Is anyone worried by the dropping lending rates?

This doesn't make sense to me. Record houses being sold, record clearance rates.

To me, there's a missing link. Either the very rich are buying(who wouldn't use cash anyway) or we are being bought out by Chinese investors who don't need to get a loan. Something ain't right...
 
This is also puzzling to me.

Anecdotal evidence suggests:
1. Foreign cash, certainly
2. Many investors using SMSF cash to buy property without a loan

and the rest - I just don'k know :eek:
 
Yes I think it is concerning. It means we are selling ourselves out to foreign investors. We fought wars for freedom and unfortunately we now have such lax rules that anyone with a bit of cash can come and purchase some Australian soil. What was the point in millions dying at war if we just end up selling it to the highest bidder. I might have done well from all this but generations to come will now have the pleasure of being indebted for life to pay off a little piece of soil or never own anything wondering whether they will have anything left in retirement. I no longer think we are a great country but one that sold itself to the highest bidder. Australia the great prostitute.
 
Yes I think it is concerning. It means we are selling ourselves out to foreign investors. We fought wars for freedom and unfortunately we now have such lax rules that anyone with a bit of cash can come and purchase some Australian soil. What was the point in millions dying at war if we just end up selling it to the highest bidder. I might have done well from all this but generations to come will now have the pleasure of being indebted for life to pay off a little piece of soil or never own anything wondering whether they will have anything left in retirement. I no longer think we are a great country but one that sold itself to the highest bidder. Australia the great prostitute.

CM - I know where you're coming from, but note that:

1. It's not as if the foreigner can roll the land up and take it away. And they continue to pay council rates on it, pay stamp duty, and (sometimes) let it out to an Australian resident.

2. The seller getting a record price is often an Australian (who is free to use the money to buy more property (maybe even overseas), start a business, retire on the equity and/or put it down the pokies, keeping Australians in jobs)

(Of course most uses for the money would eat capital and reduce Australians' wealth but I doubt that a government policy that restricts what people can do with their money will be popular)

3. Foreign investment isn't an unstoppable tide and Australians can benefit if the foreigners are forced to sell (due to problems at home or a glut in say Gold Coast property or student apartments).

4. If foreign ownership is a worry and Australians genuniely want to do something about it (rather than whinge on talkback radio), they will need to start borrowing less and accept lower consumer spending on homes and doodads. This basically means re-regulating bank lending, removing tax concessions/subsidies for home purchases (eg FHOG, CGT concession for PPOR & negative gearing) and requiring citizenship to buy property.

But how many baby boomers, about to retire, would like $200k shaved off home values or for younger folk who have just bought a place to face negative equity?

In short, the established vested interests in favour of higher property values appear to be more powerful than the less established who would gain if homes were cheaper.

John Howard said that he never got complaints from people whose homes went up by $50k. And the current government is knows this by retaining sham policies like the First Home Owners Unaffordability Grant.
 
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Tony Abbott was questioned on ABC radio by a listener a few weeks ago about overseas investors pricing local buyers out, and his response suggested that he wouldn't be particularly likely to reverse the FIRB changes for overseas investors if he was in power, and he made the point that sellers are entitled to get the best price for their properties.

If foreign investors are buying AND selling to each other... then locals could be in trouble!
 
2. Many investors using SMSF cash to buy property without a loan

Yep, that's what I did.

For a lot of people with SMSF who want to diversify into property, structuring the fund and getting a loan is still too much of a hassle, so they buy cash.

If this trend continues, it may mean that, contrary to widespread opinion, there is a level of disconnect between house price and credit growth.
 
Spiderman

I agree we have gone down a path which will now be almost impossible to turn back from. Most people do not want to see reductions in the value of their properties so any change to a policy which could result in this would lead to backlash at the polls.

My concern is that we are realistically heading towards a situation where the average price of a home could well be $1m in the major capital cities within the next 5 - 10 years. This will result in many people who do not currently owing a home being severely indebted to purchase one or alternatively not being able to afford one. I think that could result in some major social issues in the years to come.

I have nothing against foreign investment per se but I think it should be linked to other investment in Australia. If a foreign investor wishes to purchase a residential property in Australia and they do not live in Australia then there could be laws which also require minimum capital investments in other assets such as businesses or shares before such an application to purchase residential property can be approved. This was the case under the old FIRB rules. This had the advantage of providing business investment plus the benefits you have listed. Taking this away results in increases in prices and increased wealth to current owners but no benefit to those who don't own. If business investment is required as will it assist the economy, resulting in more jobs, higher incomes, higher property prices but incomes to be able to afford these homes.

Just my thoughts.
 
We fought wars for freedom
Freedom? We are a monarchy, subjects of a queen and all her illegitimate derelict descendants.
And any victory in Gallipoli would've been at the benefit of Russia.
What was the point in millions dying at war if we just end up selling it to the highest bidder. Australia the great prostitute.
The point your lifestyle and the resources and control that made it possible.
The majority of the worlds population does'nt have running water, sewer system or a hot water tap.
See how lucky you really are!
 
For a lot of people with SMSF who want to diversify into property, structuring the fund and getting a loan is still too much of a hassle, so they buy cash.

If this trend continues, it may mean that, contrary to widespread opinion, there is a level of disconnect between house price and credit growth.

I agree, and I see first-hand the disconnect happening. Credit growth, according to the figures, is slowing but prices are still rising.
 
The current FIRB rules, if being applied, are fairly onerous compared with many countries - AFAIK anyone can buy property in the UK. The FIRB website says "Foreign persons are prohibited from acquiring established dwellings for investment purposes (that is, they cannot be purchased to be used as a rental or holiday property), irrespective of whether they are temporary residents in Australia or not. Foreign persons who are temporary residents in Australia do not require approval to acquire a second-hand dwelling as their principal place of residence."

FIRB rules have been a driver behind Central Equity running their marketing campaigns in the UK, telling people (correctly) that in Australia they can only buy new and unoccupied dwellings and arguably that's exactly what the rules are meant to do - bring money into the country and increase the housing stock. Unfortunately people (I was one) fail to appreciate that the nice graph showing a steady rise in Melbourne property prices would look very different if it was a graph of CE property values.
 
Tony

The biggest change however was allowing temporary residents to purchase second hand properties. This meant a student studying in Australia could purchase a property with funds provided by the parents. A lot of Singaporeans are using this loophole to purchase second hand property here in Australia. Been to a few of the seminars in Singapore while on business and keep hearing the same things. While your son or daughter is studying in Australia get in quick and buy that property using them as the vehicle. They don't initially buy it as an investment. They buy it for the student to live in and then when the student leaves they rent it out. A nice loophole.

This is straight from the FIRB website

Temporary residents purchasing second hand dwellings

The definition of ‘temporary resident’ includes all foreign persons living in Australia who:

* hold a valid temporary visa which permits them to stay in Australia for a continuous period of more than 12 months (irrespective of how much time is remaining until that visa expires); or
* have submitted an application for permanent residency (PR), and hold a bridging visa which permits them to stay in Australia until their PR application has been finalised

Short-term visitors such as tourists, business people and those here for a medical procedure are not temporary residents.

Foreign students resident in Australia are no longer subject to a $300,000 limit on the value of an established dwelling purchased as their principal place of residence.
 
1. It's not as if the foreigner can roll the land up and take it away. .


What if they buy the exploration rights and mineral rights? The land is taken away!.

That's exactly what Chinese company Shenhua has done in my area. They have bought the exploration rights and mineral rights for about 6 times what the land is worth. [irrigated farm land is worth $10,000 per hectare, dryland farmland is worth $6,000 per hectare, grazing land is worth $3,000 per hectare]. They have bought out the farmers for 2 to 3 times what the land is worth, and they dig it up and export the coal to China.

Around here the coal is the best quality coking coal worth $200 per tonne. [About to go up to $300 per tonne]. Minimum seams of 2 meters depth, but up to 15 metres. Lets use the minumum of 2 metres depth? There is 10,000 square metres in a hectare. Times 2 metres. Equals 20,000 square metres. At 1500 kg per c/m that's 30,000 tonnes per hectare.

30,000 times $200 equals $6 million per hectare.



We really are the stupid country, born dumb, but just born lucky. Why wouldn't Australia just keep this as an asset? It doesn't have to be dug up now, and if left as is would produce food for ever more.

The broke state and federal governments needs cash now and can only see 12 months ahead!.


See ya's.
 
TopCropper

The same thing is happening in Singleton. Leaving big ugly holes in the ground that were once used for farming and leaving the residents with asthma, emphysema and cancers. What a great country.
 
Hi, re foreigners buying for their children. 1st hand real story.

My uncle bought an accommodation in Sydney [cash] for his children who studied here. 3 children used it. He also bought one in London for the son who studied there. In the 80s.

His son bought an apartment for his children about 8 years ago. He sold it last year [just took whatever was offered, it was 30K less than what he paid] to upgrade to a bigger apartment.

The daughter [his sister] married a local boy & they bought a house in the pricey waterfront suburbs of Sydney. Last year, they decided to upgrade and were looking around Rose Bay [in the 4-5M category]

Make of the story what you will.

BTW, one of my parents' ex workers' daughter studied in Melbourne. In the financial crisis, she had to go home because her family couldn't afford to pay for her to finish her education here. Cried her eyes out.

C'est la vie.

KY
 
Another angle about the benefits of foreign investors.

They normally pay cash or use overseas loans so their over heads are a lot less than ours. This allows to them to charge less rent making renting more affordable. You have a win for the aussie seller, a win for the aussie renter and a win for the govt through higher taxes on foreign investors.
 
If property prices continue to increase the way they have until the 2013 federal election (or whenever the election after 2010 is) I think the government will be forced to change the foreign investment rules.

Australians (especially 1st home buyers) will not put up with not being able to afford property. If interest rate rises do not reduce the growth in property prices, most 1st home buyers will be priced out of property. The older generation will be concerned about there kids not being able to afford property and most won't be too worried if property prices fall (only people selling will be).

If the cause of the increase in property prices is caused by foreign investment (at least in Melbourne) we will soon find out as property prices will keep increasing by the rate that it is while interest rates keep rising.

If both major parties don't respond if this happens, expect young people to vote for the greens. They will really become a 3rd force in Australian politics.

I think there's evidence to suggest growth is slowing. While I don't think there will be a crash, I think property prices will remain stagent while interest rates rise. (at least in Melbourne).
 
Another angle about the benefits of foreign investors.

They normally pay cash or use overseas loans so their over heads are a lot less than ours. This allows to them to charge less rent making renting more affordable. You have a win for the aussie seller, a win for the aussie renter and a win for the govt through higher taxes on foreign investors.

Well that strikes me as a load of you know what...

You're suggesting that foreigh landlords are going to altruistically charge less than market rent because they've paid for the property with cash?

I simply don't buy it...
 
Hi all,

Ockhams Razor, the simplest explanation is usually the best....

From the article....

First homebuyers made up 18.1 per cent of loans granted in February compared to 20.5 per cent in January, and down from a record high of 28.5 per cent in May 2009.

Who are the biggest borrowers in terms of percentage of property value? I would contend that it is FHB. Why is the percentage of FHB falling, because they got the bigger FHOG last year, that demand has been sated.

People upgrading houses have probably made a lot of money on their existing property and also paid off a great proportion of their existing loan, therefore they don't need to borrow as much when upgrading.

Add in a bit of the effect in the change of rules for temporary residents and voila, the statistics change exactly how you would expect them to..

bye
 
What if they buy the exploration rights and mineral rights? The land is taken away!.

That's exactly what Chinese company Shenhua has done in my area. They have bought the exploration rights and mineral rights for about 6 times what the land is worth. [irrigated farm land is worth $10,000 per hectare, dryland farmland is worth $6,000 per hectare, grazing land is worth $3,000 per hectare]. They have bought out the farmers for 2 to 3 times what the land is worth, and they dig it up and export the coal to China.

Around here the coal is the best quality coking coal worth $200 per tonne. [About to go up to $300 per tonne]. Minimum seams of 2 meters depth, but up to 15 metres. Lets use the minumum of 2 metres depth? There is 10,000 square metres in a hectare. Times 2 metres. Equals 20,000 square metres. At 1500 kg per c/m that's 30,000 tonnes per hectare.

30,000 times $200 equals $6 million per hectare.



We really are the stupid country, born dumb, but just born lucky. Why wouldn't Australia just keep this as an asset? It doesn't have to be dug up now, and if left as is would produce food for ever more.

The broke state and federal governments needs cash now and can only see 12 months ahead!.


See ya's.

you're in a better position to lobby this out than 99.8% of us here.

maybe that's a side-career move?
 
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