I still think we should be doing more on the supply side of things, scrapping existing incentives, shutting down NIMBY-ism and giving FIRB a few firm slaps.
Let me assure you that MP controls have been in place for 3 years and anything they do from here will be window dressing because the RBA and APRA won't want to stuff it up with garbage regulations. What is in place will be formalised to please our dumb politicians and some even dumber journalists.
I predict that within 3 months the MB focus will change from "There are no MP tools in place" to "They are not using MP tools with enough vigour"
Somehow they want high construction activity to replace the jobs lost in mining, and more housing stock, and lower interest rates, and they don't want anyone to be able to get a loan.
I'm not Dr. Watson, but I do agree with his perception of what's going on.
My take is that Glenn wants us to have a world famous 30 years without technical recession and will do anything to get there.
What bothers me about this is that when we finally do have a recession, some cities will essentially be the same place with the same infrastructure as 20 years ago, yet we will be overloaded with an extra couple of million ferals congesting our roads and hogging recourses.
"Enough vigour" being enough to produce a major crash. Nothing less than an economic collapse, and all the attendant misery, will satisfy them.
I would be satisfied if residential property investment ran by the same rules as commercial property does.
65%, higher interest rates, ability for banks to call in loans, etc.
There is no need for MP.
Let me assure you that this isn't one of those shady pyramid schemes that you've been hearing about. No sir, our model is the Trapezoid which guarantees each investor an 800% return within hours. Those who can, do. Those who can't, teach. "It's an itchy blanket, it's designed to remind you how lucky you are"
This.is now sucking 15 billion from the economy every year, that ponzi has got out of hand and is now an extreme hinderance to the economy. Yet only the other day I here how they are making under30's who have lost their job have to wait six months to recieve unemployment benefits, to save something like 1.3 billion over four fucking years. Let people go hungry so some wealthy investor can own another investment property not to mention so the rich foreign investors can buy another ip and let our own starve.
So let's get this straight, we let the less fortunate and less wealthy in our society starve and go without shelter, so the government can save 1.3 billion over four years. Instead of remove negative gearing, and save 60 billion over four years. Who are we helping here and who and we hindering here, helping foreignors to hinder our own. This government should be shot.
Watch the rents collapse even further when they try and scrap this ponzi pumping measure, another reason our property is far more a bubble than the US or euro EVER was, negative gearing.
Negative gearing will end up putting itself out of existance and will will eventually become a dirty word for generations to come.
Do you really believe they will wind back NG on new builds?
Personally I would like things to go back to the way they were 20 years ago but it isn't going to happen.
Our planners are the ones who need their arses kicked. A growing population wouldn't be anywhere near as bad if they put some thought into what they wanted the city to look like once they're done with it.
Interestingly, if the approach taken is not LVR controls, but higher repayment buffers, it will be the approach proposed by Peter Fraser, not David Llewellyn-Smith!
Looks like it.
It makes sense to me. It concentrates on where most of the risk is, which is on ability to service when things change rather than pure LVR.
The truth will set you free. But first, it will piss you off. --Gloria Steinem AREPS™
Australian Prudential Regulation Authority chairman Wayne Byres says "macroprudential" tools are already being applied to banks to cool house prices, but he rules out limiting low-deposit home loans as an additional measure.
Macroprudential policy, or limiting bank lending to housing, is a fundamental part of the APRA arsenal that could see "a gradual turning up of the dial of supervisory intensity and regulatory intensity … as things start to get a bit frothy or exuberant," Mr Byres said on Friday.
APRA is already applying three measures it considers macroprudential tools, which also served to calm hot property markets in 2003-04: verbal warnings about the issue; collecting extra data to observe which banks are lending aggressively; and seeking assurances from bank boards on lending standards.
It has other tools that could still be deployed to respond to investor-driven demand for residential property in Sydney and Melbourne, which the Reserve Bank warned in its Financial Stability Review last month had resulted in "unbalanced" lending. APRA could raise the level of equity capital banks have to hold against mortgages (which it did in 2003). It could also adjust risk weightings on home lending – another way to increase the amount of capital banks have to hold against mortgages – or employ the so-called counter-cyclical capital buffer, a new tool granted to regulators in Basel III that has the same effect.
APRA has provided no indication as to whether increases to capital levels are being considered to respond to this cycle.
But on Friday, the prudential regulator effectively ruled out capping loan-to-valuation ratios, which would make it harder to get a loan with a small deposit, after RBA assistant governor Malcolm Edey said this would adversely impact first home buyers, who are not the source of the rising demand for homes (the RBA has fingered investor-led demand as driving the recent price surge).
With the Reserve Bank worried by fast-rising house prices, but the dollar coming down and the unemployment rate now said to be steady, can a rise in the official interest rate be far off? Yes it can.
On the face of it, last week's revised jobs figures have clarified the picture of how the economy is travelling. The national accounts for the March and June quarters show the economy growing at about its trend rate of 3 per cent over the previous year, which says unemployment should be steady.
And now the jobs figures are telling us the unemployment rate has been much steadier than we were previously told, at about 6 per cent.
If economic growth is back to up at trend, we need only a little more acceleration to get unemployment falling. The Reserve is clearly uncomfortable about keeping interest rates at 50-year lows while rapidly rising house prices tempt an already heavily indebted household sector to add to its debt.
So, surely it's itching to remind us that rates can go up as well as down and, in the process, let some air out of any possible house-price bubble.
Well, in its dreams, perhaps, but not in life. Even if hindsight confirms the latest reading that the economy grew at about trend in 2013-14, the Reserve knows it can't last. Its central forecast of growth averaging just 2.5 per cent in the present financial year is looking safer, maybe even a little high.
The sad fact is that a host of factors are pointing to slower rather than faster growth in 2014-15, implying a resumption of slowly rising unemployment and no scope for even just one upward click in interest rates.
The biggest likely downer is the long-feared sharp fall in mining investment spending. To this you can add weak growth consumer spending, held back by weak growth in employment and unusually low wage rises.
Now add the point made by Saul Eslake, of Bank of America Merrill Lynch, that real income is growing a lot more slowly than production, thanks to mining commodity prices that have been falling since 2011.
Weak growth in income eventually leads to weaker growth in production, which, in turn, is the chief driver of employment. With the Chinese and European economies' prospects looking so poor, it's easy to see our export prices falling even faster than the authorities are forecasting.
Real gross domestic income actually fell in the June quarter, and Eslake sees it falling again in the September quarter.
Apart from the recovery in home building, pretty much the only plus factor going for the economy is the recent fall in the dollar, bringing relief to manufacturers, tourist operators and others.
But measured on the trade-weighted index, the Aussie is back down only to where it was in February, and since then export prices have fallen further, implying the exchange rate is still higher – and thus more contractionary – than it should be.
In other words, the usually strong correlation between the dollar and our terms of trade has yet to be restored. Why hasn't it been in evidence? Because our exchange rate is a relative price, affected not just by what's happening in Oz but also by what's happening in the economy of the country whose currency we're comparing ours with.
The Aussie has stayed too high relative to the greenback not because our interest rates have been too high relative to US rates, as some imagine, but because one of the chief effects of all the Americans' "quantitative easing" has been to push their exchange rate down.
As the US economy strengthens and the end of quantitative easing draws near – and, after that, rises in their official interest rate loom – the greenback has begun going back up. The prospects of it going up a lot further in coming months are good.
That's something to look forward to. But our exchange rate would have to fall a long way before it caused the Reserve to reconsider its judgment that "the most prudent course is likely to be a period of stability in interest rates".
But that still leaves the real risk of low rates fostering further rises in house prices, particularly in Sydney and Melbourne.
Lending curbs are nothing new, says APRA Link APRA has downplayed the significance of macroprudential tools by putting the current investor-lending boom in context.
Speaking at the Finsia annual conference on Friday, APRA chairman Wayne Byres said the newest thing about the current conversation regarding bank regulation is the word ‘macroprudential’.
“Actually a lot of what we are talking about is just normal regulation and regulation responding to circumstances,” Mr Byres said.
Comparing the current market conditions to those during 2003 and 2004, where house prices experienced rapid growth, Mr Byres said APRA had “the same playbook” and has taken the same course of action.
“At that stage we were talking about the issue and the governor of the reserve bank at the time was talking about the issue, we collected some extra data from banks to observe who the outlying guys were or who the more aggressive lenders were,” he said.
“We saw assurances from boards that they were keeping a closer eye on lending standards – all the things we have done thus far in the sense of this side of it.”
APRA then took additional measures to cool the property market by implementing changes to capital requirements and requirements around mortgage insurance.
“We did some other things designed to just temper the incentives and you shouldn’t think of this as some grand new framework and completely new, but I always think much of it is APRA doing its job, which is as things start to get a bit frothy or more exuberant or whatever – the right phrase might be there is a gradual ‘turning up of the dial’ of supervising intensity and regulatory intensity,” Mr Byres said.
“In many respects I suppose it depends on how far you want to take this concept of macroprudential, but at least in the way we are thinking about it, it is conventional supervision, conventional regulation and in very simple terms it is getting people to be prepared for adversity in the future – that is nothing new,” he said.
“People love the term macroprudential because it sounds like it is really important but there is not a lot that is new.”
Any expressed market opinion is my own and is not to be taken as financial advice
Let me assure you that MP controls have been in place for 3 years and anything they do from here will be window dressing because the RBA and APRA won't want to stuff it up with garbage regulations. What is in place will be formalised to please our dumb politicians and some even dumber journalists.
I predict that within 3 months the MB focus will change from "There are no MP tools in place" to "They are not using MP tools with enough vigour"
Somehow they want high construction activity to replace the jobs lost in mining, and more housing stock, and lower interest rates, and they don't want anyone to be able to get a loan.
At least one of those ambitions is contradictory.
What is this..............actually this just may be the dumbest post or most vested one eyed post from a bull on APF ever!
You may as well live under a rock with your mortgage be all end all agenda......you are lost boy.
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