Quincy
Jack of all trades master of 0
- Joined
- 28 June 2008
- Posts
- 173
- Reactions
- 0
FIRB ‘failing’ to enforce rules on foreigners buying Australian homes
http://www.theaustralian.com.au/nat...australian-homes/story-fn59nm2j-1227135170289
My bolding shown in referenced article.
A parliamentary committee has recommended stronger enforcement of rules around foreign property investment.
The key recommendations are:
•The collection of a fee from would be foreign property investors to fund FIRB's investigation and enforcement operations - Parliamentary Budget Office finds that a $1,500 charge would raise $158.7 million over four years;
•Civil penalties for breaches of the rules linked to the value of the property, up from a current $85,000 maximum penalty;
•Fines for any third party (such as lawyers, conveyancers, developers, real estate agents or family) who knowingly assist foreign buyers to breach the rules;
•The Government to collect any capital gains made by foreign investors who illegally purchased established residential properties;
•The introduction of a national land title register to record the citizenship and residency status of real estate buyers;
•Greater data sharing between the Immigration Department and FIRB.
Spoke to a mate who is a real estate agent, he said 1 in 2 contracts he signs are to international buyers......even he (who is earning a bucket load due to this) is concerned about the ramifications.
cheers
I have noticed a lot more 'for lease' signs in the suburbs around my area.
I don't know if it will result in an increase in financially stressed investors. However a downturn in mining and an oversupply of rental properties looks possible in Perth.IMO
Exclusive Melbourne agency Nyko Property said the “noise” surrounding overseas investment was “wildly inaccurate”.
“Vision on our television networks of people of Asian appearance bidding at auctions and outbidding other Australians does, in our opinion, simply kindle xenophobia and is anathema to the long-term goal of Australian policymakers to further integrate our economy with Asia — the fastest-growing economic region in the world,” its submission stated.
The inquiry concluded that the industry experts were correct.
“The committee is also satisfied from the evidence received that foreign investment is not causing the market distortions that have been advocated in some quarters, particularly for first home buyers,” the final report states.
“This is because foreign investment levels are not large enough to do so overall because overseas buyers mainly operate at a different price bracket from first home buyers and buy different types of properties.
It would appear the "noise" is exactly just that:-
http://www.news.com.au/finance/real...-property-prices/story-fndban6l-1227154627010
It would appear the "noise" is exactly just that:-
http://www.news.com.au/finance/real...-property-prices/story-fndban6l-1227154627010
Well on the one hand you have people in the real estate industry who claim that it's not a big deal but then when you propose tightening the rules on foreign ownership to them they go bat****. I think it's a case of thou doth protest too much.
The Reserve Bank of Australia's concerns about overheating property markets are growing deeper, with the central bank declaring it is in discussions with other regulators about "further steps" to tighten bank lending standards which would reduce the amount of credit made available to buy houses.
"The composition of housing and mortgage markets is becoming unbalanced," the RBA said in its twice-yearly Financial Stability Review, released on Wednesday.
With house prices in Sydney and Melbourne continuing to gallop ahead in recent months, the central bank said bank lending standards did not appear to have eased but "a crucial question for both macroeconomic and financial stability is whether lending practices across the banking industry are conservative enough for the current combination of low interest rates, strong housing price growth and higher household indebtedness than in past decades."
The stability review highlighted a pick-up in the debt-to-income ratio of households, which is currently at a historically high level of 150 per cent. The RBA said it was currently talking to the Australian Prudential Regulation Authority and other members of the Council of Financial Regulators about "further steps that might be taken to reinforce sound lending practices, particularly for lending to investors".
Read more: http://www.smh.com.au/business/the-...home-loans-20140924-10l9eb.html#ixzz3LpSkKz3C
No need to panic Mr Mannering.
At essence the question is fairly simple and has been put to me this week as …….
‘Can Australia craft a productive economy, and generate income with a competitive exposed sector, with house prices, and the debt to support those house prices, where they currently are?’
Trainspotter, I don't understand your position on Australian housing. Are you saying that this debt to income ratio is okay? That foreign investment is not having an influence on house prices? That the rise will continue?
The co-ordinated steps by regulators to put the brakes on investment property loans will pave the way for the Reserve Bank of Australia to cut interest rates, analysts say.
On Wednesday, the Australian Prudential Regulation Authority unveiled speed limits on investment property loans. The move was part of a decision by the Council of Financial Regulators, which includes the RBA, the Australian Securities and Investment Commission, and federal Treasury.
The RBA has signalled its intention to use "macro-prudential" type tools that typically place restrictions on home loans that would it allow it to cut rates without fuelling exuberant *property investment.
Kudos to Bill M for cranking 100k less fees is a great result. Just wondering if you have done a spread sheet on this transaction? Date purchased and all that and maybe capital gain if applicable?
Since 2000, almost all mortgages from both bank and non-bank lenders have allowed for a loan to value ratio (LVR) equal to or more than 80 per cent; in 2008, 26 per cent of mortgage offerings had LVRs equal to or more than 100 per cent. Loan offerings should not be confused with loan approvals.
Net rental income losses have mounted for investors, as rents have generally tracked the rate of inflation while housing prices and mortgage debt have simultaneously boomed. The losses are larger than indicated because the ATO does not record data on principal payments, as it is not a legal deduction. Two-thirds of investors were negatively-geared in 2012, a significant rise from the 1990s when only half of this cohort were in the same position.
The reason why property investors are negatively geared, on aggregate, is the rising interest payment burden on the exponentially-growing stock of mortgage debt. Housing-related expenses have remained steady at around 50 per cent of gross rental income.
quite an interesting article. gives a good historical contex to current prices
http://www.macrobusiness.com.au/2014/12/the-history-of-australian-property-values-redux-2/
I/O loans now make up over 60 of investor loans, and over 40% of all mortgages.
Probably explains why NG is so untouchable these days.
I/O loans at these low rates, makes for very cheap money, if you are in the highest tax bracket.
It must be under the microscope, however can't see the Government doing anything, other than take any proposed changes to the election.
The Australian Prudential Regulation Authority (APRA) has today written to authorised deposit-taking institutions (ADIs) outlining further steps it plans to take to reinforce sound residential mortgage lending practices. These steps have been developed following discussions with other members of the Council of Financial Regulators.
In the context of historically low interest rates, high levels of household debt, strong competition in the housing market and accelerating credit growth, APRA has indicated it will be further increasing the level of supervisory oversight on mortgage lending in the period ahead.
At this point in time, APRA does not propose to introduce across-the-board increases in capital requirements, or caps on particular types of loans, to address current risks in the housing sector. However, APRA has flagged to ADIs that it will be paying particular attention to specific areas of prudential concern.
These include:
a) higher risk mortgage lending ”” for example, high loan-to-income loans, high loan-to-valuation (LVR) loans, interest-only loans to owner occupiers, and loans with very long terms;
b)strong growth in lending to property investors ”” portfolio growth materially above a threshold of 10 per cent will be an important risk indicator for APRA supervisors in considering the need for further action;
c)loan affordability tests for new borrowers ”” in APRA’s view, these should incorporate an interest rate buffer of at least 2 per cent above the loan product rate, and a floor lending rate of at least 7 per cent, when assessing borrowers’ ability to service their loans.
Good practice would be to maintain a buffer and floor rate comfortably above these levels.
I/O loans at these low rates, makes for very cheap money, if you are in the highest tax bracket.
It must be under the microscope, however can't see the Government doing anything, other than take any proposed changes to the election.
I'm starting to think any changes should be held off till the slow down / recession impact is fully felt.
If APRA does start to limit I/O loans, or NG is quarantined to new builds, any fall in property prices will be blamed on the changes, rather than the unsustainable fundamentals of falling yields while unemployment increases.
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?