The future of Australian property prices

[Aussiejeff]

Westpac Chief outlook



http://www.news.com.au/money/money-matters/westpac-managing-director-gail-kelly-says-years-of-compound-growth-in-house-prices-are-over-for-good/story-e6frfmd9-1226395093277

No! This can't be happening!! It's a Big Fat Talking-Down-The-Economy Lie by an un-Australian!!!

For pity sake, one just has to look at our darling Gina. Clearly, she is booming mightily....

One should support one's gummint, surely? Let us all pray the World's Greatest Treasurer & His trusty sidekick Jools remain in their jobs forever to banish the naysayers & reward our precious FHB's!!

Up Ozzie I say!!

 

[DB008]

The reason it is over is because the banks are tightening their lending practices. So Gail would know, if anyone would.

Have been getting tightened since the GFC....

 

[Julia]

The reason it is over is because the banks are tightening their lending practices. So Gail would know, if anyone would.

Not before time, going by the story in "The Australian" over recent days.
Contrary to popular belief (my own included) Australia apparently had a thriving subprime event leading up to the GFC.

Denise Brailey of the Banking and Finance Consumers Support Assn, has, with The Australian, been closely following loan application irregularities for several years.

'But these emails prove unconscionable and predatory lending practices were happening across the board,' Ms Brailey said.

She instructed borrowers to contact their lenders and request copies of their loan application forms. 'In every single case they have come back astounded,' Ms Brailey said.
'Their incomes are vastly inflated and in most cases there are two, even three different sets of handwriting on the forms'.

Other major concerns which also point directly to imprudent lending was the writing of 30 year loans to people in their 70s and 80s.

In May 2008 as the GFC unfolded, Capital First wrote to one broker that "the maximum borrower age is now 70 years."

In the emails lenders spruik to brokers the availability of 'unregulated' loans.
That means loan application forms were ticked for 'investment or business purposes' and so were not covered by national credit laws.

 

[sptrawler]

Not before time, going by the story in "The Australian" over recent days.
Contrary to popular belief (my own included) Australia apparently had a thriving subprime event leading up to the GFC.

I think we were saved by the bell, if the U.S, Europe and U.k hadn't imploded. We would have had our own crash, not a deflation like is currently happening.
The banks would have continued to support the ever increasing valuations, if they weren't reigned in.

 

[explod]

Some knew, I hit the wall with a property using a subprime loan 8 years ago. The loan officer I knew as we had both been in the same occupation some years earlier. After being cleaned out I then hit the books on economics and discussions with my mate from dud loans and have therefore seen this coming.

It is why I have been so critical of property rampers on this thread since I joined you in 2007

Talking to my old Real Estate confidant yesterday and we all agree that for a few years here it is going to be very ugly indeed. Anyone with any sort of a mortgage needs to get out now. If you own your own home however hang onto it as most other things apart from a bit of gold and silver will soon have little value. But your own roof over your head will be everything.

Just an uninformed, innocent and humble two cents.

 

[prawn_86]

You still haven't really given any reasonings explod? Do you think it is a sub-prime cirsis coming? Or somehting else? Global or Aus specific? etc etc

 

[MrBurns]

Talking to my old Real Estate confidant yesterday and we all agree that for a few years here it is going to be very ugly indeed. Anyone with any sort of a mortgage needs to get out now. If you own your own home however hang onto it as most other things apart from a bit of gold and silver will soon have little value. But your own roof over your head will be everything.

Just an uninformed, innocent and humble two cents.

Thats about how it is and if you look back you'll realise this has been creeping up on us for the past year, it's now starting to bite and will be seriously destructive before too long.

 

[explod]

You still haven't really given any reasonings explod? Do you think it is a sub-prime cirsis coming? Or somehting else? Global or Aus specific? etc etc

A global problem. We have outgrown our planet and somehow the breaks need to come on. Perhaps this is just nature taking its normal course.

But who really knows, we are on new ground in my view and only time will tell the real story.

And the drop in property, I concede I called it far too early and could well have done better by hanging on for awhile. However when one loses confidence decision are poor.

 

[MR.]

Dear Gail,

Good to listen to another one of your speeches yesterday. I know you got roped into answering a few questions on real-estate yesterday, can’t blame them for their questions, remember your audience has been hit the hardest in Australia, but..... May I ask?


Referring to your comment “The years of compound growth in house prices were over for good”. How long is that exactly? It just sounds like a very long time !

I bought an investment property just under two years ago after reading, as it appeared, expert posts from various property experts/gurus. To think I ended up listening to the smooth words of “seal” when I should have listened to the knockers who’d never end up owning a thing....

Should I sell my investment property?
Looking forward to your response.

yours sincerely,
MR.

 

[MR.]

Dear MR..........?

If I could only find the words to say......

http://www.youtube.com/watch?v=QW5Ha1cLApw&feature=related

Best Regards

G.

 

[explod]

To think I ended up listening to the smooth words of “seal” when I should have listened to the knockers who’d never end up owning a thing....

"Some people ya just caant reach" in Cool Hand Luke

Got gold and silver.

 

[Julia]

Anyone with any sort of a mortgage needs to get out now.

That's a bit unnecessarily dramatic, isn't it? Plenty of people have perfectly manageable mortgages and are very happy living in the houses they have chosen.

Not that it would ever happen, but perhaps consider the results if everyone with mortgages were to suddenly put their properties on the market.

Totally unrealistic. Silly, really.

 

[explod]

That's a bit unnecessarily dramatic, isn't it? Plenty of people have perfectly manageable mortgages and are very happy living in the houses they have chosen.

Not that it would ever happen, but perhaps consider the results if everyone with mortgages were to suddenly put their properties on the market.

Totally unrealistic. Silly, really.

Perhaps Julia but what is going to kill the system soon is the very low yields. Money printing is one thing but heading towards almost zero interest rates in some countries and lower here means that something is going to have to give. The speed of change is gaining pace, we have had Ireland, Iceland, Greece and now Spain. Some are saying that a domino effect will occur at the collapse of Spain and indications are that this is close. Their Bond Yields almost hit 7% today. From my readings and in spite of the Government guarantees our banks here are very exposed to the world currency flows.

Not saying it will happen tomorrow but there is danger that very major haemorrhage is near. You would well remember the 18% interest rates back around 1980, sure you can say it was the Government but at the end of the day it was supply and demand. How would a $100,000 mortgage go for someone out of work or even working part time.

Call me doom and gloom if you like but it is well worth painting pictures of all scenarios for consideration at this juncture.

 

[drsmith]

The speed of change is gaining pace, we have had Ireland, Iceland, Greece and now Spain. Some are saying that a domino effect will occur at the collapse of Spain and indications are that this is close. Their Bond Yields almost hit 7% today.

If bond holders lose confidence in one of the major economies, that could get interesting.

 

[Aussiejeff]

If bond holders lose confidence in one of the major economies, that could get interesting.

Thankfully, it would seem that most of the big Euro Debt bond holders (ie bailed out banks) are not short on supreme confidence that they will be bailed out further by the gummints they themselves are helping to bail out. With new wads of bailout cash they are queuing to buy Euro debt bonds like there is no tomorrow!

It's a beautiful self-fulfilling feedback loop, invented by the cunning rich and notorious to prop their dailly need for greed. Bit like inventing the "Perpetual Motion" theory - just substitute "CONfidence" for "Motion".

Why, overnight the markets have soared again on a whiff of "CONfidence"(tm).

You know it makes cents....

 

[damien275x]

Somebody today asked me why would evil gail come out and say that, when reduced borrowing is not in the banks best interest.

a) Gail does not give a **** about market conditions, she will reduce and sack staff as necessary to ensure her bank will always turn a profit.

I saw another article today titled "Battling Aussies only have 4 weeks savings" .. So watch for job losses and mass defaults on loans when they can't pay. Especially uneducated factory workers who have no skillset relevant to 21st century Australia. These bogans are the ones who have borrowed on top of borrowed to obtain multiple homes.. This is a standard practice particulary in the west and low socio suburbs. These economic illiterate investors are set to lose it all because they listened to Tracy on ACA as well as the fat Aussie home loans dude.

Even if they debt it up to kgoing aging for a while that's only delaying the inevidible . More debt repayments also results in less consumption which in turn leads to even further job losses etc and then credit won't be available anymore.

At least with shares you are never in denial about what it's worth. When it sinks in that their ****box purchased for 700k will never go for that much again they will NOT be pleased!!!

 

[Glen48]

http://www.realecontv.com/page/10990.html

Here is a bit more what to expect. maybe Gillard can go back to Slater and Gordon suing Banks for mortgage fraud after she is tossed out.

 

[young-gun]

where did all the bulls go......? alot of them will be doing this shortly i feel.

 

[Glen48]

Kirk Douglas is still fighting on.

 

[moXJO]

where did all the bulls go......? alot of them will be doing this shortly i feel.

There is only so much doom I want to read. I'm busy making money and there is plenty out there.

My bank manager is building another three duplex developments after a profitable first development a few months backr. Go figure, he works for gail