Quote:
Originally Posted by mithrandir
Most of the reason Sydney prices keep on skyrocketing is the laws of supply and demand. This morning it was said it is now cheaper to build a 2 bedroom inner city appartment than a 3 bedroom house in the burbs.
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Supply and demand works just fine if everyone pays cash or borrows the capital when individual bank branches had all assets and liabilities on their fiscal books (keeping the branch manager honest), but over the last 20 years we've slid into this moral hazard situation where loose credit isn't even on the bank's books; it's been laundered through affiliates of affiliates, and each one taking their cut too!
All of this is now unraveling at a million miles an hour...don't be surprised to see the entire Mortgage Broker industry wiped-up in 5 years time...it must go back to branch managers and internal reconciliations again to keep bank lenders happy/safe.
We're back to basics again, save, save and save some more, then borrow as a last resort. Now the banks have wised-up, done a 180, and are kissing the proverbial buttocks of Mums & Dads on TV commercials in some vane attempt to undo the last two decades of commercial greed while ignoring the S&L market(Savings and Loans).
Phew...can't help getting all bitter and twisted on that issue!
People who are trying to leverage-up (excluding first/new home owners) are fooling themselves. The reality is if China sneezes (not the USA), we will catch a cold. This means leveraging up amongst global instability and currency instability is nuts.
