What would be the effect of an LVR Cap ?

[Aaron_C]

20% market wide is very strong. It means select properties - usually well located ones - will probably come close to doubling.

I've seen a few of em. Mine's doubled in 2 years.

 

[truong]

I didn't see that prediction . Can you link to it ?

20 % increase isn't that much when the market is moving strongly . I've seen it do that in each cycle I've been involved with , and I've seen it double in under 2 years in the late 80's .

I'm personally expecting ( and hoping ) it will do that . I've got a target of around 20 % and then we sell our current PPOR , and pay off the new one , weekender and some debt . Hopefully by next spring ...

Cliff

Look here. In best case scenario Sydney may even increase by 30%!

 

[Deltaberry]

I've seen a few of em. Mine's doubled in 2 years.

Another lazy ten or so million.

 

[handyandy]

I don't get why, whenever RE prices go up in short sharp bursts(which is what they do historically) that they start calling "bubble"

Sydney for example had its last boom ending in 2003. Nothing much happened then until 2009. It has only been the last 8-9 months since the RBA dropped IRs in Dec 2012, that the market has really started moving significantly again.

My personal view is that the free market will sort it out without intervention.

If they did cap LVRs at say 80% it would hurt:
1. FHBs
2. Very aggressive investors - although many investors who build large portfolios, do have conservative LVRs anyway.
3. MI companies - not that I have too much sympathy for them.

The main reason that I see the Government wanting to cap LVR's is because they have lost any ability to control the market via interest rates.

Better to upset a few investors and first home buyers then the mass of home owners with an increasing interest rate which if it was increase would hurt any economic recovery.

My opinion is bring on the capping of LVR's. Will have no effect re my situation and could enhance it by

Increasing rental returns.
Eliminating those investors that pump up the market on the never never.
Allow a saner approach to investing rather than having property price based on the current interest rate.
Eventually ways will be found to avoid the cap but in the mean time you can buy at your leisure.
​

When we started investing this was the situation and as a buyer it was fantastic. You could pick and choose your properties with great returns.

Cheers