Factors In Generating Australian Leads Especially In This Economic Crisis
Predicting the future of the housing market always involves risks
, but the current global financial crisis is making the task almost impossible.The Australian media are full of contradictory opinions of experts from the property where the market is headed, making it more difficult for the average homeowner or investor to plan for the future. real estate markets in most U.S. have taken a hammering in the last two years, and in Australia the big question is: Is it the same here?
On the positive side, there are several crucial differences between the U.S. Australia and housing markets:
Housing Supply...
Many areas of the U.S. housing market such as Phoenix Arizona are significantly over-supplied with dwellings. In other words, many houses were built in regular demand in each area. The oversupply of unsold new properties has been completed by the large number of properties in foreclosure that are sometimes can make dramatic price reductions.
However Australia has, according to experts of ownership, been building fewer houses than normal demand would dictate. This has been mainly a result of planning restrictions, escalating construction costs, and the increasing tendency of local governments to meet budget demands by taxing enormous developers instead of raising local taxes and fees for existing homeowners (read: voters).
The resulting housing shortage is evidenced by the very low levels of vacancies in rental markets in major cities, accompanied by rising rents. Along with the cost of new homes are significantly higher than the existing housing stock, these factors have been the basis of the Australian housing market.
Lending Rules...
Jingle mail - where owners can no longer make monthly payments on your home and mail the keys to the lender - has become commonplace in the U.S. in recent times. Most (but not all mortgages) U.S. are without recourse, in which the loan is secured solely against the property and there is no opportunity for the lender to get your hands on the borrower's income or assets. Once the keys are returned, the borrower's responsibility is essentially over.
This structure of mortgage loans has been at the heart of the sub prime mortgage crisis - has not been any pressure on lenders to verify the borrower's ability to pay the mortgage, and is not responsible for the borrower to continue payments if things get tough, or a correction in the housing market leads to the home being worth less than the mortgage.
In Australia, the onus is on loan from the borrower and the lender can pursue the borrower's income and assets should not keep up repayments. This puts more responsibility on the borrower to arrange their affairs to ensure they can meet their payments.
In addition, consumer legislation of Australia puts considerable burden on the lender to evaluate the borrower's ability to meet its credit obligations before approving a mortgage. In the last five or six years, low-documentation loans (where the level of loan service test has been lower than for standard mortgages) have grown in popularity, but these are significantly safer than sub-prime loans in the U.S..
As a result, the mortgage default rate in Australia is only about 1% mark in 2008, which is on average over the last decade or so.
Other factors.
Other positives for the housing market are strong immigration flows, an economy growing at a significant (albeit slow) pace, historically low unemployment and a growing trade surplus.
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