And the same old game happens again. You left out, blah blah.You left out, Howard government selling assets and our gold reserves at bargain prices.
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And the same old game happens again. You left out, blah blah.You left out, Howard government selling assets and our gold reserves at bargain prices.
Australia survived the GFC because of the mining boom and the Rudd government, otherwise we would of followed most countries.
Lol, early 2000s would mean the average price of a Sydney home would be $400,000. Not going to happen.One primary difference between the housing markets of Australia and other countries is that our financial contracts don’t absolve a party in default from its contractual obligations. So the bank can foreclose a mortgage and chase the defaulter for the remaining debt.
The issue with the “bubble” centres around the lending practises of the banks, being largely held unaccountable for what borders on unconscionable conduct, IMO, lending money to those who were not financially viable in the first place to sustain the debt. The outcome of the royal commission on banks has had the adverse affect on the property market, auction clearance rates in Victoria for example averaged around the 70% now sitting at 45%. This attributes to banks having to make it more difficult for a puchaser to obtain finance, resulting in a more nervous market. The market will have its peaks and troughs, but saving a world catastrophe such as a global depression, people might grow old waiting for house prices in Sydney and Melbourne to fall back to their early 2000 benchmarks.
If the Sydney market falls by the 20% from peak in nominal terms (meaning an average property costs ~$800k - not inconceivable) then that would eviscerate the banks.
They’re going to be more than 8-10% unless something major turns this around.Correct, so when people argue the hypothetical bubble burst, it’s not going to be at a fire sale price drop. Average price drops of 8-10% would be reasonable in reaction to the market factors led by a change in the banks lending practices
I was talking to my son this morning about this, when we bought our first home back in 1984 it cost us $42,000, I was on around 18k pa which was a single income family so 2 and a bit times my annual income to purchase a home.Thats what I thought way back when. Prices just kept going up.
A 30 to 50% drop has been coming for five years. There’s nothing left in the RBA’s or governments playbook to stop it!They’re going to be more than 8-10% unless something major turns this around.
A 30 to 50% drop has been coming for five years. There’s nothing left in the RBA’s or governments playbook to stop it!
Can you enlighten us why it’s hilarious? What other “doomsdaying” other than what you quoted is in this thread.Got those fingers crossed eh? Keep dreaming.
The doomsday hysteria in this thread is next level hilarious..
If the Sydney market falls by the 20% from peak in nominal terms (meaning an average property costs ~$800k - not inconceivable) then that would eviscerate the banks.
Cap in hand begging to the government for bailouts.could you elaborate on this evisceration?
Cap in hand begging to the government for bailouts.
The $1.3 trillion mortgage books of Australia's big four banks can withstand an Ireland-style correction in property prices but the lenders' ability to deal with second-order impacts remains uncertain, says Fitch.
As part of a housing "stress test", the global credit rating agency calculated that the big four would suffer $24 billion in losses if house prices fell 43 per cent and defaults hit 13 per cent. However, recoveries from lenders' mortgage insurers would cut the loss to about $19 billion.
As a percentage of risk weighted assets, losses would equate to between 1.8 and 1.3 percentage points before insurance recoveries, and between 1 and 1.3 percentage points after recoveries.
These losses would, on average, wipe out about half of the banks' operating profits before insurance, and about 40 per cent after insurance.
The stress test also concluded that based on mortgage losses in isolation, no bank would breach the minimum capital requirement of 8 per cent, including the additional requirement demanded of systemically important institutions.
That’d be unlike them!fitch (and others) may have made a real mess of their analysis
That’d be unlike them!
What analysis would convince you better than the fact that all economies that have experienced major debt deflation events have led to an implosion of their financial sector?i agree it's a possibility which is why i acknowledged it. but i also think the henny pennys in this thread (hi Lebbo73!) haven't been paying too much attention to APRA's efforts in particular over the past few years (ironic given those efforts are a contributing factor to taking heat out of the market). so yeah, i'd like to see some analysis (even if it's as bad as fitch, APRA, RBA) showing how 20%-30% falls will result in the lender of last resort having to save the big four.
The Australian Taxpayers bailed the Big Banks out in 2009i agree it's a possibility which is why i acknowledged it. but i also think the henny pennys in this thread (hi Lebbo73!) haven't been paying too much attention to APRA's efforts in particular over the past few years (ironic given those efforts are a contributing factor to taking heat out of the market). so yeah, i'd like to see some analysis (even if it's as bad as fitch, APRA, RBA) showing how 20%-30% falls will result in the lender of last resort having to save the big four.
What analysis would convince you better than the fact that all economies that have experienced major debt deflation events have led to an implosion of their financial sector?
The Australian Taxpayers bailed the Big Banks out in 2009
I gave you something. What more do you want?well, at this point anything would be an improvement on the content of this thread.
OkRBA will cut rates if the market crashes too much within the next 5 months. Once Shorten in they won't cut rates again.