Yes, and this is what we are seeing at the moment, with the high-end suburbs surging ahead (which is how the booms usually begin). However, after a few years, this top end growth starts to drag up the lower-end suburbs too... because people go to buy a house in the top-end suburbs, realise the price has moved beyond their reach, and start to look at the middle-end suburbs, which drags up the prices in middle-end suburbs, and so on eventually through to all suburbs, with the bottom-end suburbs moving right at the end of the boom.
Shadow;363882
[color="Navy"]Why the next boom will be bigger than the last one...[/COLOR]
The Australia-wide Boom
- Falling interest rates in late 2008
- Bearish stock market to drive investors into property
- High overseas immigration
- Trend towards fewer persons per household
- Already very high current pent-up demand for housing
- Not enough new houses being built
- Australian median prices still very low compared to many other countries
- Skyrocketing rents encourage investors back to property
- Banks to offer 85% LVR without LMI, as Westpac currently allow (possibly)
- Legislation changes allowing Superannuation to more easily invest in property (possibly)
- Legislation changes allowing negative gearing of PPOR, similar to USA (possibly)
The Sydney Boom Especially
- Geographic expansion constraints (Ocean/Mountains/National Park bordering Sydney)
- Resistance to high-density development
- Prices set to rise after past 4-5 years of falling prices and stagnation
- Current Sydney median historically too low compared to other Australian cities
- NSW economy starting to pick up again
- Reversal of the current internal migration trend from NSW to other States
- Top-end already booming - ripple down effect will spread throughout Sydney
Cheers,
Shadow.
Shadow;362845
I believe it will... that property will continue to grow as per the trend lines shown below. Which means that the median price in Sydney will exceed one million dollars within the next 7 or 8 years. I expect this massive boom is just round the corner, and in fact that the preliminary growth phase has already begun in several cities...
But will it be followed by the worst bust in history? Again, yes I think it will.
LOL, Yossarian, do you realise 50% of your posts on this forum have been about me? Obsessed much? While you're here... can you tell us more about your predicted credit tightening... you know the one you've been promising for the past 5 years... the one that was supposed to make house prices crash? I'd like to hear more about it... :laugh:
(Oh, and thanks for the reminder about my 2008 prediction for an upcoming boom in Sydney. The following years were excellent... up 20-30%... nice!)
LOL, Yossarian, do you realise 50% of your posts on this forum have been about me? Obsessed much? While you're here... can you tell us more about your predicted credit tightening... you know the one you've been promising for the past 5 years... the one that was supposed to make house prices crash? I'd like to hear more about it... :laugh:
(Oh, and thanks for the reminder about my 2008 prediction for an upcoming boom in Sydney. The following years were excellent... up 20-30%... nice!)
I think that it's great that Yossarian posted that blast from the past....now we can see how wrong you really are :lol:
I think that it's great that Yossarian posted that blast from the past....now we can see how wrong you really are :lol:
Yeah... that 2009/2010 boom never really happened. It was all an illusion. At least, that's what you and the other GHPC/CC bears were claiming all through that period while house prices were rising... you guys just stuck your fingers in your ears and said 'lalalalala it's not happening'. At least most of the smarter bears do now recognise that prices did actually boom then. But not you and Yossarian... you two rocket scientists still think it never happened. :laugh:
LOL, Yossarian, do you realise 50% of your posts on this forum have been about me? Obsessed much? While you're here... can you tell us more about your predicted credit tightening... you know the one you've been promising for the past 5 years... the one that was supposed to make house prices crash? I'd like to hear more about it... :laugh:
(Oh, and thanks for the reminder about my 2008 prediction for an upcoming boom in Sydney. The following years were excellent... up 20-30%... nice!)
Jeez, again?
(a) Taunting you is fun because you are intellectually inacapable of recognising how wrong you get these things but, more importantly, why you get it wrong. Watching you trot out the same obfuscations each time reminds of the days in the lab with Skinner boxes and pigeons. It's petty and childish but, you know, hard to resist. (b) Are you seriously arguing that there hasn't been a material tightening of credit terms and availability in Australia since 2007. I mean, really? 2011 saw the lowest credit growth in 34 years but you still don't think credit tightened? (c) I have never predicted not advocated a crash. Please feel free to provide quotes from any forum to support your assertion. (d) On the other hand, are you still of the view that following the construction boom of 10/11 (sic) that Australia will see the biggest crash ever?
Taunting you is fun intellectually inacapable obfuscations petty and childish
Typical bear, resorting to personal attacks, petty childish abuse, and ad hominem attacks when defeated in the argument.
When have I ever called you names Yossarian? When have I ever abused you? Never.
Yet you do it to me all the time. Do you realise that over 50% of your posts on this forum are about me.
Why are you so obsessed with me, and why do you gain so much pleasure from attempting in vain to taunt people?
Does that fact that I've generally been right about property really bother you this much? Perhaps if you had an 80-90% prediction success rate like me, you would feel more confident and comfortable with yourself, and feel less inclined to lash out at others? I think it's time for you to take some time off, relax, and contemplate the futility of your efforts here.
Are you seriously arguing that there hasn't been a material tightening of credit terms and availability in Australia since 2007. I mean, really? 2011 saw the lowest credit growth in 34 years but you still don't think credit tightened?
Well there has been a tightening, and then a loosening. You may not see that from your perspective though.
What they tightened was:-
1. Higher deposit requirements.
2. Genuine savings of 5%
3. Credit Scoring tightened
4. Much greater scrutiny of "smaller data" such as all transactions, bounced payments on a PDA, EFT transactions - where are they going or coming from.
5. An overall tightening of the pedantic issues that they glossed over before.
But that has morphed to:-
1. LVR's have increased to 95% plus LMI (total 97% possible)
2. Some non-genuine savings loans available, but a number of mainstream lenders count rental paid over the last 12 months as genuine savings. EG $350 per week $18,200 wich is 5% of a purchase of $364,000 which is in FHB territory and a little extra savings pushes it above $400,000 quite easily.
3. Credit Scoring - yes that does make a difference especially over 90% LVR
4. Yes that makes a difference, but it only makes it what it should have been.
5. as for 3. and 4. above
As an additional issue servicability is easier at the moment becasue some lenders work on a lower buffer for fixed term loans.
The big issues areally are items 1 and 2 and they have become quite easy again, although I concede that your bank may not have those guidelines.
The lower credit growth IMHO is a return to a more normal credit growth, and an adoption of a wait and see attitude by many would be buyers. We just won't see credit growth like that again in our lifetime, but that's not such a bad thing.
PS - you may have to become a broker when they cull lending staff. Better get your database ready.
Well there has been a tightening, and then a loosening. You may not see that from your perspective though.
What they tightened was:-
1. Higher deposit requirements.
2. Genuine savings of 5%
3. Credit Scoring tightened
4. Much greater scrutiny of "smaller data" such as all transactions, bounced payments on a PDA, EFT transactions - where are they going or coming from.
5. An overall tightening of the pedantic issues that they glossed over before.
But that has morphed to:-
1. LVR's have increased to 95% plus LMI (total 97% possible)
2. Some non-genuine savings loans available, but a number of mainstream lenders count rental paid over the last 12 months as genuine savings. EG $350 per week $18,200 wich is 5% of a purchase of $364,000 which is in FHB territory and a little extra savings pushes it above $400,000 quite easily.
3. Credit Scoring - yes that does make a difference especially over 90% LVR
4. Yes that makes a difference, but it only makes it what it should have been.
5. as for 3. and 4. above
As an additional issue servicability is easier at the moment becasue some lenders work on a lower buffer for fixed term loans.
The big issues areally are items 1 and 2 and they have become quite easy again, although I concede that your bank may not have those guidelines.
The lower credit growth IMHO is a return to a more normal credit growth, and an adoption of a wait and see attitude by many would be buyers. We just won't see credit growth like that again in our lifetime, but that's not such a bad thing.
PS - you may have to become a broker when they cull lending staff. Better get your database ready.
Peter,
You and I both know that there has been no return to the pre-2007 environment, nor is there likely to be. The overt and aggressive retreat circa 2008/2009 has eased for residential (any developer will tell you things are worse there, if anything) borrowers but to take the reinstatement of 95% as an example, if you've done the high LVR stuff in any volume before and post changes I am sure have worked out that there's a whole bunch of borrowers who could have got one in 2006 who can't get one now. No Doc is dead and Lo Doc has returned back to what we designed it to be.
As I lectured many over 2008 it was really only marginal borrowers that were likely to feel the impact of the credit contraction.....the only problem is they hadn't yet worked out that they were.
And never, ever under-estimate the power of the Black Box.
The return to normal viz a viz credit growth has very much been my theme for some time. The growth in Australian property prices since the early nineties has been driven and underpinned by an expansion in the availability of funds (thank you global securitization markets) and an increased credit appetite (thank you purchasers of aforementioned RMBS). Those days are gone and we are seeing a return to a more normalized environment. I should add that I see recent levels of credit growth low even by what the new normal would likely be, therefore, I don't see much in the way of CG for 2012.
Appreciate your concern but I think I'll be fine. On the other hand, a broker sector built on a decade of double digit market growth may find itself with a surplus of loan writers if the next decade is mid single-digit growth.
Got your diploma yet...the deadline is approaching?
Got your diploma yet...the deadline is approaching?
Ha ha - no I'm one of the slack ones who have left it a bit late. We both know the value of that diploma.
I agree mostly, but on this side of the fence the view is a little different. I'm sure I would share your view had I remained with a bank.
Actually it was the non-conforming lenders who brought sanity to low doc lending IMHO. Banks were slow to follow.
You would be amazed at what can be done with a full suite of lenders with different lending policies. It will come as a revelation to you.
You will find that a lot of brokers are leaving the industry - it's all a bit complex now with all of the extra regulations and study. That has both positives and negatives for the public.
Cheers Yoss, you need to do some brown nosing now otherwise I'll be mentoring you next week, unless you have a B-Double licence. TNT are hiring.
Any expressed market opinion is my own and is not to be taken as financial advice
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