Property Portfolio Specialist Website Will our property market crash?

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I’d like to share with you Catherine Cashmore’s (Property Advisor & Buyer Advocate) view on the future of Australian housing market. I enjoyed reading her article ‘Will Our Property Market Crash?’ including her additional comment regarding affordability as shown below:

All future analysis is to some extent speculation and although I can ‘envisage’ temporary drops in the market – 5/10% in some areas, I honestly don’t feel we’re heading for a 40% drop or more which has been suggested.

In the US borrowers with little income, no equity, and poor credit were allowed to take on mortgages they simply could not service. The system was unregulated and therefore even with a shortage of homes in areas such as California, a crash could not be avoided.

In Australia our lending rules are different. We don’t have sub-prime lending – high LVR loans are subject to mortgage insurance which protects the lender against the loss. In the US this wasn’t the case. They gave ‘non-recourse’ loans allowing home owners to ‘foreclose’ and walk away from the debt This resulted in a large number of properties suddenly hitting the market creating a huge surplus in stock.
Click here for the rest of the article (Source: Property Portfolio Specialist Website)

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