Self-managed super fund members will next week face a new setback when NAB announces tough new controls on business property lending, despite offices, factories and surgeries being one of the sector's most popular investments.
The $726 billion SMSF sector is facing several challenges amid proposals to reform use of franking credits, restrict lending and impose minimum amounts for assets under management.
Small business is complaining about a new credit crunch as lenders clamp down following the Hayne banking commission
With consumer confidence in brand-new or off-the-plan apartments taking a hit after the Opal Tower crisis in Sydney, many potential purchasers are turning to established apartment blocks as a safer option.
Basically, you want a well-managed building: everything else flows from that. But how do you find this unicorn of an apartment block?
The obvious answer is to avoid the bad ones (duh!)
Low Doc loans have historically been pitched at self- employed borrowers who either hadn’t lodged their tax returns or simply did not wish to supply them. Lenders seeking alternative income verification would rely on an estimate from the borrower of his/her business net profit supported by a letter from their accountant suggesting that estimate was accurate. That form of income reliance is however gradually being replaced due to post Royal Commission “reduced risk appetites” and the need to adhere to more responsible lending guidelines.
Enter the Alt Doc or Near Prime Loans.
Since Commissioner Hayne issued his recommendations following the Banking RC we have seen the greatest bank heist in Australian history, except it wasn’t banks getting robbed. It was the consumers. Put another way, Hayne is recommending mortgage brokers take the fall while banks take back the cake!
The Royal Commission was originally called to uncover and punish the banks and financial institutions for their misconduct which resulted in consumers getting a bad deal or being ripped off. The commission ran for over a year, and the immediate result was many blokes in suits looking like they’d been slapped in the face with a fish, while they were being publicly castigated for the transgressions of their companies.
How surprising it was then, that when the findings of the Royal Commission were announced, it seems that the banks not only got off with just a slap on the wrist, but their palm was opened up, and they were given a big old chocolate biscuit to go with it.
The drop out of Chinese buyers from the property market has left a significant hole in one Sydney suburb, causing house prices to plunge by 20 per cent in 2018.
Houses in the suburb of Penshurst, 17 kilometres south of Sydney's CBD, experienced the biggest fall in median price across the city, dropping by 19.7 per cent from $1.32 million to $1.06 million over the 12 months to December – double the 9.9 per cent city-wide fall in prices – according to Domain Group data.
"Penshurst used to benefit from the overflow of Chinese buyers in Hurstville, which is the capital of St George and a major China Town," Ray White selling agent Steve Pentland said.
Investors are poised and preparing to pounce on established properties to safeguard themselves against changes to negative gearing in the event Labor wins the federal election.
Industry groups have expressed fears that restricting negative gearing tax concessions will cause investors to further recoil in a market already in the midst of a downturn, but in the immediate term there's been an increase in investor inquiries.
"We are definitely seeing astute investors out there who see there's a correction in the market place but know that getting in before a potential grandfathered [negative gearing] clause is sensible investing," said Property Investment Professionals of Australia chairman Ben Kingsley said.
Courtesy - Ingrid Fuary-Wagner AFR
Federal Treasurer Josh Frydenberg has received a confidential Treasury warning that negatively geared property investors may start dumping properties making the downturn in the housing market worse. Household debt to disposable income has risen by a whopping 200% in the 28 years to 2016 but of equal concern is the threat of rising unemployment.
It is the right time in the economic cycle to abolish stamp duties what with house prices falling, auction clearance rates plunging and state government stamp duty revenue forecast to be $12 billion lower than previously estimated over the next four years, now is the time to abolish this insidious tax and replace it with a broad-based annual tax on the unimproved value of land for the principal place of residence.
Hindsight is a marvelous thing and excluding guessing where AfterPay’s share price might sit today (545% above issue price), getting interest rates right would arguably have made us all the richer. 2019 threatens to hold all the omens of 2018 plus a few we would not have otherwise imagined. In the last several weeks we saw 3 home lenders raise their variable and fixed home loan rates, one by as much as 27 basis points, blaming increased cost of non-deposit funding (savings rates have dropped from 7.3% in 2008 to just 1.35%; below the rate of inflation) and regulation to increase capital reserves.
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