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Mortgage stress has halved - only 2% of homeowners behind on repayments - Genworth; Interest rates have virtually disappeared as a source of mortgage stress
Topic Started: 20 Sep 2014, 12:13 AM (3,084 Views)
Lef-tee
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peter fraser
20 Sep 2014, 12:14 PM
Leftee they are buying, just because you can't see them in the numbers doesn't mean they are not there.

Statistics can hide as much as they reveal.
Yes they are buying but the numbers are uncertain.

In the Eastern states they may not be counted as a FHBer if they buy an existing house as opposed to a new one - but they never bought that many new ones in the past because they were generally too expensive for them, so I can't see why we shouldn't have expected an impact when it was withdrawn. Many write the impact off as statistical when it would actually be quite logical that it is real to at least a certain extent. Certainly, prospective first timers identify high prices as the biggest barrier despite oft made arguments that it is very, very easy for them.

In WA their numbers are very strong but there seems to be more to it than just a continuing grant (as is often argued) with the affordability programme undertaken by the state government.

Yes, the lowest interest rates in half a century have improved mortgage serviceability but they have also spurred investors to bid up the price which helps offset gains made by low interest rates and we can't make borrowing much cheaper than it is now.
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stinkbug
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Lef-tee
20 Sep 2014, 09:52 AM
Somebody better tell first home buyers all this because they don't appear to be responding in significant number and continue to identify high prices as the number one reason for not attempting to enter.

I guess they better dive in now while interest rates are so low - because they can't get much lower, meaning borrowing money can't get much cheaper and investor-driven price rises will sooner or later nullify all the gains made by low interest rates.
If FHBs want to go on strike in the vain hope that housing will be cheaper in the future then great, but I hope they realise that they are contributing to pent up demand that will actually put a floor under prices in high demand areas.
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While it's true that those who win never quit, and those who quit never win, those who never win and never quit are idiots.

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John Frum
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stinkbug
20 Sep 2014, 08:08 PM
If FHBs want to go on strike in the vain hope that housing will be cheaper in the future then great, but I hope they realise that they are contributing to pent up demand that will actually put a floor under prices in high demand areas.
Incorrect, some FHBs are not idiots and see incomes and rents starting to stagnate, money pouring out of our economy, and jobs disappearing due to high wage costs. They realise the old adage 'when you can afford it is always the best time to buy' is built on the assumption that extrapolates the good times to infinity (or at least the next 10-15 years).

Therefore some have just 'given up' on the dream and are resigned to enjoying cheap rents in good locations, and living life with the money they saved from not splurging on a mega mortgage to live in bumfuck.

They're the ones now eating popcorn and watching from the sidelines as Sydney house prices rocket off into a spectacularly ill-timed blow off that will take down the banking system and send thousands into years of crippling debt. They will see prices come down to affordable levels but will hold out for the same reason the greedy c*nts held out from selling on the way up - because they know there'll be further for them to run.

All just part of the cycle....
"It were not best that we should all think alike; it is difference of opinion that makes horse races." - Mark Twain on why he avoids discussing house prices over at MacroBusiness.
"Buy land, they're not making any more of it." - Georgist Land Tax proponent Mark Twain laughing in his grave at humourless idiots like skamy that continually use this quip to justify housing bubbles.
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Ex BP Golly
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stinkbug
20 Sep 2014, 08:08 PM
If FHBs want to go on strike in the vain hope that housing will be cheaper in the future then great, but I hope they realise that they are contributing to pent up demand that will actually put a floor under prices in high demand areas.
Whnever there has been pent up demand in the past there has been a boom in the number of people building their own homes, building illegal dwellings and or additions, living in illegal camps and townships, and huge numbers of people living in the avererage household.

Until I start to see even one of these conditions being met I will call the 'shortage' what it is:

Blatant market manipulation.

Fearmongering.

Dispicable.
WHAT WOULD EDDIE DO? MAAAATE!
Share a cot with Milton?
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noopsy05
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peter fraser
20 Sep 2014, 09:05 AM
True, and a loan of $307,000 is incredibly easy with two reasonable wages coming in.
easy with one if you have a decent job
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Trojan
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Lef-tee
20 Sep 2014, 07:55 PM
Yes they are buying but the numbers are uncertain.

In the Eastern states they may not be counted as a FHBer if they buy an existing house as opposed to a new one - but they never bought that many new ones in the past because they were generally too expensive for them, so I can't see why we shouldn't have expected an impact when it was withdrawn. Many write the impact off as statistical when it would actually be quite logical that it is real to at least a certain extent. Certainly, prospective first timers identify high prices as the biggest barrier despite oft made arguments that it is very, very easy for them.

In WA their numbers are very strong but there seems to be more to it than just a continuing grant (as is often argued) with the affordability programme undertaken by the state government.

Yes, the lowest interest rates in half a century have improved mortgage serviceability but they have also spurred investors to bid up the price which helps offset gains made by low interest rates and we can't make borrowing much cheaper than it is now.
It is exactly because Fhb have never bought new builds in large number (ie most buy existing) which is why the failure to count Fhb buying existing homes now have such a large impact on the stats.
Edited by Trojan, 21 Sep 2014, 02:57 PM.
I put trolls and time wasters on my ignore list so if I don't respond to you, you are probably on it ....
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Drgonzo
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Lef-tee
20 Sep 2014, 07:55 PM
- but they never bought that many new ones in the past because they were generally too expensive for them,
it is a myth that it is more expensive to buy new than existing.
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peter fraser
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Drgonzo
21 Sep 2014, 05:37 PM
it is a myth that it is more expensive to buy new than existing.
Building a home is a two stage project. First there is a contract to buy the land, and then there is a following contract with a builder to construct the dwelling.

FHB's find it difficult to build when they only have a 5% deposit because there is always a certain degree of uncertainty in a building contract. There are often extra costs at the excavation stage and during the construction there are always options that should be taken to improve the end product but put the cost beyond the financial capacity of a FTB who doesn't have equity to fall back on.

The process is made easier for them when house prices are rocketing upwards as the increased value in their block of land then assists them with their deposit. When prices are falling a 5% deposit is quickly lost as the value of the block of land falls.

Whether it makes sense or not to build for a FTB with a 5% deposit depends largely on the market conditions at the time. I think that you will find that when the market is falling FTB's struggle to build house and really only partake fully when the market is strong.
Any expressed market opinion is my own and is not to be taken as financial advice
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stinkbug
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John Frum
21 Sep 2014, 09:31 AM
Incorrect, some FHBs are not idiots and see incomes and rents starting to stagnate, money pouring out of our economy, and jobs disappearing due to high wage costs. They realise the old adage 'when you can afford it is always the best time to buy' is built on the assumption that extrapolates the good times to infinity (or at least the next 10-15 years).

Therefore some have just 'given up' on the dream and are resigned to enjoying cheap rents in good locations, and living life with the money they saved from not splurging on a mega mortgage to live in bumfuck.

They're the ones now eating popcorn and watching from the sidelines as Sydney house prices rocket off into a spectacularly ill-timed blow off that will take down the banking system and send thousands into years of crippling debt. They will see prices come down to affordable levels but will hold out for the same reason the greedy c*nts held out from selling on the way up - because they know there'll be further for them to run.

All just part of the cycle....
As population increases, so does demand, especially when people choose to rent (with their remaining years of working ticking away).

And we're talking more than just Sydney here.
Ex BP Golly
21 Sep 2014, 11:37 AM
Whnever there has been pent up demand in the past there has been a boom in the number of people building their own homes, building illegal dwellings and or additions, living in illegal camps and townships, and huge numbers of people living in the avererage household.

Until I start to see even one of these conditions being met I will call the 'shortage' what it is:

Blatant market manipulation.

Fearmongering.

Dispicable.
Plenty of people living in situtations they would prfer not to. Just because it isn't being reported in everyday media doesn't mean it's not happening.
Edited by stinkbug, 21 Sep 2014, 08:09 PM.
---------------------------------------------------------------

While it's true that those who win never quit, and those who quit never win, those who never win and never quit are idiots.

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Chris
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Veritas
20 Sep 2014, 01:19 AM
FHB loan size at its highest
ever point at $307,400

And yet 35 % have 10% deposit or less.

So a third of FTBs have a deposit of , on average 30k.

Hmmmmm....

Of which a fair portion would be grants. I know quote a few FHB and I don't know a single one who has borrowed under $450k, think about it even the 'affordable' suburbs are now $400k minimum.

I think some of the figures thrown around are just rubbish, you can't have a median in places like Sydney that are 700-800k and then believe FHB are getting properties for $350k it's just nonsensical.
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