Interest-only mortgage reset tsunami towers over housing
By Martin North, Macro Business
12:26am March 5, 2018
This is a great read.....
All in my opinion:
Australia property binge now has a hangover.
With interest only loans moving to P + I, monthly payments could double...
High proportion of interest only loans are investment properties but even owner occupiers could struggle as costs and debt push them to their limits.
Those who struggle to prop up their debt riddled property portfolio dreams will consolidate and could even sell halve their portfolios so they can cope with rising debt, an influx of housing will come on the market as prices fall.
US expects 3-4 rates rises.
US Rate rises and inflation will have a flow on affect to Aussie banks then to consumers.
Cost of borrowing goes up.
Those Aussies will get a double whammy as they move off IO loans.
Most IO loans are from NSW, VIC and QLD.
Sydney and Melbourne only STARTING to fall from historical heights. QLD market historically follows Sydney market.
Housing supply will increase as the backlog of building projects during the highs peak to completion, and investors sell off as the market falls.
Prices through the downturn could eventually fall 20-30%.
Cycle will last years as it always does in downturns.
Cashed up buyers will have years to pick and choose the better properties from last cycles overpriced wonders. No rush what so ever....
Another reason why prices will fall more. Buyers won't be keen as sellers become desperate.
Investors in their 20s and 30s have never experienced a real property downturn e.g 80s and 90s but have lived through what I call an over extended property upturn fueled by historical low interest rates (Thank the GFC) and cashed up foreign investors, as investor 'property portfolio' greed increased in Australia.....
The overconfidence in this sector could get a wake up call as it deflates. Salesman on commission may find it tough going. The entire industry will go through a consolidation stage where the small players will be swallowed up by bigger competitors.
The cyclic property market downturn is long overdue....
