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You can see the effect of that in the latest Housing Finance figures. Looking a little bit bearish aren't they.
You can see the effect of that in the latest Housing Finance figures. Looking a little bit bearish aren't they.People rely on higher and higher LVR to fuel increasing prices. Also, the way LVRs work means that 90 -> 80 makes a HUGE dent in what someone can borrow, just as it made for huge increases on the way up.
Hi Soft Dough,
A 90% LVR would seem very risky, no wonder banks are cutting back (as they should!)
Do you really believe in the ponzi scheme - a home is clearly an asset? What sort of fall are you predicting and where?
I do believe that prices are high - a good time to sell. A collapse is a bit far fetched though (a period of stagnation more like it) and your desire for one is frankly quite disturbing?
thought the RBA went too hard as usual with all the rate rises..... [/url]
Why is a home clearly an asset I would have classed it as a consumption item,
A 2nd house would be an asset,but the first house is just like your car (there for your use). Cash is an asset until you use it and of course you can raise cash against the house then the house becomes a liability.
As for ponzi scheme, for homeowners no they just want their own home but those buying homes to rent out and borrowing way too much to be paid by the renter hoping to sell and make a capital gain then that is similar to a ponzi scheme were the previous investors only get paid if new investors come to the party.
How far a price correction? hard to say but there are ways that we can get an idea. Over decades (not just the last few years ) a reasonable price for a house was 2.5 to 4 times average earnings (dependant on which city and how close to the city and of course quality of house etc) So we could start looking at say $150000 to $240000 roughly if wages dont go up substantially.
hi there all, just wondering, hows it all going with the housing.....whilst waiting for the crash ..... I miss my friend Robots....I do hope he is happy and well
Property is an asset. However, a mortgage is a liability. Rent is an expense.
supply/demand.
cheers
Excessive income leads to excessive property prices.
Record number of homes for sale takes gloss off auction prices
SYDNEY'S auction market has lost some sheen.
It seems the enthusiastic early-bird vendors got the buyers, but as the market moves into its pre-Easter rush it is becoming more difficult.
The slight decline in the market comes under the weight of a record 2860 houses and units listed for March auction.
The early March results still hover at a respectable 70 per cent clearance, but it is down on the 75 per cent February success rate, and the 85 per cent achieved during January.
The northern beaches has recorded the most sudden reversal with its clearance rate halving from 60 per cent in February to 30 per cent so far this month, according to Australian Property Monitors.
The lower north shore has dipped from 83 per cent in February to 67 per cent.
The drop is also evident in the south-west, where the sale rate slipped from 59 to 38 per cent.
''The decline in clearance rates in the south-west region is consistent with the expected slowdown in the first-home buyer segment after the removal of the government boost and the four rate rises since October,'' the Australian Property Monitors economist Matthew Bell said.
''A lot of purchasing was brought forward, and this seems to be having an effect on 2010 clearance rates.''
Interesting graph there MR.
Would like to see a house price trace in there also if you could
What region are those sales numbers for?
cheers
Rates are no longer the only instrument that is used to curb lending though - the government itself now has a second lever, the capital requirements for banks & lending institutions. Unfortunately for savers, the government now can curb credit without the need for RBA intervention (or unwittingly alter the market by adding 12 month capital guarantees)I see it the other way. RBA went to hard reducing rates to low and encouraging people to leverage up instead of deleveraging as the world economies struggle to grow under the weight of debt.
Property investors and owners have seen an extraordinary return on their investment over the last year. Melbourne +15%.
I'd class stagnation as a fall in real terms for many property holders, although the debt deflation will still help those who are geared.I do believe that prices are high - a good time to sell. A collapse is a bit far fetched though (a period of stagnation more like it) and your desire for one is frankly quite disturbing?
Agreed property is an asset but a home is a consumption item just like your car boat or furniture and yes they do have a value and when you go to a bank you can put them in the asset column
I guess it depends on your description of asset or consumption items, I suspect we'll have to agree to disagree on this one
More good news.
Where is Robots?
http://www.heraldsun.com.au/business/cba-tightens-screws-on-lending/story-e6frfh4f-1225838448648
Only 10% change in LVR's or 50% change in borrowing capacity.
Cannot see those investors flooding back to the market as everyone predicted.
This year is going to be fun.
Keen-o-nomics eh?? The problem with your theory is that the LVR for investment loans doesn't matter that much too investors as they usually get the difference from another loan/LOC against their PPOR or other property where they have plenty of equity.
Keen-o-nomics eh?? The problem with your theory is that the LVR for investment loans doesn't matter that much too investors as they usually get the difference from another loan/LOC against their PPOR or other property where they have plenty of equity.
Cheers,
Beej
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