There has been substantial media exposure given of late to UK Economist Jonathon Tepper, including a very biased 60 Minutes article designed to strike fear into the Australian housing market.
I feel that the best response to all the hubbub is the following article from economist Christopher Joye for the Australian Financial Review… AFR Article
It is also worth noting that:
- Lender scrutiny on home and investment loan transactions is very heavy. They are not necessarily easy to obtain.
- Interest Only loan repayments are now incurring higher interest rates than principal and interest repayments.
- Loan serviceability on Interest Only loans is assessed by lenders on the basis of repayments over the remaining principal and interest term.
- At Regfin, we encourage borrowers to pay off non-deductible debt on a principle and interest basis. Where deductible debt is held, we also suggest that the component of payment that would be made as principle reductions be allocated to any non-deductible debt.
Personally, I’m of the view that Sydney and Melbourne in particular, are global cities. Real estate values in global cities such as London, New York and Hong Kong are not particularly affordable either.