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Cheers Dangerous, interesting reading - and I must say, excellent avatar & location as well
Cheers Dangerous, interesting reading - and I must say, excellent avatar & location as wellinteresting article on infrastructure in NSW from w/e Austrlian.... makes me wonder if it will have drag on Australian economy at some point.
http://www.theaustralian.com.au/nat...-load-of-rubbish/story-fn59niix-1225983250480
What, How can you justify that statement, how the hell would a correction in property prices mean Higher crime rate
It's not that hard to justify, when people on a large scale loose equity or go bankrupt crime rates will rise ushally around theft.
If things get really bad you will see things like looting and street violence.
This is not in any way a predition though lol
I don't think so, i can't see my neighbors suddenly turning to petty crime because the value of the home they own has lost 10% of it's value.
If property prices stagnate for a while or fall 10% it does not mean there would all of a sudden there would be mass bankruptcies and foreclosures. I mean as long as you keep making your payments you would not even notice any shorterm fall.
You dooms dayers paint a picture of a property market where 100% of property owners have bought their properties right at the top of the market on 100% finance and are suffering mortgage stress.
This is simple not the case, You would probably find 90% of home owner have owned their property for more than 7 years and have build up alot of equity and their current mortgage interest payments are less than it would be to rent the home.
It's not that hard to justify, when people on a large scale loose equity or go bankrupt crime rates will rise ushally around theft.
If things get really bad you will see things like looting and street violence.
This is not in any way a predition though lol
10% drop i agree things won't change much, i was thinking something in the 50+% range like seen in parts of the US.
It's not going to happen, the fundamentals are different. But even a large drop like that wouldn't mean foreclosures, it's not like they will do margin calls.
And most property owners would have over 50% equity anyway.
It's not going to happen, the fundamentals are different. But even a large drop like that wouldn't mean foreclosures, it's not like they will do margin calls.
And most property owners would have over 50% equity anyway.
That statement made me laugh, sure a 50% drop in prices would not see a wave of foreclosures, you have to be kidding it would be worse than the floods in QLD.
Cheers.
You dooms dayers paint a picture of a property market where 100% of property owners have bought their properties right at the top of the market on 100% finance and are suffering mortgage stress.
This is simple not the case, You would probably find 90% of home owner have owned their property for more than 7 years and have build up alot of equity and their current mortgage interest payments are less than it would be to rent the home.
This is probably something that does get overlooked. The market here is considerably different to the US because of the sub prime loans the US market was flooded with new owners who couldn't really afford to pay the repayments which was also compounded by the way the banks on-sold that debt, that hasn't really happened here. Sure there are people around that have over-extended themselves and that will feel the pinch if rates continue to rise but the only way I can see the market really dropping more than +30% is if we get mass unemployment.
but we could certainly be in for a pretty big storm.
This is probably something that does get overlooked. The market here is considerably different to the US because of the sub prime loans the US market was flooded with new owners who couldn't really afford to pay the repayments which was also compounded by the way the banks on-sold that debt, that hasn't really happened here. Sure there are people around that have over-extended themselves and that will feel the pinch if rates continue to rise but the only way I can see the market really dropping more than +30% is if we get mass unemployment.
A fall in price will likely result from further mortgage interest rate rises. Household debt levels combined with higher interest rates will pressure borrowers to sell and increase unsold inventory as is now occurring in WA. As prices fall the threat of negative equity looms for many recent purchasors. My guess is that many highly geared investors will flock to exit some of their property portfolio in such a scenario since negative equity was probably not considered a likely event in their wealth creation strategy.If property prices stagnate for a while or fall 10% it does not mean there would all of a sudden there would be mass bankruptcies and foreclosures. I mean as long as you keep making your payments you would not even notice any shorterm fall.
I use to believe this as well but home equity stats tell a different story. Home equity has been steadily declining, almost certainly due to the price boom in housing since 2002. Given that most of the mortgage payment is interest in the first half of the loan period, little equity is accrued except for hoped for price appreciation. In the case of investors, many gear to the hilt and have little equity other than the price appreciation achieved through rising valuations (paper wealth) which they then use to purchase their next IP.You would probably find 90% of home owner have owned their property for more than 7 years and have build up alot of equity and their current mortgage interest payments are less than it would be to rent the home.
Low doc lons in Australia were 80% LVR lends though, vastly different to the US model.Maybe not as bad as the US but I can assure you that a lot of people in the last five years, before the recent tightening, obtained low doc loans here in Aus.
Remember some were even at "no down payment at all and we will give you a holiday thrown in".
Is there still a housing shortage in Australia?
A fall in price will likely result from further mortgage interest rate rises. ]
You dooms dayers paint a picture of a property market where 100% of property owners have bought their properties right at the top of the market on 100% finance and are suffering mortgage stress.
This is simple not the case, You would probably find 90% of home owner have owned their property for more than 7 years and have build up alot of equity and their current mortgage interest payments are less than it would be to rent the home.
90% of home owner have owned their property for more than 7 years
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