The future of Australian property prices

[ENP]

Funny how all the New Zealander's are moving over to Australia for the better money and now you are saying Australians are going to move overseas for better money and cheaper housing.

When will it end?

 

[prawn_86]

Personally living overseas in a developing country is definitely a very attractive option for us.

We are either looking to get an expat job over there (South America or Asia) or alternatively save enough where we can live off the interest. At this stage, depending on the tax and residency situations, i think a couple could live a comfortable Western lifestyle if they had 200k in the bank and use the interest to live on.

I always had a loose goal of retiring (or not having to work) by the time i was 35 and this is easily acheviable if we lived overseas, much harder to acheive living in a major city in Australia at the moment.

 

[white_goodman]

this is what the thread has become

 

[white_goodman]

Aaahhhhh grasshopper you have so much to learn.

The analogy placed before you was to evidence what the power of thought can do for you. Everyone thought that the bumblebee could not fly due to aerodynamics and wing size. Thus was the belief for a very long time. No one understood oscillating vortexs nor the power of lift they create. So looking at a bumblebee everyone said it could not fly yet it continued to do so. It wasn't until they understood the dynamics of the lift created before they could prove that it could.

The property market is the same. Everyone else is saying it is going to crash. Yet it continues to fly on like the bumblebee.


Are you picking up what I am putting down now there AlexG1 ???

and how long do you think the raising of new debt and increases in money supply not tied to GDP will happen?

new loans arent exactly taking off, and as my good mate who works as the loan guy at a big four in the city, they are willing to give anyone a loan atm, he said i could get 98% for a 500-600k property.

i respectfully declined

 

[trainspotter]

this is what the thread has become

And yet you continue to post? Weird HUH?

 

[trainspotter]

and how long do you think the raising of new debt and increases in money supply not tied to GDP will happen?

new loans arent exactly taking off, and as my good mate who works as the loan guy at a big four in the city, they are willing to give anyone a loan atm, he said i could get 98% for a 500-600k property.

i respectfully declined

LOLOL ...... he said she said. I say you can get a 110% loan for 1 million. Put it in writing and see how it works out for you. I have just come back from NAB after a review of my portfolio. Over 40% equity across the board. They are asking me for 2 years financials (Family Trust and the development company as well as the private company) , statement of position with the ATO, copies of insurances on all my properties, copies of leases, last 3 years personal tax returns AND bank statements.

Yep they sure are willing to give anyone a loan atm.
'
PM me with the details of your good mate from the city big four and I will call him for my next loan at 98% please.

 

[mazzatelli]

LOLOL ...... he said she said. I say you can get a 110% loan for 1 million. Put it in writing and see how it works out for you. I have just come back from NAB after a review of my portfolio. Over 40% equity across the board. They are asking me for 2 years financials (Family Trust and the development company as well as the private company) , statement of position with the ATO, copies of insurances on all my properties, copies of leases, last 3 years personal tax returns AND bank statements.

Yep they sure are willing to give anyone a loan atm.

PM me with the details of your good mate from the city big four and I will call him for my next loan at 98% please.

You're comparing apples to oranges. Requirements for a trust structure differ from that of an individual.
I am in the same boat whenever we invest via the trust [fin stats, leases, insurance etc].

It is always harder for loans under this structure despite the fact the trust may hold several properties and have strong income flows. Banks prefer people rather than legal entities - as you well know.

 

[trainspotter]

Compare apples to oranges. Requirements for a trust structure differ from that of an individual.
I am in the same boat whenever we invest via the trust [fin stats, leases, insurance etc].

It is always harder for loans under this structure despite the fact the trust may hold several properties and have strong income flows. Banks prefer people rather than legal entities - as you well know.

True ....... which is why you sign a guarantee as an individual to cover the debts of the Trust, company, whatever. Sometimes a fixed and floating charge over the company as well. Structure is the same. It is still a registered mortgage over a green title. Under the UCCC it makes no difference to the bank. Just more paperwork

 

[white_goodman]

so by arguing that loans are difficult to come by where is potential growth going to come from?

 

[trainspotter]

and how long do you think the raising of new debt and increases in money supply not tied to GDP will happen?

new loans arent exactly taking off, and as my good mate who works as the loan guy at a big four in the city, they are willing to give anyone a loan atm, he said i could get 98% for a 500-600k property.

i respectfully declined

Who can borrow 95%?
Australian lenders consider all loans over 80% of the purchase price to be a high risk. Because of this they insure these loans with Lenders Mortgage Insurers (LMI). The LMI providers have their own lending guidelines that are stricter than those used by the banks, and so because of this borrowing 95% relatively difficult compared to other home loans.

What types of borrowers are the banks looking for?

Clear credit history: This means that your credit file has no blemishes whatsoever and that you have paid all of your bills such as rent, credit cards, personal loans and other debts on time every time for the last 6 months.

Stable employment: In most cases you must have been in your current job for 6 to 12 months. Sometimes an exception can be made to this policy.

A good income: Lenders are more conservative when assessing your ability to repay a 95% loan. For this reason your “serviceability ratio” must be outstanding.
Reasonable asset position: Lenders want to see that you have a good asset position relative to your age & income.

Genuine savings: This is the one that catches most people out. Almost all lenders require you to prove that you have saved 5% of the purchase price. If you don’t have genuine savings then consider a 95% no savings loan (very difficult to qualify for) or a 110% guarantor home loan.

Minimal debts: People with many credit cards & personal loans are generally not accepted. As a rough guide people who have more than 7% of the purchase price in unsecured debts such as personal loans and credit cards are often not approved.

Location / property type: Many lenders may be hesitant to approve loans for properties in smaller towns, high rise units in the CBD or other unusual properties.

Not all lenders offer 95% loans
Lenders only have so much funds to lend out, they want to maximise their profit while keep risks under control. And because a 95% home loan is very high risk, most of their available funds are allocated to less risky loans.

In short, lenders don’t have much money to lend at 95%, hence they only accept low risk borrowers!

http://www.homeloanexperts.com.au/no-deposit-home-loans/95-percent-home-loan/

WOWEEEEEEEEEEEEEE ........ who would have thunk it?

You would have to be on over 100k a year to borrow 500k by the way with ZERO peripheral debt, same vocation for 5 years, 6 months savings history ......... need I go on? :

 

[trainspotter]

so by arguing that loans are difficult to come by where is potential growth going to come from?

Why does there need to be growth white_goodman? Why cannot lending and property prices slow for awhile? Cool their heels if you will. Have a softening in the market rather than a rampant train smash? It has happened before whereby house prices have stagnated for several years and loans were hard to come by? What is the rush to keep it moving? HUH ???

Anyone considered why people are paying up to 26% on their credit card ??? HUH??? Total credit and charge card balances outstanding stood at $45.153 billion in October 2009. This is a crisis before a housing downturn IMO. Why is it a crisis? Because it is unsecured debt. That is why !!!!!

 

[white_goodman]

Who can borrow 95%?
Australian lenders consider all loans over 80% of the purchase price to be a high risk. Because of this they insure these loans with Lenders Mortgage Insurers (LMI). The LMI providers have their own lending guidelines that are stricter than those used by the banks, and so because of this borrowing 95% relatively difficult compared to other home loans.

What types of borrowers are the banks looking for?

Clear credit history: This means that your credit file has no blemishes whatsoever and that you have paid all of your bills such as rent, credit cards, personal loans and other debts on time every time for the last 6 months.

Stable employment: In most cases you must have been in your current job for 6 to 12 months. Sometimes an exception can be made to this policy.

A good income: Lenders are more conservative when assessing your ability to repay a 95% loan. For this reason your “serviceability ratio” must be outstanding.
Reasonable asset position: Lenders want to see that you have a good asset position relative to your age & income.

Genuine savings: This is the one that catches most people out. Almost all lenders require you to prove that you have saved 5% of the purchase price. If you don’t have genuine savings then consider a 95% no savings loan (very difficult to qualify for) or a 110% guarantor home loan.

Minimal debts: People with many credit cards & personal loans are generally not accepted. As a rough guide people who have more than 7% of the purchase price in unsecured debts such as personal loans and credit cards are often not approved.

Location / property type: Many lenders may be hesitant to approve loans for properties in smaller towns, high rise units in the CBD or other unusual properties.

Not all lenders offer 95% loans
Lenders only have so much funds to lend out, they want to maximise their profit while keep risks under control. And because a 95% home loan is very high risk, most of their available funds are allocated to less risky loans.

In short, lenders don’t have much money to lend at 95%, hence they only accept low risk borrowers!

http://www.homeloanexperts.com.au/no-deposit-home-loans/95-percent-home-loan/

WOWEEEEEEEEEEEEEE ........ who would have thunk it?

You would have to be on over 100k a year to borrow 500k by the way with ZERO peripheral debt, same vocation for 5 years, 6 months savings history ......... need I go on? :

i fit all criteria minus the 5 years and make up for it in savings history.. yes I am eligible, no Ill pass thanks, as you say if there no cap growth what advantage in owning a PPOR when renting enables me to save more?

 

[trainspotter]

i fit all criteria minus the 5 years and make up for it in savings history.. yes I am eligible, no Ill pass thanks, as you say if there no cap growth what advantage in owning a PPOR when renting enables me to save more?

I did not say there would be nil capital growth white_goodman. I said what is wrong with it slowing for awhile? I also mistakenly took your previous reply meaning that the "banks" were pushing for more "growth" in the market ie more loans to force out on easy credit (which is not happening by the way) as evidenced.

The banks have increased the lending criteria for home loans. No longer easy to get credit does not necessarily equate to falling house prices either.

My advice to you is to keep saving and paying off the landlors debt ! Someone has to do it. I would be miffed if no one rented my properties and helped me pay the interest on them.

Don't answer this if you dont want to BUT ...... how much are you "saving" and as well as paying "rent" ?? Be interesting to see what you could "safely" borrow between rent and savings eg $400 per week rental money PLUS $400 per week savings = $800 per week right? $800 per week Principal & Interest loan at say 6.75% over 25 years means you can "afford" to borrow $500,000 comfortably. Plus deposit etc and criteria.

I am not advocating for one second that EVERYONE should rush out and buy a piece of the Australian Dream. No Sir. We need people renting to prop up all the investors out there as well.

My advice has been all through this thead to do the research prior to purchasing. Same as shares. It is not for everyone.

 

[mazzatelli]

True ....... which is why you sign a guarantee as an individual to cover the debts of the Trust, company, whatever. Sometimes a fixed and floating charge over the company as well. Structure is the same. It is still a registered mortgage over a green title. Under the UCCC it makes no difference to the bank. Just more paperwork

In a legal liability context, it is different for the banks. In most cases one guarantor + several beneficiaries is not comparable to all the aforementioned parties taking out mortgages in their own names [&/or joint]. The latter get loans approved much easier, and it is still happening. Not going to play the he says she says game, but have friends in banking arms who reiterate what white_goodman is saying.

Loans don't comes as easily for us folk, why do you think their legal team spends their time peering through the trust deeds every time a loan application is made.

 

[trainspotter]

In a legal liability context, it is different for the banks. In most cases one guarantor + several beneficiaries is not comparable to all the aforementioned parties taking out mortgages in their own names [&/or joint]. The latter get loans approved much easier, and it is still happening. Not going to play the he says she says game, but have friends in banking arms who reiterate what white_goodman is saying.

Loans don't comes as easily for us folk, why do you think their legal team spends their time peering through the trust deeds every time a loan application is made.

True again. Banks don't care what entity the money is borrowed in which is why they have legal eagles to peer through the paperwork and charge you exorbitant fees for the privelige. Hence the guarantors acknowledgement you sign as an individual guaranteeing the debt in the Trust/company/whatever structure as a director or Trustee thereof.

Banks like 2 income no kids with savings history etc because it is straightforward on the paperwork front for them. Gimme 6 months savings history and a letter of employment is all that is required.

It is quicker and easier for them to process. The lending criteria is the same. SERVICABILITY, EQUITY and STABILITY and as long as the bank has a clean shot at the title and you, then they will loan you the money.

Have borrowed money in all shapes and forms. (Personally and company) No difference in entity structures other than the fees and the paperwork required. Just my experience is all.

Agreeing with you here mazatelli.

 

[white_goodman]

rent is $100 a week, saving is a tad over $1k a week...

I can afford, but I dont see it as a good investment.

And as for the lenders not getting a bit hows ya father with standards...

http://macrobusiness.com.au/2011/03/banks-continue-to-lower-lending-standards/

 

[trainspotter]

rent is $100 a week, saving is a tad over $1k a week...

I can afford, but I dont see it as a good investment.

And as for the lenders not getting a bit hows ya father with standards...

http://macrobusiness.com.au/2011/03/banks-continue-to-lower-lending-standards/

Posted by a dude named Leith from unconventionaleconomist@hotmail. LMFAORF

Ummmmmm ...... you do realise that NONE of these practices went forward don't you? ING never implemented their "never ending loan". ANZ lifted their LVR to existing customers "only" for refinancing purposes for retention. Oh yeah ...... you still have the "other" criteria involved. Like LMI and valuations and proven savings history and DSR's. But you know all of this don't you white_goodman.

But but but don't let a good story get in the way of truth now white_goodman. $100 a week you say in rent eh? Can I move in with you? Does this include outgoings? Did you pay a bond? How much of the home can you utilise? Is it a share arrangement?

Saving $1000 per week eh? $52,000 per annum. WOW ....... Do you have a life? Or are you on like $200,000 per year gross? Do you have a car? What about expenses? Do you travel overseas? Have you been overseas? Just interested is all as to how all this is possible. I think it is fantastic you can save this much money. And do what with it at the end of the day? I suppose you can do anything you like.

 

[jbocker]

Ask a large proportion of talented next generation of Australian's where they are going to live, if housing continues on this inflated path, in let's say ten years from now. You will end up having a considerably large exodus of Australians living and working in more affordable places around the globe, just like Britain experienced. Ones that probably will stay here if the cost of living isn't going to be so high.

Did the Brits leave because of the cost of housing??? I am surrounded by young recent arrival Irish kids busted their whatits to stay here, did they leave because of the cost of housing? No.
IF housing continues at its inflated path - who in there right mind really extrapolates a constant rate for 10 years. Plenty on this thread will argue that it is going to plummet. Have asked plenty of smart kids where they are going to live, those want to live overseas are going to for work, not because houses are too expensive here.

How many Australian's are aware of what's going on in cities like Adelaide, for example, in which abnormal volumes of businesses have gone under. You're still seeing speculators trying to sell you the story that the property market here is stable. The statistics and information on housing here is too vague.

Cannot argue with that konkon, we dont get ready access to good 'stats' thats why you need to research to make sound decisions / take the risk. Always going to have spruikers asking for our dollars - remember stats can be made up any way you like.

The sub prime mess was pretty obvious even four years ago. If the stats and information wasn't available back then, then the US consumer would have gotten itself further in debt. The banks would have kept on lending. We don't have any real official warning signs here. So consumers will get themselves further in debt, just like they would have in the US if the statistics didn't come-out when it did.

The problem was prior to 4 years ago, the US consumer DID get into massive debt Banks DID keep on lending till the US consumer couldnt go further, they crashed, then people asked why, and 'subprime' was then explained, their apparently transparent Statistics did 'jack' to save them from getting into a real mess, that they are still wallowing in.
konkon, I wont trust any statistics for my dollars, and will only use them as very broad indicators.
You can still make a great investment despite how crappy the market is, as much as you can make a crappy investment in a boiling market. Its Buyer Beware.

 

[white_goodman]

Posted by a dude named Leith from unconventionaleconomist@hotmail. LMFAORF

Ummmmmm ...... you do realise that NONE of these practices went forward don't you? ING never implemented their "never ending loan". ANZ lifted their LVR to existing customers "only" for refinancing purposes for retention. Oh yeah ...... you still have the "other" criteria involved. Like LMI and valuations and proven savings history and DSR's. But you know all of this don't you white_goodman.

But but but don't let a good story get in the way of truth now white_goodman. $100 a week you say in rent eh? Can I move in with you? Does this include outgoings? Did you pay a bond? How much of the home can you utilise? Is it a share arrangement?

Saving $1000 per week eh? $52,000 per annum. WOW ....... Do you have a life? Or are you on like $200,000 per year gross? Do you have a car? What about expenses? Do you travel overseas? Have you been overseas? Just interested is all as to how all this is possible. I think it is fantastic you can save this much money. And do what with it at the end of the day? I suppose you can do anything you like.

like most on the board im investing it wisely, yes I have a car and have to commute to work everyday, im going to thai,laos,cambodia for 4 weeks in july. I go overseas once a year and plan on doing so most years (5 weeks annual leave).

I would love to buy a house, but I cant see the logic atm, im not permabear, my degree is property economics so I am interested, its just a bad investment for me atm.

 

[medicowallet]

LOLOL ...... he said she said. I say you can get a 110% loan for 1 million. Put it in writing and see how it works out for you. I have just come back from NAB after a review of my portfolio. Over 40% equity across the board. They are asking me for 2 years financials (Family Trust and the development company as well as the private company) , statement of position with the ATO, copies of insurances on all my properties, copies of leases, last 3 years personal tax returns AND bank statements.

Yep they sure are willing to give anyone a loan atm.
'
PM me with the details of your good mate from the city big four and I will call him for my next loan at 98% please.

Well

1. Shows that the banks are seeing it as a riskier proposition going forward.

2. 40% equity gets chewed up pretty fast during a correction.

3. Have you sold out yet?