The Negative Equity Trap

[@michaeljp9605]

A life time of high debt is just not worth it....great update again Martin thank you 🙏

[@mohammadwasilliterate8037]

That's why you borrow less than your maximum allowed and pay your home off fast, it was the highest pay rise I ever got when I finished paying off a large home and had all my salary for other investments.

[@Justin-yb6mf]

Very well articulated Martin. Some bears get too driven by emotion, while you just stick to the data. Good critique of the RBA's methodology also

[@tomtesoro7994]

BY NOW, Intelligent observers KNOW that the RBA is NOT studying and advising the OZ economic environment, BUT protecting the federal government!

[@merlingeikie]

What you are showing here Martin, is that again, the RBA is skewing its opinion of the severity of the loan situation. The RBA is essentially trying to talk up the market risks, the banking risks and is using obsolete data to do so. This is a bit like driving a car but looking out the side windows rather than ahead, straight into reality. So again, they are playing the mainstream media game, the real estate industry game and the loan broker's game. What is alarming is that the cat is out of the bag, in regard to the housing crash, and they are painting a rosy picture as though the unemployment created by a 'poverty effect' of the housing value crash, will not loom larger and larger as the contraction of the economy deepens. Hold onto your hats folks and the RBA is not our friend, it showed this with its hands off approach to APRA and ASIC, the RBA's statutory underlings who were meant to be acting in our interests, in keeping bankers from predating during the euphoric days of Australian exceptionalism. The RBA helped to create this disaster by enabling banks to operate without oversight or duty of care.

[@profdoc8339]

Martin: Excellent work! Get some rest, you look tired.

[@bondisteve3617]

Ahhh....Mr. Martin. You've done it again. Many thanks.

[@antpoo]

We have houses under $300k in Perth now. And rents are not even worth the wear and tear.

[@zwarst]

Next - How Negative equity is offset by positive thinking..

[@OnlyMyPOV]

zwarst Like unicorns and the bible god of gold.

[@tinaryan4023]

just a tiny glitch in the property market

[@haroldgrey134]

When I mention Martin's perspective in the office to my work mates with investment properties, they get angry and upset that I'm "being negative" ... they believe if I don't have something nice to say about the property market, I shouldn't say anything at all! lol I ask them wouldn't you rather know all the facts and data to make more informed decisions about your investments? Nope! They want to put their heads in the sand and hope and pray things go back to the 2016-17 mania price rises.

[@johnniethepom2905]

@@haroldgrey134 No doubt they did their research and they are all sophisticated investors . Trouble is Harold you cannot tell them , they don't want to hear. Probably in way too deep now and are convinced things will turn around, but it doesn't and it won't for years yet . Strange how some people follow the market all the way to the bottom . All you can do is save hard and watch carefully.

[@zwarst]

Harold Grey, well in those circles only the trend is ur friend, bet with the trend! kzbin.info/www/bejne/gp6zfqOKlKimaLc

[@johnl4469]

Thanks Martin. And so the story continues..... I'm looking forward to the next tranche of bank Annual Reports where they have to make provisions for losses. Then we'll start to see some truth as to what's really going on.

[@josephwilkes1668]

Don’t expect that sort of transparency John...

[@johnl4469]

@@josephwilkes1668 You're right Joe but note I said "some truth" not the whole truth :)

[@HeywoodJablowme7]

Banks are still extremely profitable. Nab bank still made $5 billion dollars in profits last year. And if their losses become great they simply cut dividends and claw it back that way

[@gringoanon4550]

What I have noticed in a suburban street in Auckland over the twenty or so years that I go to see the in laws. Fifty per cent of the occupants are now Chinese , and the street parking has increased from just visitors to permanent parking for occupants as the drives and garages are now full. So more people are living in the houses now. I would imagine that renting rooms is common and used to pay off the mortgage.

[@craigcookmusic]

Yes I'm in Auckland houses are 50% over valued. Been waiting n waiting for the crash and it's coming now that the Chinese can't get their money out if China and the new foreign investors law

[@paigemartin1096]

i appreciate all your work Martin. But how do you produce so much content in such a small space of time? More than any other KZbin channel. take care of yourself, dont burn out :)

[@anthonycresswell4690]

paige martin some people just have better organisational skills than others

[@WalkTheWorldDFA]

Thanks - yes its a matter of planning and organisation. Actually recording and editing the shows takes little time, but researching the issues, etc takes more time. And yes, careful re life/work balance... The trick is to record as much as I can direct to the final show (as if doing a live event) this avoids a heavy editing schedule. And we try to keep the production values high, but not over engineered. A static set, with lighting in place, and recorder at the ready. If people are interesting I could do another behind the scenes episode. There are a couple up on the channel already.

[@murraykrause8869]

Phillip Lowe could always get a job in one of 'those' parlours after the wheels come off the cart. He's turned 'massaging' figures into an art!

[@masteryoda498]

The unemployment rate is not low, that’s total BS, how can unemployment be low, when a week doesn’t go by when you don’t hear about some company going broke, outsourcing its labour overseas, or downsizing.

[@HeywoodJablowme7]

Wanna know why? Because that company closes and, this will blow your mind......another company moves in and sets up a new shop and begins trading again!!! Shocking I know!!

[@MrDaymien1]

IO loans have had a $25k mortgage insurance if 25% for a deposit was not available , but allot of the collateral was fake . In allot of cases there is nothing backing the loans . IO loans have only had interest payments made, in most cases the loan is 25K higher than the purchasing price of the property because of the added insurance cost . So the insurance is another percentage of negative equity . Then add stamp duty as another lost percentage of the total loan and price of the property . The insurance and the stamp duty could be 5% negative equity on the price of the property straight away and now there are 15% ? losses on property in Sydney . OMG .......

[@rockonthelough5417]

Such a joke RBA saying Aust isn't as bad as Ireland and America. You nailed it when you said the Aust banks may have actually behaved worse AND the sums mortgaged around 2012-2017 could in real terms be more damaging than Ireland and America. Ireland and America were essentially brought over the cliff by bad lending practices over a 5 year period...that's all it takes. Yes you have higher income to service those debts but I really think you could see those under attack...

[@andrewbaker9710]

Picking up the sarcasm on the point of a supportive economy!

[@cory8606]

Hi Martin. The mainstream media is now starting to say that Auckland prices will go down but a soft landing, just like Aus 1 year ago.

[@WalkTheWorldDFA]

Of course, goes to type...

[@murraykrause8869]

The peak in housing price in 2017 - took them well over 12 mths to mention that !

[@MrScoobiess]

Congratulations I just noticed now 17k subs. ( very tongue in cheek ) the RBA is head quartered in Sydney, just an observation.

[@Rob-fx2dw]

I believe what will happen when the pressure of defaults becomes more intense there will be a slowing of discretionary expenditure which will reduce sales of many goods which will then show in lower measured sales or what economist call slowing demand. The RBA will be pressured into reducing interest rates and government will be pressured to "stimulate" more by deficit spending. This scenario is a trap that is just kicking the can down the road and loading up the future with debt. More government bonds will be issued to raise funds for government and they will be sold at attractive rates thus crowding out more private investment. Added to this the private sector will feel the pinch of paying more tax to fund the maturity payouts as well as the additional interest payments on those bonds. There will follow slower growth in the private sector. It is a classic slow death scenario of bad management of money by the monopolies in the economy, the Federal government and the RBA.

[@tobybrown1179]

Thanks David, I imagine it would be time consuming and tiring in going through the data to produce your program. 🙌🏻

[@5688312]

hamster will just have to run faster till it drops dead

[@elijahschnake3863]

Looking at that RBA chart seems to indicate that every dollar drop in prices will push an ever increasing number of people into negative equity for quite some time. So unless things improve soon, they could get much worse, much, much faster.

[@MrWilliam.Stewart]

Rose tinted indeed.

[@djdj79]

RBA wants to see what they want.

[@StephenMortimer]

A Yank wants you to track the prices of USED UTES !!

[@StephenMortimer]

that is the real beating pulse of Oz

[@monsieurfortuna9952]

Yank is smart

[@frankjones493]

What if you walk away. Do you have to do time.

[@DP-zt8hf]

I understand that the RBA is primarily concerned with perception management so as not to stimulate reduced consumption. However, who looks out the for poor souls teetering at the financial distress margins. Not to mention the first home buyers who are being conned into buying with incentives and a distinct lack of risk discussion in the RBA and political narrative.

[@yusuf.alajnabi]

Philip low. The last name says it all. Low interest rates, Low returns on Investment and a Low care factor for the Australian economy.

[@MarjjorieDawes]

Phillip is a liar who knows the Australian economy is a total ponzi scheme. They all know. They just don't care. They've been having secret meetings about their next move after the shit his the fan, and it will.

[@Natpoo101]

@walktheworld Martin do think the RBA has a valid point regarding the % of loans that are Interest Only and LVR compared to Ireland and USA prior to their crash? Seems to be a significant comparison...perhaps we have seen the worst except for particular sectors like high rise apartments and new housing developments out Sydney west? (everything being equal)

[@MrScoobiess]

Martin a question on retail figures could febs pickup be a return to school bounce, a case of mums dragging kids through department stores and spending a little on themselves as they go

[@jamieb3502]

David .Caley it’s probably the return to credit since savings are gone

[@wingkeechan5329]

Negative equity is still equity, and coupled with negative interest rates makes good investing by banks on new issuance of interest-only mortgages. Would the RBA become so desperate as to spin their ''Good News' this way?

[@michaelblurry6559]

RBA basically speaking high to keep Chinese committed... Very "Chinese like" to be honest...

[@davidlazarus67]

racer x Don’t you mean the Chinese Central bankers are very RBA like?

[@TheFrickshow]

why is there no australian government logo on RBA website? time to wake up people and asked questions...

[@ivica351]

😬

[@HeywoodJablowme7]

Oh no my property is in negative equity if I sell now I'll lose hu.... oh ...I dont HAVE to sell....long as i make the repayments I'm fine. Even if i can theres a dozen options available like temporary deferment, debt restructuring or even accessing super. People will do what they're doing which is....hold off selling! Genius!

[@benderrodriquez]

... until they come home with a pink slip.

[@HeywoodJablowme7]

@@benderrodriquez oh no ive come home with a pink slip....guess i should just pack it in and go bankrupt! "or you could find another job.....or reach out to friends or family.....or talk to bank...." see there are still things you can do, stop being doom and gloom

[@philliple87]

First!

[@brianminghella3312]

Greed, the carrot that eats itself before you get a meal.

[@wingkeechan5329]

Is the RBA trying to convince the foreign fund managers, or the Aussie voters of the coming election?

[@merlingeikie]

Both........and unconvincingly regarding the latter.

[@wingkeechan5329]

@@merlingeikie, I doubt fund managers appreciate analysis of today's risks using historical price data before the bursting of the housing bubble.

[@audie-tron9219]

Martin North is my biological father.

[@audie-tron9219]

I love you dad.