How long do you think it would take someone to get out of poverty? The answer: four generations. That's the answer for Australia at least. If someone is born into a low-income family, it would take four generations before their direct decedent’s were earning the average income. And that's a miserable statistic, but we're actually doing pretty well. We're slightly ahead of the OECD average, and streaks ahead of countries like Brazil, South Africa and Columbia. What it shows is that the social mobility that capitalism promised us is a bit of a joke. This idea that anyone who works hard can get ahead and be a tech-billionaire is just BS. Where you are born has a huge influence on the trajectory of your life. If you're poor and work hard, the best you can hope for
We already know that the top-end of town is bearing the brunt of recent price declines. Falls are pretty much isolated to the top 25% of the market. The bottom 75% is steady or even growing. But it's about to get worse. APRA is introducing a new rule in the coming financial year. Going forward, banks are going to look not just at your loan to income (LTI) ratio, but also your total debt to income DTI ratio. Banks are no longer going to be looking at your ability to service the loan you're applying for, but all of your debts - including other mortgages, auto loans, credit cards - the whole kit and caboodle. And they reckon they're going to cap debt at 6 times your income. We don't know how ruthless APRA are going to be about it, but UBS reckons if they make it a hard l
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 t
If you want evidence on the fact that higher house prices in our capital city are structurally locked in, take a look at this story here. It's about a proposed high-rise development at Waterloo, on the outskirts of the Sydney CBD. "Seven hundred apartments will be built on a large block around a new rail station in inner-Sydney Waterloo, government documents show. The Waterloo "Metro Quarter" proposal by the government’s UrbanGrowth Development Corporation and Sydney Metro, made available on Wednesday, includes four residential towers of 29, 25, 23 and 14 storeys. Much of the development would occur at the same time as construction of the train station, which will form part of a new metro line connecting a new route under the central business district with the existing Bank
Back in 2009 Rolling Stone describe mega investment bank Goldman Sachs as "a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money." And what does the Vampire Squid think about Australian property? They're pretty calm actually. In fact, they reckon the surplus that opened up in Sydney and Melbourne on the back of massive apartment construction has unwound, and we're now moving back towards shortage. This is what they said recently in one of their exclusive notes to clients: Overall, we find that Australia's housing market is now close to balanced after being somewhat 'over supplied' in recent years. Regionally, this oversupply was entirely driven by conditions in the mining-exposed st
Finding it tougher to get credit? You’re not alone. This is a very tricky credit environment right now. The Royal Commission has got banks running scared. They’re a little freaked right now. What’s come to light is that banks have been playing a little fast and loose with the rules. One of them is around HEM – Household Expenditure Measures. This is a bench mark figure to determine what a household needs to survive. Banks have been using this to assess serviceability. How much can you afford? Let’s look at how much you need to survive. But APRA is saying that this isn’t good enough. Banks shouldn’t be using benchmarks. They should be looking at actual spending figures. (To be fair, these rules have been in place for a while, so the banks should have known better.)
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