Pop Quiz: Who is the fifth largest mortgage lender in the country? The Bank of Mum and Dad. You might not have seen their ads on the telly. They're largely working with a word-of-mouth marketing campaign. But they're gaining traction and market share. And now, according to the AFR, they've got a $16 billion dollar stake in the Australian mortgage market. "Bank of Mum and Dad... is estimated to have lent about $16 billion... "It is astonishing," said Martin North, principal of DFA. "Bank of Mum and Dad has become a critical factor in helping first time buyers break into very expensive property markets - and it is growing fast"... Large-scale unregulated parental funding is likely to increase prudential regulators' nervousness about the vulnerability of over-stretched buy
Property is cheaper than it was ten years ago. That's going to sound like a pretty wacky thing to say given the phenomenal boom in prices we've seen over the past ten years or so, especially in Sydney and Melbourne. (Maybe Spiro's got the chart upside down? He's normally pretty sharp with those things...) But what I really mean is, property is more affordable. Again, that's going to sound pretty crazy. But the truth is, when we're talking about affordability, we can't just simply look at prices. Because almost nobody (apart from the Chinese) buy with cash. Pretty much everyone buys property with finance. That means we need to look at finance costs as well - not just the purchase price. And on that front, finance costs are falling... fast. Record-low mortgage
One of the main drivers of the Australian property market over the past 20 years or so has been a shortage of housing. For whatever reason, we just haven't been all that good at building enough houses. And if a market is under-supplied, then prices will grow. That's economics 101. But has that story been changing? We hear a lot these days about how apartment construction is booming. How each year we're building a record number of apartments. How our capital cities are exploding with them. So does all this change the story? I mean, if we had an undersupply, do we now have an oversupply? And if there's an oversupply, doesn't economics 101 tell us that prices will fall? The short answer to this is no. No there isn't an over supply now, and no prices are not
Seems that Melbourne has become the focal point of the Chinese buy. While the other Australian capitals have seen waning interest from Chinese buyers, Melbourne is growing in favour, and Chinese buyers are going to great lengths to get into the market. This chart here from the NAB survey shows that foreign buyer demand, as a share of total demand is falling everywhere except Melbourne. In Melbourne, foreign buyers (and that's probably mostly Chinese buyers) still account for around 9% of demand for established homes. That's almost one in ten. If we look at the share of enquiries on Chinese language portal Juwai, we can see that Melbourne is starting to streak ahead. Melbourne now accounts for 40% of enquiries. Sydney barely rates 17%. And now The Australian
The Australian economy is back, baby. Global Hedge funds are out of their mind. Take a look at this chart here. This suggests that global hedge funds have collectively gone underweight Australia, relative to the rest of the region. That is, they're buying less Aussie stocks, more of others. That is, they're not so hot on Australia right now. Break it down, and it's mostly being driven by an off-loading of the financial sector. They've fallen out of love with Aussie banks. Now, I don't mean to be rude, but I think they've lost their mind. It still seems that they're positioning themselves for a market that 6-months old. Today's market is very different. For sure, there were dark clouds looming in 2016. Big waves were gathering, winds were blowing. T
Are tiny homes really 'popular'? I literally laughed out my nose when I read this the other day. It was some article talking about the tiny-home movement. Basically, you build a home on the back of a trailer so technically, you can call it a caravan, and circumvent the need for DA's and all that hoo ha. This article was saying in terms of price, $20,000 will get you something pretty basic, but premium versions can cost up to $120,000. They're homes in a sense because they normally come with everything a person needs - kitchen, sleeping areas, bathroom and toilet. You know, like a caravan. So we're really talking about glorified caravans. Caravans are just proto-tiny homes. But the quote I loved was this one: "The tiny-home movement's popularity can partly be
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