The Royal Commission has already had a profound impact on the residential property market, especially the stress testing on capacity to pay. A reader in our 'Have Your Say' section said his banker told him that 40% of applications that would previously have been approved are now "dead in the water".
It's a cautionary warning for anyone buying property to line up financing well in advance, especially when tests for older people are even stricter. The self-employed will need three years of tax returns, PAYG earners will have expenses examined like never before, and loan rates of 7% or more are assumed to check affordability.
CoreLogic reports Sydney and Melbourne comprise 60% of the Australian housing market by value, with Sydney down 5.6% and Melbourne down 1.7% in the last year. Top end homes are falling the most, with the bottom quarter by value still flat or rising.
The more immediate threat to banks is probably their exposure to property developers and builders as the market slows and falls. The deeper impact may come if Labor's proposals on negative gearing and capital gains are legislated and turn investors away from property. Vinay Kolhatkar reports on the range of proposed Labor policies that might come in next year. Geoff Warren explains the impact of Labor's franking policy based on work with colleagues at ANU.
Retirement planning theme
This week, we have a strong focus on retirement and later-stage planning from leaders in the industry. Noel Whittaker shows how to avoid the tax on super which acts as a quasi death duty, Jeremy Cooper reports on the attitudes of many retirees to income, preserving wealth and minimising losses and Monica Rule shows what happens when an SMSF member dies. Patrick Malcolm makes the vital observation that much retirement planning involves simple averages and fails to show the potential adverse events that retirees most want to avoid.
Raewyn Williams takes us into the world of fund managers who use algorithms to make decisions, and warns there can be downsides. Ashley Owen's Monthly Top 5 linked below is his September update on important market events.
This week's White Paper from Perpetual is joint research with the Australian Securitisation Forum. As investors look increasingly for opportunities outside term deposits and cash, securitised investments, especially in residential property, are gaining wider appeal. And check the many additional features linked below, including listed security updates.
Graham Hand, Managing Editor
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