting at less than $100,000, this is a killer deal. The bank which foreclosed on the developer is offering 95% financing. Put simply: they are trying to turn a non-performing loan to the developer...into multiple, smaller, performing loans to individual buyers.

These condos are just one example of the Spanish real estate bargains that are starting to pop up

 

[young-gun]

OK. I was unaware just making an offer to someone was illegal.

Sorry I think you have misinterpreted what I was saying. I am also unsure as to whether the offer itself is illegal. I can only assume once they have received so much as a cent it becomes fraud. Again I don't know for certain sorry.

 

[kid hustlr]

The RBA doesn't print money.

Well I'm not intimate with the inner workings of the RBA, but given they did not print during the panic times of the GFC, what makes you think they will/can print anytime in the future?

The Australian banking system does not allow banks to borrow money from the RBA afaik, there would need to be a lot of changes to allow something like that to happen. As for government debt, I can't see RBA monetising federal debt nor can I see the federal government going into any significant amount of debt (the economic repercussions would be too severe).

SCM are you sure about this? Where does the RBA get its funds from?

 

[Glen48]

Frank posted this in Storm Thread:

Hope for mortgage 'victims' with homeowners winning battle against banks
by: Anthony Klan
From:The Australian
June 04, 201212:00AM


THOUSANDS of struggling homeowners could walk away from their mortgages as a series of court cases helps to expose widespread improper lending practices involving some of the nation's biggest financial institutions.
Finance industry giants are spending millions of dollars on legal fees fighting homeowners who have successfully exited their mortgages because they were stung by sub-prime-style lending practices during the last property boom. An investigation by The Australian has revealed several mortgage providers and mortgage brokers engaged in improper lending practices in the years before the global financial crisis hit in 2008, including inflating borrowers' income and ability to repay debts to secure so-called "low-doc" loans.
Courts in several states have sided with homeowners who have defaulted on their loans, extinguishing their mortgages. The rulings have encouraged other lenders to reach settlements with borrowers that are saving homeowners hundreds of thousands of dollars. And the issue could be tested in the High Court in coming months.
MAY has transformed the global economic outlook like no other month since September 2008 brought the collapse of Lehman Brothers.
Award-winning consumer advocate Denise Brailey, who runs the Banking and Finance Consumers Support Association, said she was dealing with more than 100 alleged victims of improper lending. "What this means is that if you are a struggling homeowner and the bank comes knocking you may well not have to hand over your keys," Ms Brailey said.
The declining health of loans could have ramifications for the federal government, which has put about $14 billion into securitised mortgage investments - packages of home loans known as "residential mortgage backed securities" - since the GFC.
In October 2008, Wayne Swan announced the government would invest $4bn to shore up the RMBS market, but that figure has ballooned and in April last year he increased the obligation to $20bn.
Australian Office of Financial Management chief executive Rob Nicholl said the government had invested in superior-quality loans with relatively low defaults rates and that it was "very cognisant of all the risks involved".
However, default rates among some mortgage securities, which include low-doc loans, have surged to as much as 7 per cent of loans.
According to Fitch Ratings, low-doc loans comprise about 8-10 per cent of every mortgage in the Australian securitised mortgage market.
Fitch analyst James Zanesi said that proportion of low-doc loans was similar in the wider, $1.2 trillion( use to be Aussis GDP) Australian mortgage market.
According to Fitch, low-doc loans were more than four times as likely to be in default than standard loans, with 5.5 per cent of all "prime" low-doc loans in default compared with 1.26 per cent of all standard loans.
The group said low-doc loans were experiencing "considerable deterioration" and there was "no relief in sight" for low-doc loan delinquencies.
The Australian has amassed evidence of widespread improper lending activity based around abuse of low-documentation lending products.
In the race to provide credit - and earn commissions - major lenders such as Macquarie, Suncorp and GE Money spruiked imprudent lending practices to mortgage brokers, highlighting loopholes in their own lending requirements.
Low-doc or "no-doc" loans were supposed to be only for self-employed business owners who could not provide standard loan information. Borrowers typically pay a higher interest rate to reflect their lack of a regular credit and income history.
But in scores of emails those lenders - and many others - told mortgage brokers that borrowers needed only to register an Australian Business Number "for one day" to secure low-doc or no-doc loans.
One email from a Macquarie Bank business development manager to brokers says: "Why not try Macquarie for the below reasons . . . No docs - Client only needs to be self-employed for 1 day or more . . . No assets and liabilities required, no income needs to be stated!!!"
Macquarie Bank and GE Money declined to comment. Suncorp spokesman Jamin Smith defended similar emails sent by Suncorp staff, saying business development managers did not have the power to authorise loans.
The Australian has also discovered cases of mortgage brokers, loan originators and others inflating borrowers' stated incomes on loan application forms without their knowledge.
Precedent-setting court cases have recently found that, where borrowers were given loans they could never afford, lenders must extinguish part or all of those mortgages. Nine judges before six courts have to date found in favour of homeowners affected by improper loan applications, and in almost all cases courts have ordered lenders to fully extinguish mortgages within 30 days.
The most clear-cut cases have occurred in NSW because of the 1980 Contracts Review Act in that state. However, courts in Victoria and Western Australia have found in favour of borrowers under existing legislation. Major mortgage securitiser First Mac - which has issued $9.5bn in Australian mortgages since 2003 - lost a NSW Supreme Court bid to repossess the family homes of three borrowers on the grounds those borrowers were victims of loan application schemes.
The judges found lenders had acted inappropriately by engaging in "asset lending" - that is, lending money based solely on the fact that the loan is secured by an asset, usually a person's home, and paying little or no regard as to whether the borrower could afford the loan.
First Mac appealed against the decision and in December the judges again sided with borrowers, ordering that mortgages against two family homes be rescinded completely, and reduced by three-quarters in a third case. First Mac was ordered to pay court costs.
In light of those judgments, lenders such as Westpac are scrambling to settle with borrowers who claim to have been wronged. In many cases, hundreds of thousands of dollars are being wiped from mortgages.
In every court case heard, lenders had failed to make simple checks, such as calling prospective borrowers to verify their stated incomes or employment status.
First Mac, based in Brisbane, has now sought to take its case to the High Court, and a hearing as to whether the case will be heard will take place later this month.
A High Court spokesman said between 8 per cent and 10 per cent of applications for such "special leave to appeal" applications were granted.
First Mac founder and managing director Kim Cannon did not respond to calls last week.
In most instances, the precedent-setting cases against the deep-pocketed financial institutions are being funded by consumer groups or lawyers working for little or no pay because the borrower victims are often close to bankruptcy. Lawyers said the vast majority of the thousands of homeowners affected by improper or unconscionable lending activities had no idea they could legally walk away from their mortgages.
"Lenders have been throwing everything they have at these cases because they know there are thousands, probably tens of thousands, of people who have been affected," said Geoff Roberson of Champion Legal, who has run the cases against First Mac. "The problem for many borrowers is they don't know they have been wronged and simply roll over when the banks come knocking."
Consumer advocates said borrowers who believed they had been affected should approach their lender for a copy of their loan application form, which they were entitled to by law, and check the income levels stated.
Ms Brailey said not being provided with a copy of the loan application form was a key indicator borrowers may have been subject to loan application irregularities.
"In every single case of the 100-plus I am dealing with, the person has not been provided with a copy of their loan application form by their mortgage broker or lender," she said.
She said borrowers were entitled to such information by law. However, banks and other lenders had "stonewalled" such requests.
"Every time the borrowers receive the forms they are blown away," Ms Brailey said. "Incomes have been grossly exaggerated, false employment job descriptions have been entered or they have been stated as being employed when they're not.
"In one case, a lowly-paid deckhand was described as a ship's captain and described as earning $150,000 a year."
Ms Brailey, who has been tracking low-doc loans and loan application issues with The Australian for several years, said she had uncovered examples of loan application irregularities in loans approved by 14 banks and other lenders.
She obtained emails illustrating imprudent lending practices by 36 banks and non-bank lenders, including all of the major banks.
"We're about to see a major train wreck," she said.

 

[Julia]

Sorry I think you have misinterpreted what I was saying. I am also unsure as to whether the offer itself is illegal. I can only assume once they have received so much as a cent it becomes fraud. Again I don't know for certain sorry.

Thank you for acknowledging grey area in this topic. It's a pleasant contrast to the rudeness of some of the other responses.

If it were illegal to make an unsubstantiated offer, surely the courts would be clogged up with such accusations.
Just one very everyday example would be real estate agents telling prospective sellers they can absolutely get them $X for their property, knowing absolutely no such price is remotely achievable.

People make unrealistic and non-genuine 'offers' to others all the time.

 

[moXJO]

The banks didnt get bailed out they took out and used the money that was given at a really low rate. Pretty sure they posted a bumper profit that year.

The aussie lowdoc loans were something like .8% or .08% (will verify later) of loans

 

[jank]

All of them; it was called the "First Home Owners Boost" bailout package. The money went directly to the housing - which means it ended up in the banks' coffers through interest, along with a lot more debt taken on by the sheeple as a result..

That was a stimulus, not a bailout in the traditional sense. I can see why you are making that argument however, that is because you have declared your position on the matter at hand. Any government intervetion in the property market is by your reasoning a bailout of the banking system. Understandable but ultimately flawed logic.

 

[im sparticus]

The aussie lowdoc loans were something like .8% or .08% (will verify later) of loans

thankyou moxjo, thats the info i was looking for wonder why the doom merchants couldnt come out with it they always seem to have all the facts and figures these days.
One really has to wonder how those affected loans could be anymore than a blip on an otherwise solid balancesheet and to crash the housing maket.....please!

 

[McLovin]

OK. I was unaware just making an offer to someone was illegal.

It is illegal...

CRIMES ACT 1900 - SECT 192G
Intention to defraud by false or misleading statement
192G Intention to defraud by false or misleading statement

A person who dishonestly makes or publishes, or concurs in making or publishing, any statement (whether or not in writing) that is false or misleading in a material particular with the intention of:

(a) obtaining property belonging to another, or

(b) obtaining a financial advantage or causing a financial disadvantage,

is guilty of an offence.

Maximum penalty: Imprisonment for 5 years.

Of course there is a huge grey area. Which would make it very difficult to prosecute. I think on the scale of things, Nigerian scams and real estate agents with optimistic price hopes are worlds apart.

 

[Starcraftmazter]

That was a stimulus, not a bailout in the traditional sense.

Traditional sense? The government spent taxpayer money which ended up in the banks' coffers. Whether it's traditional or not is irrelevant.

 

[numbercruncher]

Hate to break it to the Permabull crew but Low-Doc is a big part of the over inflated RE market in Oz - sure to be adding to the RE mega crash - less than 1pc someone posted ? Thats wishful thinking - predators were operating in the mortgage market for years , sucking in poor victims who truly didnt understand what the deal was.

Hopefully Lawyers will continue to obtain compensation for all these unfortunate victims of what is simply dishonest practice.

According to researcher Datamonitor, low-doc loans in Australia more than doubled from $17.5bn to $37.9bn between 2002 and 2006 -- when they represented 16.1 per cent of total housing lending.

According to Fitch Ratings, low-doc loans comprise about 8 per cent to 10 per cent of every mortgage in the Australian securitised mortgage market. Fitch analyst James Zanesi says that proportion of low-doc loans is similar in the wider $1.2 trillion mortgage market.

http://www.theaustralian.com.au/news/features/the-motgage-sting/story-e6frg6z6-1226383950929


And here is an example of how these predators operate with calloused disregard .......

IN 2002 John O'Donnell had been unemployed for about 18 months when an investment spruiker for a company called Streetwise approached him in his local shopping centre. He asked if O'Donnell wanted to "unlock" the equity in his $750,000 home to buy an investment property.

Although O'Donnell earned no income and his wife Jill made just $23,000 a year, the couple was provided, via Streetwise, with a $500,000 loan against the family home to invest in a mooted property development.

Soon afterwards the O'Donnells faced financial ruin. Streetwise had folded, the property the O'Donnells thought they were buying never materialised, and when they were unable to meet loan repayments, the lender who had ultimately provided the loan sought to repossess their home.

Criminal Behaviour should not go unpunished ......

 

[lusk]

All of them; it was called the "First Home Owners Boost" bailout package. The money went directly to the housing - which means it ended up in the banks' coffers through interest, along with a lot more debt taken on by the sheeple as a result.

What about Ruddy's $900 dollars for everyone, you either spend it or put it in the bank.

 

[im sparticus]

Hate to break it to the Permabull crew but Low-Doc is a big part of the over inflated RE market in Oz - sure to be adding to the RE mega crash - less than 1pc someone posted ? Thats wishful thinking - predators were operating in the mortgage market for years , sucking in poor victims who truly didnt understand what the deal was.

Hopefully Lawyers will continue to obtain compensation for all these unfortunate victims of what is simply dishonest practice.




http://www.theaustralian.com.au/news/features/the-motgage-sting/story-e6frg6z6-1226383950929


And here is an example of how these predators operate with calloused disregard .......



Criminal Behaviour should not go unpunished ......

How many orders of magnitude greater than as crash is a "mega crash"??

 

[Starcraftmazter]

What about Ruddy's $900 dollars for everyone, you either spend it or put it in the bank.

No doubt.

I just had another thought too. We have (allegedly) very strong GDP growth, very good employment, and record-low interest rates apart from the panic GFC days.

Now, if even under all of these circumstances property prices continue to fall (10% real in Melbourne 12 months to date) - then I would hate to think that will happen once things get worse...and then much worse still.