Housing collapse and Government complicity
PERTH WA, The Capital city of the largest state in Australia,
Suburb: ARMADALE 33.4 kilometres from PERTH City. (SNAPSHOT JANUARY 2019)
Did you know?
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FIFTY Homes are UNDER $200,000
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SEVENTEEN Homes are under $175,000
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EIGHT Homes are under $150,000
SOURCE: (4) “SNAPSHOT” DATE 23rd January 2019
I CONTEND: “The Liberals” have “thrown the baby out with the bathwater”
Few would argue that the “Sydney” Housing Market needed an adjustment, however, the one size fits all, is indicative of sustained “POOR POLICY” by the current Government. The “fix” has had some success “Temporarily cooling” the Sydney market, but, in doing so utterly destroyed the lives of “perhaps” millions of Australians, all over our land.
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I am one of them. I own (sic) three properties, two in Camillo and one in Kelmscott. TWO of the THREE are worth “less” than in 2006.
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I am a victim of the Australian Prudential Regulation Authority’ (APRA) cap on interest only loans. As instigated by the Turnbull/Morrison Government.
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I am old, it was my hope, some 15 years ago to be able to reduce my burden to the Australian People, by providing (Largely) for my own retirement.
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My wife and I face a bleak future, we will lose all three homes – no power exists to stop that.
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INSTANT restoration of “interest only”, on all my properties is the ONLY solution. A solution that will allow for a “dignified” sale of all three properties over time. AND A fairly certain funding arrangement, WELL within my means.
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IMPORTANTLY it will facilitate a dignified exit for my tenants.
Up until the end of last year, I seriously considered, ending my life, which is my choice. However, as much as I still feel this will end this nightmare, it will hurt the ones I love far too much for me to bear – the sense of hopelessness is overwhelming. I have worked my entire life, NEVER touched base with centrelink – until I applied for the OAP.
Some of you “may” say I “youshould have known just as I did”! Sadly for people like me, we don’t have the wherewithal that you have – people like me, allows people like you, the pleasure of gloating.
To use a well worn “idiom” “But there’s more”, well there certainly is. Two of my properties are rented. One by a Single Woman in her late fifties – she has lived there for almost 13 years. Her son is in Prison, she of course is devastated and NOT to blame in any way. I support her fully, as best I can. Her rent has not changed since 2009. She keeps “Her Home” so beautiful, BEST garden in her street.
The second property by a (Now) Married Couple. It was initially let to X, before her marriage to XX.
X has rather severe intellectual dysfunction, however, she IS intelligent and aware of her disorder. They want to remain, having been there for 9 years or so.
Without challenging “War & Peace’s” rather large “word count” Both these people will suffer severe disruption to their lives, when the banks order them out. There is always collateral damage – but, the mark of a compassionate society is how we dish out the compassion. There will be NO compassion from the banks – they will destroy me AND they will destroy them.
MY/OUR WORLD.
The area in which we both call home (ARMADALE WA) has been devastated (Deliberately) by both the Liberals and their underlings; the banks - (Or is that vice versa??).
A Noted “Banker” $AUD Billionaire, Malcolm Turnbull was architect, as was his underling, the (Then treasurer) “multi millionaire” Scott Morrison.
We have 10 BILLIONAIRE politicians and countless “millionaires” from BOTH sides of parliament (5)
Whilst the Liberals have used APRA; it is not without criticism. Recently, the Reserve Bank Assistant Governor, Christopher Kent blamed "unnecessary" credit tightening in December 2018 for further threatening the market. (1) AND yet credit is tightening further in 2019
The Australian Prudential Regulation Authority announced it was removing a cap on interest-only loans for residential property, on the grounds that the measure had reached its objective of curbing higher-risk lending practices. (3)
APRA said the cap had "led to a marked reduction in the proportion of new interest-only lending, which is now significantly below the 30 per cent threshold". Minister responsible: Scott Morrison MP, Treasurer of Australia (Since 2015).
ADDED COMMENT from a member of “yourlifechoices.com.au”
It was a deliberate targeting of a sector of the investing public - who were doing the right thing, providing shelter for others and providing for their own and their family's future at the same time.
APRA, the government and the Opposition knew full well that while these small 'mums and dads' investors were large in number, they would have difficulty organising themselves to protest, they had little political clout (GetUp wouldn't be representing them for starters) and both sides of politics were using them as a scapegoat. (7)
I would like to add to this members contribution:
Few would know the “hidden” role “some”, 'mums and dads' investors, play in their relationships with their tenants. I know of many and I include ourselves. I am torn between offering my example and remaining silent, for fear I may inadvertently identify my tenants. Hence I will stay quiet and err on the side of caution.
I suggest the fallout will be significant, sustained and painful for a great many people, particularly those with the least skills to navigate their way out.
SOURCES:
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https://thewest.com.au/business/housing-market/another-12-months-of-pain-before-perth-property-bounce-says-moodys-and-corelogic-ng-b881066879z
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http://thebankdoctor.org/resources/glossary/
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https://www.afr.com/business/banking-and-finance/apra-removes-interestonly-lending-cap-says-its-served-its-purpose-20181219-h199rk
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https://www.realestate.com.au/buy/property-house-between-0-200000-in-armadale,+wa+6112%3B/list-1?activeSort=price-asc
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https://toprichests.com/top-10-richest-politicians-of-australia/
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http://www.lawfoundation.net.au/ljf/app/&id=/2FD34F71BE2A0155CA25714C001739DA
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https://www.getup.org.au/
Whilst I can understand your mental distress, I have to agree with Sophie on this one. 15 years ago you went into investing in three properties each of which offerred tax saving repayments of interest only. You and you alone are responsible for that and not just once but three times.
No doubt during the years of high prices off the back of the mining industry, you were probably metaphorically rubbing your hands with glee over the high increases in value your properties no doubt provided and looking forward to your later years when you could cash in on the profit. I would hazard a guess there was little thought then even for the plight of the young who were increasingly priced out of the market by investors like you, and the fact that you would one day have to repay the full loans was not something that kept you up at night.
Fast forward and the mining boom comes to an end, overseas and out of state buyers back off, then comes the Royal Commission into banking and financial services and the banks 'man-up' and start doing the due diligence they should have been doing all along, interest only loans start to mature reverting back to interest and capital repayments, house prices fall. Isn't that what people were crying out for?
Really this is nothing more than the life cycle of housing, a few good years of growth, followed by a pulling back and ultimately back to growth period once again. Its all cyclical.
Blaming the Government for your own business decisions is ludicrous. You are in the same position as the 'face' of the current class action against Westpac. That family did exactly what you did, took 5 interest only investment loans on a single salary (less than average). Basically they leveraged of one home to finance the next but couldn't actually pay for any of them. Now their interest only loans are up, they are in strife and crying all over TV they will 'lose the lot'. Well they only have themselves to blame. If that is 'victim blaming' well so be it. They were not complaining whilst their property increased in value, only now they actually have to pay for them.
You have made business decisions but are not conducting yourself like a business person. Having a reliable tenant is like gold (I was one for 17 years in the same unit), but that does not absolve them from having to pay rental increases as the need arises. As it is, you are likely to lose that home and she will have to ge elsewhere anyway and at the current market rate. Long term you have not done either of you any favours.
I am sorry but you are a 'victim' of your own decisions. It is not the fault of the banks or the Government (neither State not Federal) that you cannot service your loans. You cannot change what you do not acknowledge. You need to own your mistakes before trying to find a way out of them. Blaming everyone else will not help you in the medium to long term.
The best advice I can give is to go and seek help first from your doctor or a counsellor for your mental health. Then see a solicitor/financial counsellor/accountant to see what you can do to save something from your investments.
Good luck, you are going to need it.