Australian property 'calamity' is coming

Discussion in 'Australia, NZ, Pacific' started by scarlet witch, May 30, 2017.

  1. scarlet witch

    scarlet witch Well-Known Member Past Donor

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    We sold a property for double in Brisbane.. almost ten years ago... we only had it for 5 years at the time.
     
  2. Sallyally

    Sallyally Well-Known Member Donor

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  3. LeftRightLeft

    LeftRightLeft Well-Known Member

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    We need to be careful of not confusing facts with statistics. The only real drop was in local investors. Why? Maybe because the government is reigning in the banks on interest only loans. These were very popular for local investors. Very hard if not impossible but also not practical to first home buyers, owner occupiers or over seas investors.
     
    Last edited: Jul 18, 2017
  4. truthvigilante

    truthvigilante Well-Known Member Past Donor

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    In my thinking interest only for home owners including first home buyers is that it provided a buffer, which also essentially relied on capital growth. Furthermore, most would have a redraw facility, so in the past worked well in most parts of oz but poor old mining towns. Yeah, it makes sense for investors who receive no benefits from principal payments therefore reliant on capital growth solely. So if governments are nailing interest only loans it would actually take the buying power away from investors.

    Have they restricted interest only investor loans? I may have missed something here and know there was talk around it.
     
  5. scarlet witch

    scarlet witch Well-Known Member Past Donor

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    Local banks’ $500bn of ‘liar loans’ could threaten financial stability: UBS
    http://www.theaustralian.com.au/bus...s/news-story/ed4a80f492c492c2d03488ec974f0070


     
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  6. slipperyfish

    slipperyfish Well-Known Member

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    I think APRA has told the banks to cease offering IOL for investment. Not sure about PPOR loans, I doubt that as eventually those with PPOR interest only loans the term of that interest only period will expire and APRA has already cautioned on the renewal of such loans.

    I have purchased a fair amount of short term capital growth property under IO with great effect as the costs of the loan are fully tax deductable and the IO period runs about the same as the capital growth period. Makes sense really if you are trading in CG property. I never use IO loans for positively geared properties, as it can essentially defeat the purpose. I always work off repayments at 11% that way I am not caught when rates increase allowing me time to divest of the property if need be.

    The restriction on IO property will help in stagnating the city property markets but may also create rental price increases as Mum and Dad investors try to cover shortfalls in monthly expenditure. If they can't then obviously there will inevitably be increased stock on market and therefore creating competition through excess and hopefully driving prices down.

    Most avid property investors have seen this coming for some time and have taken measures to mitigate losses. I for one have have sold over half my investment properties as I see rates doubling over the next two years or so, settling around the historically solid 7.5% or slightly higher.

    I have now invested in agriculture. New to me and a little riskier, but it has been enjoyable so far and returns have been faster on investment.

    I will return to property when the threat decreases.
     
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  7. crank

    crank Well-Known Member

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    That's too long to double money! Should be 7, at most :p
     
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  8. crank

    crank Well-Known Member

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    What is 'affordable housing'?

    I have a problem with that expression, because when broken down it seems always to amount to: "I want to live in fashionable inner city areas but don't want to pay the high rents associated with same". Which is effectively wanting your cake and eating it.
     
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  9. crank

    crank Well-Known Member

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    the money you made was real. that's all that counts.
     
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