Very interesting article on Kellyville, Sydney.
I cannot believe people would pay almost 1 mill at Kellyville. Was the market THAT OVERHEATED at that time? Or was it all part of those real estate seminar scams?
I need to drive to Seymour Way this week to see the houses for myself.
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http://www.brisbanetimes.com.au/news/national/sydneys-struggle-street/2008/02/09/1202234226918.html
Sydney's struggle street
Maxine Frith | February 10, 2008
WELCOME to the new Struggle Street - the middle class, suburban Sydney road where four houses in a row of six have been repossessed within 10 months of each other.
Seymour Way in Kellyville is a snapshot of how the home loan crisis is moving out of traditional lower-income hot spots and into the McMansions of Middle Australia.
One expert warned that a combination of rising interest rates, stagnating house prices and irresponsible lending had created a "time bomb of loans that is probably going to implode".
First to suffer in Seymour Way was No.48, a four-bedroom, two-bathroom detached property bought for $950,000 in August 2005. It was sold in January 2007 for just $490,000 by First Mortgage Company, which had won a repossession order.
Experts believe that, like the other houses involved, the home was massively overvalued at the time. They say many loans are financed by shonky mortgage brokers who get a commission based on the value of property - so they have a vested interest in ramping up the price.
Second to go was No.42. Again it was bought for $950,000 in September 2005 and sold under order of repossession for $490,000 in March last year - again with the same mortgage company as creditor.
Next door, No.4 was bought in September 2003 for $780,000. Last April it sold for $502,500, with the Perpetual Ltd company as the owner since it had been repossessed.
No.52 became repossession No.4. Bought in September 2003 for $780,000, it was sold last October for $532,000 on the orders of the Rock Building Society.
Shaun Crockford, manager of L.J. Hooker Kellyville, the real-estate agent that oversaw last year's sale of No.42, said: "If we had been the agents [at the time of the 2005 sale] there is no way we would have expected those houses to sell at that price. They were not worth that."
Mr Crockford said some brokers were conducting "drive-by valuations", which were not giving a realistic estimate of what a home was worth.
The consumer campaign group Choice wants to see national regulation of mortgage brokers and an end to the practice of commissions linked to the value of the property.
A draft bill on federal regulation is out to consultation at the moment but does not have the backing of the Finance Brokers Association of Australia, which says it will not stop dodgy brokers and will create too much paperwork to be workable.
Peter White, national president of the FBAA, said: "One of our big issues is that the legislation will create an anti-competitive environment. We are not against national regulation but it has got to be right.
"In any environment, those that want to do the wrong thing will do it - legislation won't stop them," he said.
Another issue is the increase by 26 per cent last year of low-documentation loans that are approved by fringe lenders and mainstream banks. They were designed for self-employed people who did not have pay slips, but they have been increasingly used to approve loans for people on low incomes who cannot repay loans.
I cannot believe people would pay almost 1 mill at Kellyville. Was the market THAT OVERHEATED at that time? Or was it all part of those real estate seminar scams?
I need to drive to Seymour Way this week to see the houses for myself.
________________________________________________
http://www.brisbanetimes.com.au/news/national/sydneys-struggle-street/2008/02/09/1202234226918.html
Sydney's struggle street
Maxine Frith | February 10, 2008
WELCOME to the new Struggle Street - the middle class, suburban Sydney road where four houses in a row of six have been repossessed within 10 months of each other.
Seymour Way in Kellyville is a snapshot of how the home loan crisis is moving out of traditional lower-income hot spots and into the McMansions of Middle Australia.
One expert warned that a combination of rising interest rates, stagnating house prices and irresponsible lending had created a "time bomb of loans that is probably going to implode".
First to suffer in Seymour Way was No.48, a four-bedroom, two-bathroom detached property bought for $950,000 in August 2005. It was sold in January 2007 for just $490,000 by First Mortgage Company, which had won a repossession order.
Experts believe that, like the other houses involved, the home was massively overvalued at the time. They say many loans are financed by shonky mortgage brokers who get a commission based on the value of property - so they have a vested interest in ramping up the price.
Second to go was No.42. Again it was bought for $950,000 in September 2005 and sold under order of repossession for $490,000 in March last year - again with the same mortgage company as creditor.
Next door, No.4 was bought in September 2003 for $780,000. Last April it sold for $502,500, with the Perpetual Ltd company as the owner since it had been repossessed.
No.52 became repossession No.4. Bought in September 2003 for $780,000, it was sold last October for $532,000 on the orders of the Rock Building Society.
Shaun Crockford, manager of L.J. Hooker Kellyville, the real-estate agent that oversaw last year's sale of No.42, said: "If we had been the agents [at the time of the 2005 sale] there is no way we would have expected those houses to sell at that price. They were not worth that."
Mr Crockford said some brokers were conducting "drive-by valuations", which were not giving a realistic estimate of what a home was worth.
The consumer campaign group Choice wants to see national regulation of mortgage brokers and an end to the practice of commissions linked to the value of the property.
A draft bill on federal regulation is out to consultation at the moment but does not have the backing of the Finance Brokers Association of Australia, which says it will not stop dodgy brokers and will create too much paperwork to be workable.
Peter White, national president of the FBAA, said: "One of our big issues is that the legislation will create an anti-competitive environment. We are not against national regulation but it has got to be right.
"In any environment, those that want to do the wrong thing will do it - legislation won't stop them," he said.
Another issue is the increase by 26 per cent last year of low-documentation loans that are approved by fringe lenders and mainstream banks. They were designed for self-employed people who did not have pay slips, but they have been increasingly used to approve loans for people on low incomes who cannot repay loans.
