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S&P cites risk of "sharp correction in property prices"; 25 Australian banks put on credit watch.
Topic Started: 1 Nov 2016, 03:04 PM (2,208 Views)
Ex BP Golly
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S&P has put 25 Australian financial institutions on a negative credit outlook, largely due to growing risks from the housing sector.

The negative outlook ranges from larger institutions - such as AMP Bank, Macquarie, Bendigo and Adelaide, and Bank of Queensland - through to smaller credit unions, building societies and mutual banks......

The ratings agency pointed to a rise in Australia's private sector debt-to-GDP ratio from 118 per cent in 2012 to 139 per cent in June 2016 as a key concern, especially since inflation-adjusted home prices have risen at 5.3 per cent per annum.

"Consequently, we believe the risks of a sharp correction in property prices could increase and, if that were to occur, credit losses incurred by all financial institutions operating in Australia are likely to be significantly greater; with about two-thirds of banks' lending assets secured by residential home loans," S&P warned in the report.....

http://mobile.abc.net.au/news/2016-10-31/credit-outlook-cut-on-raft-of-small-banks-on-housing-worries/7980406?pfmredir=sm

Edited by Ex BP Golly, 1 Nov 2016, 03:57 PM.
WHAT WOULD EDDIE DO? MAAAATE!
Share a cot with Milton?
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Terry
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Ex BP Golly
1 Nov 2016, 03:04 PM
S&P has put 25 Australian financial institutions on a negative credit outlook, largely due to growing risks from the housing sector.

The negative outlook ranges from larger institutions - such as AMP Bank, Macquarie, Bendigo and Adelaide, and Bank of Queensland - through to smaller credit unions, building societies and mutual banks......

The ratings agency pointed to a rise in Australia's private sector debt-to-GDP ratio from 118 per cent in 2012 to 139 per cent in June 2016 as a key concern, especially since inflation-adjusted home prices have risen at 5.3 per cent per annum.

"Consequently, we believe the risks of a sharp correction in property prices could increase and, if that were to occur, credit losses incurred by all financial institutions operating in Australia are likely to be significantly greater; with about two-thirds of banks' lending assets secured by residential home loans," S&P warned in the report.....

http://mobile.abc.net.au/news/2016-10-31/credit-outlook-cut-on-raft-of-small-banks-on-housing-worries/7980406?pfmredir=sm

Where these ratings fall short in terms of understanding the wider impacts on the economy of house price falls on the consumer economy. Even a 5-10% fall nationwide could be devastating. That understanding is in the realm of the unknown. It doesn't get mentioned in the media and the suburbanites are largely unaware of the impacts.
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Rufus
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Terry
1 Nov 2016, 03:40 PM
Even a 5-10% fall nationwide could be devastating.
LOL - it's happened many times and more than 5% to 10%
Take risks - if you win you will become wealthy, if you lose you will become wise
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Terry
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Rufus
1 Nov 2016, 03:55 PM
LOL - it's happened many times and more than 5% to 10%
The magnitude is irrelevant. The impact on consumer behavior is what's important. The greater the impact that perceived wealth has, the greater the potential for behavior to affected. And conceptually it's not that difficult. A perceived loss of 10% of $1 mio is psychologically far greater than 10% of $500k. Anyone who understands shopper behavior will understand how perceived wealth impacts on consumer markets and price levels.
Edited by Terry, 1 Nov 2016, 04:05 PM.
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Mallard
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It's a shame these bellends weren't so analytical in the lead up to the GFC. Their depiction in the Big Short book is awful. Anyone who has a clue won't be working there.
Terry
1 Nov 2016, 04:05 PM
The magnitude is irrelevant. The impact on consumer behavior is what's important. The greater the impact that perceived wealth has, the greater the potential for behavior to affected. And conceptually it's not that difficult. A perceived loss of 10% of $1 mio is psychologically far greater than 10% of $500k. Anyone who understands shopper behavior will understand how perceived wealth impacts on consumer markets and price levels.
f***ing rubbish as usual
Edited by Mallard, 1 Nov 2016, 06:39 PM.
Collecting desperation.
Ex-Bp Golly April 2 2015. "I see with a slight overshoot -70% [fall in Sydney house prices] as being well within possibility"
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Terry
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Mallard
1 Nov 2016, 06:38 PM
It's a shame these bellends weren't so analytical in the lead up to the GFC. Their depiction in the Big Short book is awful. Anyone who has a clue won't be working there.

f***ing rubbish as usual
I believe everyone has a voice, even the angry ones skulking about the suburbs. What is rubbish to you is very important to others, like Daniel Kahneman. Angry man from the suburbs vs Daniel Kahneman. Like a pit bull trying to savage a tractor tire.
Edited by Terry, 1 Nov 2016, 07:57 PM.
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stinkbug
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Mallard
1 Nov 2016, 06:38 PM
It's a shame these bellends weren't so analytical in the lead up to the GFC.
Spot on. They dropped the ball big time.
---------------------------------------------------------------

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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Jon Snow
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Mallard
1 Nov 2016, 06:38 PM
It's a shame these bellends weren't so analytical in the lead up to the GFC. Their depiction in the Big Short book is awful. Anyone who has a clue won't be working there.

Their depiction sounds almost identical to the idiot bulls on this forum .. :hmm:
Speak when you are angry and you will make the best speech you will ever regret.
Ambrose Bierce
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Mallard
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Jon Snow
1 Nov 2016, 09:15 PM
Their depiction sounds almost identical to the idiot bulls on this forum .. :hmm:
They made no money with poor predictions. More of a bear thing eh?
Collecting desperation.
Ex-Bp Golly April 2 2015. "I see with a slight overshoot -70% [fall in Sydney house prices] as being well within possibility"
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Jon Snow
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Mallard
1 Nov 2016, 09:27 PM
They made no money with poor predictions. More of a bear thing eh?
No Dullard, S&P made a motza. Sounds like you might have read the book, but not understood it.

All the cheerleaders of the US property boom (and it's derivative, CDOs) were saying "there is no risk" , "property has never gone down nationwide simultaneously", "employment is booming" , "net wealth has never been higher"!

Sound familiar Dullard?

Speak when you are angry and you will make the best speech you will ever regret.
Ambrose Bierce
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