Fresh highs in property investor volumes

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Fresh highs in property investor volumes
Although US forecaster, economist and demographer Harry Dent continues to predict a drop of as much as 50 per cent in housing prices local analysts say this analysis doesn’t reflect the history or underlying strength of the Australian housing market. For example, the total value of investment finance commitments reported have hit new highs of $10.7 Bn in February. With investors accounting for 38.8% of all lending, that’s the highest level for 11 years.

Millionaire city - median home price in Sydney to hit $1 million in three years
Following a report showing Sydney’s Median house price has hit $800k, one property commentator has predicted that Sydney's median house prices will hit $3 million in the next 20 years and climb to $1 million in the next three years, with an average rent of $2000 a week 20 years from now. The Reserve Bank of Australia’s interest rate setting policies – which he says leave the rate at twice what it should be -- would continue to force house prices up. Read the full story here.

Questionable loan practices entering the market, claims CHOICE
With Australian families battling to get on the property ladder, consumer group CHOICE have branded many of the products that help them as “Risky lending practices”. 40-year mortgages, family guarantees and no-deposit and low-deposit home loans – have all come under fire. Low-deposit loans are currently used by a third of all new borrowers, increasingly offered by second-tier lenders. Read the full story here.

House price increase threatens banks credit ratings, Moody’s warns
Describing market conditions as “finely balanced” in a special comment released Wednesday, credit rating agency Moody’s said home price appreciation could become a “credit negative” for Australian banks within a year, particularly if prices outside of Sydney accelerate. The 13 per cent increase in Australian house prices over the past 12 months is “not yet a threat to the credit profiles of Australian banks.” Lending standards haven’t deteriorated … yet … but the firm is watching for competition on underwriting standards, which “could expose the banks to risks associated with lower-quality mortgage products.” Read the full story here.

Demography is destiny in Australia’s housing market
Bernard Salt of KPMG notes how demographic shifts in Australia will shape the consumer landscape in coming decades. Financial services providers like credit card services, mortgages and home insurance are businesses with a bright future because generation Y is starting to leave home. He argues that there’s a market for a first-home-owner mortgage product “that draws in the support of the Bank of Mum and Dad.” Read the full story here.

Australia amid “the biggest credit and property bubble in modern Western history” 
Author Lindsay David, an MBA and a co-founder of GreenRigCo, argues that malinvestment in China’s infrastructure – using iron ore from Australia – coupled with out-of-reach markets for Australia’s property, has left Australia vulnerable to a major crash. It just so happens that he has new book for sale on the subject. Read the full story here.

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