The next EZFKA can kick arrives

As previously predicted, here is a scheme by the Labor would-be-government to pour large amounts of Government debt to prop up housing.

This is the essence of it:

Under the policy, a Labor government would contribute up to 40 per cent of the purchase price of a new home and up to 30 per cent of the purchase price for an existing home.

In Sydney and NSW regional centres, the property price would be capped at $950,000 and could save homebuyers up to $380,000 on a new house and $285,000 on an existing house.

In Melbourne and Victorian regional centres, the property price cap of $850,000 would save people $340,000 on a new house and $255,000 on an existing house.

Looks like the new floor under house prices or, to be more precise – the floor under unit prices, as very soon no house should be available to buy under the scheme limits.

Also the mechanism to let overstretched borrowers exit with no losses when interest rates inch up – replacing bad old borrowers with good new borrowers, whilst keeping prices intact.


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DJE᳆KA

…replacing bad old borrowers with good new borrowers, whilst keeping prices intact.

wow, this is staggering.
it means there will be 0 risk for lenders, mortgage insurance becomes just a skimming business, and what happens when someone pays their share of the mortgage?
it is gov supported multigenerational mortgage scheme

Ramjet

What is staggering is stumping up at least 30% of the purchase price. The government is basically in the housing market in a big way. Prices ain’t going down anytime soon.

Ramjet

It was hilarious reading a comment on EmBee the other day saying the government has limited options to prop up the housing market and prices are going to fall. LOL, they either have a lack of imagination or wedded to crashnik ideology. Kitchen sinks usually follow small price decreases.

DJE᳆KA

they either have a lack of imagination or and weldded to crashnik ideology.

Last edited 5 months ago by DJE᳆KA
Gouda

They still haven’t realised there is no limit to the amount of shitfuckery that politicians will go to “save” the housing market?

After the disaster of 2019’s negative gearing and capital gains tax policies, Labor has seen the EZFKA light and have clearly become true believers in the most important religion of all – property.

Ramjet

They were always true believers. Think back to KRudd who removed foreign ownership restrictions and increased the first owner grant. Gillard introduced the 888 visa removing language and age requirements for anyone with truckloads of cash.

The negative gearing and capital gains tax changes that Labor proposed would not make much difference to prices particularly when coupled with granny visas (more demand for property).

Gouda

Back then the slightest prospect of getting rid of NG had already spooked the investor class. Labor also failed because they didn’t recognise that their previous working class base had become miners on 200k+ salaries with IPs. People like to give Gina Rineheart shit, but they probably don’t know that those who work at Roy Hill refer to her as Mumma G or Aunty Gina… they do love their bonuses, and feel like they’re been taken care of.

The effect of Indian granny visas on property also seems exaggerated. The concern was they were coming over to take advantage of Medicare and crushload an already struggling system. They were unlikely to be rich either, and would have stayed with existing families to provide cheap childcare.

Coming

that is some really serious pork

40% of $950,000 is fucking $380k in straight cash from treasury?

If only 10,000 people take up the scheme that’s already $3.8 billion

That can’t be it – is anyone across the details?

DJE᳆KA

how much was the Aussie equivalent of the QE per day?

the only thing sitting between the $3.8bil and mortgages is delivery delays in printing ink and plastic paper for printing press. (or a left click of a mouse – on the printing presses g-spot).

Last edited 5 months ago by DJE᳆KA
Coming

not really, because nobody is selling their house in exchange for reserves ala QE

straight motherfucking cash is a completely different story

I’m not sure how this actually works

It seems , from the piss poor journalism available, that the buyer can CHOOSE to repay the government’s stake in the property
So its not even a fucking loan – its a literal partnership which the government derives no income or other material benefit from

Even HECS you have to pay back with interest – fucking hilarious that this is where their priorities lie

A much better scheme would be the government/RBA simply loans money directly to the punter at the overnight rate, with much less threat of foreclosure

Coming

it shows the absolute parlous state of australian journalism that none of them has even bothered to ask what the details of the scheme might be

reminds me of the meme of the badly drawn person with the empty skull and tongue hanging out holding a pencil

like there’s a huge fucking difference between a loan (which could be a fucking great idea as it keeps the commercial banks honest if they want the business), and a non-voting stake (which is a fucking awful idea)

DJE᳆KA

…if prices stay flat or decline

unfortunately, you lost the plot there.

DJE᳆KA

the better scheme you propose is indeed better but not for the demographic which “donates” the most “value” to the election process. hence it is forever in the philosophical domain.

QE reference was only to indicate that there are means to create money out of thin air. Creativity has no limitations, particularly when it comes from the decision maker with impunity.

Coming

But QE is creating reserves out of thin air not money

DJE᳆KA

don’t want to go into QE debate, the point I tried to make is that 3.8bil or even more can be invented even if it is hitting the street. it can be from as simple as literally printing it all the way to a very elaborate scheme only insiders can comprehend.

Coming

right but you can’t make that statement and then refuse to go into the QE debate, because QE is not the same thing

DJE᳆KA

nope, I only made the $ reference for comparison that $3.8bil is petty cash in the grand scheme and then I got sucked into QE by your comment.

how much was the Aussie equivalent of the QE per day?

Coming

sure, but they aren’t comparable in any way

you might as well compare rainfall with money

DJE᳆KA

the thin air element.
like the rain out a clear sky.

Coming

no because they can’t practically be used in that way in any meaningful quantity

Coming

if you think all this usable cash was created, then why are asset prices deflating now?

Not like that QE was reversed in any way – in fact, QE is still ongoing as we speak as the fed is purchasing to offset bonds on its balance sheet that are maturing

JimsCentralBank

Either way, those reserves are responsible for pumping liquidity into markets.

Gouda

Of course you don’t know how it works – which is the beauty of it all. No one has the attention span to analyse policy anymore, so long as the general gist of it doesn’t spook the majority of EZFKA home owners into thinking their own properties won’t fall in value while simultaneously throwing a bone to FHB – it could turn out to be an election winner.

The predictable line of attack will be something like a scare campaign about Albanese owning your home, but that’s really no different from every single person currently with a mortgage – the bank owns it until you’ve paid it off.

And as for adding to the government debt pile – what’s a few billion with a trillion dollar deficit?

Coming

For starters $120k for couples is too low a limit

a few Uber eats shifts will push most jimmy couples over the limit

Gouda

Morrison really should have come up with it it first.

You can really tell he doesn’t have much real world business experience, because buying a equity stake in exchange for credit is quite a common practice.

Morrison has gone with the predictable “you don’t want Albo at the dinner table” line, failing to recognise that not too many people want him around cooking curries either.

Have read some hilarious comments on social media claiming this will make it harder for those buying in the 950k+ bracket… while failing to realise that if that’s your target market you probably don’t need any help.

canuckdownunder

This is the equivalent of the little boy sticking his finger in the dyke, and I’m not talking about Penny Wong.

Every bear has capitulated, it’s over, strap in for the ride. The elites are positioned for a crash and it’s coming.

JimsCentralBank

It would be funny if this scheme enables higher rates and it ends up being overall housing negative.

Freddy

Interesting point. Nothing stopping govt buying a share of impaired mortgages and bringing them down to a point where debt can be serviced.

Freddy

Nothing stopping govt buying a share of impaired mortgages

Far out. They have thought about this years ago. What is interesting though is Scomo is talking about the banks owning a share.

Samantha Maiden on Twitter: “Turns out ⁦@ScottMorrisonMP⁩ didn’t always hate shared equity schemes https://s.w.org/images/core/emoji/13.1.0/svg/1f970.svg⁦@newscomauHQ⁩ https://t.co/qep3CMChZ9” / Twitter

Last edited 4 months ago by Freddy
canuckdownunder

The conspiracy side of me wants to believe that the Covid response was the last big can kick, and now that “official” inflation is here it’s truly the end and the elites have been positioning themselves accordingly.

Even if this train wreck of a policy gets up, it’s essentially our NINJA loans equivalent. Give Jimmygrants a $800,000 home on a $16,000 deposit and the taxpayer assumes all the risk. When the property gets sold at a 30% loss I assume the bank gets their money back from the mug and the taxpayer wears the 30% loss. It’s the EZFKA way!

Ramjet

Property has been a very profitable investment for the last three decades. The elites are long property and they can not lose money. Yes, ordinarily a crash should be coming just like the GFC, but it is not a free market.

Coming

That was my question a few months ago

is there anyone long cash and short assets/debt apart from Warren Buffett ?

anyone in Australia

Coming

well there’s your answer

I remember I posted here some stats here on who is holding cash and how it is concentrated (not very), but it gets murky because I think it probably includes offset accounts

When you see $40 million dollar houses trading hands in sydney you have to think that those people know what’s going on (on both sides of the trade)

A fly in your ointment

When you see $40 million dollar houses trading hands in sydney you have to think that those people know what’s going on (on both sides of the trade)

mob that made indecent (and easy?) money elsewhere and are paying someone to “invest” for them?

Chad Thundercock

Aaaahahaahaha the povvos! Where’s that gimp brenten gone?

Ramjet

Do they need to be long cash (obviously more cash is better)? And do they need to be Australian?

If you are very credit worthy and had little or no leverage, it would be easy to leverage up to buy assets.

Freddy

Peachy hit the nail on the head with the “unit” comment. There is no way this can be used on anything other than an apartment in Sydney. A cynical gift to the apartment builders who are seemingly going bankrupt on a daily basis at the moment.

Last edited 5 months ago by Freddy
Ramjet

Ditto for Melbourne. This will definitely increase the price of apartments. Add in an increase in immigration and prices now have a higher floor. This scheme will be expanded by next election.

Freddy

Half of Australia’s building companies are on the brink of collapse – 4BC

50% of property developers are operating insolvent despite record property prices. They are being killed by inflation on input costs.

Freddy

50% sounds exaggerated. I do believe the massive price inflation on building materials would be crippling their cashflows. I thought I read that we are only a few weeks away from running out of certain timbers in Aus.

Last edited 4 months ago by Freddy
Aussie Soy Boy

The delays in getting materials, workers, construction delays, it’s delaying when people get their money too.

Freddy

There are a few lenders accepting unpaid invoices as collateral for short term loans. The crazy things investors are doing for yield.

Freddy

It seems a crazy concept that a builder already close to bankruptcy can receive funding based on invoices that aren’t being paid.

emusplatt

meanwhile lets not forget insolvency laws suspended in Australia for “eligible incorporated small businesses with liabilities of less than $1 million.”

This is ideal imo if you have mischief on your mind…..frinstance screw every and all creditors…..phoenix / exit altogether

https://asic.gov.au/regulatory-resources/insolvency/

https://asic.gov.au/regulatory-resources/insolvency/insolvency-for-directors/temporary-restructuring-relief/

Coming

Here’s more detail care of the guardian

To qualify for help under the shared ownership scheme, eligible homebuyers will have to have saved a deposit of 2% and qualify for a standard home loan with a participating lender to finance the remainder of their purchase.
Australians with a taxable income of up to $90,000 for individuals and up to $120,000 for couples will be eligible to participate in the program which Labor has called Help to Buy.
Successful applicants will need to be Australian citizens and not current home owners. Labor says successful applicants for the scheme will also avoid the need to pay lenders mortgage insurance, which represents a saving of around $30,000.
Home buyers under the scheme will have the option of taking additional equity in the property over the life of the home loan. They will not have to pay rent on the proportion of the house owned by the commonwealth.

Over time, the program is expected to deliver income for the commonwealth as the government recovers its equity and its share of the capital gain when the properties are sold.

Not really income since it generates no income , but hopefully a capital gain

not sure how they handle the accounting if the place sells for a loss – maybe the govt is a preferred bond holder and the bank eats the loss first (after the depositor)

Why would anybody sell when you will lose 400k equity as soon as you do ?
I guess you then take out a new partnership

DJE᳆KA

the loss risk bit can be circumvent by .gov taking the greater proportion or the full reminder of the loan and/or making the property public housing or simply rent it back to the (previous) resident. A loss on property is made only after the property is sold, if it is sold.
A creative solution can always absorb additional creativity, inclusive of the insane one.

emusplatt

https://www.smh.com.au/politics/federal/labor-announces-policy-to-buy-40-per-cent-stake-in-private-homes-and-tackle-housing-crisis-20220429-p5ah8z.html
commments…

gdc989hk8d

1 HOUR AGO
That will make it worse! This is basic supply and demand. Adding to demand by making it effectively cheaper will push up prices!
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Duncan

1 HOUR AGO
This is a lousy policy, the market will correct for the extra money in the system. If anything this policy will make prices rise even more quickly.

DJE᳆KA

If anything this policy will make prices rise even more quickly.

see, double whammy! initial
few hundreds will.make a motza by being slightly ahead but as soon as the demand goes up, the correction <upwards> will kick in.

stagmal

LOL its still absolutely F all, think about it like this

assume median house price in sydney is $1.5m

i think it’s higher than that now but yeah

40% of that = $600,000

300,000,000 / 600,000 = legit 500 FKN PPL, assuming every household
consists of 1 person

obviously more people wil lbe recipients than this, but this is a totally meaningless PR policy that will have no impact on anybodys life and will only push prices up a little bit overall

i mean is there something im missing here, does labor have like caps or something build into it. help me out here, i cant imagine more than like a few thousand people at best benefiting from this

absolute dog shit policy

DJE᳆KA

you missed the bit where it says cap on the property price to a measly 950k’s but that changes little. it also said that the .gov partake in thy loan will be “up to40%” shence some will receive less than that.

Last edited 5 months ago by DJE᳆KA
stagmal

where the fk people be buyin houses for less than 950k?

emusplatt

Let’s cross to our EZFKA expert H Triguboff to answer that…..

Coming

Can I interest you in a one bedder in Waterloo

Agent 47

Knew something like this was coming.

40% price rise and a floor under apartments.

Chinese state owned housing system here we come.

Gouda

Was going to say we’re already half way with the latest Drew Pavlou saga – have replied to Jim’s post below.

Last edited 4 months ago by Gouda
JimsCentralBank

https://www.reddit.com/r/CrazyFuckingVideos/comments/ufehd3/drew_pavlou_held_a_sign_saying_f_xi_jinping_and/

The ALP should deport the Xi fanatics and give their houses to local aged-care workers. Based class warfare.

Gouda

It’s crazy. We’ve now got the NSW police force already doing the bidding of the CCP.

https://twitter.com/DrewPavlou/status/1520649953386795008

I can’t imaging getting arrested for publicly going around with a Fuck Scomo/Albo/Putin etc sign. But if it’s Fuck Xi Jin Ping…

DJE᳆KA

we need people to talk about xi jinping and the ongoing genocide of one million uyghurs in concentration camps the media won’t cover it at all so if I have to get potentially bashed and charged for holding a protest sign to make people care so be it

LOL, pulling uyghurs is a dead give-away of paid protestor.
There are swathes of ethnicities that are oppressed equally or more than Uyghurs buy what matters is that Uyghurs are in China. Hence others don’t.

A fool with a tool is still a fool, and a tool.

Last edited 4 months ago by DJE᳆KA
Aussie Soy Boy

The only catch here is that Labor will lose the election

LSWCHP

No party with an insane policy like this deserves to be in government.

It’ll be interesting to see if they go ahead with this if they get in.

DJE᳆KA

No party with an insane policy like this deserves to be in government.

how is this different from millions of previous insane policies?
If anything, I’d give them a vote for sheer creativity but since this kind of creativity is for a sole (wrong) purpose, that vote would be stupidity of a highest order.

Jam

Lock it in Eddie!!

Gender pay gap FFS.

robert2013

WA gov has been doing this for a while. But it’s affordable in Perth and the scheme has evaporated in recent years. Forgot the name of the scheme and don’t care enough to look to look it up. Suffice to say that anything within 100km of the coast in NSW is foobar. Smart young people that want a family should not stay in NSW or VIC. Unless of course they’re super smart and in line to be the next generation of the elite.

Last edited 4 months ago by robert2013
DictatorDavid

Victorian government was talking about taking a stake in peoples houses recently too? Something like 20-25%. Someone suggested to me recently and I’m not sure of the inner workings so bear with me. But the government would own a share of the property so if someone went to sell it in say 5y time, then they would also take a proportional share of any profit from increased property price?

DictatorDavid

Also controversial opinion but couples on less than 120k should be made to show real savings for an average mortgage let alone a 950k mortgage!

Gouda
Counterfiat

The fine print says min social score and something about covid passport national ID comply card ‘yuse belong to us now’ commie comrade.

Ramjet

Unless you have had a default notice in the past, you will meet the minimum credit score. Friends who apply every few months for credit cards with bonus airline points have very good credit scores.

The90kwbeast

Indeed. The developers unit construction support package from Labor has been unveiled!

Gouda

Maybe none of it will matter if all the builders are going bust…

https://www.theage.com.au/national/victoria/i-ve-had-enough-why-some-want-out-of-victoria-s-building-industry-20220427-p5agn5.html

A plea from the industry for a legal mechanism allowing home builders to pass on escalating materials costs onto customers who have signed fixed price contracts has been rejected by the state government, which says it would be unfair to clients who were often operating on very tight budgets.

The state’s “red tape commissioner” produced a report this month with 10 recommendations to help address the supply chain crisis gripping the industry, with the government agreeing to nine of them.

Commissioner Anna Cronin wanted builders to have the ability to insert “escalation clauses” in contracts worth less than $500,000 – squarely aimed at the domestic building sector – to allow them to bill clients more than the fixed price to cover the rising costs of materials was not supported.

But the state government’s Better Regulation Victoria agency, overseen by minister Danny Pearson, rejected the proposal.

“Ensuring that projects under $500,000 do not have cost escalation clauses protects consumers involved in smaller projects who are typically unfamiliar with such risks,” the agency’s official response read.

DJE᳆KA

the issue from bust of a builder is with creditors and debtors other than the end user. Some suppliers work on a thin margin and unpaid accounts can have a domino effect. I think it affects smaller businesses much more than majors, which is a bad move by itself.
Cost of material cannot be just built in with contracts, there has to be a method to prevent machinations with prices before it is introduced otherwise it swings from one extreme to another

The90kwbeast

If there is a provision for price rises in contracts, how about price declines? Can’t see the latter ever happening and it sounds like the Vic government is just worrying about price gouging.

plaguerat

Could be that there will be a shortage of applicants for this new scheme:

Increased emergency cardiovascular events among under-40 population in Israel during vaccine rollout and third COVID-19 wave

An increase of over 25% was detected in both call types during January–May 2021, compared with the years 2019–2020. Using Negative Binomial regression models, the weekly emergency call counts were significantly associated with the rates of 1st and 2nd vaccine doses administered to this age group but were not with COVID-19 infection rates. While not establishing causal relationships, the findings raise concerns regarding vaccine-induced undetected severe cardiovascular side-effects and underscore the already established causal relationship between vaccines and myocarditis, a frequent cause of unexpected cardiac arrest in young individuals.

https://www.nature.com/articles/s41598-022-10928-z

plaguerat

You’re right, Peachy.

I shall report this grossly misrepresentative study to Bidens’ new
Disinformation Governance Board…..and take myself off to a government-

approved “How to interpret Covid statistics” course immediately.

Seems like I’ve had this Covid stuff back-to-front all along. 🙂  

canuckdownunder

The only way to make housing more affordable is to increase prices!

canuckdownunder

Full on LOLZ in the Aunty this morning.

First off, don’t worry about sub-prime lending in Australia. Single mum uses homebuilder grants + superannuation as deposit to take out interest-only variable rate mega-mortgage. What could go wrong?

https://www.abc.net.au/news/2022-05-02/borrowers-home-loans-mortgage-stress-interest-rate-rise-election/101026362

I love the comments from Dr Sy.

Last edited 4 months ago by canuckdownunder
canuckdownunder

Wee-ooo, wee-ooo, wee-ooo. Ian Verrender sounding like Pascoe or the MB boffins. The housing market is a nothing but shaky house of cards so interest rates will never go up in Australia, nothing to worry about. 2% or 3% interest rates, unpossible!

https://www.abc.net.au/news/2022-05-02/rba-will-raise-rates-but-not-to-levels-experts-are-predicting/101029534

Ramjet

None of them believe we will get stagflation. If rates go up 1%, but inflation is 8% and GDP is negative, what would they do?

We have been here before in the 1970s and 1980s. Nothing like an energy price spike to cause a recession.

Ramjet

Technically they are right. Sub-prime is low credit scores and she probably doesn’t have a low credit score. Sub-prime is not the same as poor serviceability, but there is a decent correlation there. Given the appreciation in prices, she would now have a decent LVR and probably in a good position to negotiate with the bank for a lower rate.

However, completely agreeing with you that this is an issue. However, in any downturn or potential downturn these stories come out. As Peachy once posted, lowering teh rates actually improves credit as the marginal borrowers become less marginal.

Aussie Soy Boy

Minimum standards should have always been a 20% deposit and P&I repayments only.

Reus's Large MEMBER

High rise Harry must be in trouble for them to #yolo like this to save him.

Freddy

You remind me of a 60 Minutes episode in the 90s where the presenter suggested to Harry that he might go bankrupt if house prices fell. Harry had a wtf expression on his face and responded “me? go bankrupt?”.

stagmal

harry was a thing in the 90s? i mean he’s a thing in HIS 90s today, but i didnt know he was notable all the way back then.

Freddy

Harry has been spreading his apartment cancerous growth since the 60s. Has been filthy rich as far back as I can remember.

Aussie Soy Boy

Like I said a while back they’ll merely change the inflation target from 2-3% to 6-8%. Easy.

And you will cop it on the chin and have to learn to live with less if not getting a pay rise or a return on your cash.

They’ll just blame supply chain issues, Russian sanctions, energy crisis, etc for years to come say it’s out of control and 6-8% is the ‘new normal’.

I think people have mentally come to terms with high inflation, just like they came to terms with COVID (albeit took 18 months to 2 years in Australia to come out from under the bed).

I don’t think there’s really any room to move. I think 4 rate rises will be enough to take the steam out of the Australian economy and have people who overextended feeling the pinch. Even people with a lot of equity might think of putting that renovation on hold, or hold off on ordering the Landcruiser as house prices start dropping, we have job losses, consumer battens down the hatches.

Supply chain and energy issues might start to resolve itself a little with a recession across the western world before rates start dropping again.

Reus's Large MEMBER

Sentiment is a big factor too, if rates are going up and it is not affecting inflation due to external forces then you are being hit with a double whammy, I expect that irrespective of interest rates, should the current inflation continue then we are in poo as there will be a lot less in peoples pockets to spend at the coffee/nail/massage/service industry and that feedback loop is something that can not be fixed easily without wage growth which is never going to happen with the jimmy’s streaming in.