The future of Australian property prices

[Starcraftmazter]

Mmmmmmmmmmm

Do you have a point there? Any at all? Please, humour us.

http://www.theage.com.au/business/r...ding-house-prices-stevens-20120608-200ti.html

That's really good to hear - Stevens is doing a good job telling people to hurry up and pay off their debt before our banks become insolvent.

 

[numbercruncher]

Yes good article - even the RBA boss finally saying it as it is - should of fessed up years ago though ..

Reserve Bank Governor Glenn Stevens today said he had no intention of engineering a return to the spiralling property prices and household debt levels which characterised the pre-2007 housing boom.
Mr Stevens said the surge in household wealth in the decade or so leading up to 2007 - which rose by about six or seven per cent a year - was driven primarily by unsustainable growth in property prices.


Read more: http://www.theage.com.au/business/r...ces-stevens-20120608-200ti.html#ixzz1xBybkcVd

 

[Starcraftmazter]

They must be frothing at the mouth and having seizures at APF over that comment

 

[Mr Z]

They must be frothing at the mouth and having seizures at APF over that comment

Prolly buying the dip!

Famous last words and all that

 

[Glen48]

We don't need a RBA to decide if it wasn't for the feds getting in on the act of dropping rates worldwide we most likely would not be in this mess.
All over 9/11 Bin Liner is dead? yet we are still paying now that's a good investment spend a few hundred on planes?.and destroy the worlds econony

 

[Starcraftmazter]

Moody's has recently been snooping around our mortgage insurers, and now this:

Sydney, June 07, 2012 ”” Moody’s Investors Service has announced the publication of a new quarterly report that will track the performance of the Australian RMBS market. The new report was published today with performance data up to first quarter 2012, and covers the prime and non-conforming sectors.

…The current report shows that delinquencies rose in the first quarter of 2012 despite the easing of monetary policy which occurred in late 2011.

Prime deals (excluding low doc) 30-plus arrears marginally increased to 1.58% in March 2012 from 1.57% in December 2011. However, low doc and non-conforming deals saw a larger increase. For example, low doc’s 30-plus increased to 5.03% from 4.58% during the same period, and non-conforming increased to 12.06% from 10.63%.

Low doc and non-conforming deals typically have lower credit quality and hence, with an economic slowdown and uncertainty, these deals are more likely to suffer from deteriorating performance.

http://www.macrobusiness.com.au/2012/06/march-quarter-loan-arrears-rise/

Good to see at least one rating agency is waking up to the scam that is our housing bubble.

 

[im sparticus]

Not in a deflationary environment as you asserted, it is just basic investment sense.... there is no naivety about it at all. Investing in property heading into a credit contraction (you have noticed the trend since 2007 haven't you?) is naive in the extreme. Why are you fixated with PE's? Why not compare eggs with eggs and talk grossed up yields? I can tell you there are many stocks that are looking like much better deals that RE... and it even looks like prices will get a little sillier over the US summer. A smart operator will be able to kill RE fro return over the next 12 months.

Keep it up.... I like upset RE agents, when I was developing property I did very much enjoy winding them up on the odd occasion! Some of them really deserved it! Especially the young cocky ones.

And of past and projected growth in yeild. had many rental increases of late?

 

[Julia]

I actually had the very last of my monies just returned to me today that was invested in realestate - and I was lucky to get all of my capital returned, no profit. Inflation adjusted I lost on the deal, and at the beginning of this project they projected a 3-400pc return.

Care to share with us something of what that investment was about? A 300% - $400 return?
Really?

Reserve Bank Governor Glenn Stevens today said he had no intention of engineering a return to the spiralling property prices and household debt levels which characterised the pre-2007 housing boom.
Mr Stevens said the surge in household wealth in the decade or so leading up to 2007 - which rose by about six or seven per cent a year - was driven primarily by unsustainable growth in property prices.

Might have been good to have acted before the bubble became so unsustainable, Mr Stevens.

 

[Ves]

Care to share with us something of what that investment was about? A 300% - $400 return?
Really?

Speculator come perma-bear? Well that reveals a lot of my doubts about some of these posters. So a guy who got it wrong in the first place is lecturing other posters? You would certainly hope you didn't get get it wrong twice.

 

[Starcraftmazter]

Might have been good to have acted before the bubble became so unsustainable, Mr Stevens.

You want Bernie Fraser and Ian Macfarlane - Stevens only increased interest rates after he got appointed in September of '06, all the way up to the GFC.

 

[numbercruncher]

Care to share with us something of what that investment was about? A 300% - $400 return?
Really?

Specufesting on a land development - I had my doubts (based on gut feeling) on projections from the outset but know the folks running the project, who had made those kinds of returns on similar projects earlier on in the credit boom ..... But as they told me today its currently dead in the water ....

Hell I made 100pc on my first property after holding for only 18 months - no genius input on my behalf - bought at the beginning of the Credit boom in a comparitively cheap/undiscovered suburb - any numnut could of done it ..... Used to laugh my butt off going to BBQs etc listening to everyone talking like they were some kind of property investing genius -

The game is clearly up

 

[numbercruncher]

Speculator come perma-bear? Well that reveals a lot of my doubts about some of these posters. So a guy who got it wrong in the first place is lecturing other posters? You would certainly hope you didn't get get it wrong twice.

Im bullish on plenty of things - obviously not the same things you are

 

[cynic]

Of course the entire blame falls on the lending institutions, doesn't it, NC!
No way any responsibility should be attributed to those engaging in loans they couldn't service.
Of course not.

+1

There was a time when I availed myself of one of these loans. It came in very useful given my somewhat unusual circumstances. Whilst I believe that both the borrowers and the banks have been reckless and irresponsible in the manner in which these products were engaged, I have utter contempt for any fiscally irresponsible borrower whom automatically transfers the blame for their own financial failings onto their bank.

Thanks to those irresponsible borrowers whom are now seeking to have their mortgages forgiven, this product is unlikely to be made available to those whom could have made productive and responsible use of just such a facility. Thanks to the irresponsible actions of consumers, another great blow has been struck against freedom of choice.

Of course, if the banks are found to be guilty of misrepresenting the lending product in a way that is materially disadvantageous to the borrower, then that is an entirely different matter.

 

[numbercruncher]

More news coming online about the pushy scumbag money dealers ...

Here's how it works.

In the late 1990s lenders began offering "low-doc" and "no-doc" home loans, to help self-employed people (who often didn't fit the lenders' normal wage-earner criteria) get a loan without needing to provide a lot of supporting documentation (as in, none).

In many instances clients could "self-declare" their income.

By the early 2000s the property boom was in full swing, and lenders were making a fortune flogging finance.

And just like in the US sub-prime market, some Aussie lenders decided to speed things up by paying aggressive commissions to aggressive salespeople and simultaneously lowering their borrowing standards.

Enter the A-RIPs.

Mortgage brokers targeted A-RIP consumers - those with a house paid off but no spare cash - and convinced them to "unlock" the equity in their homes by buying investment properties.

Some brokers (who were paid thousands of dollars in commissions by lenders) hung out in shopping centres, held seminars, and took out newspaper ads promising punters they could double their money in seven to 10 years -- and even increase their income by $10,000 a year - all with the power of property.

That's pretty sexy stuff when your diet consists of baked beans and Larry Emdur. Problem was that many of these A-RIPs couldn't qualify for a loan.

Enter the low-doc and no-doc ("lie to me") loans.

While the RBA doesn't keep official figures on the amount written in low-doc loans, industry analysts suggest it's in the tens of billions of dollars.

Serves them right, right?

THERE'S a part of me - the hardheaded, tough-as-nails, make-your-own-destiny part of me - that says these borrowers got what they deserved.

But over the years I've dealt with far too many financial scumbags to believe it.

Yes, the borrowers should have sought a second opinion from an accountant or a financial adviser. Yes, they should have understood the risks.

But these people sat across the table from financial professionals who were sourcing their loans from some of the strongest, most respected financial institutions in the country - and they got systematically screwed.

Consumer advocate Denise Brailey is representing hundreds of A-RIPs, and she's uncovered widespread fraud.

For example, a 2007 email from a Macquarie Bank salesperson to mortgage brokers, forwarded to me this week, said: "Why not try Macquarie for the below reasons: no docs - client only needs to be self-employed for one day or more; no assets and liabilities required, no income needs to be stated!!!"

Turns out the bankers had "six degrees of separation" between them and the eventual borrowers.

In Australia we're beginning to enter our own housing slump. With the tide now going out, we're about to find out who (lenders and borrowers) has been swimming naked.

http://www.heraldsun.com.au/ipad/we-panned-the-us-for-its-sub-prime-mortgage-crisis-but-were-not-immune/story-fn6bn4mv-1226389570687

This fraudulent money pushers just like drug dealers need to be harshly punished !

 

[Julia]

Thanks to those irresponsible borrowers whom are now seeking to have their mortgages forgiven, this product is unlikely to be made available to those whom could have made productive and responsible use of just such a facility. Thanks to the irresponsible actions of consumers, another great blow has been struck against freedom of choice.

Correct. Yet another example of the increasing way our society seems to be legislating for the most irresponsible, thus as you suggest reducing choice for the responsible.

 

[medicowallet]

As avenues to getting $$$ are removed from the system (eg low doc loans) and as banks find it harder to get finance,

these result in decreased growth of debt, and hence lower prices.

This can all come spiralling down as decreasing prices force banks to keep tightening credit... possibly could get ugly for the highly geared.

MW

PS where is Robots?

 

[numbercruncher]

Yes no problem if you own your houses but the highly leveraged and those that lend them money could be in for a huge shock as our economy hurtles back to Earth -

According to the 8th Annual Demographia International Housing Affordability Survey, published in March:

"Australia exhibited the worst housing affordability of any national market outside Hong Kong. There were no affordable markets in Australia in 2011 and the overwhelming majority of markets were severely unaffordable"

 

[medicowallet]

What a beautiful crisp day brothers, the sun shining, a light frost cleared by the time the jug had boiled and I had managed to make some breakfast.


You might be interested to know the clearance rate:

"Saturday 9th June 2012




A clearance rate of 50 per cent was recorded this weekend compared to 58 per cent last weekend and 58 per cent this weekend last year.

Due to the very low number of auctions this result cannot be seen as indicative of the state of the market.

The year to date clearance rate is 61 per cent.

Last weeks interest rate cut will help improve buyer confidence in the later part of the year, especially if the positive growth in the national and state economy continues.

There were 129 auctions reported to the REIV today with 64 selling and 65 being passed in, 34 of those on a vendors bid.

Next weekend the REIV expects around 630 auctions."


50%, now I don't know what that means, but I am sure A/Prof Robots/im sparticus will be able to decipher the significance of those, as I am merely a speculator.


Sunshine and lollipops,

MW

The original Robot destroyer.

 

[drsmith]

You want Bernie Fraser and Ian Macfarlane - Stevens only increased interest rates after he got appointed in September of '06, all the way up to the GFC.

And the Howard Government.

they changed CGT to favour shorter term speculation and disadvantage longer term investment.

 

[Gerkin]

Sunshine and lollipops,

MW

The original Robot destroyer.

what a silly weekend to auction a property, holiday weekend/....
plenty of sunshine today