No Australian Property Boom Ahead

⚠️ The Mortgage Cliff is coming!

👉 There will be Mass Defaults!
👉 There will be Mass Foreclosures!
👉 There will be Fire-Sales!
👉 There will be Bargains!

This data from CBA will shock you.

In this episode we look at the latest data from Australia's largest bank - is the property market going to CRASH or keep rising?

🩸 Will there be blood on the street and what should property investors do next?

0:00 - Introduction
0:27 - CBA forecast on house prices
1:39 - The Mortgage Cliff is here!
2:19 - Home Loan Growth Rate from CBA
3:34 - Balance growth rate between Home loan, Redraw & Offset accounts.
4:09 - Home loan arrears
4:54 - Hardships in Home Loans
5:19 - Arrears in Home Loans
6:05 - Repayment buffers are in advance
7:56 - Percentage of customers to pay back in advance
8:30 - Mortgagee in possession
9:15 - How Mortgage Cliff is Affecting Investors Vs Owner-occupiers
12:19 - Conclusion

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#PropertyInvestment #PassiveIncome #Australia #RealEstate

[AusPropertyMasteryWithPK]

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[doristan]

In 1980s Australia, mortgage rates went up to 20%. Inflation tend to be sticky so RBA will have to keep raising rates in future. We may have high inflation for next 5 to 10 yrs. House prices usually last to fall, there a long lag time

[vickysarin]

Fantastic video, PK! However, based on my experience working in a bank, it's worth noting that the Big 4 usually steer clear of underwriting high-risk loans, which might result in skewed data. Considering the Global Financial Crisis, it wasn't the major bank defaults that were the main culprits, but rather the tier 2 banks. Also this data doesnt show the loan book securitized. That number has grown significantly past year. Banks do it to make their loan books healthier. Can we also analyse data of how many loans CBA securutized past year and their asset quality

A potentially insightful approach might be to analyze the borrower profile of CBA - perhaps assessing the average income-to-loan ratio - and comparing it with the broader Australian market. Generally, it's the lower 20% of the loan market that significantly impacts sentiment. It would be interesting to explore this further to get a more nuanced understanding of the situation.

[propertyone]

Hard to conclude with a wide spread blanket to comment on the Australian property as a whole…
Need to follow state by state and locality differences…
But your points are very valid. 👍

[waffle_burger]

The huge rise on offset account holdings is interesting. It suggests that a lot of households used this strategy to offset rising interest rates, and this is probably why the data is showing that there has not been a mortgage "cliff" that so many commentators were predicing. As a proponent of this strategy, I can confirm that my own offset balance has increased by 70-80% during this period. While not all households are in a fortunate enough position to do this, it suggests households in general are sitting on large cash piles and positive equity positions.

[colinp]

This confirms what I was thinking at the start of the year, the so called mortgage cliff won't start happening until the end of the year and more so next year.

[saravananramaiya]

Let us assume Hoarder has bought Thomson Dam of Melbourne and selling water for 20 dollar a litre, would u buy water for 20 dollar a litre or protest the sale of fundamental need water to a Hoarder. 4 million investment homes in Australia and 1 million investors, 70% of investors has one investment property each and they should get negative gearing, 70% 700K people owns 700K investment homes. Remaining 30% 300K Hoarders owns collectively 3.3 million homes, an individual hoarders might own 2 or more investment homes, business hoarders such as corporations, small business hoarders, fake family trust, property trust companies own 10000 homes or more. These hoarders control rental market, create fake shortage, deprive homes for long term renters and run these homes as short term rental motels and hotels. Stop these hoarders, impose rental freeze, remove negative gearing from 2nd investment properties onwards. If u could change superannuation rule, you could change Housing policy too. Albo, Jim act now, Albo are u from Housing commission home? Max, raise this voice in Parliament. Albo fix Housing first, then we can talk about Voice

[JasonWu-skvj]

Hey PK, I love your energy, I love your insights thank you for all that you do. Can I make just one small point. CBA are only originating loans from prime borrows, basically the most credit worthy, the bank has already filtered out risky borrowers. What would be interesting is the same data analysis from sub prime / non confirming loans (people the big banks say no to) The argument will be well that’s a small number which is true, however if a lot of those guys start defaulting or selling it could drive sentiment and concern in the market?

[dubjohnston]

Lot of fixed loans rolling off is going to make a difference. My loan is at
2.7%, will turn to variable in Nov at +6%. I haven't got cashflow to refinance or play hard ball on negotiation. Repayments will go up about 50% for me. Yes, that's going to hurt

[bradwatson]

With 650, 000 cashed up immigrants coming in this year and next year, with a maximum of 125, 000 houses and units being built. Not to mention 2500 builders going broke this year already.
A boom on existing homes will be inevitable.
Well I was only a licensed agent but what would I know?

[IlonaKleyman-mxzz]

Well yes and no, asking friends and relatives around, group that made purchases within last 5 years as a residential are under stress, not selling but tide up the budget for all other expenses like holidays, new car and reno, small expenses been cut too. So do people feel it yes, do all show it - not all. Does property will fall - looks like every where else yes but not in Au, why? Open immigrant.
Thank you as always interesting debate 😀

[garyhost]

Home owner here sitting in a paid for house. I can promise debt free is a very nice way to live and very stress free. Plus no debt frees up SO much money for stock investing

[JJ-mclu]

What??? In my area property prices are rising sharply. Just like all the other times media has said prices will fall and it never happens. Those people who believe this have always missed out. My advice buy now!

[firstbornjordan]

Thank God there are compassionate and not greedy landlords who still rent out their nice houses for decent rent, for long term tenants. Those who are wealthy or in good financial position have a choice to ease rental market. It's not all about the money. Sharing the burden is a great trade off for security. Thanks for the lesson.

[HA-vhti]

Partially agree, partially disagree. People who r selling don't wait 90days to default then sell, people foresee the trouble with cash flow & sell in advance when market is still slowly rising, so I think ownership will keep changing, personally I'd ignore 90days data - those r bad decision maker, most likely owner occupier trying to hold on and will always wait till last moment, smart investor shouldn't. We r happy within 5% of boom or bust. Sydney situation is really bad, every week I am seeing it's slowing down, recently sold ones coming back again, the signs start with high-end fall first, then within 3-6month mid range get hit, most likely by Nov, Dec. That said, I also don't believe boom or bust. Aim of soft landing is to keep the curve within flatter tolerance. not too high, nor too low. So agree, no boom, nor bust - slow upwards

[justo]

I live in emerald qld been here 4 years now seems to be booming what's your opinion I'm about to buy here not as an investment 1st home buyer

[divinelyshpongled]

Great video but just one note. Doesn't this kinda just prove that commbank maybe just has more strict or rigorous processes when it comes to giving home lones and other lones which has resulted in their customers (and therefore business and data being shown here) being more stable and maybe less affected by whatever crisis is going on or on the way? Just a though. Thanks for the great videos.

[Johnny-kztb]

Very good analysis of the current properties market behaviour . Thank you Bro.

[carlosenriquecastellanoizq]

Hi newbie question, what does it mean to be in advance? Is that they have paid extra money over their repayments so they technically have paid faster or in advance?

[prabuddau]

Obviously theres a lag. Lets revisit this with Dec-23 numbers.