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Pronouncements like this come out all the time in Australia, for at least the last 7 years. This is an example of a headline that can't lose - you are telling p

by Gatsky 9y ago

Pronouncements like this come out all the time in Australia, for at least the last 7 years. This is an example of a headline that can't lose - you are telling people that can't afford a house what they want to hear, at the same time spreading fear amongst those that do own property, and eventually you'll be 'right'. The problem primarily exists in Sydney and Melbourne. Melbourne in particular is experiencing high population growth, and the city is already sprawling, without the ability to dramatically increase housing density around the central city. Growth in land prices is likely to continue for a while because of this, perhaps not at the same high rate. Apartment prices are more at risk. The ridiculous price growth in property over the last 10 years has created many asset rich baby boomers, who will continue to invest in property and transfer wealth to their children. It certainly is nothing like the sub prime loan crisis - Australian banks have remained quite selective in giving out home loans.

alfiedotwtf 9y ago
No. I've had banks throw money at me... to the point where he knew I couldn't extend myself to afford repayments, so he bumped my rental's rent to above market prices in order to approve the loan! I've heard this confirmed from others too. Gobsmacked... lucky I walked away :/
stephen_g 9y ago
There are some analysts and economists I've read who are looking at the situation and warning that there is a lot more fraudulent lending than most would think. On an anecdotal level I've also heard more than a few people say they it was hinted by banks that they could put a bigger number in the 'income' box and borrow more money. On that, it will be interesting what would come out if a future royal commission into the banking sector happens. But even if not, it wouldn't matter. You can have the best capital adequacy in the world, and have only lent to people with rock solid ability to service their loans - but you have a real problem if there's a drop in prices and you have hundreds of thousands of people with negative equity on once-million dollar assets.
- a_bonobo 9y ago
  >On an anecdotal level I've also heard more than a few people say they it was hinted by banks that they could put a bigger number in the 'income' box and borrow more money. There is at least one survey showing that liar loans are common in Australia: https://www.domain.com.au/news/australian-housing-market-built-on-500-billion-of-liar-loans-ubs-20170911-gyf32l/ https://www.domain.com.au/news/australian-housing-market-bui... About 500bn mortgages are based on inaccurate/false information, 1,100bn are 'correct'. Note that these numbers are estimates because they are based on surveys, Australia's banking system does not need to check this. Liar loans were a big factor in the US' started financial crisis: https://www.nytimes.com/2015/02/13/upshot/how-mortgage-fraud-made-the-financial-crisis-worse.html?_r=0 https://www.nytimes.com/2015/02/13/upshot/how-mortgage-fraud...
sqldba 9y ago
Australian here - I agree. HN must realise that this story gets trotted out basically ever week on prime time TV. And it's true that some people have been really stupid financing multiple properties off of each other and trying to live off of rentals then having it all fall down. But that's hardly more than a tiny minority of idiots. Furthermore the Australian property market really has at least two completely different levels. You've got Sydney with multi-million dollar hovels. And then you've got pretty much the rest of the country which is reasonably priced. There might be a third one which is "CBD apartments" which are also crazily high priced - but if you live there you're an idiot too. Guess where most of the media is? Guess where most of the focus on pricing is? Yes... it's Sydney. Now it's true our houses are relatively expensive. I watch some American shows where they're house-hunting and get pretty much mansions for 1/4 of the price of a normal house here, but, I suspect those are in semi-remote places. But is it a party? Not really. Is it over? Not by a long shot. You can't trust any of this news. Of course if you're buying a house way beyond your budget, or buying multiple houses, you're an idiot and get what you deserve. Also there's always the risk you do everything right but then lose your job, run out of savings, and can't make repayments - but we're all in that position.
- grogenaut 9y ago
  What is "CBD apartments"? It just turns up a development in the Big Easy for me when I search it. Edit: Not sure why an honest question after a google gets a down vote.
  - dalfonso 9y ago
    I’m American but my guess is central business district apartments AKA “downtown” apartments.
    - grogenaut 9y ago
      aah that makes sense. thanks.
  - simonswords82 9y ago
    Digging up my school geography from memory I think it means Central Business Distrct?
1897325423 9y ago
>Pronouncements like this come out all the time in Australia, for at least the last 7 years. This is an example of a headline that can't lose - you are telling people that can't afford a house what they want to hear, at the same time spreading fear amongst those that do own property, and eventually you'll be 'right'. Well no, it is true. A shock to the economy will obviously create a major effect in high-cost structure societies compared to low cost structure societies. That is what I like about some places like China. Here in Australia, people just think "well my wage pays for it so who cares". They don't see how it exposes you when you suddenly don't get the wage or when you want to do something other than get paid a wage. What is not true is that this is some kind of bubble due to house prices and wages being out of sync. In reality, house prices can continue to rise even if wages don't rise simply because the definition of a house is not a constant. A house becomes a small house, becomes an apartment. You can keep creating affordable housing simply by increasing density. >The problem primarily exists in Sydney and Melbourne. and Brisbane and surrounding areas, which encompasses most of Australia's population. >who will continue to invest in property and transfer wealth to their children which creates a massive divide.
LoonyBalloony 9y ago
"This is an example of a headline that can't lose" News to sad to fail? Because no one can ignore bad news forever...

by Gatsky 9y ago

alfiedotwtf 9y ago

No. I've had banks throw money at me... to the point where he knew I couldn't extend myself to afford repayments, so he bumped my rental's rent to above market prices in order to approve the loan! I've heard this confirmed from others too. Gobsmacked... lucky I walked away :/

stephen_g 9y ago

There are some analysts and economists I've read who are looking at the situation and warning that there is a lot more fraudulent lending than most would think. On an anecdotal level I've also heard more than a few people say they it was hinted by banks that they could put a bigger number in the 'income' box and borrow more money. On that, it will be interesting what would come out if a future royal commission into the banking sector happens. But even if not, it wouldn't matter. You can have the best capital adequacy in the world, and have only lent to people with rock solid ability to service their loans - but you have a real problem if there's a drop in prices and you have hundreds of thousands of people with negative equity on once-million dollar assets.

a_bonobo 9y ago
>On an anecdotal level I've also heard more than a few people say they it was hinted by banks that they could put a bigger number in the 'income' box and borrow more money. There is at least one survey showing that liar loans are common in Australia: https://www.domain.com.au/news/australian-housing-market-built-on-500-billion-of-liar-loans-ubs-20170911-gyf32l/ https://www.domain.com.au/news/australian-housing-market-bui... About 500bn mortgages are based on inaccurate/false information, 1,100bn are 'correct'. Note that these numbers are estimates because they are based on surveys, Australia's banking system does not need to check this. Liar loans were a big factor in the US' started financial crisis: https://www.nytimes.com/2015/02/13/upshot/how-mortgage-fraud-made-the-financial-crisis-worse.html?_r=0 https://www.nytimes.com/2015/02/13/upshot/how-mortgage-fraud...

sqldba 9y ago

Australian here - I agree. HN must realise that this story gets trotted out basically ever week on prime time TV. And it's true that some people have been really stupid financing multiple properties off of each other and trying to live off of rentals then having it all fall down. But that's hardly more than a tiny minority of idiots. Furthermore the Australian property market really has at least two completely different levels. You've got Sydney with multi-million dollar hovels. And then you've got pretty much the rest of the country which is reasonably priced. There might be a third one which is "CBD apartments" which are also crazily high priced - but if you live there you're an idiot too. Guess where most of the media is? Guess where most of the focus on pricing is? Yes... it's Sydney. Now it's true our houses are relatively expensive. I watch some American shows where they're house-hunting and get pretty much mansions for 1/4 of the price of a normal house here, but, I suspect those are in semi-remote places. But is it a party? Not really. Is it over? Not by a long shot. You can't trust any of this news. Of course if you're buying a house way beyond your budget, or buying multiple houses, you're an idiot and get what you deserve. Also there's always the risk you do everything right but then lose your job, run out of savings, and can't make repayments - but we're all in that position.

grogenaut 9y ago
What is "CBD apartments"? It just turns up a development in the Big Easy for me when I search it. Edit: Not sure why an honest question after a google gets a down vote.
- dalfonso 9y ago
  I’m American but my guess is central business district apartments AKA “downtown” apartments.
  - grogenaut 9y ago
    aah that makes sense. thanks.
- simonswords82 9y ago
  Digging up my school geography from memory I think it means Central Business Distrct?

1897325423 9y ago

>Pronouncements like this come out all the time in Australia, for at least the last 7 years. This is an example of a headline that can't lose - you are telling people that can't afford a house what they want to hear, at the same time spreading fear amongst those that do own property, and eventually you'll be 'right'. Well no, it is true. A shock to the economy will obviously create a major effect in high-cost structure societies compared to low cost structure societies. That is what I like about some places like China. Here in Australia, people just think "well my wage pays for it so who cares". They don't see how it exposes you when you suddenly don't get the wage or when you want to do something other than get paid a wage. What is not true is that this is some kind of bubble due to house prices and wages being out of sync. In reality, house prices can continue to rise even if wages don't rise simply because the definition of a house is not a constant. A house becomes a small house, becomes an apartment. You can keep creating affordable housing simply by increasing density. >The problem primarily exists in Sydney and Melbourne. and Brisbane and surrounding areas, which encompasses most of Australia's population. >who will continue to invest in property and transfer wealth to their children which creates a massive divide.

LoonyBalloony 9y ago

"This is an example of a headline that can't lose" News to sad to fail? Because no one can ignore bad news forever...