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Australian Housing Crash


Jimmy123

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thanks for that link to newcastle.edu - unemployment wil be the driver for further market falls

 

almost 60% of perth suburbs are rated High or MediumHigh risk

 

another commentary today "MoneyMorning.com.au" - do we in australia have a "sub-prime" or Not ?

 

first home owners grant --- but also shared equity schemes as well not mentioned

 

 

Quote

It does have something of a "head in the sand" feel about it. Take the argument about Australia not having a sub-prime mortgage market. That is only partially true. The sub-prime problems in the US were largely because lending institutions were able to lend money to the borrower but then effectively get their money back and get rid of the exposure by selling the loan to Fannie Mae or Freddie Mac.

 

That means they had very little interest in the credit quality of the applicant. Getting the loan approved was all they cared about.

 

This has happened in Australia with Residential Mortgage Backed Securities (some of which are owned by the Australian people as they now appear on the RBA balance sheet). However, a sub-prime equivalent has been created with the first home buyers grant.

 

The grant allowed borrowers who normally wouldn't have qualified, to borrow big sums of money to buy a house without having saved any of their own money for a deposit.

And don't forget, much of this happened when house prices were already high. In effect, 'sub-prime' borrowers were being 'given' money to buy a house at an inflated price.

 

Is that really so different to what happened in the US?

UnQuote

 

 

a deposit seems to get you a bigger loan but there seems to be no longer any hard requirement on borrowers to have much of their own money at risk, so the view that RE only goes UP is still current even when the evidence points otherwise - delusional

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Australia was once of the most overvalued markets in the world, before the markets overseas all crashed. And now we are still sitting up there. To encourage (trick) first home buyers to buy now just to keep it afloat is similar to Howard I think in 2001 extending the grant just before the election to keep it going. Everyone knows its a bubble. We just lag the USA. They started the credit card craze a few years ago, we followed later. Its just a matter of time. Unemployment will make it happen at some stage. Immigration is already being slowed down now, and the immigration boom of semi permanent residents will just go back home when our economy starts to falter more.
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"However, a sub-prime equivalent has been created with the first home buyers grant. The grant allowed borrowers who normally wouldn't have qualified, to borrow big sums of money to buy a house without having saved any of their own money for a deposit."

 

Sorry but that made me LOL. That grant was $7K and only last year was it boosted to $14K ($21K for new construction)

 

The average house price (national) last year was just over $400K

 

At 7K it's not even a 2% deposit

At 14K it's a 3.5% deposit

At 21K it's a 5.25% deposit

 

The grant doesn't in most cases even cover the cost of stamp duty. At $400K most FHO's needed to amass between $20-30K.

 

The media seems to swing between, "the deposit required now make housing out of reach" to "anyone can buy with the FHOG"

 

It can't be both...

 

Cheers

Matt

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the case for WA to secede

 

"In Western Australia, 40 per cent of output is actually exports"

 

while the rest of the county sustain GDP selling services to each other !

 

at some point external income is needed and WA has too many freeloaders feeding off it in the East

 

 

(Lol - couldnt help it - someone had to give the ol' Secession theme a spin)

 

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thresher,

 

Stamp Duty is state based and therefore it differs state to state... and the exemptions only started 2007 from memory.

 

i.e.

TAS has a concession of up to a maximum of $4000

QLD $8,750 (property less then $504,999.99) that reduces to nil (property more then $550,000)

 

I've looked at all the states and I can't see any duty rate that would amount to an 18K exemption ?

 

Cheers

Matt

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I suspect W.A. is much like Queensland, in that revenue from the productive north is used to buy votes in the south where the Labor voters cluster in the cities and hence the parliamentary seats are thickest. With mining in a decline our Anna saw the writing on the wall and called an early election before she had to cancel the latest stadium or whatever which was going to be paid for by the coal mines (NP initiative), coal rail profits (ditto),and income from water sales (more NP!). Basically North Queensland needs to shed its unproductive southern rump and let them carry on taking in each others' washing and mowing while the north banks the export profits... sound familiar?
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