# Housing plan to tackle affordability



## krisbarry (4 August 2005)

FEDERAL and State governments will develop a national affordable housing policy amid fears a whole generation of young Australians may be locked out of the housing market.

Housing, planning and local government ministers met in Melbourne today and agreed to begin work on the strategy, South Australian Housing Minister Jay Weatherill said.

"Today's decision is a significant outcome because the Commonwealth holds so many levers in contributing to housing affordability," Mr Weatherill said after putting the proposal on the agenda.

"We acknowledge all states and territories are working on their own affordable housing initiatives and that's why we united today in our push for a national agreement."

Without a national plan, Mr Weatherill said a whole generation of young Australians was at risk of being forever locked out of the market. 

"The great Australian dream of owning your own home is slipping through the fingers of too many people," he said.

"With high house prices, many young people just can't afford to get into the market.

"If they go to university they get saddled with high HECS debts which are already taking nearly seven years to pay off and those debts are expected to get bigger.

"If they go straight to the workforce, they often get low paid and increasingly casualised jobs with no security."

A coalition of housing industry groups also called for a national plan today and urged federal, state and local governments to invest at least $2 billion in affordable housing.

"The recent cooling in the housing market has done little to reverse the collapse in affordability," Housing Industry Association managing director Ron Silberberg said.

"A year after the boom ended, first home buyers are still struggling to enter the market and many households are in mortgage stress."

Mr Weatherill said a national affordable housing agreement would promote an integrated and long-term vision for housing, providing more funds to help struggling tenants or young people burdened by debt.

"I'm pleased we've achieved agreement from the federal government to examine a national framework, which could do a lot to help a generation get back into the housing market," he said. 


Source: 4/8/2005 http://www.theadvertiser.news.com.au/common/story_page/0,5936,16150103%5E1702,00.html


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## money tree (4 August 2005)

wonder if that means the FHOG is going up to $14k or something. I cant see them developing a whole new system, easier to modify old one since it worked well.


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## wayneL (4 August 2005)

Nothing a decent housing price crash and recession wouldn't sort out.


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## Smurf1976 (4 August 2005)

Sorry to sound negative but the only real solutions IMO are to either reduce the price of housing (that is, substantial falls in nominal house prices (otherwise known as a house price crash)) or a very large wage increase.

Neither outcome seems likely unless by accident so I expect that whatever is done will be token at best and more likely make the problem worse. 

Requiring a minimum 20% deposit from genuine savings (excluding grants etc) and requiring that this deposit be for 20% of the full purchase price including legal costs, stamp duty etc. would be a very good start. Including house PRICES in the CPI at an appropriate (relatively large) weighting would be another. Can't see either happening though.

The recent house price rises are good in just the same way that it would be good if food or petrol prices more than doubled. Good for those making the profits, not so good for the rest.

If there's one bit of good news for the victims of the house price increases it's that the widespread media attention, political attention and so on looks very much like the rises are over and done for this cycle. Indeed, with prices in many locations now going DOWN we may have already seen the top.

I don't wish anyone bad luck with their investments (property or otherwise) but please understand my point that there has been a truly MASSIVE social cost of this house price boom with too many grown adults literally reduced to tears as their dreams are shattered. Young families in many situations simply can not buy and, unless the ratio of house prices to income changes, they never will be able to.

Typical wages in this country are 40-45K for a substantial portion of the workforce with many on less than that. The small number of very high earners inflates the mean average often quoted as being over 50K. 

As for whether or not real estate makes a good investment right now, I don't give advice but I must point out that the long term value of an average house in an average suburb is about 3.5 to 4 times average earnings. I'll leave it to you to decide whether wages are going up or house prices down but sooner or later something has to give. Markets revert to the mean.


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## TjamesX (4 August 2005)

> A coalition of housing industry groups also called for a national plan today and urged federal, state and local governments to invest at least $2 billion in affordable housing.




Use taxpayer money to prop up the value of Housing.... as a tax payer - I don't like that idea, very shortsighted



> "The recent cooling in the housing market has done little to reverse the collapse in affordability," Housing Industry Association managing director Ron Silberberg said.
> 
> "A year after the boom ended, first home buyers are still struggling to enter the market and many households are in mortgage stress."




Probably because its got a long way to go yet



> Mr Weatherill said a national affordable housing agreement would promote an integrated and long-term vision for housing, providing more funds to help struggling tenants or young people burdened by debt.




Just like the FHOG was a great idea! it just threw pertol onto the flames of the boom. How about addressing something serious like the amount of money invested into housing and associated tax brakes - try diverting that money into something decent like creating businesses that keep Australia competitive globally.

As a young person with no real estate - i'm happy to rent and save the difference for the time being...... lets see what happens


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## wayneL (4 August 2005)

TjamesX said:
			
		

> How about addressing something serious like the amount of money invested into housing and associated tax brakes - try diverting that money into something decent like creating businesses that keep Australia competitive globally.




Now we're talking!!!

I still think we need the HPC and recession first....pruning an overgrown bush so to speak....and then do exactly as you say.

If that happens, I'll be investing with my ears pinned back..until then, I'm happy to shuffle paper for a living.


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## krisbarry (4 August 2005)

I think one key area missed is the "Generous” and I mean “Generous” handouts given to investor via our ludicrous taxation system.  Reward the rich and punish the poor!

Time the ATO cut back on negative gearing and deductions for investment properties.  This would share the wealth a little more evenly and stop the filthy greed I see.  A very few people own almost all the property and the rest are battlers struggling to pay of one house or have given up even thinking of buying a house because the cost out-strips the average wage earner.

I truly feel that if you haven’t bought a house buy now, your completely stuffed, and I mean stuffed.

The South Australia Government (Revenue SA) handed out $7,000 first homebuyer’s grants to people purchasing million dollar homes!!!!!!

(You say how can this happen…there was no means test applied to the grant.  Just another government ****-up!)

I have been abused by many on this discussion board about my anger towards those who own many properties.  I am sure they all work very hard to own their properties, and good luck to them.  I am sure they have sacrificed a lot to set themselves up.  

BUT

Just for one minute remove your shoes, step in your childrens shoes and see the crippling HECS debts they have endured.

The rising house costs.

And their wages!

Now could you afford to purchase your own house over again, at todays prices?

I very much doubt it!

Just remeber your greed has contributed to the property cycle rising at its most rapid rate in almost 30 years.

** You can own shares but you cannot live in them

** Housing is a necessity, share it around!


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## TjamesX (4 August 2005)

krisbarry said:
			
		

> This would share the wealth a little more evenly and stop the filthy greed I see.  A very few people own almost all the property and the rest are battlers struggling to pay of one house or have given up even thinking of buying a house because the cost out-strips the average wage earner.




nothing is gonna stop greed (in you me or anyone else). I don't think property ownership is exclusive, a lot of Aussies own property. I think its more of a generational issue - as the property boom only benefited those who owned the assets (tend to be older people). I feel for those that have stepped in and purchased in the last year or so and are at their debt limits, but we all have the choice (youger generation) to not participate. Sure it delays the settling down of families etc but thats the price society will have to pay.

I don't have a crystal ball but while its significantly cheaper to rent, thats exactly what I'll do. House prices as a multiple of wages has been historically the best indicator to judge exactly whats going on - ill address this more in the next post..... 



> I truly feel that if you haven’t bought a house buy now, your completely stuffed, and I mean stuffed.




Oh NO - im screwed!!!   



> Just for one minute remove your shoes, step in your childrens shoes and see the crippling HECS debts they have endured.
> 
> The rising house costs.
> 
> ...




You really can't blame people for taking advantage of the situation. I think the government turning a blind eye to a lot of it are much more accountable. However, as younger people will be facing more pressures as they get older, government policies would be sensilble to understand these same people will be supporting the baby boomers in their retirement. Lets just hope they can all live off the equity in their houses!!!    

Kris, there's no point blaming specific people for the current situation. Play it as best you can


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## TjamesX (5 August 2005)

On to wage to house price multiples. Below is a site I stumbled onto in one of the property forums, it lists affordability for major cities in Australia, Canada, New Zealand and the United States (2004 house price data against 2001 wage data). 

This first link is a formulation of the multpiles for all cities;

http://www.demographia.com/dhi-data200502.htm

The second lists affordability from most unaffordable to most affordable;

http://www.demographia.com/dhi-rank200502.htm

All Aus major centres (except Darwin) are listed in the most severe group 'SEVERELY UNAFFORDABLE MARKETS'. What sticks out to me (being an Adelaidean) is that while prices in Adelaide seem very cheap relative to the rest of the Aus, according to this index it is the 13th most unaffordable city.

I for one will be sitting on the sidelines to see what happens over the next few years


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## wayneL (5 August 2005)

I can sympathise with Krisbarries feelings, but agree with Tjames that you cannot blame people for taking advantage.

To me negative gearing tax breaks, fhogs etc is absolutly no different to industrial protectionism...and our govts. tossed that a while ago.

If I start a business selling widgets to intentionally run at a loss for an indefinate number of years, the tax office would go thruogh me like a dose of salts, if I tried to claim a deduction.

Yet is this not what negative gearing is?

The rest of the business community can only offset these types of losses against future gains, and thats what I would like to see happen one day. This is where I am with krisbarry in that housing should not be encouraged via government policy, as a speculative investment as has occured recently...a good solid long term investment, but not a speculative investment.

Keating shoulda stuck to his guns re abolishing negative gearing. It would have sorted itself out given 2 or 3 more years.

But thats just my view.

Cheers


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## wayneL (5 August 2005)

The bear cometh:

*Gitterdammerung (The Twilight of the Gits) - Or the coming cataclysmic property crash - and its even more cataclysmic consequences*
The current global property price boom is the biggest bubble in history – we are headed for a truly cataclysmic property crash. The consequences of the crash will be much greater than they would have been in the past as so many of us have become so dependent on property price inflation. Much of the wealth of much of the middle classes will be wiped out. But the consequences will be even greater than this…

http://www.socialaffairsunit.org.uk/blog/archives/000537.php

Yo!


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## krisbarry (5 August 2005)

Another option, and I can hear those property investors screaming with horror on this point, would be to revalue housing and index it to the inflation rate.  Now that would be a radical move to spread the wealth of an essential human need (a roof over your head).

*That way all Australian can own a piece of Australia.  *


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## tech/a (5 August 2005)

Strange.

The only people I see screaming disaster from the rooftops are those who missed or didnt take advantage of any of the last 3 booms.
IT,Stockmarket,Housing.

Kids can still buy housing---10 yrs ago NSW kids were paying 2wice what SA kids were.

Nothings going to change--when you see an opportunity go for it.

(1) Cut their credit cards up and live by their means!
(2) Buy a property and place a tennent/s in there to pay the rent,invest everything you can in reducing the mortgage---live with your parents and get them to support you in your efforts.
(3) Interest becomes tax deductable,improvements become deductable,as do rates and things like lawn mowers tools and equipment.--Get a great accountant.
(4) Be a ladder climber and look for opportunities to be of more value to your employer that way he wont mind paying you a better wage to keep you.
(5) Join with family to achieve your goal of owning a home.Make sure you have everything in writing to save the enevitable family arguements.Get a good lawyer---a friendly one who understands this is for a common goal.

This can be great education for kids to learn and understand "Street Smarts"

So there stand the doomsdayers happy that THEY arent caught up in this looming crash---as they dont have anything to get caught up with!!
How stupid those who invested are!!


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## Happy (5 August 2005)

One sure way of property market collapse could be flu pandemic. Last one was during 1-st World War, and one of comments I heard that war ended because there were not enough soldiers to fight. 
Usually flu pandemic hits once every 80 years, so we are just under 10 years overdue.

Bird flu is lingering is SouthEast Asia and with secretive Governments we don’t really know if reports that killer flu was eradicated are false or fiction, and I don't think there is true option.

Another shortage of owners could be caused by biological; chemical or God forbid radioactive terrorist attack.

Until radicals are eradicated, we have increased probability of severe properties glut.


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## krisbarry (5 August 2005)

Heard it on radio this morning that housing used to be about twice your income level, now its blown out to 6 times your income level.

Would that mean that you would need to suck arse with your boss, 3 extra times to get that job propmotion that pays enough to even afford the average house.

LOL, just adding a little humour to the subject!


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## tech/a (5 August 2005)

If there are no solutions and people arent forthcoming with solutions the point of this sort of rhetoric is?

If workers had more of their employers needs (to be as efficient and as profitable as possible) in mind rather than just a place to pick up a wage packet each week then higher wages would be a possiblilty.


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## mit (5 August 2005)

I'm curious about the house affordability statistics. I started earning a real wage around 1980 and I didn't think properties were affordable then at least where I thought it was desirable to live. Most people got to where they wanted by starting in a dinky flat and slowly trading up. We had a lot less consumer items available and my firiends were impressed by my 10 year old Datsun 180B not the new cars most people seem to have these days. Also our education was free then as well no HECS debt.

Also (as Carr found out to his chagrin) investment property is not held by the few but is widespread and many hold it to supplement a meagre super.

The tax deductability of property is a genuine business expense just as is the tax deductability of interest for margin loans etc and any investor in their right mind treats it as a business and expects some profit from it either from capital gains or the yield turning positive.

True that we are at the end of a speculative bubble and like speculative bubbles in shares, prices outstripped earnings and we are currently in a correction.

Negative gearing (Note in the US you can claim your own mortgage interest against your earnings) also not only allows an investor to bid up price by being able to afford more housing, it also causes the rents to be bid down and my English friends are amazed at the low yields we achieve on rental properties. Canning Negative gearing would have a short term negative affect on houses but I think in the long run it would only have a marginal affect on prices but a larger affect on rents. When Keating canned negative gearing in the late 80's prices went down but rents went up quicker to around a 10% yield. The renters didn't have much choice as a the pool or rentable properties dropped.

I think the other things to look at is the fact that as a population we are very concentrated into a few large population centres and everybody is bidding to get to the prime spots in these centres which is unsustainable, investors or no investors. We either need more higher density living in cities or the infrastructure in the regions in get more people out of the city rather than just building more suburbs on the outskirts.

Down the road from me in Nowra you can buy an older three bedroom house for just under $200k in a reasonable area 15 minutes from an uncrowded beach and a couple of hours from Sydney.

I think kicking property investors and negative gearing is an easy target for politicians to deflect people from their own lack of planning.

MIT


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## Smurf1976 (5 August 2005)

The bottom line is that the property bubble is very much inflated and we can not change the fact that this has occurred.

Property crashes have historically lead to recessions and there can be no guarantee that this will not happen again. Or is this going to be the one bubble where "this time it really is different"?

So, what to do? 

My personal opinion is leave the market to itself. Do away with the FHOG and all other sorts of grants. NO taxpayer bail outs of failed investors / developers. Those who take the risks should be the same people who profit if it goes well. This is NOT the taxpayer! (Unless the investors were planning on handing all their profits straight to the tax office which I very much doubt.)

The market will sort itself out. Let a few highly leveraged investors go broke (I've seen plenty of evidence that the pressure is starting to impact these people) just like in any other market. Nobody bails out stock investors so leave the property market to itself.

No guarantees but my best guess is that 5 years from now there will be no issue with property prices apart from a larger than usual number of people on the bankruptcy lists becasue they over leveraged. Same thing happens in every boom whether it's property, stocks, resources etc.

If you want evidence of the faltering market in many areas then just look at the real estate web sites and study the photos of the interior very closely. Note how many are obviously empty and then note the price - it's usually cheaper than similar properties in the area. This looks very much like empty rental properties with the owners in a hurry to sell. With plenty of unsold properties on offer the lower prices asked by these ex-investors leaves little choice for other sellers - drop the price or don't sell. Add that to the auction clearance rates which are at levels so low that just a year ago nobody would have belived it possible and it looks very much like the property market has turned.


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## Hanrahan (5 August 2005)

TjamesX said:
			
		

> Just like the FHOG was a great idea! it just threw pertol onto the flames of the boom.



The FHOG is NOT a grant, as the name applies, but a partial refund of the "notional" GST paid on purchase. GST increases the price of a new home so existing ones go up similarly.

So Jhonny can't renegue on it. It was a *CORE PROMISE* without which he would not have got the damned GST in at all. But I agree the cash in hand has fueled the fire.


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## Smurf1976 (5 August 2005)

Does anyone know why the Commonwealth Bank stopped updating its publicly available house price data after May this year. They used to be pretty quick but it just stopped. They should have just abouot had July's data out now based on their previous timing but there is still no update for June.

Does anyone have any actual real estate sales price data? It seems very interesting that the updates stopped just as the evidence of falling prices was starting to mount.


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## money tree (5 August 2005)

tech/a said:
			
		

> The only people I see screaming disaster from the rooftops are those who missed or didnt take advantage of any of the last 3 booms.
> 
> "So there stand the doomsdayers happy that THEY arent caught up in this looming crash---as they dont have anything to get caught up with!!
> How stupid those who invested are!!




You accuse others of being pretentious and continue posting arrogant statements like this. 

Housing IS a problem. Your chest-beating attitude of "look at me, I made a fortune, didnt you, wheres the problem?" adds nothing positive to the discussion.

This forum is filled with mostly young people like myself who struggle to afford a house. For an older person to look down and laugh at our predicament is neither helpful nor tolerable.


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## tech/a (5 August 2005)

http://www.homepriceguide.com.au/


This is what I use.

My area still increased 10% last year.
Agree re gearing now is the time to minimise gearing.
I'll let you know how hard it is to sell in the next month or so.
I'm selling a couple of IP's to decrease gearing myself,had 20 through on first open and no complaints about price.---I dont sell through auction.

Tree.
As a financial planner I find it hard to understand why you didnt take part in the property boom? The Three I know didnt either---they ALL looked at my buying as pure lunacy---everyone of them pushing more SUPER. I was in no better position than they were in 1997.

I certaintly feel for younger and particulaly older single mums AND dads who seem to think that its only a dream to own a home.I've made some positive suggestions above-----your additions to these are??

To those who see my comments as self serving or chest beating------- my apologies thats not how it was/is meant.


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## mit (5 August 2005)

> NO taxpayer bail outs of failed investors / developers. Those who take the risks should be the same people who profit if it goes well. This is NOT the taxpayer! (Unless the investors were planning on handing all their profits straight to the tax office which I very much doubt.)




There is a term that I like to describe this. It's called "capitalising gains and socialising losses", farmers are notorious for it.


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## krisbarry (5 August 2005)

Well said, Money Tree, I agree with you!

Off to work I go... so I can afford that new house of mine.  

I have it on layby (payment plans) at KMART.  A pop-up tent!

This way I can pop the tent up and live with mummy and daddy for the rest of my life.

God peoples get over yourselves....we have a crisis out there and people fail to see it!!!!

This will affect millions of people!


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## money tree (5 August 2005)

tech/a said:
			
		

> As a financial planner I find it hard to understand why you didnt take part in the property boom?




Well as I have stated here many times, I got my Diploma in 2003, after the boom.

Secondly, I have always been self-employed and getting a loan is difficult. 

here is our story of dissapointment:

In early 2002 we were living in a flat in Top Ryde. One of the top floor flats went on the market. They were asking $200k and I thought it was overpriced. The flat got no offers.

In Dec 2002 we relocated from Sydney to Brisbane. During a holiday in August 2002, we looked in a real estate agents window in Beenleigh. We could not believe our eyes. Our neighbours houses in Top Ryde, Sydney were around $350k. The houses we saw in the window were $30k. Also I remember a 'money' program one night where Paul Clitheroe was talking to people who got ripped off on QLD property. They apparently paid $120k for houses that were actually worth $60k. I thought to myself "friggin hell, only $60k for a house?!" At that point we discussed moving up. I argued that although QLD salaries were about 20% lower, the tax system was based on Sydney salaries
and QLD houses were cheaper so less was proportionately spent on tax and mortgage. This meant our disposable income would be higher. And we got a better lifestyle.

Well it took us about 4 months to tie up loose ends and move to QLD. As we were leaving the flat upstairs sold for $287k. A little depressing. When we got to QLD we rented a house for $200 a week. We found out the owner just paid $220k for it. We knew the QLD boom was starting to take off and wanted to buy. Because we did not have stable employment, we could not get a loan. We watched as prices rocketed.

At the end of our 12 month lease (Dec 2003) the owner said rent was going up to $350 a week. I was shocked and asked why such a large increase. The agent said the property was now worth $350k and as such a higher rent was justified. More than a little depressing. Had we taken both opportunities when presented we would be about $200k better off......


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## Bloveld (5 August 2005)

Efficiency leads to redundancy.

old jungle saying


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## Hanrahan (5 August 2005)

mit said:
			
		

> There is a term that I like to describe this. It's called "capitalising gains and socialising losses", farmers are notorious for it.



Love it! Can I have it? 

You're right, farmers are the ultimate socialists.


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## mit (5 August 2005)

Go ahead, I think it came from Paul Krugman talking about capitalists in America

MIT


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## Hanrahan (5 August 2005)

tech/a said:
			
		

> Tree.
> As a financial planner I find it hard to understand why you didnt take part in the property boom?



Tachy; You should refrain from such personal comments. The four years from '00-'04 were unprecedented in my lifetime (I suspect I'm older than you) with respest to cap gain on property. In fact, I have two stories of long term owerners of property, one with an absolute, beach front, dress circle, quality home in a provincial city and another with a Syd suburban 3br br ven house, in neither case did the estates share the spoils. One had very little absolute gain, the other less than inflation over the 50 yrs they were owned.

Being bold is great but not always profitable. For pilots it can be even worse.


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## tech/a (5 August 2005)

*Hanrahan.*

You maybe older,if you are my condolenses.Truth is that most people fail to save at all let alone in line with inflation.My first home cost the princley sum of $19,900 dumbest thing I did was sell it for $39,000--should have rented it and bought the other home,in hindsite i could have done that.
Today the same house is worth over $300K 27 yrs later.
Has nothing to do with being bold (Is that really how you see it?) and everything to do with being systematic with the numbers you are working with.As a pilot you'll understand that.

*Kris*

Its obvious you havent been in this position before,I have and worse.
*Short story*
Its in the eighties I'm in my 20's and I own commercial realestate lots of it.
A few of us were.We knew that higher rent roll===better sale prices.We'd buy them then give 6 mths rent to un tennented properies then lease for as long as we could get.Then we would sell.Fantastic we doubled initial outlay on many properties.So we bought MORE.Interest rates rose to 12% then 15% and finally 18.5%---businesses--small ones were going to the wall---we couldnt rent space--our own businesses couldnt pay the interest bill---so the bank did something really intelligent---they added another 6% penalty interest, on top of that which we couldnt pay already.24.5%!!!!

If ever you or anyone needs to get out of a bind like that call me---seriously.

But people were losing their homes left right and center---their employers were going out of business--interest rates were higher than ever.Mortagee sales were everywhere,courts were choking with bankruptcy's.

Those that are over stretched now are those who were late and are over geared--they are a large MINORITY.There are 100s of babyboomers like me who are now cashing up and gearing very low--If interest goes to 12% and property drops 30% I wont give a hoot---because Ive been there before and I wont EVER be in the same dumb ass position ever again.

You want to talk about the greatest tradgedy of all in years to come then talk
*SUPERANUATION* Forget about knocking those of us who are taking care of their financial security and start PANNICKING cause your super and that of many like you wont even scratch the surface of your financial needs.

Even the Governments pannicking----"Give them self managed superfunds for god's sake so we cant be blamed for insisting on professionals to take care of it-----theres a chance there wont be enough there!!!!!!"

*Tree.*

I do understand how hard it is --I've been there---hindsite is only benificial if you take heed of it in the future.My financial adviser friends---older than yourself--to this day---can identify an opportunity but do you think they will take one???----not in your life!!! So they stay advisors working on theory---and working for people who they wished they could emulate---Their clients dont know the truth--they see the facade.

Now can you see why I have such a low opinion of Financial advisors!?

Knock me if you like but if and when *anyone * wants to talk to someone who has been there done that for FREE and wants an opinion(My opinion) from EXPERIENCE then call me------it aint that hard wether your 17 or 70.


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## Smurf1976 (5 August 2005)

Just contemplate for a moment what happens if we go back to 1980's interest rate levels.

Don't think it's likely? Neither did those who borrowed in the 80's.

"Permanently low interest rates" justifying sky high house prices sounds a lot like the invention of the internet justifying paying a fortune to invest in anything .com did in 1999. 

Just a matter of time.


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## tech/a (6 August 2005)

Smurf1976 said:
			
		

> Just contemplate for a moment what happens if we go back to 1980's interest rate levels.
> 
> Don't think it's likely? Neither did those who borrowed in the 80's.
> 
> ...




Smurf.
*Frankly its a crying shame if people DIDNT take advantage of the lowest interest rates in 30 yrs!!*

Yes of course it will return to the mean but seriously there is a vast difference to USING the opportunities that present themselves and watching them go by due to fear of an uncertain future.

*OPPORTUNITIES are just that---they decay with time----those at risk NOW from overgearing wernt taking advantage of an opportunity---it had/has in most cases passed!*


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## krisbarry (6 August 2005)

tech/a said:
			
		

> Interest rates rose to 12% then 15% and finally 18.5%.





Your missing the point, yet again.  Low interest rates now are the same as having cheaper housing and higher interest rates as was the case in the 80's. You cannot use that line to defend your position.

The key issue is wages, which defines the capacity to borrow money and repay loans.

Housing prices have increased so much over the past 4 years that it has not kept up with wage levels and hence excludes more and more people from being accepted for house loans.

So you can beat your chest and proclaim that you have made it in the property market and for that I commend you.  I also commend you for your valuable experience.  But I must also add that it is a very different world out there now, to the one you were growing up in.

Spare a thought for those that are about to embark on this venture too.

As with University it was free in the 80's now it cost considerably amounts of money.  The choice for the young who do not get accepted for a HECS full fee paying course will be to put Uni. on hold to buy a house or forced to pay upfront fees.  Courses can run for at least 6 years and cost well over $250,000 (fees only).  These students will only ever have one option or the other.

So things are very different now!


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## Smurf1976 (6 August 2005)

tech/a said:
			
		

> *OPPORTUNITIES are just that---they decay with time----those at risk NOW from overgearing wernt taking advantage of an opportunity---it had/has in most cases passed!*



That's exactly my point. *The opportunity has passed* and if anyone wants to invest in real estate then in my opinion now is not the time to do it, especially not if it involves a mortgage greater than 100% of the purchase price as is now often the case.

It would make far more sense to rent for now if you don't already own property and invest in something else where the opportunity for growth hasn't just passed by.  

There's always a bull market somewhere but right now I don't expect it to be in Australian residential real estate. I could, of course, be wrong but given the recent steep price rises followed by a collapse in sales volume the onus of proof is on the bulls as far as I am concerned.


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## tech/a (7 August 2005)

*Kris*

I'm in the process of compiling some research with regard to your arguement.
I'd just like to be clear on what that is.

I delieve your saying house affordability is now further than ever from the reach of the Average Australian.

I'm also very aware of HEX fees my son (Kris) is doing his Masters in Physics at Adelaide Uni now with prospects of his doctorate.Kris isnt motivated by money just an insatiable urge discover---his time for financial security will come.

Smurf.
While the opportunity to profit immediately may have passed to the average buyer---with sound planning people still can purchase a home in my veiw--- even if its their first.

There are STILL opportunities out there Smurf----I bought one 2 mths ago.


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## krisbarry (7 August 2005)

Another key factor is the emerging trend towards causal/temporary/agency style employment in the workforce, something frowned upon buy major banks and finical lenders, when applying for home loans.  More than 25% of the workforce are now in this category and this is growing at an alarming rate.


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## krisbarry (7 August 2005)

Tightening of the mortgage belt.

The Australian dream of home ownership crushed

http://www.cpa.org.au/garchve03/1167housing.html


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## tech/a (7 August 2005)

*Kris*.

I see you have no interest.
Fine.
Hope your requests fall on more sympathetic ears.


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## tech/a (9 August 2005)

Seems the Reserve Bank has a similar opinion to mine on SOME housing issues.

On casual labour.
I have many fulltime employees.----No partime or casual.
Now the latest "Brain wave" from the Industrial Relations Board is to give men 2 months maternity leave and you can take 10 days leave to look after sick family.

I have 2 guys that will take that option and ALL will use up the 10 days family care.
Do you know what that actually costs a company!!
You know who ultimately pays---you and me Joe Public

Part time and Casual labour---hmmm I wonder why.

*I see many here driving on a one way freeway and they are blisfully unaware that there are other freeways! All going to the same place.*


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## krisbarry (9 August 2005)

tech/a said:
			
		

> On casual labour.
> I have many fulltime employees.----No partime or casual.
> Now the latest "Brain wave" from the Industrial Relations Board is to give men 2 months maternity leave and you can take 10 days leave to look after sick family.
> 
> ...




I think its fair.... Women have entered the workforce at such a fast rate that it has left very little options for men than too take up the slack.  Men should be given equal rights to look after their children too.

Business is business mate, and we are not all robots.  Life happens...and S**t happens too.

The governement aint interested in building child care centres so the community (business' too) need to take some responsibilty in factoring in family commitments.

Gone are the days Tech/a you arrived home from work to find dinner on the table and a family gathered around.  Now days its mummy and daddy at work till late in the evening, the child at home alone, spinning a micro meal in the microwave and sitting down to eat it in front of the TV watchin' the Simpsons.

Yes times have a changed.  Best not to fight it mate!


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## tech/a (9 August 2005)

You know I love armchair experts.

People with experience in only one part of the equation (and in some cases NO experience just theory) come out of the woodwork with un qualified opinion.Not only that but they take great delight in telling people who are experienced and are involved in practice---not theory---how it should be done.

*They dont learn*---simply because *they now know it all*

Few ever reach beyond mediocrety---as they soon find much to their chagrin--that life in theory doenst reflect life in reality.Their ideal worlds melt.
Harsh reality has these sheep battling to become the leading sheep---rather than aspiring to be a shepherd.

In all the above I see a great deal of regurgetation of other authors material.
Very little questioning or research into the reality of theory.

To these people I say be happy with *YOUR LOT*---youll never change the world as you'll never be in a position to!!!
No point in dealing in what should or could be---*simply it is*

*Stop seeing those of us who have taken the hard knocks and the high risks and EVENTUALLY come out the otherside still breathing---as the enemy!!
Give us a break---when we use examples from OUR LIFE---to attempt to help you in yours its not chest beating----it just is!*


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## Happy (9 August 2005)

One of the not explored possibilities is purchase of your first home little bit below your expectations. It is in not too bad area but not too flashy one.

Say you pay $200 a week rent, so you can afford to repay that kind of money per week and in current market one can secure about $120,000 loan ($190 interest, in 8% loan, so in 1st month $10 loan repayment).
I know not glamorous way to start the rat race, but you’ve got the foot in.
Some suburbs in some places have studio for twice or three times as much, but drop the suburb a notch and maybe, maybe outskirts, maybe bit further away.

Providing you can have some facilities in the loan like fortnightly repayments and no penalty for early repayments skip on some nights out and repayments can go fast forward.

If one is not prepared to live in dump maybe can arrange positively geared property, an option.


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## krisbarry (9 August 2005)

Happy said:
			
		

> one can secure about $120,000 loan .




True, and most first home buyers have had that option in the past. But truely in todays market what can you find for that kind of money.

It would have to be a unit and in a dumpy condition, in a low socio-economic area, great for ciminal actvity!

An hour out of the city!

And maybe a one or 2 bedroom at the most.

That would be OK for me as I am single but what about a young family just starting out with lets say a child or 2, not an ideal setting!

No Lawn for children to play on, no pets to enjoy in unit blocks and plenty of noisy neighbours! bonking, drug dealing and throwing wild parties.  Sounds like a real hoot!  *** BEEN THERE AND DONE THAT!!!  *** Luckily I was only renting!


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## TheAnalyst (9 August 2005)

I cant believe people really take the state and federal government serious, they say this in every boom and no one ever gets a place; so why even consider them to be serious they had a meeting and a nice couple of platters catered for them and some travelling expenses and accomadation paid for from the tax payer...then they went and caught up on some relatives and friends and seen some tourist attractions and had their meal allowance paid for at a really great couple of restaurants.

They went home disclosed this very important meeting to the media and nothing is done and when it does believe me history will repeat itself and people will end up leaving the homes because of some shonk mistake in the legislation and wont be able to afford to pay.


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## tech/a (9 August 2005)

krisbarry said:
			
		

> True, and most first home buyers have had that option in the past. But truely in todays market what can you find for that kind of money.
> 
> It would have to be a unit and in a dumpy condition, in a low socio-economic area, great for ciminal actvity!
> 
> ...




It's simply a stepping stone---a start.
Getting into the market.

Plenty of homes down south in Adelaide under $200K.
Plenty out North too.

I,m really interested in YOUR life plan and how you're going to fill it Kris.
Have you got one?


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## mit (9 August 2005)

I agree with Tech pretty much. Kris, you should try the forum

www.somersoft.com/forums/

It is a property forum, but getting beyond that if you search for some of the stories you will find many that overcome a lot of hardships and started out very humbly and have managed to overcome it. Most, I am sure if they had to start again would come out on top fairly quickly. There are quite a few here that also visit the other forum, probably wisely staying out of the debate.

MIT


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## Smurf1976 (9 August 2005)

Happy said:
			
		

> Say you pay $200 a week rent, so you can afford to repay that kind of money per week and in current market one can secure about $120,000 loan



Which isn't enough to buy a house literally next to the prison in the outer suburbs of Hobart. And yes, you guessed it, it's a low socio-economic area.

Basing the figures on $150K and assuming long term average interest of around 10% would be more realistic in my opinion. Remember that with low inflation the value of the debt doesn't "disappear" as in the past and of course abnormally low interest rates are just that, abnormal.

As for what is a relevant wage... I suggest that 35K wouldn't be too far wrong for a first home buyer given that a large portion of the total workforce is on 40-45K. (Even including the very high earners in the average only gets it into the 50's.)

Any yes, I do have a plan for myself. My concern is simply that in my opinion we're at the top of the cycle as far as housing is concerned. I read in the paper only today about Sydney being down 7% and the market flat overall nationally. I think that says enough.


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## wayneL (9 August 2005)

I would be interested in learning a formula to determine the intrinsic value of a particular piece of real estate.

This intrinsic value is not the price someone is prepared to pay, because that value is transient and depends on the economy, interest rates, public sentiment etc.

For instance it used to be (I have been out of this field for some time now) that commercial property was valued almost solely upon the yield of that property.

Steve Navra (one of the more sensible gurus around the traps) suggests that residential real estate should be valued this way also.

Thoughts?


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## mit (9 August 2005)

Personally, for residential, if the yield is 5%+ I would start looking closer at the property. This works fine for where and what I buy.  I think Steve's rules are better as it takes into account local historical averages as typical yields can vary from place to place. I think these things are handy just to filter out the dross and keep you from buying at the top of the market.

MIT


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## Happy (9 August 2005)

OK, lets try a little bit harder, $200 you pay anyway, so we’ve got the $120,000
You also can snatch some disposable income say $50 a week (no dinner out, maybe cheaper wine for a while or no Tim-Tams - similar to what Anita Bell did - no Tim-Tams for 3 years) so we’ve got another $30,000 loan

Now we are talking $150,000 loan, I know studio or 1 br flat is not much, but we are not talking spending the rest of your life there this is being paid from the money you actually spend.

But when you spend it this way, for the inconvenience of mod-coms you actually retain some residual value of the money would actually disappear.

And if this cannot capture your imagination, don’t worry some never buy a property and live so it is not a crime, after all if everybody had own property, investment property owners would have a hard time.


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## krisbarry (9 August 2005)

tech/a said:
			
		

> It's simply a stepping stone---a start.
> Getting into the market.
> 
> Plenty of homes down south in Adelaide under $200K.
> ...





Not interested in the real estate market at all for the next 4 to 5 years.  It has become way over-priced.  The stock market seems to be paying out a little better.

At the moment I have free accomodation in a nice suburb at a mates place, so why would I give that up for a ferral cream brick 70's unit 1 hour out of the CBD!

This has allowed me to clear a $23,000 HECS debt and start saving for a house deposit.

I am contibuting to my own super account with extra payments too.

I am 30 years of age and have no intention of having children.....woooo hooo!  That is one debt relief I can be free from.

I have no other plans at this stage other than the fact I am dead certain that I do not want to be chained to a bank with a morgate for the next 30 years.

** My biggest regret is that I should never have gone to uni and then I would have saved $23,000 + Plus lost wages and I would have been able to buy a house by now.....you see Tech/a the damage that uni is causing.

A whole generation of uni grads paying off their debt before they can even think of getting into more debt by buying a house.

* Did you know that the current HECS debt owed buy Australian's has topped $14 Billion Dollars *

Now that has to take a serious dent out of the savings of young people, hence they are having less children and buying less homes.


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## krisbarry (9 August 2005)

Happy said:
			
		

> no Tim-Tams - similar to what Anita Bell did - no Tim-Tams .




She must have been on a serious binge after that 3 year period with no Tim-Tams, as I saw here on TV just last week and she is quite a large lady.  LOL


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## Happy (9 August 2005)

I got the same impression, she should have bought more houses and forget Tim-Tams for good.


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## krisbarry (9 August 2005)

LOL....too funny!


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## tech/a (9 August 2005)

Kris.

What did you do at Uni and why?

Do you hold any responsibility for anything in life---you seem particularly bitter--why?

30---living at a mates--getting rid of a $23000 Hex debt---how long ago did you finish your degree? What are you doing now?
Sorry but I'm fascinated with where your at at 30.

I'm also fascinated by the way you seem to think that your going to be chained to a bank if you buy property.
Done correctly you'll have the bank and its money working for YOU.

A quantum shift in thinking is needed here!!--or in 20 yrs time you'll still be bitter and twisted---not that Ill give a rats ---I'll be dead!


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## mit (9 August 2005)

Happy said:
			
		

> I got the same impression, she should have bought more houses and forget Tim-Tams for good.




Her books almost turned me off property for life. It was all about screwing the last dollar out of everybody and doing everything yourself. Wasn't she the one who took her family to McDonalds for christmas dinner? Although Tim-Tam withdrawl will do this to people.

She actually got sick of property and went into shares instead.

MIT.


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## Happy (9 August 2005)

The moral is:
If you want something, sometimes sacrifice is the only way to get it.

Alternatively you can wait for Lotto win.


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## TjamesX (9 August 2005)

If you are at the stage where you need to buy a house for family/personal reasons then i reckon tread carefully and don't get into too much debt. But if you don't;

Renting is still waaaaay cheaper than owning the same place. The place I'm renting ATM for example, i live with a mate and we halve the rent;

To rent, yearly cash outflow (for me) - $8190

To own (assuming I own whole House and charge him his half the rent)
Desposit $38,000 (10%)
Interest only Loan $23,940 (part of which would be tax deductible)
Rent recieved from mate $8190

So all up to own I would need $38,000 tied up as deposit and I would have a cash outflow of $15,750 per year (just on interest - not including rates, maintenance etc). This yearly outflow figure would be reduced slightly due to tax deductability of half the loan.

All this for the privalege of owning an asset and hoping it will continue to rise in value  , no thanks..... see you in a couple of years

TJ


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## Smurf1976 (9 August 2005)

"You can't lose with real estate"

Um...

http://www.thecouriermail.news.com.au/common/story_page/0,5936,16200706%5E462,00.html


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## mrfirkin (9 August 2005)

Bloody Uni.

Seems as though these days every man and his dog has to go to Uni.

You are looked down upon if you haven't got some dumb ass degree.

In a few years from now we will have all these di*kheads, Uni degree in hand and there will be nobody to empty their garbage bins or fix their cars or perform many other TAFE taught trades all because Mommy just had to send little Johhny to Uni - Keeping up with the Jone's mentality.

Any fool can graduate from Uni today. it's just an extension of High School. Not too many years back, you actually had to be intelligent just to get in.

Just my 2 bobs worth.

Oh, and I'd hate to be a kid growing up today. They are doomed as far as home ownership goes.


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## money tree (9 August 2005)

well Ive been looking for a while and finally found something that suits. 

today, I am a homeowner   

but, I got the property at a 9% discount to asking price, and pretty much negotiated a quarter of the reno work included in the price  It took 6 hours of negotiation to seal the deal. 

I will develop the property (which is easily done) until it is cashflow positive.

the discount to asking price and the positive cashflow should insulate me from any downturn.

Im going to be busy as hell for the next 6 months.....


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## Mofra (9 August 2005)

Congratulations money tree, given those negotiation skills remind me never to sell anything to you


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## Julia (9 August 2005)

Congratulations, Moneytree.  Is this your first property?  Where did you buy?
Keep us up to date with the renovation progress.

Julia


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## tech/a (10 August 2005)

money tree said:
			
		

> I will develop the property (which is easily done) until it is cashflow positive.




Tree.
Well done 
*Jack Dyer once said "Bite off more than you can chew and chew like crazy"*

I'm interested in your statement above.
Are you going to live there?


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## money tree (10 August 2005)

The house is highset, was restumped to 2.4 by the owner but he ran into a cashflow squeeze when rates went up.

The downstairs is basicly a shell. So no hardcore building work required, just throw up a stud wall here and there, put in a $2k Bunnings kitchen and a cheap bathroom, carpet & paint.....

then I need to do the kitchen & bathroom upstairs, carpet, paint again....

that will give me 2 rentable spaces, though we will live downstairs until our 6 months is up on the FHOG, then repeat the entire process on another property using the mrs FHOG 

cashflow should be positive to the tune of $80 - $100 wk


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## tech/a (10 August 2005)

2 Rentals one property--Nice!!


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## Warren Buffet II (10 August 2005)

money tree said:
			
		

> that will give me 2 rentable spaces, though we will live downstairs until our 6 months is up on the FHOG, then repeat the entire process on another property using the mrs FHOG




Sorry for disappoint your plans but you can't claim FHOG for your wife.

From the http://www.firsthome.gov.au/

Neither the applicant nor their spouse (or de facto) must have owned and occupied a home after 1 July 2000. 

WBII


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## money tree (10 August 2005)

we aint married


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## Warren Buffet II (10 August 2005)

money tree said:
			
		

> we aint married




 (or de facto)


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## tech/a (10 August 2005)

or the applicant. (as a pair----either married or defacto),
Brother/s and sister/s can do it though.
Keep it in the family.


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## DTM (10 August 2005)

tech/a said:
			
		

> 2 Rentals one property--Nice!!




Yes, well done moneytree, a home and an income source.  Nice. 

And I was living in just round the corner from you when you were living in Ryde.  Hope Brisbane works out for you.


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## keebab (10 August 2005)

This is an interesting thread and I've been very interested reading it as it has developed. I believe that where there is a will there is a way regardless of whatever the current property climate is. I've been a renter for 7 years and hating it. I live in Sydney and for work and play reasons need to be as close to the action as I can be. 

I'm self employed with extremlly sparodic income. If nothing else my goals with trading and investing have been to achieve a verified stability to my income and to build a deposit to purchase a home. Having talked with a couple of mortgage brokers my best hope for a loan is a low doc loan. Unless I can increase my deposit level to around 30%, the maximum I can borrow is around 275k. The loans could not be used for studio or certain 1br apartments because of loan security. I am eligible for FHOG as a single person. My thoughts have always been towards getting a 2-3br townhouse/appt as a PPOR and renting the additional rooms. I will deduct certain costs for home office as well. 

Long story short, I have not found anything suitable within my price range and I am not sure of other options to upsize my borrowing capacity. I want to take the plunge but don't have enough experience to be sneaky!

Suggestions Tech? (no recommendations of course!)

Cheers

Mick


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## krisbarry (10 August 2005)

keebab said:
			
		

> Having talked with a couple of mortgage brokers my best hope for a loan is a low doc loan.





** Be very careful of the low doc loans **

There was a featured story on these types of loans on ACA or Today Tonight, not sure which one.  But the interest rates are extremely high and with the current peak in the property market you may end up owing more than the property is worth.  This may be your worst investment!


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## tech/a (10 August 2005)

Mick.

No need to be sneaky.
Youve identified 2 things banks love.
(1) Servicability--This is a problem area for you as your income hasnt been stable over a good period of time. *Being self employed you really need to pay yourself a wage and recieve a group certificate each year. Start doing this now if you dont already---doesnt have to be the same each week just must have a tax record of it.*

(2) Deposit---or equity,Again a problem. Do you have a Mother/Father/Brother/Sister/Partner that can help with deposit or equity.

Some parents lend their kids $$s for deposits.They then register a caviet on the title as protection for the $$s lent.Ofcourse in return you'd enter into an agreement re return on their investment(Loan) upon sale.Details up to you.

These are your 2 biggest obsticals.You'll need to get them in order before you'll have much clout!
Just have a plan. But apply that in bold as soon as you can.

If you go lo doc--DONT MISS a payment--a bad record with a lender means you just caught leprosy--you can after a few years when you have the above (part 1) in place then apply for a "Normal" loan and then fix if you wish.
Be sure to find out the payout costs BEFORE you take out this type of loan.
Get a good finance broker.

DONT EVER over stretch yourself---if your not comfortable then your out of your zone. How would a 2-3% interest rise affect you?

Renting out the rooms is a great Idea and you can get good $$s.
I'm sure your entrepeneurial enough to gear yourself right.

*MOST OF ALL
If buying to INVEST DONT buy because you LIKE the house.
Buy Because the NUMBERS add up in your favor---be PATIENT.*

These are some of the keys that were passed to me I hope that they are of assistance to you.


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## Singh (10 August 2005)

Just wondering what everybody thinks, is there any area of potential growth in the near future in Sydney? What suburb and why it is worth considering if looking at buying a unit/house upto $350,000.Any suggestions...


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## Happy (10 August 2005)

If you cannot buy for yourself in your city to live in, you can always buy rental property interstate, with paid management.

It can be frustrating to see the number of taps replaced and light fittings fixed and locks repaired or replaced, but if it is in a driving distance, you can claim up to 5000 km a year of travelling to conduct repairs and it can be travel by car, train, bus. I don’t thing air ticket will be looked at favourably, but ask around maybe it is OK.

Getting positively geared property would be the best option.

Also retail-rental-investment with long term contract is better than private tenant, who can do more damage and there might be constant stream of them.

Smaller cities have lower property prices, of course does not apply to posh satellite cities around State Capital cities, but there are so many possibilities it is possible to start property rat-race from as little as $50,000 - $100,000, - $150,000 and that much money you can get easily without pawn-brokers involved, hence safer arrangement.

One foot in, one year later or even 6 months later, you’ll be able to get a feel for your arrangement also up to 80% value of your first property might be used can be used to claim a stake in another one.

Over-stretching no good in any market and Tech/a can give you some real life examples if you ask.
Many possibilities, even managed holiday properties can be considered, cabin in cruise ships, even parking spaces.


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## waratah (10 August 2005)

This is a relevant and interesting discussion.

However, I fear most have missed the point. 

I'm 40, and currently reside in my 4th owner-occupied property. First purchase was a $100,000 flat in Melbourne 16 years ago. Did I do it easier back then, rather than now? I don't know.

This progressed to the nice townhouse, then the first real house, now a move interstate to a very comfortable place on the best coast in Australia. Currently cashed up in a major way and looking for that "Dream Home" on a cliff overlooking the ocean. Up here, I'll need about $2.8 - 3.5 million, I reckon. It will happen within the next 2 years.

In 1996, I left a promising career and a reasonable salary, circa 60K. Plenty of people told me I was a fool. 10 years later, I've just made 10x that amount trading.

Please forget the low-doc loans, the FHOG, the cars/mobile phones/etc., AND DEDICATE YOUR EVERY EFFORT TOWARDS YOUR PRIMARY SOURCE OF INCOME. 

Your primary income is the first determinant that governs all these other issues.

THINK BIG!


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## Singh (10 August 2005)

Happy said:
			
		

> Smaller cities have lower property prices, of course does not apply to posh satellite cities around State Capital cities, but there are so many possibilities it is possible to start property rat-race from as little as $50,000 - $100,000, - $150,000 and that much money you can get easily without pawn-brokers involved, hence safer arrangement.
> 
> .....Many possibilities, even managed holiday properties can be considered, cabin in cruise ships, even parking spaces.





Happy i'd like to thank you for the Reply and the advice.

The idea of investing in small city is good,but without having much knowledge of Australian cities,it'll be hard for me to select one,and also another thing i need to consider is whether that property'll be leased or not. If you(or someone else here) can give any opinion of few small cities that you think may have growth potential.I'll take it as opinion not advise.
Regards


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## Mofra (10 August 2005)

krisbarry said:
			
		

> ** Be very careful of the low doc loans **
> 
> There was a featured story on these types of loans on ACA or Today Tonight, not sure which one.  But the interest rates are extremely high and with the current peak in the property market you may end up owing more than the property is worth.  This may be your worst investment!



NEVER EVER EVER rely on a "plastic" current affairs show for your financial information.

I am in the home lending industry (wont mention which institution for fear of abuse) and there is no difference in the rates for low dow loans to normal loans. The only difference is the amount of deposit or equity req'd - it is higher for low doc loans due to the increased risk to the financial institution.

If you trade under a company structure than you can use your company earnings for servicing - most institutions look at the campany's annual income on your tax returns rather than on any monthly basis. If you pay yourself a salary this will be added back to your income statement and also included for servicing if you are the sole beneficiary of the company.

However, always remember that you can't eat equity


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## Happy (11 August 2005)

Without knowing what industry is in a city and how prosperous city is, good gauge would be to check the population according to census.
If the population is gradually growing, there must be something that holds the city together and city is growing.

Internet is great place to start; one of them is www.allhomes.com.au http://www.realestate.com.au http://www.homepriceguide.com.au 
You can try agent like www.ljhooker.com

Try search engines like: msn, yahoo, google and there are more.
In a blink you’ll be overloaded with information.

Look at the prices, and supported with demographics you’ll be able to look on the Internet at many cities, a lot of cities have their web pages. 
They mention their industry, accommodation, and attractions. 
But they do not mention their problems, so before purchase a trip would be beneficial. 

Some Australian Road Travelling guides have basic info including population and industry.
One that comes to mind is “Australian Motoring Guide” and if there were few editions you can compare population, but check if different census was used otherwise there will be no change. Census is run every 5 years.

Local library will be good place to have a look too.  For small fee they can even get you books from other libraries.


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## krisbarry (12 August 2005)

*Houses overvalued despite softening*

12aug05

HOUSE prices are still more than 20 per cent overvalued, despite growth having softened since the start of last year.

National house prices had skyrocketed between the last trough in 2000 and the end of 2003, but growth had slowed considerably since then, JP Morgan economist Jarrod Kerr said. 

"Indeed, for the first time since 1996, real national house prices have submerged into the negative," he said. 

"Prices are falling over the year in nominal terms in Sydney, Melbourne and Canberra." 

He said JP Morgan estimates showed that national house prices were 22 per cent overvalued, even after the significant slowdown in growth. 

"Sydney's overvaluation is the highest of all capital cities and above the estimated levels of overvaluation at similar points in time where house prices had stalled," he said. 

Sydney was overvalued by 37 per cent, Melbourne by 22 per cent, Perth by nine per cent and Brisbane by four per cent. 

Adelaide was neither overvalued nor undervalued. 

Meanwhile, Canberra was undervalued by six per cent, Hobart by seven per cent and Darwin by 29 per cent. 

JP Morgan has forecast a 10 per cent correction in national house prices by the end of 2005, which Mr Kerr said was modest given the overvaluation in the market. 

In its quarterly Statement on Monetary Policy this week the Reserve Bank of Australia (RBA) published new data to provide a better measure of median house prices. 

The RBA said the data, compiled by Australian Property Monitors, confirmed there had been "a marked cooling in nationwide house price growth over the past 18 months". 

It said average city-wide prices had fallen or remained unchanged in Sydney, Melbourne and Canberra in the 18 months to the June quarter, while there had been only modest growth in Brisbane. 

Growth in Adelaide and Perth had also slowed, but in contrast to the other capitals, prices had continued to rise at a solid rate.


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## tech/a (12 August 2005)

*Adelaide was neither overvalued nor undervalued. 

Meanwhile, Canberra was undervalued by six per cent, Hobart by seven per cent and Darwin by 29 per cent. * 

So where then would you be looking to buy realestate?
Where is the best opportunities?


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## krisbarry (12 August 2005)

*Property prices too high for young people*

12aug05

YOUNG people should think about leaving Sydney because it is such an expensive place to live, Reserve Bank of Australia (RBA) governor Ian Macfarlane said.

Mr Macfarlane said there had been significant net emigration from NSW over the past three to four years. 

"Recently we've heard so much about house prices retreating in NSW, more so than other states,'' he said. 

"It would give you the impression that somehow or other the imbalance has gone away and that Sydney is no longer so expensive relative to the rest of the country." 

Mr Macfarlane said Sydney was "enormously" when compared to any other city in Australia. 

"In dollar terms, Sydney is still way, way more expensive than anywhere else in Australia, and in fact I think it's so expensive that, particularly for a lot of young people, it's in their interests to go elsewhere, where the lifestyle is more affordable," he said. 

Mr Macfarlane said Sydney house prices were somewhere between 50 and 60 per cent more expensive than Melbourne house prices. 

"Despite all the increase in house prices in Melbourne and despite all the increase in house prices in Brisbane, Sydney is still extraordinarily expensive," he said. 

"And that's why I have to say I get a little impatient when I hear the real estate industry in NSW saying `Oh, what we've got to do is get house prices going up again' - that somehow or other that's going to save NSW. 

"That's Sydney's problem, it's not its solution," he said. 

Mr Macfarlane was testifying before the House of Representatives committee on economics, finance and public administration.


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## Knobby22 (12 August 2005)

My opinion for what it's worth is that the present low interest rates and high unemployment  as well as a stable economy have made it possible for the present house values to be maintained. I cannot see any real upside over the next 4 years. 

The US will be forced to raise interest rates over time and this will eventually effect us. When our interest rates rise, possibly in two years, then whammo!
This is not a reason to not buy a property for personal use as you get many advantages including no capital gains tax but with all the state taxes and lousy yields it is not a good environment for investing.


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## krisbarry (12 August 2005)

Knobby22 said:
			
		

> high unemployment .




You mean low unemployment?


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## krisbarry (12 August 2005)

LENDING finance for home owners rose 0.8 per cent in June to $11.7 billion, the Australian Bureau of Statistics said today.

Oh and did I mention that the combined total debt owed by Australian's on HECS debt is $14 billion.

Now that is a pretty amazing fact....that we have more debt tied up in our brains than we do in bricks and mortar.

Unsure if that $11.7 billion is for the month of June or the June quarter or the entire debt, but anyway I thought I would share this useless info.

What are we doing about this epidemic called youth debt? Nothing

John Howard thought the best way to solve it was for the youth to inherit more debt by increasing HECS fees another 25%

Can I paint the picture any clearer that in the past 4 years the youth of tomorrow have seen their study debt increase 25% AND House prices double


....I HEAR A CRISIS CALLLING!!!!!!


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## Knobby22 (12 August 2005)

er-  high employment.


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## tech/a (12 August 2005)

Unemployment is at an all time low


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## mit (12 August 2005)

tech/a said:
			
		

> Unemployment is at an all time low




Those figures are a bit rubbery unfortunately. There has been a slow redefinition of what consititutes unemployment and now if you work for an hour or more a week you are deemed as employed.  So the current figures are hiding the move from full time employment to part time/casual employment. It's like the training statistics. Training is up but it actually translates to more people learning how to work in McDonalds and less apprenticeship training in TAFE and so-forth. Aren't statistics wonderful.

MIT


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## Rafa (12 August 2005)

Very Interesting thread this...

I am someone who completely missed the housing boom, but i don't hold any grudges on anyone... good luck to them i say, and i hope to be ready when the next one comes along.

I have just bought a property in SA, first home, paid around $400K, with a mortgage of around $200K. Aim to pay it off as soon as possible, tho i am struggling to work out how to do that, as well as try and stay in the stock market... any ideas? Yes, i should have bought about 3 years ago... but was sitting on my hands. Whilst living in it initially, i plan to rent it out for a couple of years. I am 27, so no immediate plans of settling down.

I think we have all made bad decisions.... i keep makiing then, if i add up all the bad decision i have made, i probably have lost close to $400,000!!! (e.g. both from shares losses and not getting into the property market!). 

i made one just the other week when i got out of bhp, zfx and oxr...
since then the shares have gone up a combined $15000!!! I sold so i could put money into the mortgage!!!

But thats life. You get on with things... but one thing I never do is begrudge someone else's success. one day i hope to learn enough to make up for all this.

tech/a thanks for all your input so far, i have learnt a lot.  keep it up.


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## tech/a (12 August 2005)

I dont know if it can be done now---but back 7 or so years ago I heard of someone who paid off his mortgage by putting all his pay into his mortgage and using a card---line of credit---then securing a margin loan with his house equity and placing the dividends and the profit back into the housing loan.

Along with some tricky accounting for tax advantages---which a good accountant could set up---and you can see the benifits if your a successful trader.

I dont think Margin lenders take house equity as security any more---could be wrong.

In your case Rafa you have time on your side and you'll see probably another 2 housing and 2 market booms.
One secret that was passed on to me and placed me in this last boom was/is
look for a reason for housing prices/stocks to rise.

As you know Adelaide mine was the Southern Expressway---we tendered the Walls on it---so knew it was happening way before most others.
We started buying houses in Seaford and Moana--particularly Esplanade.
Its just laughable what they were then and now.
Just one---I didnt buy--so I make errors in judgement like everyone else--was 3 bed Esplanade $89000-1996 last sold 2003- $425000.

I wasnt smart enough to see the boom coming but was in the market when it did.Like you Ill know what to lookfor next time.

Did know that Commercial followed 3 yrs behind domestic so took advantage of that late 2002.

With 50% equity in a 400K property at 27 your well in front of the pack.


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## Alpaca (13 August 2005)

krisbarry said:
			
		

> *Property prices too high for young people*
> 
> 12aug05
> 
> YOUNG people should think about leaving Sydney because it is such an expensive place to live, Reserve Bank of Australia (RBA) governor Ian Macfarlane said.




But what about employment? It is fine to say leave Sydney, but these "young people" also require work, and like it or not, Sydney provides more employment opportinities than other Australain regions. Mcfarline should be well aware of this. He should stick to monetary matters and leave the politicing to the dills we have elected.


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## DTM (13 August 2005)

Alpaca said:
			
		

> But what about employment? It is fine to say leave Sydney, but these "young people" also require work, and like it or not, Sydney provides more employment opportinities than other Australain regions. Mcfarline should be well aware of this. He should stick to monetary matters and leave the politicing to the dills we have elected.




This is an excerpt from an article in the SMH and it does looks like most of the jobs have been created out of Sydney.  The article quotes that Sydney is becoming an ageing work force and technically, it is in recession. 

Quote from the SMH

*Since July 2002 the number of full-time jobs in NSW has grown by only 3.3 per cent, but by 15.6 per cent in Queensland, 14.9 per cent in Western Australia and 12.4 per cent in Tasmania. *

http://www.smh.com.au/news/national/job-boom-turns-gloomy-for-nsw/2005/08/11/1123353449455.html


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## markrmau (14 August 2005)

DTM said:
			
		

> The article quotes that Sydney ... technically, it is in recession.




I am just a little concerned that Sydney will turn out to be a leading indicator for the rest of OZ. This may be just the begining of the property bubble hangover. Remember, you can't eat coal, zinc, copper ....


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## Smurf1976 (14 August 2005)

markrmau said:
			
		

> I am just a little concerned that Sydney will turn out to be a leading indicator for the rest of OZ. This may be just the begining of the property bubble hangover. Remember, you can't eat coal, zinc, copper ....



What, exactly, have the other states done differently to NSW in order to avoid the consequences when the boom ends? Not much so I expect a similar outcome at least in Queensland, Victoria and Tasmania. Not so convinced about SA, WA, NT.


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## Julia (14 August 2005)

For those finding entry into home ownership difficult, there is another possibility which I used in New Zealand but which I'm not sure is available in Oz.

Following the 50/50 split of assets after a divorce, I didn't have enough for a deposit on a reasonable property.  After much searching I found a 30 year old two bedroom brick house on LEASEHOLD CROWN LAND.  This effectively halved the price of the property and cost $52 p.a. in "rent" for the land.
I upgraded the kitchen and bathroom, worked long and hard in the garden, and sold it two years later for three times what I paid for it.

To those people who complain about interest rates;  when I bought my first investment property I was paying 22% on second mortgage.

There has been a lot of really sensible and encouraging advice offered on this thread.  No one has suggested it's easy to acquire property, but it's usually a matter of priorities unless one is well below the average wage.  I can well remember buying only second hand clothes for about 5 years in order to pay off a mortgage.  And when shopping settling for sausages when I really wanted fish or steak.  I'm sure we've all heard about the wealthy person who, when in receipt of the comment "oh, you're so lucky, you have everything you could possibly want", says "yes, and the harder I work and the more sacrifices I make, the luckier I get".

Julia


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## Smurf1976 (14 August 2005)

Julia said:
			
		

> To those people who complain about interest rates;  when I bought my first investment property I was paying 22% on second mortgage.
> Julia



When rates are high it's time to buy...


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## TjamesX (15 August 2005)

Sydne'y excessive prices lock out anyone from joining in their economy that doesn't already live there, and will continue to be a major problem in the future. Getting rid of the vendor tax is definitly not the answer.



> The property developers' idea of nirvana is a boom in house building and house prices that goes on forever. But market economies have never worked like that. Booms always give way to busts.
> 
> Having overdone things so badly, we now must suffer the painful correction. To hanker for a resumption of the boom is as silly as curing a hangover by getting back on the grog.
> 
> ...




http://www.smh.com.au/news/business...ates-vendor-tax/2005/08/14/1123957949576.html


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## markrmau (15 August 2005)

TjamesX said:
			
		

> Getting rid of the vendor tax is definitly not the answer.



Actually, Gittens has been saying that scrapping the vendor tax will have a negative affect on sydney house prices as it will improve liquidity.


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## wayneL (15 August 2005)

Julia said:
			
		

> For those finding entry into home ownership difficult, there is another possibility which I used in New Zealand but which I'm not sure is available in Oz.
> 
> Following the 50/50 split of assets after a divorce, I didn't have enough for a deposit on a reasonable property.  After much searching I found a 30 year old two bedroom brick house on LEASEHOLD CROWN LAND.  This effectively halved the price of the property and cost $52 p.a. in "rent" for the land.
> I upgraded the kitchen and bathroom, worked long and hard in the garden, and sold it two years later for three times what I paid for it.
> ...




http://www.royweston.com.au/propsearch/?oid=geraldton&est_ct=1

Oh yes. Above is an example of that. The lease on the land expires in 2014...allegedly renewable, but would you trust the guv'mint?

A beach shack with no security of tenure past 2014 for 100k? Pass!

Cheers


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## DTM (15 August 2005)

markrmau said:
			
		

> Actually, Gittens has been saying that scrapping the vendor tax will have a negative affect on sydney house prices as it will improve liquidity.




Yes, it will result in more of a move in the supply/demand curve to the oversupply area and will result in a drop in prices.

Good article I might add.


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## Rafa (17 August 2005)

Well, the next great infrastructure project planned for Adelaide is the extension of the highway from south road to Gawler... cutting the time to get to Gawler considerably!

But Gawler doesn't really classify as the next 'sea change' destination! But, it could well develop into a fine satellite city, doorstep to the Barossa, etc, etc!

Still, one thing about Adelaide that has always concerned me is the fundamentals... and that is population and population growth. As a result I have never looked north or south of the city... (and been proved spectacularly wrong!). I have felt the the east west corridor around the city is the long term growth area, because it is a fixed area, unable to expand... i.e. sea on one side and hills on the other! 

Any thoughts?

Also... what are your thoughts on the share market now... i.e. how much higher can it go... having got a property now, i am torn between trying to repay the loan as quickly as possible, or continue to look at shares and then use gains from the share market to pay the loan off!

Any thoughts on this?


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## krisbarry (17 August 2005)

Wage price index up... you know what that means, more pressure on interest rates... Bring it on I say!  UP GO THOSE RATES!!!

17aug05
THE wage price index increased 1.1 per cent in the last quarter, the Australian Bureau of Statistics said today.

Releasing figures which give some indication of possible inflationary pressures, the bureau said the index rose 1.1 per cent in the June quarter, to be up 4 per cent in the past 12 months.

The index shows private sector wages (excluding bonuses) were up 1.1 per cent for the quarter, to be up 3.8 per cent over the past year.

Public sector wages (excluding bonuses) rose one per cent for the quarter to be up 4.7 per cent over the year.

The quarterly increase in June matched the March quarter increase. 

*The biggest increase was recorded for the education sector, up 5.7 per cent for the year.* HECS UP 25%!, also factor in Teacher wage claims!

Other industries with strong increases included government administration and defence (4.9 per cent), construction (4.9 per cent) and mining (4.8 per cent).

The bureau said there appeared to be strong demand for skilled labour in both the construction and mining sectors, with many respondents saying they were paying additional wage increases to retain quality staff. 


source : http://www.theadvertiser.news.com.au/common/story_page/0,5936,16290641%5E1702,00.html


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## tech/a (17 August 2005)

krisbarry said:
			
		

> ... Bring it on I say!  UP GO THOSE RATES!!!





*WHY?*


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## Smurf1976 (17 August 2005)

tech/a said:
			
		

> *WHY?*



Rates will go up at some point. I think most would agree with that.

But the last thing you want is to be heavily in debt when it happens. House prices at the moment are basically a function of "how much can we borrow at PRESENT interest rates if we stretch everything to the limit?". Most people do just that and then spend as much as they can get on buying a house. So no surprise that house prices have been bid up way beyond any official measure of inflation.

I am bearish in my view on real estate prices for this reason. I acknowledge that the bulls could be right but I am more convinced by the bear case at the present time.

Now, when interest rates go up the amount that can be borrowed for a given income level goes DOWN. This means less to spend on houses, A LOT LESS. 

Now, if it were me I would rather have prices fall / rates rise BEFORE I buy, not after. The last thing anyone wants is a mortgage worth more than the house at rates considerably higher than they budgeted for (remembering that in many cases they budgeted on the basis that rates would steadily FALL and they are in big trouble if they don't).

I assume this to be the reason why some would like to see higher rates. Personally, I gave up "wanting" things economic quite some time ago. But I do believe housing to be a bubble. I am not "wanting" any specific outcome but I believe that we are at the top of the market cycle for real estate right now and am acting accordingly. Others disagree. They could be right. Time will tell.


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## krisbarry (17 August 2005)

Wage growth highest in 8yrs, that is the key ingredient for inflationary pressure.  The RBA is relaxed for the moment, but hold onto your hats for rapid rate rises in early 2006!

Bring em' on!


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## tech/a (17 August 2005)

No No Smurfy.

... Bring it on I say! UP GO THOSE RATES!!!

*Why the hell is this statement being made? I'm afraid I'm missing the benefit of why someone would be cheering on an interest rate increase.*

Locking in interest rates and decreasing gearing is the simple answer.
With the longterm veiw being (for me ) passive income---selling property and freeholding others is the long term goal (3 are on the market now--one sold on W/E and one almost cleaned out by theives on Sunday before the open--- caught with the kitchen half out by my wife as she went around to put the heater on!!!!!). Many others who invest in R/E have the same goal---if they dont then they should!.

Few Pro R/E investors will be hurt at all.
Its the younger ones who mortgaged themselves to the hilt in 2002 and after who have no equity,and are currently on maximum servicability that will be hurt.

*RAFA.*
We do a lot of work for LR&M from Gawler.Talking to their contracts manager they report that the area has more approved subdivisions than in the south.

SHIP CONTRACT
Should mean something to you.
I always look for a REASON why an area will go ahead.
I'd say you've found one.
You can certaintly make the numbers work out there.(Gawler etc).

You know if those who constantly whinge about how tough life is---spent as much time persuing opportunities and taking advantage of them----they'd find life is there for the taking.

*Kris* here is a great line for you.

*"I started with nothing and still have most of it!!"*

Couldnt resist!


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## krisbarry (17 August 2005)

tech/a said:
			
		

> *Kris* here is a great line for you.
> 
> *"I started with nothing and still have most of it!!"*
> 
> Couldnt resist!





That is very same pig-headed attitude that you constantly display on this board and for that very same reason many people simply ignore replying to your posts!

* I feel sorry for your children as you are robbing them of a chance to enter the housing market *

Time you give a little of it up and let others have their turn too!

The question I pose to you is...."Do you ever feel guitly about the amount of wealth that you own?"

How do sleep at night, while others are homeless, geeezzz I ain't homeless, but I always think about those who cannot even put a roof over their heads.

Remember your children mate and their friends, while you beat your chest and proclaim that you still own all that wealth!  To own that amount of wealth you must have robbed many others!

Who said greed ain't evil !!


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## Smurf1976 (17 August 2005)

I think we're talking about different things here.

Tech/a seems to be focusing on investing in real estate in up and coming areas if I have understood correctly.

I and it appears krisbarry are thinking in terms of buying an established property, in an established area TO LIVE IN.

Totally different things IMO.

I can see the logic of investing in an up an coming area. It's an investment like any other. As long as you've got it right you ought to do fairly well. Get it wrong and you'll lose. No problem with that.

What I DO have a problem with is the notion that an ordinary working person pays far more in interest payments than they could rent the same type of property for. Where is the sense in paying over $30,000 in interest (not repayments, they're extra, that's just for the interest) plus maintenance, rates and insurance for a property that is FALLING in market value when you could rent the same place for less than $20,000 and in many cases around $15,000. Why pay double? 

OK, you could pay less than this if you buy a cheaper property. You would pay less rent for one of those too.

As I said, investment in up and coming areas is one thing. Buying in a falling market, which is the situation for most, is entirely different in my opinion.

Good that we have some disagreement though. Democracy still seems to be working here.


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## wayneL (18 August 2005)

tech/a said:
			
		

> *WHY?*




There are many, who have much to gain from rising interest rates...including some members of my family.

I personally would like to see them up too. I have several reasons for this, some financial, some sociological.

Up about 2-4% from here will do nicely.

Cheers


----------



## RodC (18 August 2005)

Smurf1976 said:
			
		

> What I DO have a problem with is the notion that an ordinary working person pays far more in interest payments than they could rent the same type of property for.




This is nothing new, when we bought our first house in 1987 the repayments were higher than we could have rented for (interest rate was around 14%).

I don't know about the other cities, but this has been the reality in Sydney and Melbourne for at least the last 20 years. Plenty still seem to be able to buy a house. 

The one thing that has changed is that many first home owners are no longer content with a modest first house. They all seem to think they need something new and huge.

Rod.


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## tech/a (18 August 2005)

*Kris.*

You have no idea where I put funds to work and the benefit people recieve from their application.
Guilty--No--We are all very fortunate to live in a country where these opportunities are available to all of us.
I've also been fortunate enough to travel most of the world---and if you think there is poverty here then get off your butt and travel to India or Malaysia---or Mexico where $50AUS can keep 10 people alive for a month.

If you think we are Rich or I am for that matter go to Palm Beach Florida where my nett worth is someones 50th Birthday bash---or a Packer wedding.

* "To own that amount of wealth you must have robbed many others" *

Thats an amazing statement---rather than understand that you can create your own wealth and do with it what you wish---you and people like you believe that those who make an effort to be self sustainable must do it at the expense of others!---amazing. In retirement I wont be a cost to the general populace
95% will----Do you hear me whinging about the tax I pay??

I ask what your doing here ---a stock trading forum where most are looking for ways to increase their lot----your not? 

What you see as chest beating Kris is encouragement to anyone who has a go. If I can help and people ask then I'm genuinely happy to lend a hand.
Even to you.

There will be plenty of housing for my kids and yours---and they will all be able to own their own home.
One of my daughters friends who is 22 owns 3 properties (Along with the bank) in Adelaide and she is a hostie---she rents to other hosties--by the room (Bedroom) $120/room she has 4 bedroomed properties.--returns 50% more than normal renting and the girls dont mind as they are transient. 

*Think out side of the square and you'll find yourself outside of the rat race.*


*Wayne*
Seriously I would like to know of some of the reasons (Specific) you and others lookforward to a rate rise?---I'm not beyond learning myself despite popular opinion.

*Smurf*

"What I DO have a problem with is the notion that an ordinary working person pays far more in interest payments than they could rent the same type of property for. Where is the sense in paying over $30,000 in interest (not repayments, they're extra, that's just for the interest) plus maintenance, rates and insurance for a property that is FALLING in market value when you could rent the same place for less than $20,000 and in many cases around $15,000. Why pay double?"  

Smurf simply they would be crazy.
*But whats wrong with making this situation work for you?????*

Sure rent the property--- and save your butt off.
In 5 yrs when you have a 100k and the markets dropped to 1997 prices (Thats simply not going to happen) put $100k down sit on the rent roll---keep renting if you wish and wait for the next BOOM.
Do you honestly also believe that buying when interest rates are at their highest is smart?-----To me thats a time to sit out!


----------



## krisbarry (18 August 2005)

I guess the question you have to ask yourself is...is it moral?

Tech/a you have in-directly pushed up the price of housing and now the government have to find ways to make it affordable again.

You question the amount of tax you pay and the opportunities that you give others, REALLY?

I believe that you have been greedy and given people less opportunities.

That very same tax that you are paying to the government is now funding 10 other people to find them affordable housing and paying them rental assistantce, which at the end of the day goes back into your pocket.  So really mate, you are not doing the community any favours.

Governments should be applying the rule of thumb, One property and one investment property, per family unit.  That would spread the wealth a little more evenly.  Just like the 1 child policy that was introduced in China.

You say that you will be a self funded retiree, and that will save the government lots of money, REALLY?

But you have done this at the cost of 10 other people that could have been self funded retirees too.  Now you see my point!

Tech/a you have bought up lots of properties, and hence it has made Smurf76 have to pay way more for his house too, same can be said about petrol prices. We pay more now because PING PONG POO in China now wants to live like his western folk and drive a car too.

I am not questioning investment in property, more so the greed that some have and fail to see what their actions are doing to the rest ... BUTTERFLY EFFECT!

Yes I have travelled right throughout North America too and I see the wealth of Australia heading that way too.  A few with all the wealth, and most with very little at all.


----------



## doctorj (18 August 2005)

krisbarry said:
			
		

> I guess the question you have to ask yourself is...is it moral?




In theory, any money made is at the expense of somebody else.  Whether it be a wage slave or property investor.  Money in itself is not moral, I certainly don't feel bad making money.  In fact, it could be argued that without self-interest the market economy as we know it, the one that puts food on our tables, would simply not function. 

To get a bigger picture, this is a function of human nature.  Look at communism for example - absolutely fantastic in theory, but it fell apart because it was at ends with basic human behaviours and motivators.



> Tech/a you have in-directly pushed up the price of housing and now the government have to find ways to make it affordable again.



The market will do this.  It always has.  There's no reason to believe it won't in the future.



> That very same tax that you are paying to the government is now funding 10 other people to find them affordable housing and paying them rental assistantce, which at the end of the day goes back into your pocket. So really mate, you are not doing the community any favours.



It also could be argued that the government has created this situation through tax breaks for investing in property (which on its own is unsustainable en masse as its a non-productive investment) and subsidies for rent.  These have certainly only contributed to the boom, not aided the populace looking for a roof and a place to put their bed.



> Governments should be applying the rule of thumb, One property and one investment property, per family unit. That would spread the wealth a little more evenly. Just like the 1 child policy that was introduced in China.



Eeek.   What's next?  Investment in mining tenenants makes it unaffordable for the populace, people and companies limited to 10km² to make it affordable for everyone?  Government intervention is not the answer.  It never has been and whatever they do will only ever make something else worse.  



> But you have done this at the cost of 10 other people that could have been self funded retirees too. Now you see my point!



Chances are, if they have not sought to be self-funded in the current market, they would not have in your utopia.  Tech has not consigned these people to be pensioners for forever and a day, its either been through their own action, inaction or unfortunate circumstance.


----------



## Happy (18 August 2005)

Not every person is rich by depravation of wealth to others.

Tech/a’s story is different, it is hard yakka, long days of work, long years of sacrifices.
All in the name of FUTURE FINANCIAL SECURITY.

And actually the Government advocates SAVING.

If anything, Tech/s should get the citizen of the year award, not this.


----------



## tech/a (18 August 2005)

Kris.

I think a Communist country would suit you best.

Your view is I'm afraid narrow minded and naive.
In a democratic society its natural for economies to seek expansion and betterment as it is for all participants in that community.

Without people like myself who take the risks needed to grow financially many would be without work. Like Geoff the handyman repairing the house damage.

House prices rose due to demand and affordability.Thats now peaked and the cycle will come around again when you'll hear whingers saying how impossible buying a house for 700k is.

If people like us did disappear Kris you would have poverty.
Your perception of greed is your perception--you've quantified it.
To someone like Packer I'm not even player. 

I have a strong feeling you'll always hold your views and remain bitter and twisted throughout your life---pity---but your choice.


----------



## krisbarry (18 August 2005)

Sorry, but I am not going to sit here and praise Tech/a for his achievements like others do on this board.

I am here to question his ethics and morals.

DO TECH/A'S ACTIONS BENEFIT OR INHIBIT OTHERS....THAT IS THE QUESTION UP FOR DEBATE!


----------



## doctorj (18 August 2005)

And I have debated.  I sit here awaiting your response. 

It's unfortunate this country has such a culture of cutting down the tall poppies.


----------



## krisbarry (18 August 2005)

So you are quite happy to pay 1.30 a litre for fuel? Same principle right! Supply and demand!

The Tech/a's of this world are like (OPEC) governing the price at which housing should be paid and the average Fred and Freda Nerk have no choice but to pay it because of the greed that has been forced upon them by the top.

Well don't bitch when petrol hits 1.50 by Xmas!


----------



## Knobby22 (18 August 2005)

I can see where krisbarry is coming from.

The Me generation (or baby boomers) have had a pretty easy run and the tax system has supported them.

The next generation has unfortunately had to pay for their Uni and live with the effects of negative gearing. The rules have changed for them also, we know we won't get a lump sum when we retire and will have to carry the bulk of the me generation on pensions which we will not receive.

But things are changing!
The baby boomers are starting to retire and job opportunities are finally opening up. Some will start selling their properties for lifestyle. The Y generation will start supporting the X generation to even the playing field a bit. State taxes are higher which disadvantages investors. Conversely, investing in the sharemarket has never been cheaper.

Our time is coming! Carefully considered decisions now will pay dividends in the future. It was never easy to buy a home but it will probably not get much easier. There is the new reality. It is also the new reality that people who have their investments in real estate are in for a long period of little capital gain which will hurt.

We should be sending letters to politicians whenever the Me generation creates another break and support politicians who remove distortions from the market that advantage investors.

Personally I am awaiting higher interest rates so I can upsize my home.


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## tech/a (18 August 2005)

krisbarry said:
			
		

> Sorry, but I am not going to sit here and praise Tech/a for his achievements like others do on this board.
> 
> I am here to question his ethics and morals.
> 
> DO TECH/A'S ACTIONS BENEFIT OR INHIBIT OTHERS....THAT IS THE QUESTION UP FOR DEBATE!





Kris.

*On greed and morals.*

Let me tell you something that happened to me in April.

*Its a great story and true*

When I met my wife she had 2 girls who were Street Kids who she had looked after as a foster mum (15 in total over 8 yrs) who adopted her as their mum and still do.
One of the girls met one of the guys who worked for me.
Over the next few years they moved from house to house never seeming to get ahead.
So we decided to help out and buy a house (they didnt have enough for a bond let alone a deposit) so 3.7 yrs ago we bought the house and let them be tennents for the cost of interest--they paid all outgoings.

Deal was that in 3 yrs we would go halves in the capital gain and give it to them as a gift--as a deposit on their home.
All went well for 3 yrs.
They then decided to get married.
We paid for the wedding.Paid for the Honeymoon and the 3 kids to go as well.
New House Paperwork was signed---all due to move in when the honeymoon was over.---Off they went in one of the 2 vehicals that were supplied to the family through my company.

*Now the interesting bit*

19 days into the Honeymoon (of 24) I find my claytons son in law and 4 of my employees have been theiving off me for 4 yrs.The evidence is so compelling and in such a quantity (We found it in text messages on employee phones) that criminal charges have been laid.The last time being the day before his wedding.


When I fronted this piece of scum and asked why didnt you just ask if you needed money his reply------------*You could afford it!!*

Kris.
I'd reckon this guy would be your IDOL!!


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## tech/a (18 August 2005)

Knobby22 said:
			
		

> Personally I am awaiting higher interest rates so I can upsize my home.




Knobby can you explain what you mean here?
How this works---- why its better later and not now.


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## Happy (18 August 2005)

I think it goes like this:

Interest rates go higher, people who bought and were stretched to the limit, cannot afford to continue with payments. 

They sell, property is absorbed by the market at close to market prices.
Then the avalanche of higher interest victims arrive and now Knobby22 comes in and offers price 22% lower or less and pays cash, so no higher interest worry whatsoever.

There could be different explanation, will see.


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## krisbarry (18 August 2005)

Tech/a, So you are a real human being after all, with feelings too, for that I commend you.

My story...

I moved out of home at the age of 17 with nothing more than a garbage bag full of clothes after suffering 17 years of domestic violence.

I am building my wealth slowly with no help from my family.

I feel wealthy having my life back and yet I am financially not that well off.

So I guess that we have both come from nothing and must agree to disagree on the topic of housing and its affordability.

All is well!


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## tech/a (18 August 2005)

krisbarry said:
			
		

> Tech/a, So you are a real human being after all, with feelings too.




Suprising isnt it!


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## tech/a (18 August 2005)

krisbarry said:
			
		

> My story...
> 
> I moved out of home at the age of 17 with nothing more than a garbage bag full of clothes after suffering 17 years of domestic violence.
> 
> ...




And now I know where the "attitude" comes from.

Dont let your own preconcieved beliefs shrink the possibilities in your world.
You may find more suprises.


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## Knobby22 (18 August 2005)

tech/a said:
			
		

> Knobby can you explain what you mean here?
> How this works---- why its better later and not now.




Tech

At present, everyone would have to agree house prices are fully if not over valued. When interest rates rise, the economy suffers and people with very large borrowings suffer. Investors who are overstretched (I'm sure your not one also suffer). Their equity reduces and investors will become sick of ruining their lifestyle for the third property. I remember in 1989 a family friend who lost their whole property portfolio (12 properties) as well as his own home. 

So my first point is that there will be more forced sellers on the market.

The second point is that as interest rates rise, the people wanting to borrow to their limits will get their loan sizes reduced. In addition the banks become more fearful.
This will mean that when I am bidding against them I (who have build up a fair bit of wealth in the sharemarket) will be able to get the property for a price that is not overly inflated. Secondly, as the interest rates fall, property prices will increase and I will have additional equity in the home. 

Personally, I think a rise of only 2% would be enough to remove the remaining heat out of the market. I also think the next housing boom is a few years away and will not be near the magnitude of the existing boom. Another friend of mine bought a house in an inner suburb just after the previous boom and sold it seven years later for the same price just before the latest boom started. This should happen again.


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## Knobby22 (18 August 2005)

Kris

My family is poor and I have never had help from them either. my wife's family is almost as poor though they did pay for our wedding for which I am eternally grateful.

Don't worry about how lucky some people are. Firstly, what is wrong with other people getting a few free things? It doesn't really affect you. It is sometimes annoying when you see other people getting a start up from their parents but you will find in the long run most of them get used to the charity and refuse to invest in their own wealth, preferring to waste money and forever anxiously look at whether their parents are spending their inheritance. It is a great freedom not to be in this position and have this mind set. 

Jealousy is a weakness and a wasted emotion. This society pushes material things too much. We all know plenty of miserable people who own the latest cars and gadgets. 

I had a great time recently at a pub and everyone there was relaxed and most of them rented and yet they knew how to enjoy life. 

Look at Warren Buffett, a bit strange granted, but he lives in a pretty average house and drives a pretty average car. It's all a matter of seeing what's important in life.


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## kph (18 August 2005)

tech/a said:
			
		

> Dont let your own preconcieved beliefs shrink the possibilities in your world.
> You may find more suprises.




That pretty much sums it up for me..
I have read various bits of this post and it seems tech/a has copped a bashing for saying it as it is.

No matter where you look, there will always be someone better off and someone worse off than yourself.

The backlash regarding housing affordability is simply symptomatic of something else.
It may be a preconceived notion of what we think we are entitled to in life, based on what others seems to have, or what culturally, we are expected to have, or what we feel we deserve.
This attitude is prevalent in 'developed' western nations especially the US, UK, 'old' Europe and Aus.

There are more opportunities to 'have a go' and get ahead here in Aus than there are in many other parts of the world, some of them right on our doorstep.
Its just a matter of focusing on what you are trying to achieve and geting on with it, instead of being distracted with all the noise and chatter that goes on around you.

Stupid is what stupid does....we have choices here more than most have elsewhere.

kph


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## Julia (18 August 2005)

"It seems TechA has copped a bit of a bashing for saying it like it is"

I agree.  Have been following this thread with interest.  When an obviously experienced person is attempting to offer helpful suggestions to others (and isn't that at least part of the reason for participating in a forum?) it is pretty difficult to do so without mentioning some of one's achievements, if for no other reason than to add validity to the suggestions.  My observation has been that Tech is nevertheless always interested to hear other points of view and retains a flexible outlook on most matters. His contributions on various subjects make the forum a more interesting and useful site.

Kris,  I'm truly sorry you had such a rotten start in life.  You can feel good about having achieved as much as youu obviously have in spite of that.  Perhaps it's time to focus on these, your positive achievements, and let go of the past resentments.  Bitterness is something that rarely "gets back at" those who have hurt us.  Rather it turns inwards and sours our capacity to experience warmth and goodwill from others.  I wish you every success in  pursuing what will one day make you happy, and look forward to your continuing contributions to the forum.

Cheers
Julia


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## krisbarry (18 August 2005)

Thanks Julia for your kind words. Yes I am a survivor of a truely horrid childhood and yes this has altered my sense of achievement.

While others have had the easy run, the easy life etc, I have struggled emtionally to put myself back together and to house, feed, clothe and educate myself.

My childhood could have lead me down the path of drugs,alcohol, prostitution, homlessness etc.

But I chose to live life!

I have done it all the hard way and hence the somewhat bitterness I hold towards those who have more than ample to support themselves.

There is no reason to own more than one or two houses in Australia, I see it as pure greed!  It is not investment it is greed.

Investing is saving money in a bank account, buying shares, educating yourself, to gain that better paid job etc

But when you take and essential service (Housing) from the ordinary folk and buy more and more housing with that capital is it not just pure greed!


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## tech/a (18 August 2005)

krisbarry said:
			
		

> While others have had the easy run, the easy life etc, I have struggled emtionally to put myself back together and to house, feed, clothe and educate myself.




Kris where do you get this idea that all people who have a higher asset base than most have never had to struggle in life??




> I have done it all the hard way and hence the somewhat bitterness I hold towards those who have more than ample to support themselves.




How do you quantify more than ample. Consider this. If you just save cash in a bank its value will diminish dramatically each year. In 1968 a house was $9k on average--thats what my father paid. $100k then was an enormous sum.
If you had that then you could pay cash for 10 houses. $3 million will do the same today in 20 yrs I'll be 70 and by then 10 houses will be worth $6 million.
I cant save cash that fast---take off the biggotted glasses!!
$100K today isn't a great deal of money and in many years to come todays riches wont be comparable to the futures cost of living.



> There is no reason to own more than one or two houses in Australia, I see it as pure greed!  It is not investment it is greed.




See above there is every reason---when the opportunity presents itself.
Kris you're presuming we (investors) buy housing trust homes!!

Investing is saving money in a bank account, buying shares, educating yourself, to gain that better paid job etc



> We do that to and thats OK I see thank goodness.
> 
> But when you take and essential service (Housing) from the ordinary folk and buy more and more housing with that capital is it not just pure greed!




Kris
I specialise in Esplanade property,small subdivisions and commercial real estate---hardly something "Ordinary folk" get involved in. 
It's not even investment its BUSINESS---but I guess your view on this would be that business profit should be limited to YOUR perception of a fair earnings.
Business means that people like you can use that education you carefully selected and paid for to your advantage---we (Oh and a government near you) can give you that opportunity.

Anyway I'm done here-----(this Kris discussion)
Goodluck Kris with whatever you do with your life.
When your older I hope you dont look back and see wasted opportunity.
If living in a communes your thing or a simplistic community go for it.
"Anyone can be a bum even an educated one."


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## krisbarry (18 August 2005)

Yes it is time to surrender. My white flag is now at full mast!

Tech/a, you and I have come from completely different walks of life. 

I will take this opportunity to post this as my last on this thread and the last on this board too.  

I have really learnt today from Tech/a that he couldn't give a toss about the future housing market, the youth, or others peoples views on this board.  As long as he has gained, and got his point of view across, and won the argument thats all thats matters.

I will be using other discussion boards in future!

Farwell to all, and thanks Joe for running a well planned discussion board.


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## Battman64 (18 August 2005)

A great shame.  
You have a lot to offer here.   
The Ignore button works for me....Try it


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## Knobby22 (18 August 2005)

I thought it was a draw!


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## sam76 (18 August 2005)

I always enjoy reading your posts, Kris.

Don't let it get to you mate.

It would be a shame to see you go.


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## tech/a (18 August 2005)

Unbelievable----KIDS!!!!!!!!!


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## doctorj (18 August 2005)

Perhaps we need a session on Dr Phil.

This thread has provided a fantastic insight into the people behind the avatars.  Difference in opinion and circumstance is the key to discussion, education, this forum and even the market.  

Kris, you've obviously benefited from some very unique life experiences and this board is poorer without you.  Just because we differ on opinion and we don't share the same beliefs doesn't mean we all can't learn something from each other.  

One final word though, making money, or the desire to make money doesn't make you a bad person.  Tech's success has contributed to the country through tax and those he's employed.  Choosing to invest in homes doesn't make you bad any more than investing in Uranium stocks does.  This forum is an opportunity to get something (education, different ideas/opinions) in exchange for your own thoughts - in a way its an educational co-op.  If we all thought the same thing, it'd be a very boring place!


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## Smurf1976 (18 August 2005)

Property is presently the most mainstream hyped up investment class by far. So either the masses have got it right for the first time or this bubble is going to end in tears like every other bubble before it.

Different this time?


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## doctorj (18 August 2005)

You make an interesting point.

There's an addage that when the cabbie starts giving you stock tips, then its time to get out of the market.  To put it in perspective, not only have the cabbies been giving "housing" tips for years, but every second cabbie (and mums and dads and bellhops and bank teller etc) has mortgages their primary residence to invest in property.

Imagine if they did the same in shares...


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## DTM (18 August 2005)

Kris, 

you've run a good argument and made some valid points.  Your leaving this forum because you disagree with  Tech A or anyone else who has large property portfolios would be a shame because you contribute a point of view that many can identify with.  I myself am from a poor background and understand where you're coming from.  I also have worked hard for what I have and am working hard to "get ahead" whether it be in the sharemarket, a business or in property.   Opportunities abound in this land of ours and I'm sure Tech does put back into the community as anyone else would.  His contribution (as well as yours) to this forum has been excellent because he shares his trading knowledge and experience with everyone else on this forum.  Its helped me personally and for that I am grateful.

What ever you do, make sure you don't minimise your opportunities just because you disagree with someone.  Tech has a lot of things people could learn from because you have to remember, he started with nothing too after going bust.  To his credit, he didn't stop trying.


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## Happy (19 August 2005)

People make choices, this was one of them, and I am happy to move on.

Probably similar thing happens in ‘real Australia’, where people cannot accept other people’s way of life…


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## Rafa (19 August 2005)

I do feel sorry for Kris's past based on his childhood life...
Tho there is no way I can sympathise with his current actions...

The reason young people can't buy a house is because they choose to spend their money of consumer goods... flash cars, phones, ipods, etc, etc, travel around the world, etc, etc... it is the choice they make and then they expect others to come and bail them out... RUBBISH!

This is one sorry society if we start blaming our predicament on others. People from most of Asia, India, Africa, Latin America have nett assets of close to ZERO! AND yet in those countries, there are some very very very wealthy people! 

But the poor there will always have a smile on their face... and will always invite a visitor in for cup of tea and yarn. And they get on with life and try the best they can to make a living. 

In Australia, we can all own a property if we choose to live within our means. But we want to have it all, and even then are not satisfied! That is a sad state of affairs.

Its all about the choices we make... and we are solely responsible for our own decisions. And it is UP TO US to make the best out of our lives!

And for those talking about How Moral is Tech/A... I have a question... 

How moral are you who wish interest rates to rise so that ordinary familles struggling to get by are kicked out of their homes... and then you can come in and buy the house off them at the fire sale.... ??? The hypocrisy is amazing!!!

Anyway, thats my rant for the day... sorry about that.


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## Knobby22 (19 August 2005)

It is very rare that homeowners default. Even when interest rates were at 17% very few defaulted. The ones that were forced to sell were investors who overreached.

This is good otherwise every house would be owned by an investor and the young would have even more trouble buying a home. the next generation need houses prices to stabilise and fall somewhat so they can enter the market.

I don't want interest rates to rise in the short term but I do think a rise, if warranted by economic conditions, would be helpful to the next generation.
Sorry if I sounded like a bastard, but market forces, like nature will catch the unwary.


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## Rafa (19 August 2005)

I agree completely, market forces will catch those out who have invested un-wisely. And so it should.

I just thought that the moral arguement put forward by some was just simply uncalled for.


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## Smurf1976 (19 August 2005)

I can't help but notice that nobody seems to have a convincing reason as to why house prices would rise, apart from a few specific areas, over the next few years.

We have come to point where people will not pay, CAN NOT pay, any more that present prices and indeed many have bought knowing that the only way they can meet repayments over the longer term is with a fall in interest rates. The comment about depending on lower interest rates came from a local real estate agent who added words to the effect of "It's crazy, people borrowing almost 100% of the house price plus the buying costs and borrowing for furniture and they have car loans, credit cards etc too. A lot of these people are going to be in trouble sooner or later. It just can't go on. They're in way over their head with so much debt. I can see a lot of them having to sell in a few years." This agent was based in Hobart's Eastern shore suburbs, a reasonably wealthy area. 

Just down the road from where I live an entire new subdivision of 200 or so lots has been almost totally unsellable for around 2 years now. Less than 10% had sold last time I checked and the whole thing has been downgraded in scale, changed agents numerous times and still it doesn't sell. Just like the 10 new villas that were supposedly "nearly all sold" 12 months ago. The bottom line is that 8 are empty right now.

I follow the real estate listings at www.realestate.com.au and it's the same story over and over. They list the house for sale, it sits there and goes from newest listing to oldest and then it gets taken off the market. OK, some do sell but the only quick sales seem to be for those blatantly admitting they're desperate to sell and willing to drop the price. Most just disappear from the listings apparently unsold. Not surprising of course when you consider the 50% or so fall in transaction volumes. 

And I listen to the radio too. And it seems that a very large portion of total advertising (mainstream commercial station) is either real estate agents wanting your business or someone wanting to help you work out how to repay your debts. Or sell you more debt.

It may well be booming in Adelaide, Perth and Darwin. But it's gone awfully quiet in Hobart and it's no secret that prices are down in Sydney especially. And they say Sydney leads the nation when it comes to real estate... Gold Coast auctions have become a joke because practically nothing sells. And it's the same overseas too. The UK had the same boom as we did. And they've had the collapse in volume too. And now they have falling prices. Not by much, but falling nonetheless. 

I don't doubt that money can still be made in real estate. Buy in the right area, improve the property etc. But for the majority just looking to buy somewhere to live in their local area then, in the Eastern state capitals at least, there doesn't seem to be too much urgency.

Regardless of your own views, I think you ought to read http://www.jenman.com.au/NewsNews1.php?id=9 it's a bit old but still very relevant IMHO.


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## Rafa (19 August 2005)

I don't think anyone can sit here and say house prices are going to keep rising... Nor, to everyone’s credit, has anyone even attempted to say that. I think we all know that for the next few years (5 at least...), if not longer, prices will stagnate, 0% real growth, or maybe even a 10% fall... Should give those not in the market plenty of time to save up, as well as wage growth etc, plenty of time to catch up.

But that doesn't mean one can't make money from property. Just have to be smart about it, find that compelling reason why the particular suburb will grow. Like all things, in the next few years, the dud suburbs will fall by bigger percentages than the blue chip suburbs. If you’re in the business of developing property, then you should still make money provided the business case stacks up.

What it does mean, is that the average joe blow (not you mod!  ) won't be able to make money in property. It’s the same like the share market in the last year, pretty much all you had to do was be in the market and you'd make money...! 

(tho I still managed to hold a couple of dud stocks that cost me a lot!)


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## mrfirkin (19 August 2005)

Knobby22 said:
			
		

> Sorry if I sounded like a bastard, but market forces, like nature will catch the unwary.




How true. And one day it will surely catch us all. You can't take it with you. :


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## tech/a (20 August 2005)

Smurf1976 said:
			
		

> I can't help but notice that nobody seems to have a convincing reason as to why house prices would rise, apart from a few specific areas, over the next few years.




In general terms housing will I feel continue in most capital cities (with the exception of Some inner areas of Sydney and Melbourne) to rise albeit it muted. Gone are the days of 50% a year. 3-10% wont be uncommon. A 2% rise in interest rates would put a halt on that as well.

Demand causes prices to rise --sever lack of property will cause sharp rises--as demand is filled prices stabilise. A glut in property availability in areas will cause prices to fall in some cases to increase demand.This is normally bought about by developers rather than the genreral public trying to off load houses they cannot afford---This simply means the developer wont make as much (on those he discounts to encourage interest) but he will have done his numbers and will simply move on.



> We have come to point where people will not pay, CAN NOT pay, any more that present prices and indeed many have bought knowing that the only way they can meet repayments over the longer term is with a fall in interest rates.




I think we should be---SOME--.



> The comment about depending on lower interest rates came from a local real estate agent who added words to the effect of "It's crazy, people borrowing almost 100% of the house price plus the buying costs and borrowing for furniture and they have car loans, credit cards etc too. A lot of these people are going to be in trouble sooner or later. It just can't go on. They're in way over their head with so much debt. I can see a lot of them having to sell in a few years." This agent was based in Hobart's Eastern shore suburbs, a reasonably wealthy area.




I really think this agent was either *GREEN* or alarmist.
Lets look at this---100% loan + duties and costs + Borrowing for Furniture + Credit Card/s debt + Car loan/s.
Show me a bank that will loan to this case!! LO DOC loans I here you yell.
Even LO DOC have serviceability criteria and their buffer is 2% on their 8.5%. Simply these people wont get a loan.
BUT SOME DO---Lending insto's have got that covered too--MORTGAGE INSURANCE---Less than 80% down you pay mortgage insurance---simply if you then cant maintain your commitment to the insto and they reposes and fire sell their asset and it comes up short---insurance pays the difference.
Borrowers not financially crucified!!!

Honestly I know a lot of younger people (I went to school with a lot of them!). Those with the huge car and credit debt---DONT WANT A HOUSE--- they want a goodtime--no commitment.(Mind you theyve got it and dont see it!!)Those that do count EVERY CENT. These kids would back away from over commitment like it was the plague!



> Just down the road from where I live an entire new subdivision of 200 or so lots has been almost totally unsellable for around 2 years now. Less than 10% had sold last time I checked and the whole thing has been downgraded in scale, changed agents numerous times and still it doesn't sell. Just like the 10 new villas that were supposedly "nearly all sold" 12 months ago. The bottom line is that 8 are empty right now.




A bad developement but this is an investor bleeding not those who are starting out!
I have one comment for the developer--due diligence.



> I follow the real estate listings at www.realestate.com.au and it's the same story over and over. They list the house for sale, it sits there and goes from newest listing to oldest and then it gets taken off the market. OK, some do sell but the only quick sales seem to be for those blatantly admitting they're desperate to sell and willing to drop the price.




So do I. I'm not seeing that.(Could be Tassie)I have 3 properies for sale myself--I've sold one at full price although there was offers--The one demolished by theives is now repaired and will be on again next week---but had 20 couples through in the first and only open---the Third is currently under negotiation---very different this one---they want to pay more but not settle for 18 mths.



> Most just disappear from the listings apparently unsold.




Could be that they ARE sold and simply removed.



> Not surprising of course when you consider the 50% or so fall in transaction volumes.




Maybe the case in Tassie but 50% on the mainland--nah.
I have many contacts in the building industry--many friends.
There is a new buyer around--those with an I/P or so who are selling them up and getting cashed up and building/buying their dream homes---pretty well debt free!
New home approvals while down are no different to pre boom times!!
Hardly catastrophic.



> And I listen to the radio too. And it seems that a very large portion of total advertising (mainstream commercial station) is either real estate agents wanting your business or someone wanting to help you work out how to repay your debts. Or sell you more debt.




REALLY.



> It may well be booming in Adelaide, Perth and Darwin. But it's gone awfully quiet in Hobart and it's no secret that prices are down in Sydney especially. And they say Sydney leads the nation when it comes to real estate... Gold Coast auctions have become a joke because practically nothing sells. And it's the same overseas too. The UK had the same boom as we did. And they've had the collapse in volume too. And now they have falling prices. Not by much, but falling nonetheless.




OK again lets look at the statement---Adelaide Perth and Darwin arent booming but are steady.This is also the case with parts of every state.
Sydney Melbourne and Adelaide have parts particularly inner suburbia which are coming off a BIT.---demand is lower.Pretty well all auctions are under sold in comparison to the boom years--to be expected.*SMART VENDORS  * wont be intmidated by agents who work like crazy to get vendors to lower their reserve---those that hold out often sell to a bidder at their price AFTER the auction.

S this doesn't mean that they dont sell----maybe Queenslanders have woken up to the greedy AUCTION agents-----Jenman may actually be getting through!!



> I don't doubt that money can still be made in real estate. Buy in the right area, improve the property etc. But for the majority just looking to buy somewhere to live in their local area then, in the Eastern state capitals at least, there doesn't seem to be too much urgency.




Its harder to make a quid in R/E but yes it can be done and YOUNG FIRST HOME buyers CAN still buy housing and not be shackled to a bank forever.

You know banks are wonderful.They will lend you 1000's for a very small fee and if your smart enough to increase the value of your property by your own means or by sheer luck in being in the right place at the right time---they wont take a SINGLE CENT of your profit!!---and if its your own place of residence---NOR WILL ANY OTHER INSTITUTION.



> Regardless of your own views, I think you ought to read http://www.jenman.com.au/NewsNews1.php?id=9 it's a bit old but still very relevant IMHO




Get a hold of his book 
"Dont Sign Anything"---even if you dont own a property this is a MUST for any library---I bought 10 copies and gave 9 away to family and friends---BRILLIANT.

There are many ways to get into the R/E market for first time home buyers.
Moneytree was one here who found a way.
Rafa is on the right track.
My daughters Hostie girlfriend found a great way---wish I'd thought of it and was 25 yrs younger!!

Think outside the square--way out.

Its only YOU that limits YOUR POTENTIAL.


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## Smurf1976 (22 August 2005)

I do see both sides of this debate. I would describe myself as moderately bearish on property _relative to_ other assets. I just think that right now there's better money to be made than by buying houses. 

Prices might go up a bit, they might go down a bit. But they haven't been going up in Sydney lately, in fact they are going down.

http://www.smh.com.au/news/business/sydney-house-prices-fall/2005/08/22/1124562790666.html


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## wayneL (31 August 2005)

Homebuilder insiders on selling spree
Analysts worry sales may presage downturn after boom

http://www.marketwatch.com/news/sto...5D3-4B97-8623-96A6CFC6C5BF}&siteid=mktw&dist=

BOSTON (MarketWatch) -- A rash of insider selling in recent months at red-hot homebuilders appears reminiscent of a similar trend right before the technology bubble burst in 2000, Merrill Lynch said Monday.

"There has been record insider selling within the last 10 months across a broad range of homebuilding companies despite very few sell ratings by Wall Street analysts and the general perception by investors that the stocks are undervalued," Richard Bernstein, the firm's top strategist, wrote in a note to clients.........................


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## tech/a (31 August 2005)

Smurf/Wayne.

I'm personally selling 3 of my holdings.
Simply to decrease my exposure to Lenders and increase free hold holdings.

I guess its a bit different for me I treat it as a business.It has to be nett profitable.
I agree with Smurf that now is not the time to build a realestate portfolio.
However if you are a young person who wants to get on the train there are ways to do this--- but you need to be outside of the square.

If your overgeared ---and you'll know if you are---Now is the time to mitigate your risk--like I am--Costello has been good to us and the market hasnt come off like a train.

Be wise--not a "Maverick"--( The name I call one of my trusts--hahaha).


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