Australian Politics, Mark II

This is such a ■■■■■■■■ way to look at it. What about the all the young people who have absolutely busted their ■■■■■ to get into a tough market and put everything they have on the line?

And i’m just talking the apartments they live in. Not investment properties.

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I think short term pain for the market and suckiness/unfairness (for some) is inevitable. We’re just going to have to eat some on-paper losses until it levels out.

But it’s a market which can literally drop 5% in a few months based on nothing. So I’m not sure why we’re treating another, planned, adjustment as some sort end times.

the 25yo trust fund kids who “own” 2% of 15 separate properties are the exact target of these changes.
They’ve taken on a stupid amount of (largely unpredictable) risk because the tax system promoted it, and they’re probably gunna have to eat a loss on a few properties.

What about them?
They only lose money if they sell.
If they’ve got in in the last few years, they’ve got in with much stricter lending regulations than 5 years ago. That should give the vast majority of people enough of a buffer that a 5 or even 10% drop on the property value isn’t going to touch them.

We’re not going to agree on this so i’ll leave it there. I do enjoy the discussion and and your opinion though.

I’m not talking about the people who’ve bought their own apartments. Neg gearing simply doesn’t apply to property you live in yourself.

Step on up @Reboot

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It’s a reasonable point.
What are people who bought in the last two years doing selling?
Sometimes circumstances change, but you’re mad if you go into a purchase thinking you can cash in in five years.

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I think he’s getting at if the market declines by over 20% people will get hurt. It’s a valid point it’s not the well off guy that’s used tax structuring to build up a few million in wealth but rather the most vulnerable that get hurt. The Aussie battlers in the burbs who have to declare bankruptcy when the bank reposes their house.

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The bank won’t repossess your house if the value drops. That’s…a really bad decision on their part.

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I’m not sure what their strategy would be, but I suspect it’s bad.

On the one hand if someone can make the repayments why reposes for the bank to make a loss.

On the other hand they have to protect their own balance sheet. All their ratios go down the crapper. Lots of loans with no equity to offset. They either reposes, raise more capital or get bailed out.

At a minimum I expect if you have no equity your are going to be strong armed into coughing up more to keep the loan.

No but a young couple who want to start a family might be stuck in a one bedroom apartment for the next 10 years.

Banks don’t repossess houses when the value drops, they repossess houses when the owner can’t keep up with payments.

If house prices drop, it doesn’t affect an resident mortgage holder at all, unless they’ve hugely leveraged their residence to act as surety for another loan. Sure, if they have to sell up they won’t get as much, but on the other hand, if they have to sell in order to upsize/downsize/relocate, then the new place will be cheaper for them to buy.

It WILL affect people who bought at the top of the market, are highly leveraged, and then are forced to sell up and NOT buy a replacement home, because they won’t get as much in the firesale.

It would affect people like, for instance, my sister, who is paying off a loan on a unit, but married a guy with several kids so they have to rent a bigger place in order to live, while they rent out the unit and neg gear it. Which presumably is the argument in favour of the ALP policy’s grandfathering arrangements.

I am not sure of your agenda here Lance.

I bought my first house in 1974, and just after that prices boomed with strong wages growth and Banks modernising their lending practices. There was much talk of doom and gloom that it was a bubble and it was going to burst. I am still wating for that bubble to explode. Some of us have lived through 18% home loan interest, and still prices grew, albiet slower than of recent times but they did not ever actually fall, when you take any two year period.

It my opinion the only thing that will make prices collapse is if interest rates go up to 8% plus, and all those home buyers ( not investors) who have geared themselves so highly to buy that precious home, and lenders have doled out in some cases 120% of the value, will be truly farked. And while Banks are not known to be nice people, they will need to review policy around mortagee sales, as they will lose their shirt in some cases.

And Lance, I know lots of property investors and developers, and few if any have much exposure if a crash comes. The exposure is mostly with first home buyers like my kids; who I will financially protect if the world crumbles.

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Is this what Broad has the AFP investigating?

Ha! Wonder if we’ve met…

Your correct in saying the bank legally can only reposes when you haven’t serviced the loan.

But if we’re talking about who gets hurt it’s still the most vulnerable. It’s people who are allready in mortgage stress missing payments or those that loose their jobs in the recession that has to follow a big housing crash. As now they aren’t servicing the loan and they don’t have equity.

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It must be nice to be in that position. Not many people are. Was it Malcolm who said if prices get to high then parents should give their kids a handful of cash?

And saying i have an agenda because i have a differing view to you says more about you than it does about me. I respect your opinion without assuming you have an agenda and i enjoy hearing your opinion.

Note I think prices do need to go down, completely unsustainable at current levels.

But I hope it’s s slow managed deflation, not a crash that gives us a recession.

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Or at least sit still for the next 10 years while everything else catches up. Agree that it’s ridiculous.

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