The title of the RBA discussion paper here (by Simon and Stone) is "The Property Ladder after the Financial Crisis: The First Step is a Stretch but Those Who Make It Are Doing OK":
"The results we find in this paper are very much bittersweet. On the one hand, we find that fewer people are making the transition from renters to home owners than prior to the crisis. Given research that links the rise in inequality to changes in home ownership patterns, this could have significant longer-term consequences for the distribution of wealth in Australia. On the other hand, those households that do make the transition are more financially secure than earlier cohorts. So the rise in aggregate and individual debt ratios do not appear to be associated with an increase in household financial vulnerability – at least as far as first home buyers are concerned.
We attribute much of this change to the increase in housing prices and the associated hurdle that deposit requirements represent. While saving a deposit is a stretch, it is also a sign of financial discipline that is associated with fewer subsequent difficulties. Thus, while the first step on the property ladder is more of a stretch than before the crisis, those who do make the step are, on average, better placed to pay off their loans than prior to the crisis."
The title of the RBA discussion paper here (by Simon and Stone) is "The Property Ladder after the Financial Crisis: The First Step is a Stretch but Those Who Make It Are Doing OK":
"The results we find in this paper are very much bittersweet. On the one hand, we find that fewer people are making the transition from renters to home owners than prior to the crisis. Given research that links the rise in inequality to changes in home ownership patterns, this could have significant longer-term consequences for the distribution of wealth in Australia. On the other hand, those households that do make the transition are more financially secure than earlier cohorts. So the rise in aggregate and individual debt ratios do not appear to be associated with an increase in household financial vulnerability – at least as far as first home buyers are concerned.
We attribute much of this change to the increase in housing prices and the associated hurdle that deposit requirements represent. While saving a deposit is a stretch, it is also a sign of financial discipline that is associated with fewer subsequent difficulties. Thus, while the first step on the property ladder is more of a stretch than before the crisis, those who do make the step are, on average, better placed to pay off their loans than prior to the crisis."
That's a conclusion? !!!
WHAT WOULD EDDIE DO? MAAAATE! Share a cot with Milton?
It's smoke and mirrors horse shite, in a nutshell they are saying those homes have a lower debt to price ratio which ignores the fact there has been speculative growth creating a theoretical buffer called 'equity' and the fact they still heavily indebted to income.
We already know 33% of all FHB assisted by mum and dad are struggling so but all others are doing really well?
It's all conjecture until things go south only then will we see what's real and what's rubbish
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