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Aussie banks vulnerable to housing collapse

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Your Investment Property | 16 Jul 2013, 09:30 AM Agree 0
Australia’s banks are vulnerable to any potential housing collapse, having the highest exposure to residential mortgages in the world, say analysts
  • John | 16 Jul 2013, 12:51 PM Agree 0
    This doesn't matter with housing in Australia. Underlying fundamentals don't govern any market, particularly the AU housing market. Sentiment is the only player. As long as Governments sell the Aussie dream, and are prepared to maintain tax advantages to those with housing, the over-heated housing market will remain un-affected by any movement in fundamentals.
  • Reality | 16 Jul 2013, 01:01 PM Agree 0
    This speculation of a housing collapse has been on going, every year another article stating the same thing as the year before, collapse collapse...yawn yawn.
  • Pascoe | 16 Jul 2013, 02:13 PM Agree 0
    If they keep predicting a housing collapse every year, eventually they may get it right.
  • Fi | 16 Jul 2013, 02:38 PM Agree 0
    A recession or collapse is just a way for the powers that be to take the wealth from the people.
  • Frankle | 16 Jul 2013, 03:09 PM Agree 0
    last time I looked, Au property was not overpriced relative to other world markets when superannuation was taken into account, and the flat line for the last few years has left Sydney below the longer term trendline, suggesting as some do, that Sydney is due for property increases

    doomsayers have predicted 11 of the last 3 crashes - and Sydney tends to flat line rather than crash - as it did for the last few years - so time for another growth phase

    but hey - I'll take it on board - I think I've got a reasonably balanced portfolio so even if it does crash I should survive OK.
  • Moody's Employee | 16 Jul 2013, 04:59 PM Agree 0
    Vulnerability of banks is not driven by house pricing. Given that any mortgage over 80% LVR has to be insured the banks are sitting pretty with an average LVR of 60% the entire market would need to loose 40% before the banks felt any strain as the Basel capital accords require them to offset
    Capital for loans underwritten. In addition being in negative equity doesn't directly correlate with mortgagees ability to make repayments - their salary does. The high concentration in domestic mortgages is what saved the big Aussie 4 from the last GFC and is not going to be what send us into one. This article sensationalises a balanced report, the main comment of which being the high concentration in Aussie residential mortgages. In the same way you'd watch theatre before listening to the pundits,
    apply the same logic and read Tony's report!
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