For all the doom and gloom about Docklands, has anyone who currently owns a property there for the last 12-18 months, had their bank or financial institution approach them to add in equity to their loans??
Surely that is the ultimate test that values are falling significantly??
James
…and who wants to admit it?!
georgis
Wouldn’t that be a bit premature of banks to do a margin call? Is that actually legal for a bank to do anyway?
kay henry
Not saying that it wouldn’t be premature… Given the reports of some properties currently ready to be settled at a valuation $100-200k below original contract price, I would assume there would be some impact and flow-on effect on the existing properties in Docklands. You probably would argue that in a rising market, your property is worth more and potentially re-value if you saw fit. This would be a significant move by the banks, admittedly, but knowing that no-one has been able to get anything more than 80% loans on Docklands for well over year now, not sure whther we have come to a critical mass….
Banks can certainly ask for it….I don’t think it is illegal. They did this on commercial properties in the early 90’s.
James
James,
Banks in sydney have also been loaning 80% LVR on apartments in sydney inncer-city too. I think it’s been thr highly developed areas- glebe, ultimo, Green Park etc etc. Those areas <10km’s from the city. But those areas have also done very well in terms of maintaining values.
I think banks just wanted to slow down on the big spending. It was similar to them acting as their their own Reserve Bank- but instrad of raising interest rates, they just tightened lending criteria.
Presumably, it’s the same situation in brisbane too in the heavily supplied inner-brisbane/gold coast areas.
I haven;t seen reports of properties in Docklands at 100-200k below original valuation. I’ll have to look it up. Got a reference for it, James?
kay henry
Forget the name of the building. I heard it on the radio very briefly the other day…..I’ve got someone who has had some dealings there and he has alluded to the same thing…Give me some time to get the correct details.
James
It certainly could happen. However, the banks really don’t want to do it. It looks bad for them, especially if it is a PPOR.
If the customer always pays the loan on time, etc., they will tend to stay away from the margin call.
BUT, if they’re problem payers, the banks may well call it in. Depends how nervours they are with the exposure I guess.
Cheers
Mel
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