Interest only loans - Australia

Is Australia’s house price boom really over?

https://first2move.com.au

I’m fairly negative on the Australian housing market because I think it’s been propped up by low rates and easy lending practices among big banks like Commonwealth Bank of Australia(ASX: CBA), and especially Westpac Banking Corp(ASX: WBC), which had 50% of its loans in the interest-only format.

However, the characteristic of a boom – and there is some debate about whether we even have a property boom – are a warped psyche and strong fear of missing out (FOMO) among participants.

While we arguably have seen some of that, we certainly haven’t seen much change in the psyche of participants. I would argue that many property buyers in Sydney may not even grasp the recent changes APRA has imposed on bank lending policy or the implications of stricter capital controls in China.

If there is a widespread belief that property goes up forever – an essential characteristic of a boom – it’s hard to argue that this belief has changed in recent months.

(Source: YahooFinance )