All signs point to a house price hike

[tambourineman]

afraid not:

http://www.abs.gov.au/ausstats/[email protected]/Lookup/1301.0Main+Features1292012

see chart 10.6a - the line 'owner without a mortgage' is on a slippery slope.

the 'renter - private landlord - is on an upward trend.

 

[geoffw]

afraid not:

http://www.abs.gov.au/ausstats/[email protected]/Lookup/1301.0Main+Features1292012

see chart 10.6a - the line 'owner without a mortgage' is on a slippery slope.

the 'renter - private landlord - is on an upward trend.

The owner with a mortgage has gone up while the owner without a mortgage has gone down.

The renter private landlord has gone up while government tenants have gone down.

The proportion of owner occupied private dwellings has gone from 71.4% to 69.8% since 1966. 1.6% drop in nearly 50 years is not hugely significant in terms of the topic of discussion here.

 

[willair]

then the proportion of the population impacted by a decision to wind back ng concessions would be less and it would be less controversial for the government.

The only question to ask is who is it going to hurt,i myself i don't think any government will ever wind back "NG" that within itself is one of the engine rooms that runs Australia,and as only a very small % of title holders need to sell then that cuts the numbers even further and with a steadily improving stock market who knows..

 

[Deltaberry]

Wind back negative gearing? Happy for that to happen if we wind back stamp duty also. Watch house prices boom, especially high quality positive cashflow inner city ones.

 

[Aaron_C]

Wind back negative gearing? Happy for that to happen if we wind back stamp duty also. Watch house prices boom, especially high quality positive cashflow inner city ones.

Good thing I got a few of those. Bring it on.

 

[Aouta]

How "far" up can house prices even go? Can it continue to outstrip increases in wages?

Does anyone think longer term mortgages or higher LVR are going to be the norm in the future to support higher property prices?

 

[zed_kid]

How "far" up can house prices even go? Can it continue to outstrip increases in wages?

Does anyone think longer term mortgages or higher LVR are going to be the norm in the future to support higher property prices?

how far can credit expansion go? why do people think house prices are tied to wages?

yes, I think that's the future, also generational loans

 

[tambourineman]

The only question to ask is who is it going to hurt,i myself i don't think any government will ever wind back "NG" that within itself is one of the engine rooms that runs Australia,and as only a very small % of title holders need to sell then that cuts the numbers even further and with a steadily improving stock market who knows..

Thanks , that made no sense at all

 

[oc1]

how far can credit expansion go? why do people think house prices are tied to wages?

yes, I think that's the future, also generational loans

Finally....someone gets it. It's how creative financiers get especially towards the end of the next cycle that will determine how high prices go. Credit expansion has a much greater effect than wage increases.

Oscar

 

[Ausprop]

how far can credit expansion go? why do people think house prices are tied to wages?

yes, I think that's the future, also generational loans

how does a generational loan help? that is for loan term, not loan amount.

 

[lyndon01]

I assume that if you have longer to pay the loan off you can increase the amount as the monthly repayments are smaller?

 

[zed_kid]

I assume that if you have longer to pay the loan off you can increase the amount as the monthly repayments are smaller?

Yeah that’s what I was getting at. Imagine if an IO loan was transferable to your kids.

 

[Ausprop]

I assume that if you have longer to pay the loan off you can increase the amount as the monthly repayments are smaller?

yes but the monthly amount can never be less than the interest. unless you get a new product that starts to capitalise the interest as well... hard to see that working for any lender but never say never. It's not that far removed from a reverse mortgage, however they basically eat equity, whereas your typical new loan has none

 

[zed_kid]

yes but the monthly amount can never be less than the interest. unless you get a new product that starts to capitalise the interest as well... hard to see that working for any lender but never say never. It's not that far removed from a reverse mortgage, however they basically eat equity, whereas your typical new loan has none

Ahh I see what you mean. But aren’t P&I loans more popular with PPOR buyers? And these are the people that really drive the market, not investors, investors will fall off if the numbers don’t stack up. At least that’s how it works in my head

 

[Brady]

Ahh I see what you mean. But aren’t P&I loans more popular with PPOR buyers? And these are the people that really drive the market, not investors, investors will fall off if the numbers don’t stack up. At least that’s how it works in my head

Longer loan terms means that can borrow more.

Most banks will forget the IO and look at the P&I over the contracted term...

If the loan term is more then the P&I is less therefor borrow more, this is were I see credit going.

 

[geoffw]

Longer loan terms means that can borrow more.

Most banks will forget the IO and look at the P&I over the contracted term...

If the loan term is more then the P&I is less therefor borrow more, this is were I see credit going.

A P&I loan at 6% on $1,000,000 over 25 years will mean a monthly payment of $6443. A 50 year loan will mean a payment of $5264. A 20% reduction in payments in return for a doubling in the term. Perhaps not really worth it.

 

[Ausprop]

Longer loan terms means that can borrow more.

Most banks will forget the IO and look at the P&I over the contracted term...

If the loan term is more then the P&I is less therefor borrow more, this is were I see credit going.

the more I think about it, the more a partially capitalised IO model would work - a low cost funder with cheap overseas money, half the cream on top for operating costs and the other half deferred income. No end to the loan term. (may want to cap it to 120% LVR or 2 generations??)

responsible lending criteria would be the killer

 

[plusnq]

the more I think about it, the more a partially capitalised IO model would work - a low cost funder with cheap overseas money, half the cream on top for operating costs and the other half deferred income. No end to the loan term. (may want to cap it to 120% LVR or 2 generations??)

responsible lending criteria would be the killer

Exchange rate is the killer here. A lot of farmers borrowed in Swiss francs in the 1980s only to have the falling exchange rate increase the loan size beyond their capacity to service it. Perhaps combined with an AUD$ put it might be possible. Some historical reference here ;


http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id:"media/tvprog/VR200"

Cheers

Shane

 

[Brady]

A P&I loan at 6% on $1,000,000 over 25 years will mean a monthly payment of $6443. A 50 year loan will mean a payment of $5264. A 20% reduction in payments in return for a doubling in the term. Perhaps not really worth it.

Agreed that it doesn't change it a whole lot, but the decrease in repayment p/m would increase overall serviceability... which could in turn see purchasing for higher amount.