Crazy policy moves to ignite property?

According to Canstar’s Steve Mickenbecker, the typical buyer could expect to have an extra $70,000 to spend on a home if the Morrison Government is successful in axing responsible lending rules:

If requirements to assess borrowers’ expenses ease, an average buyer may see a jump in their purchasing power by about $70,000, Canstar group executive of financial services Steve Mickenbecker says.

Based on an average income of about $80,000 and a 20 per cent deposit, he said a would-be buyer might have the amount they could borrow increase from $440,000 to about $510,000.

“I don’t have a crystal ball for this,” he said. “That’s a hypothetical number…

Mr Mickenbecker assumed rolling back the requirement to heavily scrutinise living expenses would lead to the assessed level of expenses going down, allowing the average person to get a loan $70,000 larger.

But winding back that one rule would not be enough to cause a jump in buying power across the board, Mr Mickenbecker said.

“We’ve seen lenders tightening on credit in other ways,” he said. “Sources like rent, casual employment, those sort of places – banks have already said, ‘We’ll be tougher on that, in terms of giving out credit’”…

“In isolation this is something that will have a positive influence on prices,” he said. “When you net it out against the other supply side movement, maybe it compensates rather than increasing supply. But it does ease one barrier from buying a property.”

Make no mistake, Josh Frydenberg’s announcement last week was a policy ‘black swan’ and a potential game changer.

In forecasting falling property prices this year and next we have been working off the assumption that mortgage rates had bottomed and, as a result, future price growth would need to come from rising household incomes.

So, with net overseas migration crashing alongside high unemployment and the unwinding of emergency income supports, it seemed logical that house prices would fall significantly in Sydney and Melbourne, dragging national values lower (even with modest growth in the smaller capitals).

However, if qualifying borrowers are permitted to borrow more and previously non-qualifying (sub-prime) borrowers are pulled into the market, alongside the RBA monetising the banks mortgage debt, then this could lead to national property price increases in 2021 as mortgage rates edge lower still and the banks lend to anybody with a pulse.

Australia’s housing market now represents a tug-of-war of war between lower interest rates and easier credit availability on the one side (positive for prices) and collapsing immigration, high unemployment, and unwinding of emergency policy support on the other (negative for prices).

It is already clear that this will lead to a bifurcated market with non-virus capitals prices rising as Sydney struggles and Melbourne falls. There is also a split between all capitals inner-property, and their surrounding rural districts, as work from home becomes the new black post-COVID.

The scale has clearly been tipped in favour of rising prices thanks to Josh Frydenberg’s abolition of responsible lending rules, and the likelihood that the RBA will seek to crunch mortgage rates to 1%, which has brightened the outlook for Australia’s property market.

So long as you know you where to look.

Unconventional Economist
Latest posts by Unconventional Economist (see all)


  1. Oh well. I’ve been trying to buy for about 6 months now. Fkck-all stock on market is really the only thing stopping me.

    If I’m going to get THAT much debt (and I am) then at least gimme a decent house for it! Fkcken!

    • Know IdeaMEMBER

      I certainly don’t envy your position. As it turns out, I am about to face the same problem, although indirectly through my eldest offspring. There are no easy options.

    • Arthur Schopenhauer

      We ended up buying an absurdly overvalued house desperately in need of renovation. It‘s the gift that keeps giving.

      Good luck in finding something half decent.

        • Charles MartinMEMBER

          Worst house in the best street is an astute buy because property prices double every 7 years and if your street is really nice it may even outperform that accepted benchmark. You cannot lose.

          • PaperRooDogMEMBER

            True dat, we’re now looking at buying, not that we believe prices will rise but because we want to be in the protected class who the government will support at the expense of everything else & get dem tax breaks etc (thinking as much about an extreme event & a debit jubilee for which you’ll have to be a property owner to be protected)

      • Hi Arthur,
        is there any decent apartment building in Ivanhoe? My son would like to buy it there. What’s going on with that building on Upper Heidelberg road above pharmacy? Cheers

        • Arthur Schopenhauer

          I don’t know if anything built in the last 10 years is particularly well built, and you want to avoid buildings with lifts. There are plenty of well built, completely depreciated 1930s to 1980s flats & townhouses in the area. They’d be better value over the long term, and any problems will have already surfaced.

          Not as flash as a new building, though. Anything with a lot of horizontal steps is bound to have waterproofing problems at some point in its life.

    • We are looking to buy upper north Shore in Sydney, and there is hardly any stock which sucks

    • What do you guys think is the reason for lack of stock, particularly Sydney which hasn’t been in lockdown? Is it a combo of ppl holding on to earn $$ through property given the risk/loss of job, plus the pause on mortgage repayments?
      Are there just a lot of properties delayed who otherwise would have went to market, so we should expect these will come online all at once?
      Or is it just a new normal.. no one goes bankrupt, no one changes homes, and it’s either take ur pick of the few properties available / grab something brand new?
      It feels like the opposite of a market whereby people are suffering from job losses / decreased income and there is no new immigration..

      • Uncertain times leads to stasis. If things were that good there’d be heaps of stock. Nobody is sure what happens next.

      • ^This. Uncertainty. A classic broad effect of troubled times.

        More specifically, few people are likely to move for work if their current job is secure. And people approaching retirement thinking of selling their biggest asset / main nest egg are very likely to pause until the situation is clearer rather than risk something unforeseen happening. Just normal human behaviour, unfortunately or otherwise.

    • Hey mate…nice to hear from you.

      I’m in the same boat. My partner has moved in with me as she sorts out the finances with her ex. Once she has the cash from the sale of her ex home we’re going to start looking for a place to buy…probably Q2 next year. Meanwhile, there’s fck all on the market in 2611 at the moment.

      Would you like to do some ranting and oath-emitting and beer drinking at the Meating Room sometime?

      • My oath I would! I’ll check my packed* social calendar and let you know what evenings I’m free.

        *packed with free evenings, usually.

  2. boomengineeringMEMBER


    Hello John,
    To the complete surprise of property analysts and economists alike, the Central Coast is a shock winner resulting from a huge increase in demand for purchase and rental properties, as Sydneysiders seek to realise their decentralization plans!

    It is fair to say that nobody could have foreseen this unexpected trend emerging so quickly and so dramatically! We have seen an increase by 5 times on enquiry rates and price rises of 15% to 20% or more in some areas!

    This means your property is potentially worth much, much more than it it was in February this year!
    Rental prices are also soaring with an increase of 30% or more in some locations as vacancies almost disappear and a rental squeeze is the positive result for investors!
    So! The upshot is that now is a fantastic time to sell, lease or buy Central Coast property on a buoyant and rising market!

    Contact Stuart, Jodie or any of our friendly team for a confidential assessment of your property potential in these exciting times!
    Kind Regards,
    Central Coast Reaty

    • happy valleyMEMBER

      Dog be blessed for ScoVID-19 – never been a better time to do a real estate deal?

      • Jumping jack flash

        COVID certainly was extremely beneficial for patching up the foundations of the New Economy. Indeed!

    • truthisfashionable

      I love how so many people like to pretend the Central Coast hasn’t been a Sydney commuter region for decades. Although it is great that all the new families are diluting the retirement village stronghold.

      • Reus's largeMEMBER

        Anecdotes from the ground in Ettalong, in spite of the agents puff piece above, most properties are still selling for below the lower limit of the asking price, plenty are still “contact agent” which from experience when looking to buy means selling lower than they would like to disclose on the website.

        But the split is quite noticeable in the who the buyers are, there are the lower end places that are getting sold to locals or renters ex Sydney and then the occasional place that sells for stupid money to a Sydney BB looking to escape.

        My feeling is that this boom is from BB’s who are cashing out of the cities and running for the country.

    • This is what I don’t get:
      – immigration at a standstill
      – high unemployment
      – regional house prices going hog wild (in some places)
      – the metro areas should be losing out that their ^^^ expense. But no (or not yet)

      The only explanation is that the metro dwellers are buying second properties in the regions by leveraging the Equity Mate on their city properties …

      • My partner works in real estate support services (multiple high end regional and premo Melbourne firms supported). Lots of stuff is selling in the regions but they are not seeing records being set. Agents say they have never had better months but this is a volume play rather than a price records play. Those properties priced well are selling well, those priced in 2019/early 2020 prices seem to hover on the market as owners either meet the market or hold onto older expectations.

        Properties in the 1/2 – 10 acre space are in high demand, bigger properties seem to be going a lot slower.

        I sold 420 acres on the far south coast NSW recently (still to settle). Took a good but not great offer (bird in the hand). Now looking for something smaller 1hr out of Melbourne as a PPOR. Made 3 offers on different properties, all turned down at this stage. 2 of the properties have been in Market for 10 months (60-130acres) and one has been restricted viewings. Owners bought that last one for $700K 5 yrs ago and are now asking $1.7m…done the numbers and on a per acre basis they are 200% above equivalent average. I offered a premium above the average but was going nowhere near the $1.7m….they are holding until viewings can re-open. If they can get it, good luck to them….there is always a bigger fool.

        • Good colour. Thanks

          Curious to see whether things take off from here or whether there’s a twist in the tail.

  3. happy valleyMEMBER

    “Make no mistake, Josh Frydenberg’s announcement last week was a policy ‘black swan’ and a potential game changer.”

    Absolutely. Just as the rot of a fish starts at the head, so will the rot of the banks as boards and management likely place ridiculously-high and unconscionable loan volume and amount writing targets on their dog’s body staff as the banks furiously compete for business in Josh Rainbowberg’s world of totally irresponsible banking.

    Now, what’s the tip as to which of our “unquestionably strong” (LOL) banks will go belly up first?

    • Is that where the MMT narrative comes in. After all, if you can just keep pumping out money, why would the music ever need to stop. It just keeps going.

      • Thought MMT was envisioned to make the best use of avaliable human and physical resources. In Australia’s case that would have been a building boom of affordable houses rather than the now baked in house price inflationary boom. Couldn’t expect more from the current LNP rubbish which is on par with the old “why do Crocodiles eat people” ….. “because that’s what they do” and thought we had reached the end game with this nonsense.

    • The Big 4 are wards of the State. Therefore, Josh gets on the phone and tells the CEOs: “Get lending ya muthas!”

    • This. Bank offered kids with a baby and currently one Parks Vic income $800,000 loan to build – and that’s before the end of responsible lending laws. No questions asked. No way they could service it.

      • I don’t have the full story but a bloke from work recently purchased a PPOR in Mullumbimby for $1.1m. He is single and earns a salary of no more than $85k pa. the place is 2+ ha so will cost bulk to maintain. I repeat, I don’t have the full story, but from a cashflow perspective, please tell me how this can even happen???

      • thanks for sharing mdsee, great read!

        ” The only ones that can really cause forced selling are the banks and the government, who not surprisingly are also the ones who have the most to lose in this scenario. So how could anyone in their right mind think that a government with a four year term is going to implement a set of policy moves that causes their own demise?”

        and this blokes summary on the twitter feed:
        “Good article Luke. The propadee situation is too big to Fail. Sure, 1) remove lending and capital restrictions on banks 2) banks wind up insolvent with bad loans 3) Govt nationalizes the banks 4) only way out is to default or devalue 5) devalue AUD.”

  4. Victorian Real Estate is totally broken.

    Horrible weather board 2 hours from Melbourne on a dusty bush block in the middle of nowhere are asking similar prices to prices to pristine renovated properties in beach side towns with swimming pools and tennis courts in NSW.

    There is something very, very wrong with Victorian property prices.

  5. The housing market in several countries, and especially Australia, is badly broken. There is a 2-3 decade property mania on the go, a sort of mass delusion.

    Look beyond it. Rent, and give up the idea of buying a house. Looking back on my life, some of my happiest times were when I was young and living carefree in a 2-bed apartment, whereas some of my worst times were when I owned a 300m² mansion overlooking sea in California. Houses and the owning of them does not correlate with happiness (although that’s the illusion sold to you by the real estate industry).

    When all the rats are running in one direction, you run in the other direction. When all around you are losing their heads over bricks and mortar, you invest your money instead in something counter-cyclical, like precious metals, whose day will surely come. Invest in travel and experiences that can never be taken away from you. Time’s arrow travels only in one direction, this is not a dress rehearsal, you don’t get any do-overs

    • “When all the rats are running in one direction, you run in the other direction.”

      Like Steve Keen or Mr. “Don’t buy now”?

      I listened and lost a decade.

    • Happiness has been dropped out, replaced with, look at me, I’m so good, I (don’t) own a property (yet, if ever). The illusion bought replaces (in many cases, not all), well being and comfort, common sense, rationale, with narcissism. Look at me, I’m getting a head, I’m better than you, I’m now in a better class of people, …, stuff like that.

      Let the rats run in their one direction, not only do they refuse to see why you’re running the other way, they neither see the piper way a head of them. Nothing to worry about, let them be.

      • It’s a matter of psychology. Reframe the situation so that you find happiness. If buying a house has become impossible, stop seeking happiness in that goal.

    • Totes BeWokeMEMBER

      Best comment I’ve seen for a long time. Life is short. A house is nothing compared to health and happiness.

      Get over it and rent. I still hear people saying “rent is dead money”. Insane. If prices aren’t rising and rent is cheaper than a mortgage, you’re better off renting. Even better, rent where you want to live for now, negative gear somewhere else.

      • Considering “owning” a house these days can only by done with an interest only 1mil loan, with the occasional mortgage repayment pause. I’d say renting and owning are not far off from being the same thing.

          • Goldstandard1MEMBER

            That’s why capital gain and the expectation of capital gain is so important. That is the real difference between renting and owning. I am renting a 2.8m place in Inner east Melbourne for 950 a week. That’s smart money unless the house I sold last year suddenly gains 20% and or/rents tighten and I could have rented it for more than the mortgage. It also depends on how much certainty you have being able to stay in a rental. I want a year at a time and the owners are settled overseas so it’s as certain as it can be.

        • Totes BeWokeMEMBER

          Exactly. You’re in effect renting an enormous amount of money. You’ll actually own very little of that house in 10 years UNLESS prices keep rising.

          It does not make any sense to be buying at these levels.

          If it rises 10%, big deal, no significant life change, if it falls 50% (which where I’ve been watching, would still be stupidly expensive), its financially ruined you.

          IMO, it is a no brainer to stand back and watch whatever it is that’s coming.

          • In which case, you could look at an owner with massive debt as playing the market naked, while renters are hedging their position. While the renter has a perfect hedge in relation to property, he can still get upside with excess funds invested elsewhere.

          • Totes BeWokeMEMBER


            Yep. That’s how I see it. Im better off with my money elsewhere.

            Nimble renter paying market rates.

            I must say though, in life I have to be careful of not being a victim of my own defiance. I’ve refused to play their BS game for a long time and lost…but I’ve done extremely well in other government sponsored rorts.

          • Mike Herman TroutMEMBER

            Yep I agree with all of that. I’m sitting in Melbourne waiting and wondering what to do…. the downside risk for me far outweighs the upside potential miss.. I can live with that…. I think…..but in terms of putting money elsewhere…where do you go? I find that question a difficult one to answer…

          • Totes BeWokeMEMBER


            For me it’s hedged FANG and other key global stocks via managed funds.

            No idea what’s going to unfold with covid, Australia, AUD, or anything really. We’re at the mercy of people (LNP, Labor, regulators, msm) not acting in the interests of Australians. We should have rioted decades ago.

            Good reason we didn’t. A concerted effort to scam the narrative. Infiltrate Labor, Greens and MSM. Feed the electorate just enough cream, and put off any discontent until the whole lot belongs to the elites, and we’re servants and serfs.

            The biggest swindle in human history.

          • Precious metals have been very good to me. Value has almost tripled, and as far as I am concerned, it’s just keeping my money safe. I don’t want return on investment, I want return OF investment.

      • Arthur Schopenhauer

        I hear you totes, but as we are witnessing, everything will be done to sustain the unsustainable.

        • Totes BeWokeMEMBER

          I absolutely agree, but there’ll come a time where it can’t be sustained. Wages are falling, unemployment is rising, can’t hand out $750 forever. It’s going to break, but it’s not possible to know when.

          Other than some very positively geared regional properties, I’m remaining on the sidelines.

      • Every situation is different. When you have a family, owning gives you a sense of stability. It’s a psychological thing.

        The last house I rented, the very 2nd day of moving in I got a call from a RE agent asking when was convenient to show someone through? WTF! The developer who owned the house wanted shot of the place quickly but wanted someone to fund the mortgage in the meanwhile. I rang the agent who let the place and said there’d no cooperation from me (after giving him both barrels for his sliminess). My mother, wife and one of my children both slipped down some outside stairs at various times (after wet weather) because the imbecile who reno’d the place painted them with highly slippery varnish. The tight ***t then came round and stuck thin strips of sand paper on the steps (which peeled off with a couple of weeks). The whole tenancy was a disaster from start to finish – not being able to hang pictures, make small changes to the place, being bound by stringent terms of the agreement.

        When we bought, the clouds parted and the sun came out. But I get that there are good landlords too.

        • This is where Oz differs from other countries. Here, a lot of the landlords are Mom n Pop types, often scummy and grasping and unwilling to fix or maintain things. In the US, we rented mostly from corporations who would react instantly to any complaints and send someone to fix it. Try to rent from a company, not a specufestor. Failing that, buy the cheapest apartment you can, bec. apartment prices are falling and will fall more. Kids? Don’t have ’em!

        • alwaysanonMEMBER

          I totally agree. We’ve been renting Sydney units for the 15 years I have been in Australia. Between some regular inspection from a 19 year old RE agent being critical that we haven’t cleaned our shower screen or that the 12 year old carpet is starting to ‘not look good’, to being forced to move at the worst possible time because the owner wants to sell, to this current apartment being 12 years old and literally everything has broken in the last year (heat/AC, oven, dishwasher, dryer, 1/2 the down lights with wires rusted out (as bathroom exhaust vents the moisture into the false ceiling), etc.). The agent/landlord is acting put out and like this is all somehow our fault (none of this stuff has ever broken before you) and they are doing us a favour when it is just that nearly everything in here has reached the end of its lifespan, has long since been depreciated, and they now need to invest some more money into the place. They did but it was like pulling teeth to get them to do it. I almost wish that rentals here were run by big corporations like in the US as a proper business rather than mom and pop landlords where it is all their money and they have not planned ahead for this stuff – but I digress.

          We were just over renting, over being in an high-rise apartment while both working from home 24/7 and wanted a house and some stability. I did suggest just moving to a rental house instead of unit but my wife used one of her rare “putting my foot down” cards and was like “we’ve been saving for 15 years and it is time – I am not moving twice and want to own a house.” We get the keys in a week and I have never seen her so happy…

        • Hey Dom,

          When we moved into our current rental I refused to pay a bond unless the real estate agent deducted the interest it earned from my rent, they said no. I asked that they take a offer of 12 months rent up front with no bond to the landlords, they did and the landlord excepted. After we had signed up, I told the agent that we would be treating this house as our home and so will be putting up pictures, having a dog etc. Inspections had to meet our schedule or they didn’t happen. We have been here for years now with no issues. Sometimes you can win.

        • Totes BeWokeMEMBER

          Great insight. I agree. People and circumstances are going to be much different.

          I’ve lived in housing i owned and couldn’t care less. Mates were pulling their hair out to get on the ladder (hate that term).

          I’d do whatever I could to make things impossible for that agent and owner way after I moved out. They’re scum.

    • Frankly though, rents may not be going up but mortgage rates are going down. For houses, rental stock still looks pretty lean. Was there such an incredible shortfall that even with no immigration, no tourism, migration to the regions and continual completions there still isn’t enough housing?

      • Rents are going down in many places. Renting allows you to move easily and follow jobs, a critical aspect in these times. My son has had to move country to country, several times, in his career, as did my wife and I. Jobs are impermanent nowadays, so being able to up and move at the drop of a hat is a huge advantage.

        Don’t buy too many possessions because it makes moving difficult. Live light, have a small footprint.

    • At times I also feel like I also lost a decade, but being able to save 7 figures while working part time for half of that period takes the edge of.

      At the moment I’m reading medical groups where there’s discussions about trying to save money (shopping at Aldi) and how their investment properties are making a loss. May be at risk of overdosing on schadenfreude.

  6. Totes BeWokeMEMBER

    A government that’s dodgy to the core with regulators, an opposition and MSM all dodgy to the core, along with a dumb electorate?

    What could go wrong?

    Very sad where this country is going.

  7. Surely this black swan should be more critically analysed in the MSM, given it is directly contrary to recommendations from the RC. And given the devastation similar policies caused elsewhere.

    Not implementing a change that an RC recommends is one thing – and we have ample examples. But re-introducing reckless policy doesn’t seem to be raising the slightest concern outside of MB and a few other places.

    How far can this can be kicked?

    • Totes BeWokeMEMBER

      MSM is as corrupt and unpatriotic as the wokers party.

      Australia is screwed mostly because MSM and Labor have betrayed their core roles, leaving LNP to run riot.

      It is very sad. It could be worse, and that is going to 50m people before it collapses.

      This could be a blessing in disguise if all this blows up before immigration restarts.

    • MountainGuinMEMBER

      MSM is rubbish. A Bank AGM would be interesting, “why are you making loans that you recently viewed as too risky as economic conditions turn worse? How will you be held to account if you lose the banks and shareholders money?”


        Reply: “Well, the Government have implicitly stated that the taxpayer will bail us out/in, so that’s not our problem. To compete with the rest of the market, we have to grab our share of the sub-prime loans”

    • How far can this can be kicked?

      I’ll take a stab, or dumb guess at that question. When the big developers, have covered their costs, made some profit, pushing their costs, and potential losses, as debt to consumers. At that stage, they may walk away from their enterprises.

      Yes a dumb guess, I had that impression soon after the federal election last year. When Hairy TriggerBorff was being interviewed on an ABC program, and said something like, after the election result, Snott Horrorson called me, to thank me for helping him win the election, I said, ho ho ho giggle giggle, it wasn’t me Snott, you did it.

      At that point I got the impression, Snott wasn’t intending to help people to buy property, he was helping Hairy to sell his.

    • Governments are given to short-termism. Throw caution to the wind and let someone else deal with the consequences later. The property market is everything to this government. If the only solution to save it was to round up 1000 random members of the public and shaft them all with the rough end of a pineapple, they would do it. They could not GAF.

  8. I have been watching some specific areas in Victoria and NSW for about 15 years. Some of the Victorian areas had barely had a new listing in months – rarely a single one for weeks.

    In the last two weeks I am seeing 50 a day.

    Dunno about NSW – but Victoria is WILDLY over priced – especially in the regions. See my comparative post above if it gets approved. As such – despite Covid – Victoria I think is already collapsing. The new listings are saying crazy things too “GET IT SOLD” – “ANY OFFERS” –

    Understand the theoretical position being put forward here – but its like warning people about the dangers of unattended BBQ’s in the middle of a tropical cyclone.

    IN normal conditions yes – this lowering of standards would turbo charge things, in the middle of deep depression it will do very little except endanger the reputation of the banking system internationally.

    • Mining BoganMEMBER

      Had a look at some south NSW coast towns and there does seem to be a sudden rush of new listings over the last two weeks. Had been quiet for a while.

      Hoping it’s panic setting in but yeah nah, it never is.

      • Reus's largeMEMBER

        In 2257, the total listings are pretty stable, but I see that the agents have removed all the crap this is not selling and the new listings are coming thick and fast 20+ a week, where there were only maybe 5 or so a week leading up to now.

    • but Victoria is WILDLY over priced

      You may think so, but most would disagree. Had you been alive in Amsterdam in 1637, you could see single tulip bulbs sold for more than 10 times the annual income of a skilled craftsworker. You would tell them they’re insane, but nobody would have agreed with you.

  9. We ceased to have any sort of real economy since the 80s. The “political economy” took over and rising house prices became “the system”. They give the false impression of prosperity, they mortgage people for 30 years which allows the government huge amounts of control over people through the manipulation of interest rates and other housing related policies. If house prices fall dramatically or people start losing homes then that control lever is broken, that must not be allowed by our masters. The powers that be want everyone working full time in bullsh!t jobs, paying off a huge mortgage and mindlessly consuming for the majority of their lives, then pay for their own retirement with a reverse mortgage. They figure this is a sustainable way to control the populace and keep them distracted and docile. In theory it’s even sustainable intergenerationally if the people never catch on to how they’re being manipulated by their overlords. It’s part of the circus, when we simple folk start to lose interest in the dancing clowns because our tummies are rumbling then of course the government will start handing us all a little bread to fill our bellies and refocus our attention on the latest circus trick. It’s a simple matter of, when they start losing their own game, they change the rules. they’re Only interested in their control over the plebs and their own self interest.

    • Totes BeWokeMEMBER

      Nice comment. Pretty accurate IMO. Everything’s a scam in straya now, and we’re the patsies.

    • Nice sentiment but its not about control. Australian politics like America, EU and much of the world is entirely captured first and foremost by banks. I think everyone can agree on this one point. Yeah mining, pharmacists and resources are powerful in Australia – but banks are on their own level.

      To this point consider banks as any other business selling a commodity – such as sugar. Its in their interests to promote sugar, get as many people as possible eating it, and raise the price as much as possible.

      Tell everyone that fat is bad for them – here eat this low fat yogurt (full of sugar) – here is a Mars Bar – same price, half the size as two years ago. This is a protein bar for healthy people who want to look gorgeous. Cornflakes are great for kids. Special K has almost no fat. Eating meat is bad for your health and bad for the environment – sugar, transfats, cotton, rice, wheat, palm oil, soya are all great.

      Same with housing loans. Its not a service to help society with business – its a product.

      Banks want to sell as many loans at the highest price possible.

      That’s it.

      Housing could be $150k for your average home – it would make absolutely no difference to the economy or anyone else – the only ONLY area that would suffer are banks and their investors.

      Banks need to be removed asap. They serve no real purpose in the modern age – literally none – we can deliver all their services with online digital methods – they need to be removed.


      • Great comment Casus.

        There’s nothing inherently wrong with Banks wanting to sell their sugar.

        The problem is MP’s being influenced to adjust policy for the favour of a single industry/business.

        Removing/breaking up the banks won’t change the susceptibility of MP’s to be influenced.

        Ergo, any meaningful resistance has to include an adjustment in policy away from the banks (eg abolish negative gearing / maintain responsible lending etc) & preferably have a self-funding model (& culture) which reduces the chance of decision makers being influenced by Le Vested Interest.

        • Pollies are in thrall to banks because they see them as being the lynchpin to a ‘stronger’ economy — credit is the crack cocaine the economy requires ever more of. Reform is too painful to contemplate so it’s just more of the same until the addict inevitably expires.

          Then it’s a case of: Nobody could have seen this coming! And the system resets without consequences for the architects of the original mess.

  10. pfh007.comMEMBER

    None of this is surprising.

    It is precisely what one would expect when credit creation by private banks is allowed to dominate the monetary system for 40 years.

    And if you are hoping for change or a crash forget it.

    The only hope is fundamental reform of the monetary system and most seem to think that is just impossible.

    So get ready for more asset price inflation and bizarro non regulation of the private banks.

    • pft007, the trickle down, bulldoze up, wealth system, is neither changing, nor crashing, like you’ve pointed out, and never will.

      People (think they) have some idea of how this ecomony and political system operate, and because the systems they perceive aren’t entirely happening, it is interpreted as the economy is crashing. The crashing economy is also an illusion.

      No it’s not crashing, actually it’s well buttressed. Many people are crashing, and this crashing of people is perceived as a consequence of socialist, or left wing whatever. Far from any notion of a “libertarian democratic capitalism”, they’re not in but think they are, is causing systemic decay for many. Don’t try explain Neoliberalism to them, they’ll look at you as the idiot, which granted, maybe the case.

      So get ready for more asset price inflation and bizarro non regulation of the private banks.

      And the people will love it, embrace it. Many that can’t afford it, will borrow big, many that can afford it, will borrow bigger, and they’ll let you know it. No one will tell you the financial struggle they’re enduring because of their actions, covering short falls with somekind of credit facility. You just need to look good.

      • “never will”

        I’ll take the other side of that. Anything which is not sustainable will end.

        Slowly at first … then suddenly.

        • +1 In a nutshell. The whole giant Ponzi is unsustainable. Grab a chair, cos when the music stops it’s going to be bad.

  11. Jumping jack flash

    “Australia’s housing market now represents a tug-of-war of war between lower interest rates and easier credit availability on the one side (positive for prices) and collapsing immigration, high unemployment, and unwinding of emergency policy support on the other ”

    I wouldn’t go so far as to say that, though. Its not a tug of war at all. Its a walk.

    It is quite easy to read between the lines and predict what is going to happen, and most importantly, why it will happen that way.

    Advanced manufacturing in the name of COVID will fix everything. Where are the skills for this? After the last 20 years we have very few skilled people for advanced manufacturing. The government may or may not even provide token research to prove it to the “racists”.

    Therefore this will mean skilled migrants aplenty. Subsidised wages growth. All untouchable due to COVID.

    Then, looser lending standards catapaults debt growth (hopefully) and also fixes the problem of the great displaced. The unfortunates get bailed out by the new immigrants required for “advanced manufacturing”.

    The key this time, as with every other time, will be whether tha banks come to the party and lend out as much as they need to.

  12. just to remind everyone that house prices started to fall well before anyone knew how to spell Royal Banking Commission. Those falls coincided with drying of Chinese buyers as China started tightening the rules.
    But China was not the sole factor for falling prices that started mid 2017. I think that is when we reached our borrowing capacity and that was the main factor. When LIBS won house prices started to move up but never reached the same pick. Scott and Josh know this and in order to keep the ponzi going they have to go with irresponsible lending so they can kick the can down the road.
    I say let it be and be patient. If the economy don’t start burping well paid jobs then this will be very short lived recovery.

    We are seeing low stocks because the banks are engineering controlled clean up of bad loans. This is what I think is happening right now. Anyone that can’t make repayments but still have over 5% equity is being given 3 months of additional holiday. Rest will be forced to sell but won’t be too many. The effect is low stock and very slow price depreciation. Next quarter banks will repeat the process and keep sending some to the wall. Banks also count on the economy to start improving and as a result some people to find jobs and start paying off their loans.
    If our economy does not improve and does not start producing well paid jobs then this strategy will not work for the banks and they are risking to find that their bad loan book actually increased after 3 months despite forcing some people to sell but giving most another 3 months holiday. If this plays out then banks will have no choice but to force much larger group of their customers to sell and accelerate the price falls.
    Monitoring unemployment figures and wage rise data will never matter more in our history than right now. Over the next 3-6 months our economy must start to improve. If it doesn’t then banks will be at risk of failing.

    • Jumping jack flash

      Something definitely happened around 2017.
      But also looking at the debt growth charts we haven’t had adequate debt growth since 2006.
      That in itself will eventually cause some problems, perhaps 11 years was the limit. Coupled with an RC, and China, it was the last straw on the economic camel?

      With such a need for debt and the amount of debt we have, we cant get rising wages.

      You may be correct, maybe banks are taking the lead on this and trying to clean up the mess they made? If that’s the case then Joshy boy is pushing the proverbial up the hill with looser lending standards.

      I’ll find out in a few months i guess.

      • Also, in Syd and Mel, the bank of mom and dad is getting stretched so that help is losing steam too.

        • Arthur Schopenhauer

          Good point. BoMD directors are moving into generations where fewer people not reaped the windfall of astronomical property appreciation.

        • Yep, even the bank of mom and dad has its limits – the limits being the Boomer generation, declining as you go through each generation.

      • The problem is that as debt to GDP increases and IRs fall, the rate of debt repayment approaches the rate of issuance of new debt.

    • The level of “spin” regarding house prices at the moment is frenzied. They really are whipping people into a frothy wide eyed hysterical craze.

      I said above, the reduction in lending standards is like telling people not to smoke because they might start a bushfire as cyclone Yasi rages outside.

      We are in the middle of a depression. Economic activity is going to drop by 25% across the board and it has only been maintained, with house prices, by flushing trillions down the drain.

      That money has not gone into long term projects, it has just been flushed feeding people for the past year.

      Its done. Support is being removed – system will crash. Easy loans will not save it.

    • Agree Niko – The Tier 1’s are using this hail mary to clean their books and pass the bad debts onto the market or Tier2-4 lenders who are chasing market share but are not in cahoots with the government, APRA, RBA.

      They are doing it fast enough to clear the risk but slow enough for the majority not to notice the change.

      Slow is smooth, smooth is fast.

  13. giving access to another $70k to bid higher is not much when house prices are over $1m. It would have matter if house prices were around $200k. We are very close to the upper limit and not much room to cut teh rates. On top of all this, where are the jobs – especially well paid jobs.

      • that does not sound like jobs heavy industry. automation is very big in this industry. Plus, most of this will go to EU, US, Japan and S Korea. They have know how and relevant supply chains and support industries. We will continue to dig dirt for them.
        Yes, few advanced plants will pop up here and there but I doubt will transform our landscape much.
        3D is something that may get up and running here as in most cases doesn’t require large capex and in many cases only needs materials we already produce.

    • Canstar bloke knows nothing. 70k hahaha. No responsible leading requirements, no moral hazard for bankers,100% guaranteed bailouts, and zero mortgage rates on the cards. Welcome to NINJA territory through you local mortgage broker.

      My expectation is that all welfare recipients will soon qualify for at least a million (more when the broker lies for them, which now won’t be checked) on an interest only loan. Repayments will be manageable because interest will be at near zero and/or gov will offer their new stimulus program of MortgageHelper. This is the nirvana where the gov, rba, media, etc want us to be and they are doing their best to get us there.

      • agree. And every knew loan will come with automatic 12 months holiday – buy now start paying later.

      • Display NameMEMBER

        Yep. Remember at the RC the UBS did an analysis of a loan set submitted by each of the major banks. That showed, if I recollect correctly, that 32% of the broker originated loans from the NAB had declared family incomes exceeding 500K. And this was allegedly with responsible lending in place. It will be loans for anyone with a pulse going forward if the responsible lending is passed. And when they have 200B now and probably more coming from the RBA, its party time in banking again. Until the lights go out.

  14. Over priced RE is the gift that keeps on giving taking.
    What a joke it is to talk about supports for Advanced Manufacturing one day and then the very next day to double down on the very thing that killed Manufacturing (RE speculation and unconstrained growth in unproductive capital)
    Honestly what kind of dullard would take the Advanced Manufacturing initiative seriously, as far as I’m concerned I’ll write some fantastic proposals, sop up as much Gov’t money as I can get and invest the whole F’ing lot in RE.

  15. Dream on. This country is becoming impossible to live in. But the punters are too stupid to know it. I thought I’d seen everything, but these are the dumbest people on earth.