THE BANKING ROYAL COMMISSION AND OTHER INTERESTING STUFF
Have you struggled with finance recently? We live in interesting times.
The past few months have been very interesting on a number of fronts and one of the more prominent issues filling newspaper columns lately has been the findings of the Banking Royal Commission, or to use its full name the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. The Commission has revealed some serious deficiencies across those industries, the extent of which has surprised some people.
It begs the question as to how these unfair, immoral and in some cases illegal practices were allowed to exist and even flourish in the first case.
In general these industries are officially monitored by two statuary authorities being APRA (the Australian Prudential Regulation Authority) and ASIC (the Australian Securities and Investments Commission). It is the job of both of these organisations to ensure that what has been happening doesn’t actually happen.
Whilst banks, insurance companies etc. have been shown to have been derelict in their duties to their customers, the Commission has also singled out both APRA and ASIC for criticism saying that they both should have been much more active in monitoring and controlling these financial entities.
Among other matters the Commission found that lending practices for property purchases were relatively “free and easy” where suitable due diligence was not being taken to assess a borrower’s ability to meet their repayments based on the assumptions the Institutions had made on the borrower’s cost of living.
Loans were very easy to get due to this apparent slackness and in business terms this was not only bad risk management for the lender but also bad for the borrower whereby they may fall into a situation whereby they accidentally overextend themselves financially. This practice certainly was a contributing factor in previous price gains across Australia housing markets; it was “easy money” and as long as the band kept playing everyone was happy.
The major fallout from the Commission’s findings is that all lending institutions have has to dramatically tighten up their lending practices whereby they are scrutinising individual borrowers true cost of living and ongoing financial commitments.
Among other associated statistics loan approval rates have tumbled resulting in less buyers being able to qualify for a loan, or if they do qualify, the amount they can borrow is less than they might have been able to get previously. The buyers then need to reset their expectations as to the type and value of property they can acquire.
As result buyer numbers have slowly decreased and the number of listings have increased, resulting in a gradual reduction in prices across Australia. The reductions are not uniform and vary across geographies and property types.
Having said this, people’s lives still go on regardless and properties are still selling, in fact here at openhomeonline we have just had our best January for several years. New listings are coming in every week and we are as busy as ever.
We have seen a steady rise in median property prices in the Bellingen real estate market from 2013 through to 2017, from which point they have levelled off with the 2017 and 2018 years showing modest increases of just 1.0 % and 1.7% respectively.
The total number of sales in the Bellingen property market has been reducing quite markedly over the past few years with just 53 properties sold during the 2018 calendar year compared to 74 in 2017 and 88 in 2016.
As with the trend in other parts of Australia, Bellingen property purchasers are acting more cautiously tending to take more time over their property acquisition process. This puts a greater emphasis on the ability of local real estate agents to obtain credible offers in a timely fashion for their vendors.
The desire by out of town buyers for the idyllic Bellingen lifestyle is as strong as ever, regardless of what is happening in the rest of the Australian real estate market. We are noticing that people are becoming much more aware about the quality of the life they wish to lead and they tell us Bellingen is a very good fit.
The ideal mix of culture, the arts, social intimacy and community togetherness in Bellingen is said to be unequalled by any other country town on the NSW Mid North Coast.