A squeezing lemon

APRA Lending Squeeze is a Lemon

Kevin Young Insights 1 Comment

 

The recent moves to restrict bank lending to investors in order to dampen price growth clearly shows that APRA have the historical knowledge of a toddler.

The last property boom from 2001-04 went much higher than we’re currently experiencing, but then self-corrected as housing supply came through. The charts below expose their ignorance.

 

Main Cities in Australia

 

Yes, property prices are growing – after a long and sustained period of little or no growth.  Investor confidence and borrowing capability is a necessary ingredient to stimulate the supply of new housing construction.

This is happening now… unless APRA ignorance kills off this emerging supply and causes prices to soar. By restricting investors, we’re bound to see prices take flight right across Australia as APRA’s folly restricts building and causes even greater housing shortages in the areas we need it most.

Is it time to buy?  Our Property Club members can get first hand information on the best areas and we can guide them on how to obtain the right funding.

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Credit growth by sector

So, if we have an expanding economy, and I believe we will, what’s the capacity of housing and business to borrow to take part in this expansion?

The red arrow again shows where we were in 2007 and you can see that housing, business and personal credit was much higher than it is today. So the capacity to increase credit growth and to create more spending as a result, and stimulate more jobs as a result, and more taxes as a result, is certainly there.

The exciting thing to see here is that business confidence is coming back at a forty-five degree angle. In the past, from about 2001 this continued all the way up to the record high in 2008.  This is a period of growth, where your wealth increases from asset price growth. Housing in particular goes up at a rapid rate and you can see that housing credit is still at the bottom, so the uplift in housing is yet to come.  Despite the headlines, it will come and all that extra money will do one thing – it will push up prices.  So let the good times roll and get in now while you can.

 

Regards,

Kevin Young

Club Founder

 

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