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PROPERTY
Mags
post Posted: Jul 25 2017, 01:28 PM
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I think the RBA will struggle to control interest rates, our banks are far to exposed to foreign cost pressures for the RBA to remain in charge. We've already seen lots of little hikes from the banks recently.

A huge issue no one appears to be covering is the IO investors struggling to gain finance as their loans come up for renewal.

As early bird touched on, the Chinese money is a massive, massive factor. Housing is a market, where the value of the entire thing is created from a few sales at the margins. So all this foreign money getting parked here, is holding prices up, even the credit market/growth figures from the ABS support this.

I'd hardly call 10% a correction given the current prices.

But the really problem, is this is a huge, super credit bubble. And what do we know about buyer behaviour when a credit bubble retreats heavily? It crashes.

So when is the crash? Dunno, but's it's at least 10 years overdue by my schedule

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balance
post Posted: Jul 25 2017, 08:32 AM
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In Reply To: early birds's post @ Jul 24 2017, 11:05 PM

A correction is due and very much needed. 10 to 20% would be a good shake out and still leave prices high. Certainly in Sydney anyway.

Nobody wants to see people lose homes, but like the stock market, people over expose themselves and they get the rough treatment. No sympathy for interest only investors jumping on the hype train though.


The banks via APRA are doing the dirty work on housing loans albeit too late imo. The RBA imo will hold fire until it is absolute certain a series of rises is required. They will look stupid if they go early, but have to reverse the decision if things are not as rosy as they thought. Is there ever just one move up or down? I don't think so.



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Said 'Thanks' for this post: early birds  Mags  
 
early birds
post Posted: Jul 24 2017, 11:05 PM
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http://www.cnbc.com/2017/07/24/australian-...s-research.html

We still see rates on hold in the coming year, amid macroprudential tightening on credit growth and interest only loans.

"Hence we still see a correction, but not a collapse, but if the RBA hikes too early or too much (as flagged by its hawkish minutes), it risks triggering a crash," Tharenou warned.

Housing starts fell 19 percent in the first quarter of the year and May's mortgage approvals also slid 20 percent.
...
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looks bleak, going forward.
but don't think RBA dare to raise rate this year....imho.
if chinese money stopped flow to here { heard chinese govt. really try to crack down capital out flow at moment}, then we should be able to see a decent correction at least.




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blacksheep
post Posted: Jul 21 2017, 01:11 PM
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With all the projects in the pipeline/under construction around Townsville, property market there is starting to warm up.

Housing revival tipped for Townsville
TONY RAGGATT, Townsville Bulletin
July 19, 2017 12:00am

QUOTE
DEVELOPERS are eyeing unit projects in Townsville as a series of major developments and an uplift in inner-city home sales point to a much-anticipated recovery.

Townsville has caught the attention of national property firms and researchers like Terry Ryder who has placed Townsville among the Top 10 buying areas in the country.

“I think the market in Townsville is starting to turn but the really big movement is yet to come,” Mr Ryder said yesterday.

He points to rising house sales and an impressive line-up of major job-creating projects as indicators that the market is starting to move.


QUOTE
Mr Wheeler said major projects were lining up to create jobs and spur the economy.

They included the $250 million stadium project, more than $1 billion worth of solar projects, a port expansion including a widening of the channel and new rail corridor, the Carmichael coal project where proponent Adani was setting up in headquarters in Townsville and driving demand for more than 80 rental properties and a $515 million upgrade of the Bruce Highway 40km south of Townsville.

“That’s going to be a lot of job creation,” Mr Wheeler said.


http://www.dailytelegraph.com.au/news/nati...7ac136f7c99b487



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The herd instinct among forecasters makes sheep look like independent thinkers. Edgar Fiedler

If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter. George Washington

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nipper
post Posted: Jul 7 2017, 12:24 PM
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In Reply To: Mags's post @ Jul 7 2017, 11:23 AM

More that ISO requirements are being circumvented by importing pre-assembled components by the container load from China.



--------------------
"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
Mags
post Posted: Jul 7 2017, 11:23 AM
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In Reply To: nipper's post @ Jul 7 2017, 09:17 AM

Nothing to do with the fact that there's more appartment construction on the east coast than the entire north america continent.......

 


nipper
post Posted: Jul 7 2017, 09:17 AM
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Tenants' high-rise fears a new headache for apartment investors
QUOTE
Frightened high-rise tenants are imploring their landlords to move them to another property or rescind the lease because of fire concerns, creating more problems for apartment owners and investors already worried about valuations. A 60th-floor resident of a residential Melbourne high rise claims the 2014 fire in a nearby Dockland's apartment block — followed by the inferno that incinerated dozens of residents in an inner-London apartment block — has forced the decision. She wishes to remain unnamed.

Both fires are shaking confidence in the future of high-rise living, the nation's fastest-growing inner-urban accommodation, as a safe, cheap, convenient alternative to the suburbs.

Rising insurance premiums, tougher building rules and higher liability for tenants' injuries, death and damages are making the difficult decision on whether to invest in a high rise even harder.

Owners of buildings and apartments clad in non-compliant materials face depreciation in values, big bills for rectification and complicated claims against builders, developers, architects and building surveyors. "This has a long way to run," says Simon Black, a partner with legal firm Barry.Nilsson. "It is only a matter of time before claims and litigation," he adds.

Unfortunately it's often unclear as to who is liable under different circumstances. But existing and future high-rise property owners do need to take steps to minimise their risk and liability. "This is causing a lot of head-scratching and soul-searching across the industry," says Elishah Lusi, director of Direct Property Group, a real estate agency that specialises in inner-city residential accommodation. "Tenants are becoming more aware of the potential risk they are putting themselves in for the sake of a panoramic view."

The chief concern of the 60th floor tenant is what would happen to the lifts if there was a fire and whether she would have to make her way downstairs on the fire escape with other residents.

Growing public concern about potential dangers from shoddy building and cheap cladding were crystalised in Melbourne in 2014 when the 13-storey Lacrosse Apartments in Melbourne Docklands engulfed the facade in less than 15 minutes. The cladding used was Alucobest, which is aluminium on the outside and polyethylene fibre on the inside, a plastic commonly used on the facades of multi-storey buildings.

But this is "just the tip of the iceberg", according to Strata Community Australia (SCA), which claims to represent more than 80 per cent of corporations representing strata title complexes. Exploding glass panels falling from high-rise buildings are another example of dangers emerging in an industry that for years turned a blind eye to slipshod building standards and sub-standard products because of high demand and big profits.

The Victorian state government is already on its second public investigation into cladding and building standards, having spent years reaping massive taxes by allowing the structures to be built. A recent study NSW study found there are up to 2500 buildings in NSW that may have non-compliant cladding. A Victorian Building Authority audit of about 170 high rises in Melbourne's central business district and surrounds found more than 100 had problems.

....[New] buyers need to factor in the potential liability for loss or damage arising from faulty construction, or replacement of sub-standard materials, even if a calamity is caused as a result of changes to government construction policies rather than breach of regulations.

For example, owners of the Melbourne's Lacrosse Apartments were last year served a $16 million bill to rectify the building, which works out to be about $40,000 per owner. The residents are considering a class action.

SCA general manager Rob Beck says: "Ahead of thousands of proposed inspections and material tests, it could well be that we sit on the brink of multiple owners' corporations being faced with similar bills to strip and replace dangerous materials."

Insurance specialists predict increased risk of loss or injury will result in higher premiums and, for some apartment buildings, refusal to provide cover by exempting faulty products. This might lead to astronomical premium increases or governments being forced to provide guarantees.

Black says another common legal scenario might be a fight over who pays to replace or rectify undamaged, non-compliant cladding.

Tim O'Dwyer, property lawyer and author of Real Estate Escapes, says whoever might cause a fire, if negligent, could be liable for injuries, inconvenience and any reasonably foreseeable adverse consequences.

"Duties of care extend from tenants, landlords and bodies corporates — or owner corporations — through to all involved in a building's construction," he says.

But damages actions taken against builders, developers, architects, building surveyors and others on the grounds that "they have failed to take reasonable care to ensure that any cladding or other structural component complied with the relevant building standards" may be expensive, time-consuming and could hammer a property's value for prospective buyers.

O'Dwyer recommends those considering buying an apartment obtain a comprehensive inspection of body corporate/strata records. "After purchase, ensure you are suitably insured," he adds. "Tenants would be wise to have their own apartments insured."

Body corporates,or owners corporations, which manage the apartment as a whole, must have adequate cover for the building and should be alert to their potential liabilities. "How owners manage — and notify — non-compliance issues may have a significant impact on their position," adds Black. "They will have to decide whether to notify insurers — and be subject to increased premiums and decreased property's value — or fail to notify and face the inevitable consequences in the event of a claim."
Read more: http://www.afr.com/personal-finance/tenant...q#ixzz4m629X58R



--------------------
"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne

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nipper
post Posted: Apr 15 2017, 12:20 PM
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However, these aggregate figures mask significant variation across borrowers, with available data suggesting that around one-third of borrowers have either no accrued buffer or a buffer of less than one month’s repayments. Those with minimal buffers tend to have newer mortgages, or to be lower-income or lower-wealth households.
http://www.rba.gov.au/publications/fsr/2017/apr/

- can interpret that as " one paycheck away from bankruptcy" .... & why employment numbers are closely examined



--------------------
"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne

Said 'Thanks' for this post: early birds  
 
early birds
post Posted: Apr 5 2017, 10:17 AM
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speech in Melbourne last night, RBA Governor Philip Lowe expanded on his post-board meeting statement comments on housing lending - pointing the finger at some lenders for lax lending standards, blaming the current tax arrangements and urging governments to do something more constructive to boost the supply of housing and land.
rising level of debt associated with the home lending boom and rising house prices a growing risk to the stability of the Australian economy. the said the threat wasn’t to the financial system because the banks are resilient and well capitalised.

”Instead, the concern has been that the longer the recent trends continued, the greater the risk to the future health of the Australian economy. Stretched balance sheets make for more volatility when things turn down.”

Journalists pointed out that while the dinner was private, TV cameras were invited to the function, indicating the RBA wanted to get the widest possible dissemination of of the Governor’s comments.

Probably the most important (politically anyway) comment was the way he added weight to growing calls from sections of the property market, company directors, economists and company leaders for action - such as reassessing the capital gains tax discount of 50%.

He told the dinner - in remarks released ahead of the function that one of the reasons investor loans and interest-only loans were climbing so fast was “the taxation arrangements that apply to investment in residential property in Australia”.

"Not surprisingly, the rising prices have encouraged people to buy residential property as an investment in the hope of ongoing capital gains. With global interest rates so low, many investors have found it attractive to borrow money to invest in appreciating residential property. This has reinforced the upward pressure on prices.

"This configuration of ongoing increases in indebtedness and rising housing prices has been discussed at length by the Council of Financial Regulators. This council, which I chair, brings together the heads of the RBA, APRA, ASIC and the Australian Treasury. The concern has not been that these developments have posed a risk to the stability of our financial system. Our banks are resilient and they are soundly capitalised.

"Instead, the concern has been that the longer the recent trends continued, the greater the risk to the future health of the Australian economy. Stretched balance sheets make for more volatility when things turn down,” Mr Lowe told the dinner. He said that in some cases banks were “assuming that people can live more frugally than in practice they can”, leaving little for them to live on if things went wrong.

“Over the past year, close to 40 per cent of the housing loans made in Australia (and 60% for investors) have not required the scheduled repayment of even one dollar of principal at least in the first years of the life of the loan; only interest payments are required,” Mr Lowe said.

“Like the earlier ‘speed limits’ on investor lending (in 2014), these new requirements should help the whole system pull back to a more sustainable position. A reduced reliance on interest-only loans in Australia would be a positive development and would help improve our resilience. With interest rates so low, now is a good time for us to move in this direction.”

"Over the past year the value of housing-related debt outstanding increased by 6½ per cent. This compares with growth of around 3 per cent in aggregate household income. The result has been a further rise in the ratio of household debt to income, from an already high level.

"In aggregate, households are coping reasonably well with the higher debt levels. Arrears rates remain low and many households have built up sizeable buffers in mortgage offset accounts. At the same time, though, slow growth in wages is making it harder for some households to pay down their debt. For many people, the high debt levels and low wage growth are a sobering combination,“ he pointed out.

The governor also pointed to supply-demand problems, saying:

"The various prudential measures do not address the underlying supply-demand issues. But they can reduce the risk from the financial side of the housing market while the underlying issues are addressed. These prudential measures help lessen the amplification of the cycle we get from borrowing and reduce the risk of developments on the financial side weakening the resilience that our economy has exhibited for many years. Ideally, this would be achieved by financial institutions acting themselves, without the need for prudential guidance. But sometimes prudential guidance can help the whole system adjust.” Finally, he warned that regulators would act again if the latest measures from APRA and ASIC on interest only loans did not produce the desired result:

"The Council of Financial Regulators will continue to assess how the system responds to the various measures so far. It would consider further measures if needed. As I have said, though, in the end addressing the supply side of the housing market is likely to prove a more durable way of dealing with the concerns that people have about debt and housing prices than detailed supervisory guidance,” Dr Lowe said.
===============================================

this is a prop analysis by our new head of RBA. i reckon people focus on this issue really should spent few minutes to read this.....



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balance
post Posted: Mar 31 2017, 09:33 AM
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In Reply To: nipper's post @ Mar 31 2017, 08:48 AM

Yes that seems a bit silly to include those areas. If you asked someone from Gosford, central coast or the Hawkesbury towns where they live, the answer would not be Sydney.



--------------------
Day Trader: Lowest form of life in the known universe.
Shorter: Can limbo under a day trader.
Investor: Salt of the Earth.Sits to the right of God (Warren Buffet)
Share prices are only ever manipulated down.
Paper losses are not really losses.
Chat site posters always know better & know more than anyone about anything.
I'm 29.
The cheque is in the mail.
 
 


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