Bad news? Silly news?

I’m starting to see caution in the market starting to tip towards silliness.

Remember, the only thing you have to worry about losing in this game is your head.

Someone tell the AFR:

“Deposits Have Tripled

A typical deposit on a $1 million residential property has nearly tripled from about $50,000 to $150,000 as borrowers commit to tougher standards demanded by regulators, increasing pressure on the Bank of Mum and Dad or unsecured loans to make up shortfalls, lending analysis shows.

Deposits required for nearly eight-out-of-10 loans have increased from a minimum of about 5 per cent of the property price to about 15 per cent of the price for investors and 12 per cent for owner-occupiers, it shows.

….Sally Tindell from RateCity said: “Home buyers no longer need one or two incomes to get their first property. They now need three, including their mum and dad.”

Ok, yes, technically, deposits have tripled. But how many people were really getting away with a 5% deposit on a $1m dollar property?

And now they’re being forced up to what, 15%? For owner-occupiers it’s 12%?

OMG! What a disaster! You obviously haven’t been in this game long if you think a 12% deposit is a disaster.

“Households need three incomes…” Get your hand off it.

And then there’s this from The Australian, predicting dire falls in the property market.

Mr Gunning (from the Real Estate Institute of Australia) said the credit squeeze was taking its toll on the eastern seaboard, with buyers not able to borrow as much as they could 18-months ago.

“Banks are not interested in lending to investors, and that’s affecting demand, which is affecting prices,” he said.

He predicted median house prices would fall 5 to 6 per cent across the country by the end of the year.

“You’ll see further falls after this winter period,” said Mr Gunning.

“No one wants to call doom and gloom because we’ve got good immigration and low interest rates and in most cases, pretty good employment.

“But I would’ve thought by the third quarter, the picture will be a drop of around 5 to 6 per cent along the eastern seaboard, with a bit more fluctuation in the other states.”

Seriously, 5-6%?

I mean sure, when you’ve become accustomed to a market pumping along at 10% a year, that feels like a step down.

But it’s barely news. Sure, prices are consolidating in Sydney and Melbourne. Credit is tougher thanks to APRA and the Royal Commission.

But it’s hardly a disaster. And even 6% is barely a blip on the radar.

Let’s just take a breath everyone. Let’s not make a mountain out of a mole hill.

People will lose their heads.

Spiro Kladis
Managing Director, Cashflow Capital

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Leave A Reply (2 comments so far)


  1. wayne loftus
    5 months ago

    See Facebook post.


  2. bob fioretti
    5 months ago

    Thank you Spiro for your dose of common sense. If you do the numbers over the medium to long term a 6% retracement is not only a blip but a necessary function of the market

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