Somersoft's Official Start of the New Property Cycle Indicator

[boomtown]

'The latest wave of posters seems to be new players on their way to imploding. It will take awhile for the market to digest that.'

I've been an investor 10yr+ though more seriously only in the last 6yrs. Only a new poster though. So am I doomed to implode or do I herald the upswing? Knew I should have posted sooner and improved all our CG.....

Surely the exception that proves the rule!

 

[james_w]

Interest rates no cost to hold $0 in many areas

rents above interest rates well above in riskier areas...

lots happening around QLD

interesting note take a look how many viewers are on the where to buy section

in the past I noticed mostly views on Innovative techniques

and adding value while things were'n't as good as they look now.

 

[BayView]

It might be the bottom and all that, but no-one has mentioned the Bank's lending goalposts yet...the rates might be lower but ya's still got to qualify for a loan....are they starting to give the stuff away again? Doubt it.

A lot of you blokes/chicks here might qualify for lending, but you aren't the average masses out there with little financial education other than how to find a bargain on ebay, or sign on the line for the 50 months interest free deal at HN.

Pretty hard to have another upswing if no-one can get lending.

 

[Aaron_C]

It might be the bottom and all that, but no-one has mentioned the Bank's lending goalposts yet...the rates might be lower but ya's still got to qualify for a loan....are they starting to give the stuff away again? Doubt it.

A lot of you blokes/chicks here might qualify for lending, but you aren't the average masses out there with little financial education other than how to find a bargain on ebay, or sign on the line for the 50 months interest free deal at HN.

Pretty hard to have another upswing if no-one can get lending.

Yeah you're right they are becoming a pain in the *** to deal with. But hopefully things get better from here.

 

[CharlesNSW]

I'm one of the new members and I hope the up cycle does not start for several more months while I'm looking to buy, but really, who knows? Calling the bottom is notoriously hard. Sentiment seems to be picking up though in some areas while doom and gloom stories are becoming quite prevalent in the media.

 

[IFBB]

Have to agree with Bayview on this one. Sentiments around me seem to be that its still unaffordable to enter the market for most, and that finance is still very difficult to get.

 

[Jamie M]

finance is still very difficult to get.

I wouldn't say it's difficult - if you've got "genuine" savings or equity, can service the loan and don't have anything adverse on your credit file (or too many hits) then it's not that difficult. I haven't seen many declines in recent times - and banks seem like they want to do business. I'm only speaking from my perspective though - others might feel different.

Cheers

Jamie

 

[china]

I'm one of the new members and I hope the up cycle does not start for several more months while I'm looking to buy, but really, who knows? Calling the bottom is notoriously hard. Sentiment seems to be picking up though in some areas while doom and gloom stories are becoming quite prevalent in the media.

I think doom and gloom is all media beat up. The Australian economy is still exceptionally strong. I note that restaurants are still full at night. In fact, walking around Erina Fair on the central coast, nsw, I believe that the restaurants are busier than ever before. If the economy was poor, you would think that dining out which is discretionary spending, would be the first to go. Average property prices on Sydney's north shore is still about 1.4mil for an average suburban house but there are still plenty of buyers. So overall, I think that the average aussie is not battling but doing very well.

 

[Rolf Latham]

Pretty hard to have another upswing if no-one can get lending.

reasonable income, clean credit, 5 % savings, and a 95 % lend.............

aint too tough I think

ta
rolf

 

[Sylvester]

reasonable income, clean credit, 5 % savings, and a 95 % lend.............

20,000 Qld, 15,000 NSW, and 4200 Victorian public servants would be curious to know if lenders considered their income reasonable.

And just wait til the Coalition take the razor to the Fed public service.

 

[shuggy]

reasonable income, clean credit, 5 % savings, and a 95 % lend

95% lend on val can differ detrimentally to contract price in current market as witnessed by those who bought OTP

 

[Aaron_C]

95% lend on val can differ detrimentally to contract price in current market as witnessed by those who bought OTP

95% lend isn't easy. Rolf makes it sound easy

 

[shuggy]

95% lend isn't easy. Rolf makes it sound easy

Yes i think rolf is stretching the truth when he says a 95% lend isnt hard to get but i guess thats the job description

 

[BayView]

reasonable income, clean credit, 5 % savings, and a 95 % lend.............

aint too tough I think

ta
rolf

What's a "reasonable income"? To my knowledge, FHB's as a group aren't big earners - our crop of 20-something high-enders here on SS being the very big minority.

Does the 5% include the FHOG?

If it does; then yes, I'd agree.

Say the average FHB is only spending $300k plus stamps etc.

Yes; I believe in Santa Claus too.

Final whack is approx $315 based on this. Bank will lend 95%, the borrower needs to tip in the stamps.

Their 5% (without FHOG) is gunna be around $30k.

Maybe I'm out of touch, but how many FHB's have got that sitting in their ING account or under the futon?

 

[Aaron_C]

What's a "reasonable income"? To my knowledge, FHB's as a group aren't big earners - our crop of 20-something high-enders here on SS being the very big minority.

He means a reasonable income relative to the amount being borrowed.

 

[Rolf Latham]

95% lend isn't easy. Rolf makes it sound easy

I beg to differ.

Stick to the SIMPLY defined credit rules required for the 95 % lends, max 500 k purchase, and dont introduce stoopid addons like OTP, security in birdsville, high external gearing, telco and other defaults etc and there is no reason why the average FHOG punter cant get a 95 % lend.

Where folks get into issues is most often they want to push the serviceability envelope at the same time as the LVR envelope, and drop in with a bunch of GE interest free money, a salary packaged broom, and a sizeable HECS slug. Yes, that profile is hard, and if it dont fit, it doesnt fit.

Now if as a broker, one makes a living from taking on and pressing on with "hard case" 95 %ers, that doesnt mean 95s are hard to get, it just means we need to chase for a client that suits the tougher credit requirements.

I will always look to stick with a 90 +cap, because the LMI premium and end available fund mix is usually better, but where there is no option and a 95 er is the only way, and it meets criteria.............

ta
rolf

 

[Rolf Latham]

What's a "reasonable income"? To my knowledge, FHB's as a group aren't big earners - our crop of 20-something high-enders here on SS being the very big minority.

Does the 5% include the FHOG?

If it does; then yes, I'd agree.

Say the average FHB is only spending $300k plus stamps etc.

Yes; I believe in Santa Claus too.

Final whack is approx $315 based on this. Bank will lend 95%, the borrower needs to tip in the stamps.

Their 5% (without FHOG) is gunna be around $30k.

Maybe I'm out of touch, but how many FHB's have got that sitting in their ING account or under the futon?

Hiya

Lets back the truck up a little : )

I replied to the statement made

Pretty hard to have another upswing if no-one can get lending.


The statements you make above were similar 10 20 or 30 years ago. In my view, a 95% lend is more achievable today, than in the 1990s.


While many would argue that house price to income ratio is a bunch higher, first home buyer territory has been moving further out from capital cities since the 1970s.

Finally, no the 5 % doesnt include the FHOG, and yes, I would expect borrowers to have funds to complete the balance of the transaction.

My point on the 5 % was that this is a general credit condition, not that a buyer can get in with 5 % ( though in QLD and WA they go close)

ta
rolf

 

[Rolf Latham]

Yes i think rolf is stretching the truth when he says a 95% lend isnt hard to get but i guess thats the job description

No harder than meeting the requirements for a drivers licence.

Meet the requirements, get the loan, simple.

Dont meet the requirements, dont bother applying, simple


BTW, 1 in 16 of ours are above 90 %, and they are actually simpler to get through than many of our commercial, trust, half baked builds, edge of the envelope serviceability or equity positions.

ta
rolf

 

[pete_w]

Rates are low
Rents are rising
IMO sellers are being a bit more flexible than maybe a year or 2 ago

Affordability is good:

From here: http://christopherjoye.blogspot.com.au/2012/06/australias-house-price-to-income-ratio.html

 

[pete_w]

also starts are way down http://www.abs.gov.au/ausstats/[email protected]/mf/8750.0

DWELLING UNITS COMMENCED
- The trend estimate for the total number of dwelling units commenced fell 7.5% in the March quarter 2012 following a fall of 7.2% in the December quarter 2011.
- The seasonally adjusted estimate for the total number of dwelling units commenced fell 12.6% in the March quarter following a fall of 4.5% in the December quarter.


NEW PRIVATE SECTOR HOUSES
- The trend estimate for new private sector house commencements fell 4.7% in the March quarter following a fall of 3.7% in the December quarter.
- The seasonally adjusted estimate for new private sector house commencements fell 7.8% in the March quarter following a fall of 2.6% in the December quarter.

NEW PRIVATE SECTOR OTHER RESIDENTIAL BUILDING
- The trend estimate for new private sector other residential building commencements fell 12.1% in the March quarter following a fall of 11.7% in the December quarter.
- The seasonally adjusted estimate for new private sector other residential building fell 21.6% in the March quarter following a fall of 6.3% in the December quarter.