Trending Financial News 18 July

The Great Australian Dream is alive – First home buyers see the light

Increasing optimism in property markets is pointing to better days ahead for first home buyers. 91 per cent of Australians now believe that home ownership is achievable, up from 80 per cent in 2018, according to a big new survey by Commonwealth Bank.

“Australians are taking an increasingly optimistic attitude towards the property market,” said Commonwealth Bank’s Dan Huggins.

Mr Huggins said more than 90 per cent of Aussies believe property ownership is achievable if first home buyers are willing to make spending sacrifices.

75 per cent of survey respondents under 30 years old said they feel property ownership is the ‘Great Australian Dream,’ while 69 per cent of Aussies over 30 believe that. In Queensland and West Australia, 64 per cent say home ownership is the Great Australian Dream.

Banks beware: The banking watchdog is off the leash

Banks will face more inquiries from a re-energised banking industry regulator after a Capability Review blasted the productivity, focus and effectiveness of the Australian Prudential Regulatory Authority.

The review was completed by former ACCC commissioner Graeme Samuel and two other leading industry experts and was ordered by the government following the Hayne Royal Commission into the financial sector.

There is “a tendency towards conformity in APRA,” the panel found.

APRA “should change … from its behind closed doors approach” with banks and credit unions” said the review.

APRA needs to “adopt a stronger approach” towards banks and end its internal “patronage model of advancement.”

APRA chair Wayne Byers at a recent parliamentary hearing, Image from www.bankingday.com

Crypto prices react as Facebook Libra labelled “delusional”

Bitcoin prices have crashed 15 per cent this week as US Congress grills Facebook executive David Marcus over the proposed Libra digital currency.

Democratic Senator Sherrod Brown said Facebook does not deserve public trust

The company had showed “through scandal after scandal that it doesn't deserve our trust”

“We'd be crazy to give them a chance to let them experiment with people's bank accounts,” said the senator who branded the idea that people wanted Facebook to handle their “hard-earned” money “delusional.”

Republican senator Martha McSally told Mr Marcus that “I don’t trust you guys.”

“Instead of cleaning up your house you are launching into a new business.”

Mr Marcus said Facebook knew it had to take the time to get Libra right.

Who will control Facebook Libra?

Facebook executive David Marcus is facing intense questioning from the US Congress about Libra.

Facebook says its proposed new online currency Libra will be managed by an independent association of 28 member companies including Visa, Mastercard and PayPal.

“Facebook will only have one vote and will not be in a position to control the association,” said David Marcus.

“Nor will Facebook or the Libra Association position themselves to compete with sovereign currencies or interfere with monetary policy.”

“We've built this is to separate social and financial data because we've heard loud and clear that they don't want those two types of data streams connected.”

The changing Australian property market …

The Australian home ownership rate has declined over the last 20 years, but more Australians than ever are home loan borrowers according to the data released yesterday by the Australian Bureau of Statistics (ABS).

Since 1997, the proportion of Aussies who own a home declined 4 per cent from 70 per cent to 66 per cent.

There was a corresponding 5 per cent rise in the number of Australians renting, from 27 per cent to 32 per cent.

However, the number of Australian households without a mortgage decreased 10 per cent from 40 to 30 per cent.

One million Aussies have bought a home recently

The Australian Bureau of Statistics reported yesterday that more than 1 million households have purchased a home in the last three years.

35 per cent of these recent buyers were first home buyers who spend more of their gross income on housing costs (21 per cent) than changeover buyers (16 per cent).

The median value of homes purchased by first home buyers was $500,000 in 2017-18, while the median value of homes purchased by changeover buyers was $645,000.

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