Only in 3 other extreme events have clearance rates been in the 30s in Sydney: twitter.com/LouiChristopher/status/1053585757351231488 (they'll be revised down to ~38% once the full results come in) - Oct/Nov 2008 (GFC), May 2004 (NSW vendor stamp duty) and July 1989 when the cash rate hit 17%. Sydney buyers are responding with the same recluctance to buy as during the worst recession in our generation, the highest new purchase tax in our generation, and the highest interest rates in the boomers generation.
All these new buyers on IO only loans will rollover causing spending to reduce in the economy rba.gov.au/speeches/2018/images/sp-ag-2018-04-24-graph4.gif and investors being forced to sell as they cant afford the now 40% increase in repayments. They are new buyers and won't have made a profit, thousands of sellers making a loss, completely eroding whatevers left of positive sentiment.
who knows how long it'll stay in the warning zone though, could be 2 years or 10 years
Xavier Garcia
No itll be a short fall. US feds rates increases guarantee that.
Gabriel Myers
It's bliss, Start on the bongs (preferably bucket) 24x7 and you will be there to!
Michael Brooks
>The number of Australian homeowners over the age of 65 still carrying mortgage debt has trebled since 2002, raising concerns the nation's retirement savings could be absorbed into the housing boom.
>In 2002 only 4 per cent of homeowners aged over 65 carried mortgage debt, figures from the Australian Bureau of Statistics show. By 2015, the latest figure available, that had grown to 12 per cent.
>The number of 55-64 year-old homeowners with mortgage debt had more than doubled, from 23 per cent in 2002 to 47 per cent in 2015. The percentage of homeowners aged 45-54 with mortgage debt climbed from 55 per cent to 77 per cent over the same time frame.
12% - thats fluff my man, those people should never have bought to begin with. This is the sort of thing that brings the market back to sanity.
Chase Powell
It is just another great legal Ponzi scheme. The only losers are those who had no idea of the risks or take them at the extremely vulnerable point. Some came out with a motza and most everyone got a little something. It is pretty much life really.
Chase Wright
The trend is worse than the static number. 12% today is 40% in a few years.
Look at 47% of 55-64 yos having mortgages, up from 23 in 2002. It'll be over 50% by now. These people have no wage growth and will retire with mortgages. They will be forced to sell. More stock on the market for a seller who has no choice but to sell, so theyll bring prices down while bringing property choices up.
Dominic Garcia
>tfw ywn be this short-sighted
Hudson Mitchell
Those numbers are pretty alarming.. I wonder what the mortgage rates are like? What percentage (with age breakdown) of people have mortgages now compared to 2002? Mortgage completion stats would be nice to see too.
Aiden Robinson
Sadly I'd wager that these near sighted bastards are in charge of a property fund or high flying exec. Australia is rife with the biggest grabbastic boys club who slap each others backs and bray like donkeys meanwhile everything is in shambles
Connor Hall
It really is just a classic ponzi, built on credit lending to retards who never could pay it back. Once the credit dried up it was like the ponzi collapsed because nobody could repay the newest buyers. Unlike stocks prices cant change so dramatically within a week, but the rate of change seen in Sydney and Melbourne is staggering as far as illiquid real estate prices go. It should be falling much slower, its fallen 7% year on year in the first year, so 10%+ falls by this day next year are highly likely as falls accelerate. 20% in 2 years, that's the median $1m home down to $800,000 - that's $200k saved on the principle plus the 5% interest p.a., you're talking about buyers saving half a million dollars over their lifetime. The opportunity cost of this event is going to be the biggest in a persons lifetime in most cases.
Do metro and regional areas respond differently in these kinds of situations? Will country towns remain unaffected while city properties tank?
Levi Carter
The MSM has swung from 'its just a dip' to 'its only going to effect syd and mel'. Anyone who's studies this knows how interconnected our property market and banks are - multiple property owners have investments outside the hubs and the same banks lend for both. It takes a cursory glance to understand how much our economy is driven by construction and a crash will have widespread effects as tradies stop spending try to move where the work is flooding that employment market. They know that bubble crashes are not fully rationale and even some places with health will fall for the same FUD.
This is going to be a lot worse than most people expect.
Joseph Rogers
Because of the property ripple effect smaller areas follow the same trajectory but they have lower falls/rises because theirs just not as much investment/competition there.
Country towns will essentially just lose tourism dollars, less purchases for their goods they export because city people have to cut back on spending, and their home prices will fall a little bit but nothing insane. If you invested regionally since 2015 itd be annoying because youd be taking an L
Jordan Hughes
How bad will it be? Minor correction(10-15% fall) predicted by most mainstream economists? Or are we going to see Ireland 2007, or even worse Iceland 2007
Josiah Martinez
My guess is ireland but I'm prepared for iceland.
Henry Smith
>This is going to be a lot worse than most people expect.
Yep
>The normalcy bias, or normality bias, is a belief people hold when facing a disaster. It causes people to underestimate both the likelihood of a disaster and its possible effects, because people believe that things will always function the way things normally have functioned. This may result in situations where people fail to adequately prepare themselves for disasters, and on a larger scale, the failure of governments to include the populace in its disaster preparations. About 70% of people reportedly display normalcy bias in disasters.[1]
>Cause: The normalcy bias may be caused in part by the way the brain processes new data. Research suggests that even when the brain is calm, it takes 8–10 seconds to process new information. Stress slows the process, and when the brain cannot find an acceptable response to a situation, it fixates on a single and sometimes default solution that may or may not be correct. An evolutionary reason for this response could be that paralysis gives an animal a better chance of surviving an attack and predators are less likely to see prey that is not moving.[8]
You can tell them whats going to happen and why its going to happen but the biological wiring in their brain wont let them see it, understand it, or believe it.
You really need to be kind of autistic and be unemotional to override the bias. Which is why you find lots of autists in trading and investing rather than emotional extroverted optimistic people.
Juan Wright
Iceland is actually the better scenario, Iceland today is better off having let everything crash and taking the fresh start, Ireland re-inflated the bubble now they are back to square one
Jace Davis
It can't just stop at 10-15% because buyers literally do not have the amount of money necessary to buy for 10-15% less than the peak.
They havnt got $1m in savings The bank wont lend them $1m
They can only pay what they can afford, which is now 40% less than at the peak. So at an average you're looking at 40% losses until the median buyer can buy the median house again.
But because of the trajectory of falls it'll exceed 40% as the public shit themselves once they see -7% become -10% become -15% become -20% become -25% become -30% become -35% become -40%.
That's all before the economy grinds to a halt as the negative wealth effect kicks in and unemployment increases and absolutely nobody is buying anymore. The people who used to be able to get a mortgage, who now can only get 60%, now cant get 0% because theyre unemployed.
Agree, i would prefer a complete crash with nationalisation of banks and glass steagall legislation. I think they will try reinflating the bubble, tanking the AUD in the process. Given current world economics (china trade war, US fed hikes) I don't believe it will be successful.
Lincoln Phillips
Actually Ireland is doing ok. We tried our best to reinflate the housing bubble but the banks being total cunts abiut mortgages now managed to stave that off (probabky by accident) at the expense of a weird rent bubble
Liam Gutierrez
Very interesting take, user. I wonder which places (rare nuggets) are going to BOOM or remain stable during the recessive phase where everything else crumbles to base demand/value. Your posts are a fucking good read, dude.
Best thread on fourchan right now. Have you considered copy/pasting to Jow Forums for further discussion?
Thanks user. I don't think i have many original thoughts, all this shit is out in the open and people are starting to connect the dots.
Get whatever money you can out of Australia imo. Only industry i can see doing better from this is domestic tourism and cheap camping stores when people can't afford 2k AUD to fly to Thailand.
Chase Butler
Fantastic. Enough time for one more retarded crypto bubble
Samuel Miller
>if you invested regionally since 2015 you'd be taking an L Forward-thinking millenlials and late gen X on suicide watch.
When I replied to this guy I thought it was you for some reason, this post is mostly intended for you (no disrespect to the other guy who's posts are of equally high quality).
Carter Hernandez
hopefully the same happens to Canada's housing market
Adrian Brooks
This is up till 2013 so its much worse now because prices roughly doubled in Sydney from 2012 to 2016
yes brother. we are not bulls or bears but realists. ride the waves as they come. triumph and victory
Lucas Brown
Using some simple sentiment analysis would show Australia is not in a housing bubble. Since everyone has believed we are for a long time, it was already a good time to sell years ago. If you sell now you're selling the dip
Oliver Morris
For most of the past 5 years sentiment has been above average
Brandon Thompson
Its only just turning and a we've had a year of decline. Its a classic bubble.
Is it just me or did anyone else link a surge in cheaper properties being bought up, barely renovated then relisted on the market within 6 months at a 20%+ markup with the increased popularity of home reno shows like the block or whatever. More noticeable in rural cities and towns.
Robert Gutierrez
>tfw unlike my millenial friends I don't trust the media so I create a document that contains every piece of information I find to piece together a broad analysis of the market that aims to be as objective as possible because I don't feel like fucking spending a million fucking dollars on an investment that'll could turn sour and shackle me for decades or my entire life all because I trusted everything I heard from people who had a vested interest in telling me things were going to always go up and that $1m house would be worth $2m in 7 years and $4m in 14 and $8m in 21 years despite nobody in the world having enough money to create $8m median middle class homes
Nonsense, the rent bubble is only distracting from the fact that house prices are as high and higher in Dublin specifically than before 2008. The Irish bubble is certainly reinflated. Banks still having to pay for non-performing mortgages they should've never given out 10 years ago has raised our interest rates far above EU levels, which is inevitably going to bite current mortgage holders when the precariously positive situation we are currently in goes tits up, and they end up in arrears and eventually default, continuing the cycle. But sur' lookit, we're not used to the money, sur' we've been poor for all of history, sur' we may as well enjoy it now
Easton Nguyen
Bought in 2010, got a great deal
Jose Nguyen
So where should i store my money, another countries currency? bonds? Or just keep funneling cash into crypto?
Luke Butler
I don't watch TV but I noticed a few years back that Domain had partnered with a lot of media outlets, and like 90% of their articles were promoting the idea of flipping homes for free money. Many of these articles were formatted as news pieces to the point that I didn't know I was just reading blatant advertising. Not sure how the hell it was even legal.
Wyatt Phillips
Just put your savings into crypto. Livingroomofsatoshi lets us use crypto to pay bpay, credit card bills, direct bank transfers. Only reason I have cash anymore is to use it as cash.
Hunter Moore
From my understanding account holders are covered for 250k by the financial claims scheme or whatever. So if banks raid your account, government is just going to pay you back anyway. This creates even bigger problems...
Joshua King
Wonder if this will effect NYC property. Prices already slightly dipping if some recent news feed articles I've seen are to be believed.
I imagine foreign money trying to stash cash in NYC property may prefer to buy the dip in Australia, leading to falling demand in NYC.
Mason Richardson
Quite a (relatively) controversial view you have there. If the Australian housing market isn't a bubble and this is a dip, what happens in the future? Similar growth and blow-off like we've seen?
I wish I understood how equity, mortgage and interest worked, it seems like everyone is on a different "contract" with their respective banks.
Luis Nguyen
>banks dont have enough and take your savings >dont worry goy its all guaranteed up to 250k >money is "frozen" while everything is sorted out >miss all the prime buying opportunities because of "frozen" money >Government: "Shit now we need more money to give back to the people" >Print more money >Your money is unfrozen, along with massive inflation, having missed all good buying opportunities
Sounds like fucking bitconnect to me
Ethan Roberts
And it looks like the government has to 'activate' that scheme. So in the case banks start to kick it and government hasnt hit the switch, depositors will be left out of pocket entirely. Holy fuck.
Ryan Wilson
>funneling cash into crypto I'm going to start/continue to do this.
Jackson Bailey
Based autisic information gatherer
Jason Phillips
keep the thread alive lads
also (yesterdays thread)
Isaiah Sullivan
>NAB has slashed the number of home loan referrers from 8000 to 1000, and revealed 300 staff were sacked last year for breaching its code of conduct.
alright, what do you want to know? i'm fairly experience in mortgages as i've had a fair share of them.
Daniel Rivera
Wish I could invest in Aussie property, but as a Yank I doubt I'd be able to without a shell company/owner.
Cameron Hall
30% of mortgages over the last five years have been interest only. They are just starting to mature now which means a massive increase in payments for 10's of thousands. Over the next 5 years watch as these speculators or over capitalised try to sell before they are in negative equity territory. The RBA can't drop rates because the money the banks borrow from offshore is already subject to higher interest.
Ethan Cruz
>Note: I am not an expert
I think you can. How come those rich chinese can buy properties in Aus and you can't?
I'd like to know, generally, what will happen to people who are about halfway through paying off a mortgage in regional Australia, if/when we're finding the bottom of the market?
As a side query, what if someone has been paying the mortgage off faster than required with extra cash? Is this a good thing to do? Does it depend on the market?
Asher King
Mate, I'll buy houses/property for you, wherever you like, just give me a small cut and I will hunt down anything you want!
James Carter
The faster the debt is paid the sooner you stop losing money on the interest of the principle. Then you can get working to investing that money saved thats no longer going into interest.
Levi Green
>>I'd like to know, generally, what will happen to people who are about halfway through paying off a mortgage in regional Australia, if/when we're finding the bottom of the market?
don't understand the question really. if you are half way through you mortgage and the market bottoms, it will eat into their equity value. i don't see it causing people to default though.
>>what if someone has been paying the mortgage off faster than required with extra cash? Is this a good thing to do? Does it depend on the market?
it means you will save money on the total interest paid on the loan. paying off the mortgage sooner then later is generally a good idea if the interest on the mortgage is greater than the rate of return on an investment. example a index fund returns 8% a year while your mortgage payments are 4%. you are better off investing any extra money than paying off the mortgage. but if the returns on the market are 2% and your mortgage rate is 4% it's better to pay down you mortgage than investing it.
Adam Bailey
>mortgage is interest only >higher payments on mature loans >negative equity >over capitalised Please explain these, I'm a brainlet.
Ryder Gomez
Hey Dick nose, people live in these houses. They won't sell just because the market plummets.
The worst it will get is that there will be more foreclosures and these will make up the stock being traded.
No one else will sell unless forced.
Hey dooms dayer, last time I looked the people if Ireland and Iceland still live in houses and eat food and drink.
Don't push your apocalypse bullshit. Not many will fall for it.
James Diaz
>example a index fund returns 8% a year while your mortgage payments are 4%. you are better off investing any extra money than paying off the mortgage. Not necessarily true after you account for the fact that you get taxed on your 8% return and then adjust it for inflation too
Matthew Gray
New laws came out in China earlier this year. Basically mainlanders are no longer allowed to own more than 2 properties (In China and Overseas).
The Mainland Authorities are also cracking very heavily, which is why a fuckton of Chink overseas real estate corporations bailed early. This coupled with new Overseas restrictions on real estate purchase in Australia/NZ/USA/EU would ensure that there will be no one propping up this market when crisis hits
Chase Brooks
depending on you jurisdiction canada and the USA have favourable taxation rates on capital gains. 8% return + dividends are more then enough to counter the rate of inflation. and given the interest rates of the last 10 years, it is very favourable to leverage your mortgage into the stock market.
Lincoln Moore
I understand this better now, thanks.
It was just meant to be a general question, think you answered it quite well as I feel I understand it better now, thanks. The second part of your post makes sense to me also, thanks.
One more question: >eat into equity What does this mean? Does it have any effect if the person has low/negative equity?
Elijah Taylor
Even if we assume you're only paying 30% tax overall, that brings your net return from 8% down to 5.6% Even if inflation is only at 2% (its between 2 and 3) this means that your net inflation adjusted return is only 3.6% i.e. you would have been better off paying down your mortgage. This of course assumes no CGT discount on the investment, but even then with a more accurate rate of inflation it probably still holds true
Tyler Foster
So you can't live without cash. Interesting how far crypto has come.
Mason Fisher
>doomsday/apocalypse scenario Yeah, it seems like this pretty much never happens.
Alexander Long
>leverage your mortgage into the stock market. Agreed. But direct execss cash flow to investments instead of paying down the mortgage? Probably not a good idea
Ironically they were the only reason prices were rising so now they've taken their money out the prices are falling and they won't want to buy into a falling asset. Look for them to invest in other anglospheres.
Deceased estate Divorce Moving Default on mortgage
Its not some calculated option people make optionally, lol. the fuck is this post.
Samuel Wilson
>>What does this mean? Does it have any effect if the person has low/negative equity?
example. your property is 1m in assessed value. you have 200k in a mortgage(debt) and 800k in equity. if the property value drops to 500k you will still have 200k in debt but your equity gets reduced to 300k from the 800k.
>>Even if we assume you're only paying 30% tax overall, that brings your net return from 8% down to 5.6%
5.6% not including dividend gains or any tax shelter schemes available to you. 5.6% still being less than the current interest rates. inflation also affects the mortgage interest rates as well. it erodes the amount you owe.
Nathaniel Rivera
With the advent of washable money and crypto, will these restrictions have any effect? Maybe if the Chinese Government brutally punished offenders to make an example, but even then..
Blake Moore
china is a very small player in the NYC market. they are far more prevalent in California. China represents about 17% of the Californian market and less then 5% of the national market. the real reason why there has been a run up of the market is because the vast majority of purchases are american.
Colton Williams
and exactly what percentage of the market do these circumstances cover?
Chase Sanders
LOL, There is not one documented case of it happening.
Isaiah Sullivan
>inflation also affects the mortgage interest rates as well. it erodes the amount you owe. Effect of inflation in this situation is not as pronounced as interest on mortgages is front loaded. On a 30 yr mortgage making minimum repayment it generally takes about 15 years for principal repayments to even equal interest repayments.
Parker Fisher
Ahh I see, and I hate ask such a beginner question, but is equity what people use as a kind of proof-of-payment to take out further loans up to (or around) their equity value? Does equity have any other value? Can you "withdraw" from your equity?
Parker Perry
is generally a good idea for people who do not have access to large loans. mortgages are some of the cheapest loans available to the typical person.
Chase Sanders
so i just bought a house for 600k in clayton, victoria. 4BR, double car garage, brand new build nbn etc. real nice place
feels like i bought the top. how fucked am i? i used a 200k deposit. minimum repayments with principle are around $450 pw, with a combined income of $3k a week
Andrew Baker
how much value is property set to lose? hopefully ive got enough capital by then to buy up
Jason Brown
According JL Warren & the other Chinese overseas investment sites, they are hoardin' gold until the whole thing (GFC) blows over. They are timin' the bottom so to speak
Nathaniel Sanchez
you can withdraw from your equity as long as you are within the banks guidelines. these are typically called HELOCS. you can leverage your equity into other things provided the bank allows it.
the effect of inflation is consistent regardless of the term of the loan. 2% inflation per year effects you the same regardless if it's is 2 year loan or a 30 year loan.
Levi Reed
Crypto already got banned last year. The traceable 'washable' have been made to pay a 'fee' or sorts to ensure compliance. And the 'untraceable' Black Washables are being hunted & used to pay off the Shadow loans
Cooper Adams
Its already worked, lets look at some Chinese popular suburbs in Sydney: Chinatown (Haymarket), Ashfield, Campsie, Chatswood, North Ryde, Hurstville.
